1963 (4) TMI 38 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of exemption under "inter-State sales" for sugar dealer. Whether sugar candy falls under the exemption notification.

Analysis:
The petitioner, a dealer in sugar and arecanut, contested the refusal of exemption under "inter-State sales" for a turnover of Rs. 21,616 and taxation on sugar candy turnover of Rs. 88,901. The contention was that the exemption on sugar should extend to sugar candy due to their similarity. The Central Government's Act 58 of 1957 declared sugar as a special commodity in inter-State trade. The State of Madras issued notifications exempting sugar from local sales tax to qualify for proceeds of additional duties of excise. The definition of sugar under the Act includes any form with over 90% sucrose. The petitioner argued that sugar candy is essentially sugar in crystallized form, thus should be exempt. The Court analyzed various legal provisions and notifications to determine the scope of exemption.

The Court examined the purpose of the exemption notifications and the Central Act regarding additional duties of excise. It concluded that sugar candy falls within the term "sugar" mentioned in the exemption notification. The State's intention to exempt sugar from local taxes to align with the Central Act supports the inclusion of sugar candy. The Court referenced a Mysore High Court decision where sugar candy was held to be included under the exemption for sugar. The judgment highlighted that sugar candy is a purer form of sugar and legislative practices indicate that sugar and sugar candy are often considered together in legal provisions.

In alignment with the Mysore High Court decision and an independent analysis, the Madras High Court allowed the petition, stating that sugar candy was included in the exemption notification for sugar. The petitioner was granted costs. The judgment emphasized the broader understanding of sugar to include sugar candy and the legislative intent behind the exemption notifications.