GSTR No.48 of 2005 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH GSTR No.48 of 2005 Date of Decision: April 15, 2009 The State of Haryana ..Applicant Versus\ M/s Swiss French Laboratories, Kaithal Road, Karnal ..Respondent CORAM : HON'BLE MR. JUSTICE M.M.KUMAR HON'BLE MR. JUSTICE H.S.BHALLA Present:- Ms. Ritu Bahri, Deputy Advocate General, Haryana, for the applicant. Mr. Sandeep Goyal, Advocate for the respondent. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reports or not? 3. Whether the judgment should be reported in the Digest? H.S.BHALLA, J. Facts required to be noticed for the disposal of this reference are that vide order dated 13.2.2002, the Sales Tax Tribunal, Haryana (for brevity, “the Tribunal”) had allowed the appeal of dealer M/s Swiss French Laboratories in STA No. 128 of 2001-02 and had held that Sugar Globules, sold by the dealer-assessee are covered by entry No.39 of Schedule `B' to Haryana General Sales Tax Act, 1973 (hereinafter referred to as “the Act”). ETC Haryana moved an application under Section 42(1)of the Act, which was allowed by the GSTR No.48 of 2005 2 Tribunal vide order dated 13.6.2005 and the following question of law was referred to this court for determination : “ 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”. We have heard learned counsel appearing for the parties and also gone through the record minutely with the assistance of the learned counsel. It is an admitted case of the respondent-assessee that it was assessed for the assessment year 1997-98. On the sale of sugar globules, no tax was levied as it was held that in view of entry 39 of Schedule `B', the same was treated as tax free. The matter was taken up in revision under section 40 of the Act and vide its order dated 21.12.2000, the turn over of the assessee to the tune of Rs.15,15,700/- was assessed holding that the goods, i.e., sugar globules, do not fall under entry 39 of Schedule `B' of the Act and hence are not tax free. Aggrieved against this order, appeal was preferred before the Sales Tax Tribunal-I, Haryana. Operative part of order dated 21.12.2000 passed by the Tribunal reads as under:- “ I have heard the arguments of both the parties and have gone through the record. I find that the globules produced by the appellant are more than 90% sucrose. I also find that there are enough citations to show that any product which has 90% of more of sucrose is to be considered as sugar whatever be its form, as long as it is not mixed with any other ingredient. I also find that the JETC (A) Ambala, in similar cases of M/s J.P.L. Pharma and in the case of GSTR No.48 of 2005 3 the appellant for the assessment year 1998-99, has held that the sugar globules sold by the appellant are nothing but sugar covered under entry 39 of Schedule `B' appended to the HGST Act, 1973. In view of the discussion mentioned above I accept this appeal and quash the order of the Revisional Authority dated 21.12.2000.” The State, being aggrieved by the aforesaid order, moved an application for referring the question of law, which has been reproduced above, to this court. This application was allowed and the matter was referred to this court for consideration under section 42 (1) of the Act. All this clearly spells out that the entire case revolved around entry 39 of Schedule `B' and before proceeding further, it is necessary to reproduce entry 39 of Schedule `B', which is relevant for the determination of disputed question, referred to above. SCHEDULE `B' ( See section 6 and 15) ___________________________________________________________\ Serial Description of goods Conditions and No. exceptions ___________________________________________________________ 39 Sugar including khandsari - and boora Learned Deputy Advocate General appearing for the State of Punjab has vehemently argued that the goods in the present case are not termed as sugar in the common parlance and the true interpretation of entry 39 of Schedule `B' should be same in the sense, which is understood in the common parlance. According to GSTR No.48 of 2005 4 the learned State counsel, the State Government has exempted sugar, which is commonly presumed to be sugar in crystal form used in various household and for the manufacturing for sweet items. Learned counsel has further submitted that sugar globules being sold by the assessee are used in the Homeopathic medicine, which does not fulfil the criteria laid down by the State Government under Schedule `B', which is meant only for sugar and finally, she has pleaded that sugar globules can not be termed as sugar. On the other hand, learned counsel appearing for the assessee has pointed out that in a plethora of judgments, it has been held that sugar means an item which contains more than 90% of sugar. In order to lend support to this contention, he relied upon the judgment of Hon'ble the Supreme Court of India, reported as [1967] 19 STC-24, The State of Gujarat Vs. Sakarwala