TMI Blog2001 (11) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... Nadu Act 21 of 1998, which introduced item 71A in Part B of the First Schedule to the Act making the sale of such imported sugar taxable at the first point of sale at the rate of 4 per cent. 3.The Revenue does not, and rightly, dispute the fact that the rate and stage of levy had not been specified with reference to imported sugar specifically. It is, however, the case of the State that imported sugar is taxable under the residuary Entry 68, which provided for levy of tax at the rate of 8 per cent. That stand has been taken by the State notwithstanding what the assessing officer had done. He had treated this imported sugar as declared goods and had taxed the same at the rate of 4 per cent notwithstanding the fact that there was no specific entry in the Schedules, which specified imported sugar and also the rate and stage at which sale of such sugar is to be taxed. The assessing officer had relied upon an administrative circular in which the State's view had been recorded that imported sugar would fall under the residuary entry but the tax to be levied thereon should be limited to 4 per cent as in the State's view, such sugar was "declared goods". That circular had proceeded on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods' means goods declared by Section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), to be of special importance in inter-State trade or commerce." It is thus clear that Section 3(1) of the Act, read with Section 4, requires dealers, who deal in sale or purchase inside the State of declared goods to pay tax "at the rate and only at the points specified against each in the Second Schedule" on the turnover of such goods in each year. The specification of the rate and the stage is, therefore, an essential requirement, without which the dealer cannot be held liable to pay tax under the Act. The mere fact that the goods dealt with by the dealer are declared goods will not suffice. It is only when the rate of tax as also the point at which the levy to be made are specified, the dealer dealing in declared goods will become liable to pay tax. 5.The importance of specifying the stage of levy in order to enable the State to demand and collect tax from a dealer was pointed out by the Apex Court in the case of Govind Saran Ganga Saran v. Commissioner of Sales Tax (1985) 60 STC 1. The Court in that case held that in the absence of a notification which the State of Uttar P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Belting Works - (2001) 121 STC 396. 9.The learned Additional Advocate-General appearing for the State, however, contended that even though the rate and stage have not been specified after enumerating imported sugar as separate item in any of the Schedules, imported sugar would still fall under the residuary entry. In order to be able to make such assertion, learned Counsel contended contrary to what the assessing officer had done and contrary to what the Commissioner of Commercial Tax had opined, that imported sugar is not an item of declared goods at all and, therefore, the non-specification of imported sugar in the First Schedule would not disentitle the State from levying tax on imported sugar, as the residuary entry would take within its fold all goods which are taxable but which have not been enumerated in the Schedule. 10.It was his endeavour to show that the sugar imported by the dealer, which is admittedly refined sugar, is not an item covered under entry (viii) in Section 14 of the Central Sales Tax Act. That entry (viii) reads thus : "Sugar covered under sub-heading Nos. 1701.20, 1701.31, 1701.39 and 1702.11 of the Schedule to the Central Excise Tariff Act, 1985 (5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "sugar", which had been set out in the repealed First Schedule to the Central Excise Act and which had been incorporated by reference in item (viii) under Section 14 of the Central Sales Tax Act. That definition in the Central Excise Tariff Act is however made applicable only to the sub-headings specified therein. 14.Heading No. 17.01 in Chapter 17 of the Central Excise Tariff Act describes the goods thus : "Cane or beet sugar and chemically pure sucrose, in solid form." Under that heading are to be found five sub-headings, the first of which (1701.10) is "sugar, in or in relation to the manufacture of which no process is ordinarily carried on with the aid of power". The second sub-heading (1701.20) is "khandsari sugar". The third sub-heading (1701.31) is, "sugar, other than khandsari sugar". Under that sub-heading there are two other sub-headings, "Required by the Central Government to be sold under clause (f) of sub-section (2) of Section 3 of the Essential Commodities Act, 1955". Sub-heading 1701.39 is "other". The last sub-heading, 1701.90 is also "other". For the sake of completion, we may also mention that the other subheading referred to in clause (viii) of Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut uniformity in the mode of description of goods, which are the subject-matter of international trade. Parliament thought it fit not to continue the reference to the repealed enactment and wanted to take advantage of the more precise classification of goods set out in the Central Excise Tariff Act. That Act was referred to in several of the entries in Section 14 of the Central Sales Tax Act either by referring to the whole headings thereunder or sub-headings only in certain cases. In the case of sugar, the reference was not to the main headings, but to the specified sub-headings. The sub-headings chosen by Parliament for being referred to for the purpose of identifying sugar, which is declared goods, are items which answered the definition of sugar as it had been defined earlier in the repealed First Schedule to the Central Excise Act, the only exception being palmyra sugar, for which the sucrose content is not specified. The sugar covered under entries 1701.10, 1701.20, 1701.31 and 1701.39 is sugar, the sucrose content of which, if expressed as a percentage of the material dried to constant weight at 105 degree centigrade, would be more than 90. This is so, by reason of Note 2 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation of India Ltd. - 1998 (100) E.L.T. 17 (S.C.) = (1999) 114 STC 7, referred to the definition of sugar contained in the First Schedule to the Central Excises and Salt Act, which had been incorporated into the Kerala General Sales Tax Act, by employing words in that Act which were identical to those in item (viii) of Section 14 of the Central Sales Tax Act prior to the amendment of 1988, and held as follows : "The definition of 'sugar' in the First Schedule of the Excise Act has been incorporated in Schedule III to the said Act. The definition must, therefore, be read as it stands and, so read, all sugar, whether imported or otherwise is not liable to tax under the said Act if produced in a factory ordinarily using power in the course of production of sugar." 21.The use of the words "covered under", after the amendment in the year 1988 did not bring about any fundamental change in adding a requirement for the declared goods in the description of which certain headings or sub-headings of the Central Excise Tariff Act are referred, that the goods be manufactured in India and be subject to the levy of Central Excise. The words "covered under" merely denote that which is com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h even when imported would qualify as declared goods, as in the case of cotton in entry (ii), which refers to all kinds of cotton, indigenous or imported, and the omission to refer to the imported sugar in item (viii) of Section 14 of the Central Sales Tax Act would indicate the legislative intent to confine the benefit of Section 14 only to indigenously manufactured goods. This argument, though superficially attractive, is without substance. Cotton referred to in item (ii) included indigenous or imported cotton even prior to the amendment of the year 1988. Moreover, as held by the Apex Court in the case of State Trading Corporation - 1998 (100) E.L.T. 17 (S.C.) = (1999) 114 STC 7 (S.C.), the definition, which is incorporated into the Central Sales Tax Act and which definition does not make a distinction between imported and indigenous manufacture would take within its scope the imported as also indigenous product. 25.The fact that the word "imported" is not found in item (viii) of Section 14 of the Central Sales Tax Act, therefore, does not result in the declaration with regard to sugar being confined only to sugar which is produced domestically. 26.On principle also there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the sucrose content. It is not the case of the State that the sucrose content of the imported sugar is less than 90 per cent. 30.The State Legislature has, in the entries relating to sugar in the Third Schedule to the Act, exempted sugar other than khandsari sugar, produced or manufactured in India from tax. In the Second Schedule the sugar, in or in relation to which no process is ordinarily carried on with the aid of power, is subjected to tax at the point of first sale at 4 per cent. Khandsari sugar also is similarly taxed at the same rate at the stage of first sale. The Second Schedule which deals with declared goods thus specifies only sugar, which is not manufactured with the aid of power and khandsari sugar. It does not specify imported sugar nor does it specify sugar manufactured with the aid of power. There is no specific entry in the Second Schedule which is capable of taking within its fold refined sugar which is produced domestically or outside. Sugar produced in a factory is specified only in the Third Schedule, which deals with goods which are exempt from tax. 31.In the anxiety to grant exemption to sugar produced or manufactured domestically the reference to su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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