1977 (2) TMI 120 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to assessment orders levying sales tax on sales of kala namak under U.P. Sales Tax Act, 1948. Interpretation of the term "salt" under section 4 of the Act. Validity of the notification issued by the Government of Uttar Pradesh levying sales tax on kala namak. Alternative remedy under article 226 of the Constitution. Determination of whether kala namak can be considered exempt from sales tax as a species of salt.

Analysis:
The petitioners sought to quash assessment orders levying sales tax on their sales of kala namak under the U.P. Sales Tax Act, 1948. The petitioners argued that kala namak should be exempt from sales tax as it is a species of salt. The Government of Uttar Pradesh issued a notification imposing sales tax on kala namak, leading to the dispute. The main issue was whether kala namak falls within the exemption for salt under section 4 of the Act.

The Court examined the definition of "salt" under the Act and concluded that the term should be understood in its ordinary meaning, primarily as an edible substance. Even though kala namak contains a small percentage of sodium sulphide and other sulphides in addition to sodium chloride, it is used for edible purposes and should be considered as "salt." The Court referred to a previous decision where black salt was deemed exempt from sales tax as it was used for digestion, supporting the inclusion of kala namak under the exemption.

The Court addressed the argument that kala namak, being a product of further manufacturing process from salt, should not be considered as "salt." However, the Court rejected this argument, emphasizing that the legislature did not explicitly exclude kala namak from the definition of salt in the Act. The Court also dismissed the contention that kala namak, used as a spice or digestive, should not be classified as salt, reiterating that its edible nature qualifies it for the exemption.

Ultimately, the Court held that kala namak, even if manufactured through the process alleged by tax authorities, qualifies as a species of edible salt exempt from sales tax under section 4 of the Act. Consequently, the notification levying sales tax on kala namak was deemed ultra vires, and the assessment orders were quashed. The respondents were restrained from collecting sales tax on kala namak sales, and each party was directed to bear their own costs in the proceedings.