1974 (10) TMI 94 - HC - VAT and Sales Tax

Summary

Issues involved: Determination of whether biscuits can be classified as confectionery for the purpose of sales tax assessment.

Summary:
The petitioners, engaged in the manufacture and sale of biscuits, were assessed to sales tax at the rate applicable to cooked food under notifications issued under the U.P. Sales Tax Act. Subsequent notifications increased the tax rates for certain categories of sweetmeats and confectionery. The petitioners contested the classification of biscuits as confectionery, seeking clarification from the Sales Tax Officer. The taxing authority maintained that biscuits were liable to tax at the enhanced rate applicable to confectionery.

The court deliberated on whether biscuits could be considered confectionery based on the ingredients and characteristics of each. Confectionery, typically sweetmeats, involves sugar as a primary component along with various additives like chocolate, fruits, and nuts. In contrast, biscuits are described as a type of dry bread with sugar playing a minimal role, absent in salted varieties. The absence of a specific definition of "confectionery" in the Act necessitated interpreting the term in its popular sense, as understood by those familiar with the industry.

Referring to a relevant case, the court highlighted the distinction between biscuits and confectionery, emphasizing that while there may be fancy biscuits with confectionery toppings, the essential nature of biscuits differs from that of confectionery. Common parlance and trade practices also distinguish between biscuits and confectionery products. Consequently, the court concluded that the tax rate applicable to confectionery should not be imposed on biscuits.

In the final judgment, the petition was allowed, directing the respondents not to assess the petitioners based on the confectionery tax rate for biscuits. No costs were awarded in the case.