TMI Blog1984 (10) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... otification issued by the State Government in Item No. 78 of List C, i.e., List of goods subject to sales tax, "sugar-candy" was notified as a goods taxable at the rate of 4 per cent. This was effective from 1st May, 1976. Subsequently by another notification dated 29th December, 1977, published in the Orissa Gazette (Extraordinary) this item was included as entry No. 86 of the said list, and this was effective for the period from 1st January, 1978, to 31st March, 1982, which is relevant for the purpose of this case. The petitioner being confused by the aforesaid misleading entries, made queries to the Commissioner of Sales Tax as to whether "sugar-candy" is a taxable or tax-free goods as "Sugar" includes within its ambit all forms of sugar, that is to say, sugar of any shape or texture, colour or density and by whatever name it is called. Copy of that letter is annexed to this petition as Annexure I. As the petitioner did not receive any reply, he approached this Court for injecting opposite parties from realising sales tax on "sugar-candy". In the meantime opposite party No. 2 has assessed the petitioner and imposed sales tax at the rate of 4 per cent on sugar-candy, for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4." Item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944, reads as follows :- "Sugar, produced in a factory ordinarily using power in the course of production of sugar - 'sugar' means any form of sugar in which the sucrose content, if expressed as a percentage or the material dried to constant weight at 105°centigrade, would be more than ninety." According to the petitioner, in view of this definition, "sugar" also includes "sugar-candy". This contention of the petitioner is supported by the decisions reported in (1982) 51 STC 75 (State of Orissa v. Satyabadi Sahu Sons) and (1967) 19 STC 24 (S.C.) (State of Gujarat v. Sakarwala Brothers). There are also series of decisions on this point reported in (1970) 25 STC 34 (Paro Co. v. State of Andhra Pradesh), (1971-72) 76 CWN 623 (Madanlal Khaitan v. Commercial Tax Officer, Siliguri), (1976) 37 STC 576 (Dulal Chandra Bhar v. Commercial Tax Officer) and (1981) 48 STC 277 (Commissioner of Sales Tax, Delhi v. Nangumal Ram Kishore). On the other hand it is contended on behalf of the opposite parties that "sugar" and "sugar-candy" are separately mentioned in different schedules of the Sales Tax Act, i.e., in Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether a dealer in sugar-candy has to pay sales tax under the Andhra Pradesh General Sales Tax Act, 1957. Under Section 6 of the Andhra Pradesh General Sales Tax Act, 1957, sales or purchases of declared goods by a dealer shall be liable to tax at the rate and only at the point of sale or purchase, specified against each in the Third Schedule on his turnover of such sales or purchases for each year. Item 12 of the Third Schedule was "sugar-candy" and it was to be taxed at the point of first sale in the State. Thus reading Section 6 along with entry 12 in the Third Schedule, the dealer was liable to pay sales tax on "sugar-candy". But it was argued with reference to the definition of "sugar" that "sugar" includes "sugar-candy" and since "sugar" is exempted from the payment of sales tax under Section 8 read with entry 6 in the Fourth Schedule, "sugar-candy" also is exempted from the payment of salex tax. It was held : "....... though the only component of 'sugar-candy' in 'sugar' in common parlance the expressions 'sugar' and 'sugar-candy' are used to denote substances identifiable as distinct substances and if the expressions 'sugar' and 'sugar-candy' are understood as they are und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as sugar. Though diamond sugar is made out of sugar, it is the result of a different process other than the one involved in the manufacture of sugar. Though item 9 of the Second Schedule to the Act does not refer to diamond sugar, as long as diamond sugar is sold in the market as a separate commodity apart from sugar, it can be taken as a separate commodity other than sugar for the purpose of levy of sales tax. So long as the legislature has got the power to classify articles for the purposes of taxation, the court cannot question the power of the legislature to give a restricted definition of 'sugar' for the purpose of sales tax, and to restrict the exemption only to pure sugar." According to the opposite parties, the above cases of the Andhra Pradesh and the Madras High Courts fully support their contention. The Learned counsel for the petitioner tried to distinguish the decision of the Madras High Court and submitted that in the definition of "sugar" itself "sugar-candy, etc." have been excluded, which is not so in the present case. 5. As already indicated, "sugar-candy" was not previously included in List C, i.e., List of goods subject to sales tax, which was done only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rose". The effect of inclusion of "sugar-candy" as a separate and distinct item in the List of Taxable Goods, as in the present case, was not for consideration in those cases. The learned counsel for the opposite parties also cited a decision of the Supreme Court reported in (1976) 37 STC 319 (S.C.) (State of Tamil Nadu v. Pyare Lal Malhotra) which may be usefully referred to. It will throw some light regarding the matter in controversy in this case. In that case the State of Tamil Nadu was aggrieved by the decision of the Madras High Court holding that the manufactured goods, said to consist of "steel rounds, flats, angles, plates, bars" or similar goods in other forms and shapes, could not be taxed again if the material out of which they were made had already been subjected to sales tax once as iron and steel scrap as both were "iron and steel". The Supreme Court held : "Entry No. (iv) in Section 14 of the Central Sales Tax Act, 1956, as originally worded (prior to its amendment by Amendment Act, 61 of 1972) was meant to enumerate separately taxable goods and not just to illustrate what was just one taxable substance, viz., 'iron and steel'. Each sub-item in Entry No. (iv) is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her iron or steel. The mere fact that the substance or raw material out of which it is made has also been taxed in some other form, when it was sold as a separate commercial commodity, would make no difference for purposes of the law of sales tax. The object appears to us to be to tax sales of goods of each variety and not the sale of the substance out of which they are made. As we all know, sales tax law is intended to tax sales of different commercial commodities and not to tax the production or manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales tax. Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing or are merely joined together, they may remain commercially the goods which cannot be taxed again, in a series of sales, so long as they retain their identity as goods of a particular type. ......……………………………… It is true that the question whether goods to be taxed have been subjected to a manufacturing process so as to produce ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
