2014 (8) TMI 782 - HC - VAT and Sales Tax

Levy of Tax on patasa, harda and sakaria - Validity and legality of earlier order passed - tribunal observing that patasa, harda and sakaria are different forms of sugar, and therefore, they are required to be assessed, as if, they are sugar or fall in the category and entry of sugar and consequently the Tribunal has set aside the orders passed by the Assessing Officer, holding that these sales are not at part with the sale of sugar, and therefore, such sales are exempted - Held that - The fact that by virtue of decision in case of Sakarwala Brothers (1966 (9) TMI 102 - SUPREME COURT OF INDIA), such items are considered as sugar for the purpose of sugar covered under subheading Nos. 1701.10, 1701.20, 1701.31 and 1701.39 of the schedule to the Central Excise Tariff Act,1985, there is no dispute possible in fact, not seriously raised. Such subheadings defined the term sugar in the same manner as it was done under item no.1 of the First Schedule to the Central Excises and Salt Act, 1944. It is not even the case of the petitioner that levy and collection of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, is exempted. The respondent had pointed out before the tribunal that his vendors pay full additional duty at the point of clearance of goods. State Government however, raised a curious contention namely, that such duty must be paid by the respondent. We do not see any such warrant in condition contained in entry 86. Condition in plain terms is that levy and collection of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, should not be exempted on account of any exemption or drawback. When admittedly, the additional levy of duty is not exempted nor is the case of the petitioner that any drawback is granted, entry 86 would certainly apply. Such condition no where provides that such additional duty must be borne by the dealer. Additional duty of excise would be payable on manufacture of goods and would therefore, be paid by the manufacturer, in the present case the suppliers from whom the respondent dealer would be purchasing such goods. - Decided against Revenue.

Summary

Issues:
Challenging legality and validity of judgment on assessment of patasa, harda, and sakaria as sugar.

Analysis:
The petitions involved a challenge by the State of Gujarat against the judgment assessing patasa, harda, and sakaria as sugar. The Tribunal had set aside the Assessing Officer's orders, exempting these sales from income tax based on an earlier decision. The Division Bench of the Court confirmed the Tribunal's view, stating that the items fell under entry 86 of the GST Act, considering them as sugar. The Court emphasized that the goods could only be excluded from entry 86 if specific conditions for exemption were not met, such as the levy and collection of additional duty of excise. The Court clarified that the responsibility for paying the additional duty of excise rested with the manufacturer, not the dealer, unless exempted. The decision distinguished a Supreme Court case where dealers had to prove payment of additional duty for exemption from sales tax, highlighting the different context of the present case.

The Court's judgment relied on the interpretation of entry 86 of the GST Act, which covered the respondent's case as sugar. It emphasized that the conditions for exemption must be met, and the responsibility for paying additional duty of excise was on the manufacturer, not the dealer. The Court dismissed the Special Civil Applications challenging the Tribunal's decision, as it had been upheld by the Division Bench previously. The Court found no grounds to deviate from the earlier decisions and hence dismissed the petitions, maintaining the assessment of patasa, harda, and sakaria as sugar under entry 86 of the GST Act.