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2002 DIGILAW 592 (KER)

Deputy Commissioner v. Rama Shenoy

2002-09-10

C.N.RAMACHANDRAN NAIR, G.SIVARAJAN

body2002
Judgment :- 1. The question that arises for consideration in this Tax Revision Case is as to whether 'sugar candy' sold by the assessee falls within Entry 56 of the Third Schedule to the Kerala General Sales Tax Act (hereinafter referred to as 'the Act') eligible for exemption from payment of sales tax under the Act. 2. The Revenue is the revision petitioner. Respondent-assessee is engaged in the business as Indian Drugs Merchants. In the assessment under the Act for the year 1992-93 the assessee claimed exemption on the sales turnover of 'sugar candy'. The assessee's contention that 'sugar candy' is an item falling in category of sugar under Entry 56 of the Third Schedule to the Act was not accepted by the assessing authority. Assessee's appeal before the first appellate authority was unsuccessful. However, the Tribunal by order dated 23rd July, 1997 in T.A. No. 49 of 1996 allowed the appeal of the assessee holding that "sugar will include sugar candy" and, therefore, it is exempted from payment of sales tax under Entry 56 of the third schedule to the Act. 3. The learned Government Pleader appearing for the revision petitioner submits that 'sugar candy' has never been understood in common parlance as 'sugar' since 'sugar candy' is commercially a different commodity from sugar. He in support of the said contention, relied on the decisions of the Orissa and Karnataka High Court and also the decisions of the Supreme Court in Annapurna Biscuit Manufacturing Company v. Commissioner of Sales Tax, Lucknow, U.P. ((1981) 48 STC 254) and State of Kerala v. M/s.Vattukalam Chemicals Industries ((2002) 10 KTR 69 (SC)). He also sought to rely on the dictionary meaning of the word 'sugar'. He, on the basis of the aforesaid decisions and the dictionary meaning submitted that the Tribunal had erred in holding that the 'sugar candy' will fall within Entry 56 of the Third Schedule to the Act. The learned Counsel for the respondent submitted that 'sugar candy' is nothing but sugar falling under Entry 56 of the Third Schedule to the Act. The learned Counsel for the respondent submitted that 'sugar candy' is nothing but sugar falling under Entry 56 of the Third Schedule to the Act. He submitted that Entry 56 is not 'sugar' but the 'sugar covered under sub-headings 1701-20,1701-31,1701-39 and 1702-11 of the Schedule to the Central Excise Tariff Act, 1985' and submitted that by virtue of the provisions of Chap.17 of the Central Excise Tariff Act, 1985 'sugar-candy' will fall under Entry 56 of the Third Schedule to the Act. He also relied on the decision of the Supreme Court in State of Gujarat v. Sakarwala Brothers ((1967) 19 STC 24) and submitted that the principles laid down in the said decision will squarely apply. 4. In order to appreciate the rival contentions, it is necessary to refer to the relevant provisions of the Act and also the relevant provisions of the Central Excise Tariff Act to which reference is made in Entry 56 of the Third Schedule to the Act. Entry 56 of the Third Schedule to the Act reads as follows: "Sugar covered under sub-heading 1701-20,1701-31,1701-39 and 1702-11 of the Schedule to the Central Excise Tariff Act, 1985." Chapter 17 of the Central Excise Tariff Act deals with 'sugar' and sugar confectionary'. Para.2 of the said Chapter reads as follows: "Forme purpose of sub-heading Nos. 1701-10,1701-20,1701-31 and 1701-39, 'sugar' means any form of sugar in which the sucrose content, if expressed as a percentage of the material dried to constant weight at 105°C would be more than 90." The relevant sub-heading of the Schedule to the Central Excise Tariff Act, 1985 also reads as follows: 5. A contention similar to the one taken by the revenue was considered by the Supreme Court in State of Gujarat v. Sakarwala Brothers ((1967) 19 STC 24). The decision of the Gujarat High Court under appeal was appended to the said decision at pages 25 to 30. The main question which arose for consideration in that case was as to whether the sale of patasa, harda and alchidana (small lumps of sugar) are exempt form the payment of sales tax by virtue of Entry 47 in Schedule A of the Bombay Sales Tax Act, 1959. The main question which arose for consideration in that case was as to whether the sale of patasa, harda and alchidana (small lumps of sugar) are exempt form the payment of sales tax by virtue of Entry 47 in Schedule A of the Bombay Sales Tax Act, 1959. The learned Advocate General appearing for the State of Gujarat