1989 (2) TMI 380 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to assessment order under C.S.T. Act and Karnataka Sales Tax Act regarding lisa sugar's tax liability.

Analysis:
The petitioner challenged the assessment order by the Assistant Commissioner of Commercial Taxes, Belgaum, regarding the tax liability of lisa sugar under the Central Sales Tax Act (C.S.T. Act) and the Karnataka Sales Tax Act. The main issue was whether lisa sugar qualifies as declared goods under section 14(viii) of the C.S.T. Act and if so, whether it is subject to tax under the State Act.

The petitioner, a general merchant dealing in various commodities, including lisa sugar, argued that lisa sugar, with 99% sucrose content, meets the definition of "sugar" under the Central Excises and Salt Act, making it a declared goods under section 14(viii) of the C.S.T. Act. The petitioner claimed exemption from tax under the State Act based on this classification. However, the authority denied the exemption, relying on a previous court judgment and treating lisa sugar as general goods taxable under the State Act.

In a related case, the court previously ruled that lisa sugar was not exempted under entry 31B of the Fifth Schedule to the State Act, which specifically exempted "sugar other than sugar candy, confectionery and the like." The court held that lisa sugar, being a special kind of sugar, did not fall under the exemption.

The court emphasized that the key issue was whether lisa sugar qualifies as "sugar" under the Central Excises and Salt Act to be considered declared goods under the C.S.T. Act. The court concluded that if lisa sugar meets the definition of "sugar," no tax is leviable under the State Act. The assessing authority was directed to determine whether lisa sugar is indeed declared goods based on the definition provided.

The court clarified that the authority's reliance on a previous judgment was incorrect, as the question of lisa sugar's classification as declared goods was not addressed in the earlier case. The decision on whether lisa sugar is declared goods is crucial in determining its tax liability under the State Act.

Ultimately, the court partially allowed the writ petition, quashing the assessment order related to lisa sugar's tax levy. The matter was remitted to the assessing authority to determine if lisa sugar qualifies as declared goods under the C.S.T. Act. Depending on this finding, the authority was instructed to either refrain from taxing lisa sugar or proceed with a fresh order under the Karnataka Sales Tax Act.