1966 (1) TMI 72 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of the term "successive" in Section 3-A of the U.P. Sales Tax Act.
2. Applicability of Sections 14 and 15 of the Central Sales Tax Act, Section 7 of the Additional Duties of Excise (Goods of Special Importance) Act, and the definition of "sugar" in the Central Excises Act to the imposition of tax on khandsari sugar for specific periods.

Detailed Analysis:

1. Interpretation of the term "successive" in Section 3-A of the U.P. Sales Tax Act:
The primary issue was whether the term "successive" in Section 3-A includes the first dealer, i.e., the manufacturer. The court rejected the argument that "successive dealers" means only those dealers who succeed a manufacturer-dealer and does not include the manufacturer himself. The court clarified that the term "successive" means "coming one after another in an uninterrupted sequence," which includes the first dealer in the series. Therefore, the manufacturer-dealer is considered one of the "successive dealers" and can be taxed by the State Government. The court concluded that the word "successive" should be interpreted in its primary sense, which includes the first dealer in the series.

2. Applicability of Sections 14 and 15 of the Central Sales Tax Act, Section 7 of the Additional Duties of Excise (Goods of Special Importance) Act, and the definition of "sugar" in the Central Excises Act:
The court examined whether the U.P. Government could impose tax on khandsari sugar given the restrictions under Sections 14 and 15 of the Central Sales Tax Act and Section 7 of the Additional Duties of Excise Act. The court noted that Section 15, effective from 1st October 1958, restricted the imposition of sales tax on declared goods, including sugar, to the last sale within the state and capped the tax rate at 2%.

The court addressed the argument that the sales by the manufacturers were the first sales and not the last sales, hence not taxable. It clarified that the first sale could also be the last sale if it was the only sale within the state. The court also discussed the applicability of Section 7 of the Additional Duties of Excise Act, which required reading the restrictions and conditions specified in Section 15 of the Central Sales Tax Act. The court rejected the argument that Section 7 could not be applied before Section 15 came into force, stating that Section 7 required reading Section 15 to ascertain the restrictions and conditions, irrespective of its enforcement date.

The court further analyzed the impact of the notification dated 14th December 1957, which exempted sales tax on sugar provided additional Central excise duties were paid. The court concluded that if additional Central excise duties were not paid or their payment was not proved, sales tax remained payable under the original notification dated 31st January 1957. The court distinguished this case from other cases based on the structure and conditions of the notification.

Ultimately, the court answered both questions in the affirmative, upholding the imposition of sales tax on khandsari sugar by the U.P. Government for the specified periods.

Conclusion:
The court concluded that the term "successive" in Section 3-A includes the first dealer, and the U.P. Government could impose tax on khandsari sugar for the specified periods, subject to the conditions and restrictions under the relevant Central and State laws. The references were answered accordingly, and the Commissioner of Sales Tax was awarded costs.