raised a contention in the High Court that the word 'sugar' in Entry 47 has been used in the same sense in which it used in common parlance and that in common parlance, "patasa", "harda" and "alchidana" are not commercially known as and cannot be asked for or obtained as sugar. Entry 47 of Schedule A of the Bombay Sales Tax Act, 1959 reads as follows: "Sugar defined in item 8 of the First Schedule to the Central Excise and Salt Act, 1944". Item 8 defines sugar "sugar means any form of sugar containing more than 90 per cent of sucrose". Gujarat High Court observed that the Advocate General was right when he says that the articles known as patasa, harda and alchidana bear & distinct and different name from sugar and are not commercially purchased or sold as sugar. The High Court, however, observed as follows: 'The Legislature, in Entry 47, does not use the word sugar simpliciter. It has in terms stated that what is covered is sugar as defined in item No. 8 of the First Schedule to the Central Excise and Salt Act, 1944. When we turn to the definition appearing in the aforesaid item No. 8 that definition is not intended merely to cover sugar as known in common parlance. As stated by us earlier, it is intended to cover all forms of sugar. It is further intended to cover only sugar in any form which contains more than 90 percent of sucrose. A definition which refers to the chemical contents of an article cannot be said to be a definition which is intended to cover the article as understood in common parlance." 6. It is further intended to cover only sugar in any form which contains more than 90 percent of sucrose. A definition which refers to the chemical contents of an article cannot be said to be a definition which is intended to cover the article as understood in common parlance." 6. In the appeal against the said judgment the Supreme Court at page 30 of the said report dealt with the position as follows: "The question which we have to consider is whether patasa, harda and alchidana are 'forms of sugar containing more than 90 percent of sucrose' and hence are covered by the definition of Entry 47 of Schedule A to the Bombay Sales Tax Act. It is not disputed that patasa, harda and alchidana contain more than 90 per cent of sucrose. It is contended, however, by Mr. Bindra on behalf of the appellant that they are not 'forms of sugar' but they are products of sugar and do not fall within Entry 47 of Schedule A. We are unable to accept this argument as correct. It is not disputed on behalf of the appellant that the chemical composition of patasa, harda and alchidana is the same as that of sugar, viz., there is more than 90 percent of sucrose. Mr. Bindra, however, laid stress on the argument that patasa, harda and alchidana were sweets used on festive occasions. But this circumstance has no relevance on the question of legal classification for the purpose of the Bombay Sales Tax Act. On the other hand, it appears from the judgment of the Tribunal that it is possible to convert these articles into sugar by dissolving them in water and by subjecting the solution to an appropriate process. It is stated by the Tribunal that these articles can be put to the same use to which sugar-candy can be put. It is, therefore, manifest that patasa, harda and alchidana are only different forms of refined sugar with the requisite sucrose contents. It is argued by Mr. Bindra that the phrase 'any form of sugar' referred to any variety of sugar and the phrase cannot be taken to mean sugar in any form. It is not possible to accept this argument as correct. It is argued by Mr. Bindra that the phrase 'any form of sugar' referred to any variety of sugar and the phrase cannot be taken to mean sugar in any form. It is not possible to accept this argument as correct. If the Legislature had intended to refer to 'any variety of sugar' there is no reason why it should not have used that expression in item No. 47." The Supreme Court ultimately upheld the decision of the Gujarat High Court. The position obtained in the instant case is similar to the one considered by the Supreme Court. 