JUDGMENT V.K. Mehrotra, J.
1. The Commissioner of Sales Tax, U. P., who is the applicant in both these cases, has assailed the orders of the Additional Judge (Revisions), Sales Tax, Varanasi Range, Varanasi, by which he held that the turnover of the respondent-dealer in respect of batasha and illaichidana in assessment years 1973-74 and 1974-75 was exempt from levy of sales tax.
2. It is not in dispute in this Court that the dealer was a manufacturer so far as batasha and illaichidana are concerned. The turnover of these commodities in these years was subjected to tax by the assessing authority whose decision was upheld by the first appellate authority.
3. Under Notification No. ST- 4064/X-960(4)-58 dated 25th November, 1958, issued in exercise of the powers under Section 4 of the U. P. Sales Tax Act, 1948, sugar containing more than ninety per cent of sucrose but excluding, inter alia, batasha was exempted unconditionally from payment of sales tax under the Act with effect from 1st July, 1958. This notification was, however, amended with effect from 1st December, 1969, by Notification No. ST-9706/X-900(37)-69 dated 1st December, 1969. The existing entry in the notification of the year 1958 at serial No. 1 was substituted by bringing in the following entry :
Sugar containing more than ninety per cent of sucrose, but excluding khandsari sugar, cooked food, confectionery, sweetmeats and sugar products such as batasha, sugar-candy, gatta, sugar-toys (chini-ke-khiloine) and illaichidana.
4. By another Notification No. ST-9707/X-900(37)-69 dated 1st December, 1969, issued in exercise of the powers under Section 3-A of the U. P. Sales Tax Act, the turnover in respect of sugar products such as batasha, sugar-candy, gatta, sugar-toys (chini-ke-khiloine) and illaichidana were held not liable to tax except (a) in the case of the aforesaid goods imported from outside U. P. at the point of sale by the importer, and (b) in the case of the aforesaid goods manufactured in U. P. at the point of sale by the manufacturer. It was declared that the turnover shall be liable to tax at the rate of 3 paise per rupee.
5. There was yet another Notification No. ST-II-332/X-1012-1971 dated . 15th November, 1971, issued under Section 3-A of the Act by which the turnover of these sugar products was held liable to tax in the hands of the manufacturer or importer at the rate of 3 percent with effect from 15th November, 1971.
6. It is clear from a perusal of the two notifications dated 1st December, 1969, and 15th November, 1971, that sugar products like batasha and illaichidana were subjected to tax in the hands of the manufacturer with effect from that date. In other words, these items made out of sugar were excluded from the exemption given to sugar under Section 4 of the Act. The revising authority was clearly in error in taking the view that the turnover of batasha and illaichidana manufactured by the dealer in these cases was not liable to tax on account of the exemption granted to it by the notification of the year 1958 as amended by Notification No. ST-9706 dated 1st December, 1969.
7. In State of Gujarat v. Sakarwala Brothers [1967] 19 STC 24 (SC), the Supreme Court upheld the exemption in respect of sale of batasha, harda and alchidana on account of entry No. 47 of Schedule A to the Bombay Sales Tax Act, 1959, which provided exemption from tax on the sale or purchase of "sugar" as defined in item No. 8 of the First Schedule to the Central Excises and Salt Act, 1944. The definition of "sugar" in that item was any form of sugar containing more than 90 per cent of sucrose. It was not in dispute that batasha, harda and alchidana contained more than 90 per cent of sucrose. The Supreme Court took the view that having regard to the definition of "sugar", it was clear that these items will be covered by the exemption for they were but different forms of sugar. The Supreme Court was clearly not dealing with the notification in which sugar in specific forms was excluded from the exemption granted.
8. In Commissioner of Sales Tax v. Bansilal Bhasin 1978 UPTC 279, the question that was answered by a Division Bench of this Court was whether ittaichidana sold by the assessee-firm was liable to tax under the provisions of the U. P. Sales Tax Act. The Bench noticed that under Notification No. ST-4064/X -950(4)-58 dated 25th November, 1958, "sugar" was given exemption from the levy of tax except in the forms which were excluded from the exemption clause. It was observed by the Bench that there was no finding that illaichidana fell within any of the categories specifically excluded under the notification. On that ground it was held exempt.
9. In Commissioner of Sales Tax, Lucknow v. Roshan Lal Balram [1972] 30 STC 166 the assessment year involved was 1963-64. The question which was referred to this Court for opinion was "whether on the facts and circumstances of the case, batasha is taxable as an unclassified item". The Bench took the view that batasha could not be treated as an unclassified item and subject to tax at the rate of 2 per cent as provided in Section 3 of the Act for the reason that khandsari sugar, out of which it was manufactured had been subjected to tax by a notification under Section 3-A of the Act. The Bench took the view that once the item came to be included for tax under Section 3-A it could not be subjected to tax under Section 3. Dealing with the notification dated 25th November, 1958, the Bench observed that the fact that khandsari sugar and batasha had been excluded from the category of sugar exempted under that notification, did not mean that khandsari sugar and batasha were two different commodities. It observed that the intention behind the notification was to exempt sugar containing more than 90 per cent of sucrose but not to extend the exemption to khandsari which was a different variety of sugar and certain sugar preparations. It is obvious that the decision in this case is of no avail to the dealer in the instant case.
10. The dealer was held not taxable in respect of its turnover of batasha and illaichidana in the years in question upon the erroneous impression that the exemption from tax through the notification issued under Section 3 of the Act also was available to these items. The revising authority overlooked that where exemption is being claimed under a particular notification, the items which are covered specifically by that notification are entitled to get exemption from tax. When sugar in the form of batasha and illaichidana has been specifically excluded from the exemption granted to sugar in Notification No. ST-9706 dated 1st December, 1969, they could not be granted exemption on the footing that they were sugar in the wider sense of that term.
11. Sri S. B. L. Srivastava, appearing for the dealer urged that that part of the notification which excluded batasha and illaichidana from the exemption given to sugar was ultra vires. It is obvious that such a submission is not open to him in these proceedings.
12. In consequence, the revisions are allowed. The decision of the Additional Judge (Revisions), Sales Tax, Varanasi, in both these cases is set aside. The dealer is held liable to tax upon its turnover of batasha and illaichidana manufactured by it in the years in question. Its liability in that regard shall be computed in accordance with law.
13. A copy of this order shall be sent to the appropriate Tribunal, which has in the meantime replaced the revising authority, for appropriate action, as required by Section 11(8) of the Act.
14. The Commissioner of Sales Tax shall be entitled to his costs in these proceedings which are assessed at Rs. 50 in each case.