2009 (4) TMI 204 - HC - VAT and Sales Tax

Whether on a true and proper interpretation of entry 39 of Schedule B , the Tribunal was correct in law in holding that the sugar globules being manufactured and sold by this dealer fall under the said entry ? Held that - When the sugar candy, illiachidana, batasa and other similar items having used sugar to the extent of 90% or more, then there can not be any doubt that Sugar Globules (which are made of almost 100% of sugar) have to be regarded as sugar within the meaning of entry 39 of Schedule B of the Act. Thus the Sugar Globules fully answer the test of Sakarwal Brother s case (1966 (9) TMI 102 - SUPREME COURT OF INDIA). Moreover, that definition of sugar is only illustrative. It is not exhaustive. There are well known principles of interpretation that illustrative definitions have wider scope to include even further items. In that context also it has to be held that Sugar Globules would meet the characteristics of sugar including khandsari and boora . In the result, the question is answered in favour of the assessee and against the revenue.

Issues Involved:
1. Interpretation of Entry 39 of Schedule 'B' of the Haryana General Sales Tax Act, 1973.
2. Classification of sugar globules as tax-free under the specified entry.
3. Applicability of previous judicial precedents on the definition and classification of sugar.

Detailed Analysis:

Issue 1: Interpretation of Entry 39 of Schedule 'B' of the Haryana General Sales Tax Act, 1973
The primary issue revolves around the interpretation of Entry 39 of Schedule 'B' of the Haryana General Sales Tax Act, 1973, which exempts "Sugar including khandsari and boora" from tax. The Tribunal had previously held that sugar globules fell under this entry, making them tax-free. The State contested this interpretation, arguing that sugar globules, used in homeopathic medicines, do not fit the common parlance understanding of sugar, which typically refers to sugar in crystal form used in households and manufacturing sweet items.

Issue 2: Classification of Sugar Globules as Tax-Free Under the Specified Entry
The Tribunal's decision was based on the fact that the sugar globules produced by the assessee contained more than 90% sucrose, which aligns with the definition of sugar in various judicial precedents. The Tribunal cited that any product with more than 90% sucrose should be considered sugar, provided it is not mixed with other ingredients. The Tribunal referenced similar cases where sugar globules were classified as sugar under Entry 39, thus exempting them from tax.

Issue 3: Applicability of Previous Judicial Precedents on the Definition and Classification of Sugar
The assessee's counsel cited several Supreme Court judgments to support their contention that sugar globules should be classified as sugar. In "The State of Gujarat v. Sakarwala Brothers," the Supreme Court held that products like patasa, harda, and alchidana, containing more than 90% sucrose, are forms of sugar. Similarly, in "Commissioner of Sales Tax, Delhi v. Nangumal Ram Kishore," the court held that misri and batasha, being forms of sugar with more than 90% sucrose, should be classified as sugar. The court also referenced "Paro & Company v. State of Andhra Pradesh" and "Chuni Lal Moti Lal v. Commissioner of Sales Tax, Madhya Pradesh," where it was held that sugar in any form, provided it contains more than 90% sucrose, should be considered sugar.

Conclusion:
The court concluded that sugar globules, containing almost 100% sugar, meet the criteria established in previous judicial precedents and should be classified as sugar under Entry 39 of Schedule 'B' of the Act. The court emphasized that the definition of sugar in the context of tax exemption is inclusive and not exhaustive, thus covering sugar globules. Consequently, the question was answered in favor of the assessee, affirming that sugar globules are tax-free under the specified entry. The court left the parties to bear their own costs due to the complexity of the question.

Summary:
The judgment extensively analyzed the interpretation of Entry 39 of Schedule 'B' of the Haryana General Sales Tax Act, 1973, and concluded that sugar globules, containing more than 90% sucrose, qualify as sugar and are thus tax-free. The court relied on various Supreme Court judgments to support this classification, ultimately ruling in favor of the assessee and against the revenue.

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