Brothers. According to him, Hon'ble the Supreme Court has held that even Patasha, Harda and alchidana have also been held to be sugar by the aforesaid judgment. It has further been held that Patasa, Harda and alchidana are only different form of refined sugar which is sucrose sugar contents. Learned counsel has also relied upon the judgments rendered in the cases of Commissioner of Sales Tax, Delhi Vs. Nangumal Ram Kishore [1981] 48 STC 277; Paro & Company Vs. State of Andhra Pradesh [1970] 25 STC 34 and Chunhi Lal Moti Lal Vs. Commissioner of Sales Tax, Madhya Pradesh, 35 STC 198. In Sakarwal Brothers' case (supra), it was held as under:- “ The question which we have to consider is whether patasa, harda and alchidana are “forms of sugar containing more than 90 per cent of sucrose” and hence GSTR No.48 of 2005 5 are covered by the definition of entry 47 of Schedule A to the Bombay Sales Tax Act. It is not disputed that patasa, harda and alchidana contain more than 90 per cent of sucrose. It is contended, however, by Mr. Bindra on behalf of the appellant that they are not “forms of sugar” but they are products of sugar and do not fall within entry 47 of Schedule A. We are unable to accept this argument as correct. It is not disputed on behalf of the appellant that the chemical composition of patasa, harda and alchidana is the same as that of sugar, viz., there is more than 90 per cent of sucrose. Mr. Bindra, however, laid stress on the argument that patasa, harda and alchidana were sweets used on festive occasions. But this circumstance has no relevance on the question of legal classification for the purpose of the Bombay Sales Tax Act. On the other hand, it appears from the judgment of the Tribunal that it is possible to convert these articles into sugar by dissolving them in water and by subjecting the solution to an appropriate process. It is stated by the Tribunal that these articles can be put to the same use to which sugar-candy can be put. It is, therefore, manifest that patasa, harda and alchidana are only different forms of refined sugar with the requisite sucrose contents. It is argued by Mr. Bindra that the phrase “any form of sugar” referred to any variety of sugar and the phrase can not be taken to mean sugar in any form. It is not possible to accept this argument as correct. If the Legislature had intended to refer to “any variety of sugar” there is no GSTR No.48 of 2005 6 reason why it should have used that expression in item No.47. It is significant that item No.14 which relates to tea states as follows: “Tea' includes all varieties of the product known commercially as tea and also includes green tea.” Item 16 which relates to soap provides that soap means “ all varieties of the product known commercially as soap.” But in item No.47 the Legislature has used the words “any form of sugar” and not “any variety of sugar”. We are accordingly of opinion that the word “sugar” in item No.47 is intended to include within its ambit all forms of sugar, that is to say sugar of any shape or texture, colour or density and by whatever name it is called. The qualifying words are that it must contain more than 90 per cent of sucrose. We hold that the view taken by the High Court is correct and the argument of Mr. Bindra on behalf of the appellant must be overruled.” In Nangumal Ram Kishore's case (supra), it was held as under: “ From the various points of view expressed above, it would appear that the questions referred to us have usually been answered by the courts in favour of the view that misri and batasha should also be treated as sugar. In most cases, this has been done because “sugar” has itself been defined as sugar in the Central Excise Act. There are no words of limitation in the present case. The words used in our Act, i.e., the Bengal Finance (Sales Tax) Act, 1941, are “sugar and molasses”. It is not provided in GSTR No.48 of 2005 7 the Act that “sugar” is used in its extended meaning or in its restricted meaning. In the U.P. Act, just referred to, the legislature had given a restricted meaning, so khandsari sugar, etc., were not covered. In other cases, we have referred to, the court has held that the word “sugar” should be given a restricted meaning. As has been analysed above, there is no real difference between various types of sugar. They are all produced from the juice of sugarcane which is the principal source of sugar in this country. In some cases, greater refinement leads to a greater percentage of sucrose. The refined product is normally more costly. The mere fact that it is produced in a factory and khandsari sugar and bura sugar may be produced by hand machines, does not mean that the end- product is very different from the other. The natural juice of the sugarcane when dried produces gur which has comparatively low percentage of sucrose. This may not be sugar as generally understood. All the other products such as refined sugar, cane-sugar, khandsari