1980 (12) TMI 169 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether "sugar" under entry No. 9 of the Second Schedule of the Bengal Finance (Sales Tax) Act, 1941, means any form of sugar containing more than 90 percent of sucrose.
2. Whether misri and batasha are considered "sugar" within the meaning of entry No. 9 of the Second Schedule of the Act.

Issue-Wise Detailed Analysis:

Issue 1: Definition of "Sugar" under Entry No. 9
The court examined whether the term "sugar" under entry No. 9 of the Second Schedule to the Bengal Finance (Sales Tax) Act, 1941, refers to any form of sugar containing more than 90 percent of sucrose. The court reviewed various precedents, including the case of Mangoo Mal Ram Kishore v. H.K. Sharma, where it was held that "sugar" includes any form of sugar with more than 90 percent sucrose content. The court also referenced the Prevention of Food Adulteration Rules, 1955, which define different types of sugar based on their sucrose content. The court concluded that "sugar" includes any form of sugar containing more than 90 percent sucrose, as this standard is consistent with both the Prevention of Food Adulteration Rules and the Central Excises and Salt Act, 1944.

Issue 2: Classification of Misri and Batasha
The court analyzed whether misri and batasha fall under the definition of "sugar" as per entry No. 9 of the Second Schedule. The court examined several cases, including Channulal Motilal v. Commissioner of Sales Tax, Madhya Pradesh and State of Gujarat v. Sakarwala Brothers, where it was held that products like batasa, chiranji, and mishri are not considered sugar in common parlance, but may be considered sugar under specific legislative definitions. The court noted that misri and batasha are essentially crystallized and shaped forms of sugar with high sucrose content, making them chemically identical to sugar.

The court emphasized the importance of the legislative intent behind the term "sugar" in the Act. It was determined that the legislature intended to cover all forms of sugar, not just refined cane sugar, as indicated by the absence of restrictive language in the Act. The court reasoned that misri and batasha, being pure sugar with no additives, should be considered sugar for the purposes of tax exemption.

Conclusion:
The court answered both questions in the affirmative:
1. The term "sugar" in entry No. 9 of the Second Schedule means any form of sugar containing more than 90 percent sucrose.
2. Misri and batasha are considered sugar within the meaning of entry No. 9 of the Second Schedule.

Additional Judgments:
The court also referenced the judgment in Commissioner of Sales Tax, Delhi v. Puran Chand & Sons, where it was held that icing sugar, which contains starch, is not considered sugar under the same entry. This judgment reinforced the principle that "sugar" for exemption purposes must be pure and not mixed with other ingredients.

Final Ruling:
Both questions were answered in favor of the assessee, confirming that misri and batasha are exempt from sales tax under the Bengal Finance (Sales Tax) Act, 1941. The court left the parties to bear their own costs due to the complexity of the questions involved.