1972 (1) TMI 88 - HC - VAT and Sales Tax

Summary

Issues:
- Whether batasha is taxable as an unclassified item under the U.P. Sales Tax Act for the assessment year 1963-64.

Analysis:
The judgment delivered by the Allahabad High Court pertains to references under section 11(3) of the U.P. Sales Tax Act. The primary issue at hand is whether batasha should be considered taxable as an unclassified item for the assessment year 1963-64. The case involves the contention of the assessee that batashas are essentially a different form of khandsari sugar, prepared through a mechanical process without any additional ingredients. The Sales Tax Officer, however, categorized batashas as unclassified goods and imposed a tax rate of 2% on their turnover. The revising authority later sided with the assessee, recognizing batashas as a variant of khandsari sugar and not a distinct commodity. This discrepancy led to the Commissioner bringing the matter before the High Court for resolution.

The court noted that khandsari sugar had been taxable since April 1, 1960, under a specific notification. The assessee, who was not a manufacturer or importer of khandsari sugar, produced batashas from locally purchased khandsari sugar. Given that batashas were essentially khandsari sugar in a different form, the court referred to a Supreme Court decision in State of Gujarat v. Sakarwala Brothers, which established that batashas are merely a variant of sugar and not a separate commodity. This precedent was crucial in determining that batashas should not be treated as unclassified goods and their turnover should not be taxed separately.

The court addressed the argument put forth by the standing counsel, who contended that batashas and khandsari sugar should be considered distinct commodities based on a specific notification excluding both from certain exemptions. However, the court emphasized that this exclusion did not alter the fundamental nature of batashas being a form of khandsari sugar. Additionally, the court highlighted the legislative intent behind different notifications related to sugar and khandsari sugar, emphasizing that once khandsari sugar is taxed under a particular section, its various forms should not be subjected to additional taxation.

In conclusion, the court ruled in favor of the assessee, stating that the turnover of batashas should not be taxed separately as they are essentially a different form of khandsari sugar. The judgment clarified that once khandsari sugar is taxed under a specific section, its various forms should not be taxed again, aligning with the legislative framework. The reference was answered in the negative, with no costs awarded due to the absence of representation from either party.