7. We have already extracted the relevant provisions of the Act viz. Entry 56 of Third Schedule to the Act and the relevant sub-heading in the Schedule to the Central Excise Tariff Act, 1985. C1.2 of Chap.17 of the Central Excise Tariff Act has clearly stated that for the purposes of sub-heading Nos. 1701-10,1701-20, 1701-31 and 1701-39, 'Sugar' means any form of sugar in which the sucrose content, if expressed as percentage of the material dried to constant weight at 105°C would be more than 90. Further the said sub-headings take in all forms of sugar. Entry 56 of the Third Schedule to the Act is not'sugar' simpliciter. It is sugar covered under subheadings of the Schedule to the Central Excise Tariff Act. In view of the decision of the Supreme Court in Sakarwala Brothers case ((1967) 19 STC 24) mentioned above it is not the common parlance theory that has to be applied to find out as to whether the sugar covered under the sub-heading of the Schedule to the Central Excise Tariff Act will take in sugar candy. The said question has to be considered only in the light of the provisions of the Central Excise Tariff Act which we have already extracted above. 8. Thus the only question to be considered is as to whether 'sugar candy' dealt with by the respondent contains more than 90 per cent sucrose content. In the instant case, the Tribunal has found that the sugar-candy dealt with by the assessee satisfied the definition of sugar in Clause.2 of Chap.17 of the Central Excise Tariff Act. We do not find any illegality in the order of the Tribunal. In the instant case, the Tribunal has found that the sugar-candy dealt with by the assessee satisfied the definition of sugar in Clause.2 of Chap.17 of the Central Excise Tariff Act. We do not find any illegality in the order of the Tribunal. However, the Government Pleader appearing for the revision petitioner, as already noted, relied on the decisions reported in Una Subba Rao v. State of Orissa and Ann ((1986) 61 STC 49), Kaypee Industries v. Commercial Tax Officer and Ann ((1992) 84 STC 384), Praveen Corporation v. Commissioner of Commercial Taxes and Ann ((1997) 107 STC 290), State of Orissa v. Laxmi Industries ((1991) 81 STC 43) to contend that even going by the provisions of the Central Excise Tariff Act, sugar candy will not fall within the definition of sugar. In Una Subba Rao's case ((1986) 61 STC 49) a contention was taken before the Orissa High Court that'sugar' includes 'sugar candy' and since sugar is exempted from payment of sales tax under the Act 'sugar candy' is also exempted from payment of sales" tax. The Court noted that the said contention is supported by the decision of the Supreme Court in Sakarwala Brothers' case ((1967) 19 STC 24), decision of the Orissa High Court in State of Orissa v. Satyabadi Sahu and Sons ((1982) 51 STC 75) and other decision of other High Courts Paw and Co. v. State of Andhra Pradesh ((1970) 25 STC 34 (A.P.), Madanlal Khaitan v. Commercial Tax Officer ((1972) 29 STC 625 (Cal.)), Commissioner of Sales Tax v. Nangumal Ram Kishore ((1981) 48 STC 277) (Del.), Dulal Chandra Bhar v. Commercial Tax Officer ((1976) 37 STC 576 (Cal), and so on. With reference to its earlier decision the Orissa High Court in State of Orissa v. Satyabadi Sahu and Sons ((1982) 51 STC 75) noted that at that time 'sugar candy' was not included in the list of goods subject to sales tax. The Orissa High Court held that in view of the amendment made subsequently by which 'sugar candy' was included in item 86 of the List C goods subject to sales tax the claim of exemption pleaded was rightly rejected. The Orissa High Court held that in view of the amendment made subsequently by which 'sugar candy' was included in item 86 of the List C goods subject to sales tax the claim of exemption pleaded was rightly rejected. A Division Bench of the Karnataka High Court in Praveen Corporation v. Commissioner of Commercial Taxes ((1977) 107 STC 614), reversing the judgment of the Single Bench reported in 107 ITR 290 which held the view that 'sugar candy' is not 'sugar' under Entry 31-B of the Fifth Schedule to the Karnataka Sales Tax Act held that sugar candy made from sugar contains more than 90 per cent of sucrose and therefore it definitely falls within the statutory definition of sugar as set out for the purpose of the Additional Duties of Excise (Goods of Special, Importance) Act, 1957 and the Central Excise Tariff Act, 1985. It was accordingly held that sugar-candy is also covered by Entry 31-B of the Fifth Schedule to the said Act. 9. The other decisions relied on by the Government Pleader are also distinguishable. 10. In the present case 'sugar candy' does not find a place in any of the entries in the First and Second Schedules to the Act. There is no other entry in the said Schedules under which'sugar candy' can be brought in. Applying the principles laid down in the decision of the Supreme Court in Sakarwala Brothers case ((1967) 19 STC 24) we hold that 'sugar candy' dealt with by the assessee falls under Entry 56 of the Third Schedule to the Act. We accordingly confirm the order of the Tribunal. This Tax Revision case is accordingly dismissed.