2001 (3) TMI 997 - HC - VAT and Sales Tax

Summary

Issues involved:
1. Interpretation of exemption under the Assam General Sales Tax Act, 1993 for sugar candy.
2. Competence of State Legislature to impose tax on sugar candy.
3. Applicability of Central Sales Tax Act, 1956 on sugar candy.
4. Impact of Additional Duties of Excise (Goods of Special Importance) Act, 1957 on the taxation of sugar candy.

Issue 1: Interpretation of exemption under the Assam General Sales Tax Act, 1993 for sugar candy:
The appellant argued that since sugar and sugar candy are essentially the same, the exemption granted to sugar should also apply to sugar candy. However, the State Legislature consciously excluded sugar candy from the exemption provided to sugar in Schedule I of the Assam Act of 1993. The court held that the State Legislature has the authority to restrict the scope of exemption for specific items, and in this case, sugar candy was intentionally excluded from the definition of sugar for exemption purposes. The court referred to a previous case to highlight that the legislature's power to limit the scope of exemption is well-established.

Issue 2: Competence of State Legislature to impose tax on sugar candy:
The appellant contended that the tax rate of 8% on sugar candy under the Assam Act of 1993 was unauthorized since sugar is a "declared good" under the Central Sales Tax Act, 1956, limiting the state's power to tax it above 4%. However, the court clarified that the actual levy rate should be challenged during assessment proceedings and cannot invalidate the tax imposition itself. The court found no evidence of the tax being levied at 8% and dismissed this contention.

Issue 3: Applicability of Central Sales Tax Act, 1956 on sugar candy:
The appellant argued that since sugar candy is considered sugar under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, the State's imposition of sales tax on sugar candy was unauthorized. However, the court found no evidence in the pleadings or counter-affidavit to support this claim. The court rejected the argument, stating that even if the State receives a share of the central excise duty on sugar, it does not invalidate the State's right to levy sales tax on sugar candy under the Assam Act of 1993.

Issue 4: Impact of Additional Duties of Excise (Goods of Special Importance) Act, 1957 on the taxation of sugar candy:
The appellant's argument regarding the impact of the Additional Duties of Excise Act on the taxation of sugar candy was dismissed by the court. The court emphasized that the receipt of a share of central excise duty by the State does not render the State's sales tax on sugar candy invalid. The court disagreed with previous decisions that suggested otherwise, stating that the levy and collection of sales tax on sugar candy under the Assam Act of 1993 remain valid.

In conclusion, the High Court dismissed the writ appeal, considering the facts and circumstances of the case, with no order as to costs.