and bura sugar are products of the juice after it has been subjected to various types of refinement and exclusion of non- sucrose element. The fact that they had to be differently prepared does not mean that they are different items. They are really all different types of sugar. Misri and batasha, which we are dealing with, are produced from highly refined sugar as is obvious from the definition in the Prevention of Food Adulteration Act and the standard which has to be maintained. They are, therefore, sugar, GSTR No.48 of 2005 8 but in a different form. They are not sugar additive mixed with another ingredient, but are sugar formed into different shapes. It would appear that they continue to be sugar and hence, the exemption should apply to these articles also. Turning now to the question of law referred to us, the first question is whether the term “sugar” used in entry No.9 of the Second Schedule to the Act means sugar containing more than 90 per cent of sucrose. We think the answer to this question has to be in the affirmative. All products which can be described as “sugar” and which are not produced by mixing sugar with some other ingredient such as starch ( as in icing sugar) or with nuts (as in sweetmeats or confectionery) are sugar provided they contain more than 90 per cent of sucrose. The 90 per cent sucrose seems to be the standard of all the sugar defined in the Prevention of Food Adulteration Act. So, this can be taken as a standard for defining sugar. The same type of definitionis to be found in the Central Excise Act. We would accordingly answer the first question in the affirmative. As regard the second question, we hold that misri and batasha are sugar within the meaning of entry No.9 of the Second Schedule and accordingly this question is answered in the affirmative.” (emphasis added) In Paro and Company's case (supra), their Lordships of Hon'ble Supreme Court of India, have observed as under: “ Apart from all other considerations, prima facie, it is GSTR No.48 of 2005 9 difficult to comprehend that “sugar candy” can be other than purified sugar itself, for it contains no other ingredient but sugar. If sugar tablets are to be included in the expression “sugar” and we do not see any reason why they should not be included therein, there is no reason why “sugar candy” should be excluded therefrom. It is, however, argued that if it was intended by the Legislature that sugar in whatever form it may be must be included in the term “sugar” used in Schedule V, the Legislature wo0uld have expressed so in clearer terms. It would have used the expression “sugar in all its forms.” But as we have already noticed, having regard to the historic background and the expression used in the Central Act, we do not think there can be any clear context evidencing the intendment of the Legislature that the expression “sugar” used was not confined to sugar in its ordinary form but covered sugar in all its forms provided the sugar element is wholly predominant and that sugar candy is undoubtedly such form of sugar.” (emphasis added) In Chuni Lal Moti Lal's case (supra), their Lordships of Hon'ble the Supreme Court have observed as under:- “ it is true that entry 47 specifically mentioned sugar to mean in the same sense as item No.8 of the First Schedule to the Central Excise and Salt Act, 1944, which defined “sugar” to mean any form of sugar containing more than 90 per cent of sucrose. However, in the Madhya Pradesh Act, the phrase used is merely “sugar” GSTR No.48 of 2005 10 including khandsari and palmyra. Of course, subsequent amendments have been made from time to time, but the phrase “sugar” was given a meaning unqualified by any other category. Their Lordship of the Supreme Court, affirming the view of the Gujarat High Court, held that the word “sugar” as used in entry 47 was wide enough to cover “batasa”, “harda” and “alchidana”. We do not see any distinction between the two definitions of “sugar” in all its forms as provided by the Central Excise And Salt Act, 1944, and the phrase “sugar” as used in the M.P. General Sales Tax Act, 1958. Of course, if sugar were to be mixed with some other substance, in that event it would be a taxable item. Moreover, the definition of “sugar” as provided by an allied enactment, which has a bearing on the M.P. General Sales Tax Act, 1958, ought to be taken for the purposes of interpreting the word “sugar” occurring in the M.P. General Sales Tax Act, 1958.” 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 (supra) and other judgments of Hon'ble Supreme Court as quoted hereinabove. 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 GSTR No.48 of 2005 11 the characteristics of `sugar including khandsari' and boora'. In the result, the question is answered in favour of the assessee and against the revenue. In view of the complicity of the question, we leave party to bear their own costs. ( H.S.BHALLA ) JUDGE ( M.M.KUMAR ) 15.4.2009 JUDGE VK