1977 (4) TMI 158 - HC - VAT and Sales Tax

Summary

Issues:
Whether the substance produced during the manufacture of khandasari sugar, referred to as "liquid jaggery" or patla gur, is liable to be taxed as molasses under the Sales Tax Act.

Analysis:
The petitioner argued that the substance should be taxed as jaggery, while the department contended it should be taxed as molasses, upheld by the Sales Tax Appellate Tribunal. The petitioner, a dealer in khandasari sugar and jaggery, submitted a return for the assessment year 1974-75, showing sales of "liquid jaggery" and claimed it should be taxed at 6%, but it was taxed at 25% by the Commercial Tax Officer and confirmed by the Assistant Commissioner and in second appeal. The petitioner's representative argued that the substance, patla gur, is liquid jaggery, distinct from molasses in name, appearance, quality, price, and use. The Tribunal held it was molasses based on the Molasses Control Order, 1961, defining molasses as the mother liquor produced in the final stage of manufacturing sugar by the open pan process, which includes khandasari sugar. The Tribunal concluded that the substance was molasses and taxable accordingly.

The petitioner's representative relied on a monograph prepared by the Indian Central Sugarcane Committee, discussing the manufacture of "molassine gur" from exhaust molasses mixed with clarified juice. However, the Tribunal noted that the substance being taxed was liquid in form, referred to as liquid jaggery by the petitioner. The Tribunal emphasized that the substance, although it may ultimately solidify, retains characteristics of molasses as long as it remains in a liquid or semi-liquid form. The Tribunal's decision was supported by the definition of molasses in the Molasses Control Order, 1961, and the name given to the substance by the petitioner as liquid jaggery.

The petitioner's representative cited several legal precedents differentiating between various substances to support the argument that patla gur should not be taxed as molasses. However, the Court found that the basic characteristic and nature of the substance remained consistent with molasses, as it was the liquid form from which khandasari sugar was extracted. The Court upheld the Tribunal's decision that the substance was molasses and taxable at 25% under the Sales Tax Act. The Court dismissed the tax revision case, directing each party to bear their own costs and rejecting the request for leave to appeal to the Supreme Court, as no substantial question of law was found.