STATE OF GUJARAT Vs. SAKARWALA BROTHERS

JUDGEMENT

(1.) This is a reference under section 61 (1) of the Bombay Sales Tax Act, 1959. The opponents are registered dealers dealing inter alia in "patasa", "harda" and "alchidana". The opponents requested the Deputy Commissioner of Sales Tax (Appeals) , Gujarat State, Ahmedabad, to determine under section 52 (l) (e) of the Bombay Sales Tax Act, 1959, whether any tax was payable in respect of the sales of "patasa", "sakar", "bura sugar", "harda" and "alchidana". Along with their application, they sent two copies of bills Nos. 46, 85 and 92 dated respectively 2/05/1960, 1/07/1960, and 9/07/1960. The Deputy Commissioner of Sales Tax held that the sale of "bura sugar" was exempt from tax as the item was covered by entry 47 of Schedule A to the Bombay Sales Tax Act, 1959, whilst the sales of other articles were covered by entry 22 of Schedule E to the Act and tax was payable on them. By a further order dated 3/10/1960, the Deputy Commissioner rectified the earlier order and held that the other articles were covered, not by entry 22 of Schedule E, but by entry 31 of Schedule C to the Act. The Commissioner of Sales Tax in revision, by his order dated 24/10/1960, held that "sakar" (sugar-candy) was a form of sugar and was covered by the definition of sugar in entry 47 of Schedule A and was also exempt from tax. He held that articles like "patasa", "harda" and "alchidana" were products of sugar and not sugar as such in any form. The matter was carried further before the Sales Tax tribunal. The tribunal held that "patasa", "harda" and "alchidana" should be treated as forms of sugar and not sweets or products of sugar and were covered by entry 47 of Schedule A and were exempt from tax. At the instance of the State of Gujarat, this reference has been made for the determination of the following questions:

(2.) The question of law involved in this appeal is whether the sales of patasa, harda and alchidana (small lumps of sugar) fall within the definition of "sugar" in entry 47 of Schedule A to the Bombay Sales Tax Act, 1959 (No. 51 of 1959 -) (hereinafter called the "bombay Sales Tax Act") and are exempt from the payment of sales tax. The respondents applied under section 52 of the Bombay Sales Tax Act to the Deputy Commissioner of Sales Tax to determine whether any tax was payable on the sales of patasa, sakar, bura sugar, harda and alchidana effected by them under their bills No. 46 dated 2/05/1960, No. 85 dated 1/07/1960, and No. 92 dated 9/07/1960. The Deputy Commissioner of Sales Tax held that the sale of "bura sugar" was exempt from tax as the item was covered by entry 47 of Schedule A to the Bombay Sales Tax Act, whilst the sales of other articles were covered by entry 22 of Schedule E to the Act and tax was payable on them as such. By a further order dated the3/10/1960, the Deputy Commissioner rectified the earlier order and held that the other articles were covered not by entry 22 of Schedule E, but by entry 31 of Schedule C to the Act. The Commissioner of Sales Tax, however, revised the order of the Deputy Commissioner of Sales Tax and by his order dated 24/10/1960, held that sakar (sugar-candy) was a form of sugar and sales thereof were exempt from tax under entry 47 of Schedule A to the Bombay Sales Tax Act. He further held that articles like patasa, harda and alchidana were products of sugar and not sugar as such in any form. Thereafter, the respondents preferred an appeal to the Gujarat Sales Tax tribunal which held that patasa, harda and alchidana should be treated as forms of sugar and not sweets or products of sugar and were covered by entry 47 of Schedule A and were exempt from tax. At the instance of the State of Gujarat the tribunal referred the following questions of law for the opinion of the Gujarat High court: