DEPUTY COMMISSIONER Vs. RAMA SHENOY

JUDGEMENT

(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.) 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 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. "