1997 (2) TMI 504 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to levy of tax on "sugar-candy" as unconstitutional.
2. Exemption from sales tax on the turnover of sales of sugar-candy.
3. Whether the turnover of sales of sugar-candy is exigible to tax under item No. 18A of the Second Schedule.

Detailed Analysis:
1. The petitioner, a wholesale kirana merchant, challenged the levy of tax on "sugar-candy" as unconstitutional, despite not following the statutory appeal process under section 20 of the Karnataka Sales Tax Act. The court noted the absence of any constitutional question justifying the approach under Article 226 of the Constitution. However, the court proceeded to analyze the merits of the case due to the arguments presented by the counsel.

2. The petitioner claimed exemption from sales tax on the turnover of sales of sugar-candy, contending that since "sugar" is exempt from tax, "sugar-candy" should also be exempt. The assessing authority had rejected this claim and levied tax at 4% single point on the sales turnover of sugar-candy. The key issue was whether sugar-candy falls under the exemption granted to sugar.

3. The central question for consideration was whether the turnover of sales of sugar-candy is subject to tax under item No. 18A of the Second Schedule. The court delved into the provisions of the Sales Tax Act, highlighting the definitions and interpretations of "sugar" and "sugar-candy" under relevant schedules and Acts. The court emphasized the distinction between sugar and sugar-candy, based on common parlance understanding and legislative intent.

4. The court examined the process of preparing sugar-candy, noting that it involves a different manufacturing process than sugar. Various judicial precedents were cited to support the distinction between sugar and sugar-candy for taxation purposes. The court concluded that sugar-candy, being a form of sugar preparation, is liable to payment of sales tax under the Act, and upheld the clarification by the Commissioner of Commercial Taxes regarding the taxability of sugar-candy.

In summary, the judgment dismissed the writ petition and affirmed the tax liability on sugar-candy, emphasizing the differentiation between sugar and sugar-candy for taxation purposes based on legislative intent and common understanding.