D.K Kapur, J.:— The three sales tax references before the Court relate to the assessment years 1965-66, 1966-67 and 1967-68. As the points are common, a single consolidated order was passed by the Financial Commissioner on three separate revisions. This judgment will, therefore, also effectively deal with all the three references before this Court.
2. The question which has arisen for decision before us is related to whether misri and batasha which are almost purely sugar products are exempt from sales tax under the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi, at the relevant time. In order to understand the question involved, it may be stated here that there are three schedules to the Act. As per the provisions of section 5 of the Act, the goods specified in the First Schedule are taxable at the rate of 10 per cent and the goods specified in the Third Schedule are taxable at the rate of two per cent. As per section 6, goods specified in the Second Schedule are totally exempt from tax. As regards goods which are in none of the three schedules, the rate is five per cent as mentioned in section 5. Therefore, the various classes of goods are taxable at the rate of 10 per cent, or at the rate of five per cent, or at the rate of two per cent and there are some goods which are totally exempt. Amongst the goods which are totally exempt as specified in the Second Schedule is to be found “sugar and molasses” which is entry No. 9. The question whether misri and batasha are exempt depends on whether they can be treated to be sugar for the purposes of the Act.
3. The questions of law which have been referred to us are as follows:
“(1) Whether, on the facts and in the circumstances of the case, the Financial Commissioner was right in holding that under entry No. 9 of the Second Schedule appended to the local Act ‘sugar’ meant any form of sugar containing more than 90 per cent of sucrose?
(2) Whether misri and batasha are ‘sugar’ within the meaning of entry No. 9 of the Second Schedule appended to the local Act?”
4. In order to determine the answers to the questions which have been referred, it may be useful to refer now to some of the decided cases. In Mangoo Mal Kishore… v. H.K Sharma…., Ward No. 2, Delhi [1974] 33 S.T.C 182., it was held that bura is sugar because the word “sugar” as occurring in the Act means not only sugar as understood in the popular sense, but also the sense in which the Government attributes meaning to the word. The contention raised in that case was that when a person goes to the market and asks the shopkeeper to give him sugar, the shopkeeper cannot give him bura, and conversely, if a person asks for bura, he cannot accept sugar in lieu thereof. It was contended that sugar and bura are differently understood in the market. The learned court held that there was no denying the fact that bura was normally understood as bura sugar. Therefore, the meaning given to sugar in the First Schedule to the Central Excises and Salt Act, 1944, which defines sugar as any form of sugar in which the sucrose content is more than 90 per cent was apposite. The standards given in the Prevention of Food Adulteration Rules, 1955, were also referred to. It was held that bura was a form of sugar and, therefore, exempt.
5. The next case which can be referred to is Channulal Motilal v. Commissioner of Sales Tax, Madhya Pradesh, Indore [1965] 16 S.T.C 297., which is a direct case relating to batasa, chiranji and mishri. In this case, the Madhya Pradesh High Court held that batasa, chiranji and mishri cannot be regarded as sugar within the meaning of entry 41 of Schedule I of the Madhya Pradesh General Sales Tax Act, 1958. The court referred in its judgment to Punamchand Dalichand v. State of Bombay, decided by the Bombay Sales Tax Tribunal, and distinguished the same on the ground that the Bombay Sales Tax Act defined sugar as defined in entry No. 8 of the First Schedule to the Central Excises and Salt Act, 1944, and, therefore, for the purpose of interpreting the Bombay Act the Central Excises and Salt Act, 1944, could be referred to. But for interpreting the Madhya Pradesh Act, the common parlance or popular sense of the word should be used. It was also held that obviously sugar as understood in the popular sense did not include products like batasa, chiranji and mishri. Reference was also made to another decided case, Jethmal Ramswaroop v. State, where it was held that misri and batasa were not merely sugar and the fact that sales tax had not been paid on sugar is no reason for not levying sales tax on these articles made from sugar.
6. In State Of Gujarat v. Sakarwala Brothers, the Supreme Court dealt directly with the question whether patasa, harda and alchidana came within the definition of “sugar” as occurring in entry No. 47 of Schedule A to the Bombay Sales Tax Act and hence their sale was exempt from the payment of sales tax. It was held that the word “sugar” in entry No. 47 was intended to include within its ambit all forms of sugar and the decision of the Gujarat High Court was affirmed. As it happens, entry No. 47 of Schedule A to the Bombay Sales Tax Act reads “sugar as defined in item No. 8 of the First Schedule to the Central Excises and Salt Act, 1944”. The definition in the Central Excises and Salt Act read “sugar means any form of sugar containing more than 90 per cent of sucrose”. It was not disputed that patasa, harda and alchidana contained more than 90 per cent of sucrose, so the court considered whether these items were forms of sugar. The court observed:
“‘Patasa’, ‘harda’ and ‘alchidana’ are made from sugar. The process by which they are made has been set out by the Tribunal and the relevant passage in that connection has been quoted above. On these facts, we will have to consider whether ‘patasa’, ‘harda’ and ‘alchidana’ are forms of sugar within the meaning of the definition of sugar.”
7. The court concluded as follows:
“The legislature, by using the words ‘any form of sugar’ has intended to cover sugar of any variety in whatever form it may be found and by whatever name it may be called.”
8. Thus, it was accepted that the articles in question were exempt. One of the arguments raised before the court was that in common parlance the word “sugar” could not be used for “patasa”, “harda” and “alchidana” which were not commercially known and could not be asked for and obtained as sugar. It was held that the legislature has not used the word “sugar” simpliciter. It has in terms used the word “sugar” as defined in item No. 8 of the First Schedule to the Central Excises and Salt Act, 1944. Hence, on reference to the definition in the Central Excises and Salt Act, 1944, it was held that the chemical content had to be examined and not the common parlance.
9. In the Act we are dealing with, there is no limit on the words “sugar and molasses”. The question we have to ascertain is whether the words “sugar and molasses” have been used from the point of view of common parlance or from the point of view of the essential ingredients of the article in question.
10. In the Prevention of Food Adulteration Rules, Appendix B sets out the definitions and standards of quality. Item A. 07 deals with sweetening agents. There are a number of sweetening agents mentioned. A. 07. 01 defines cane-sugar and also misri which is crystallised sugar with sucrose content not less than 98 per cent. Similarly cane-sugar is defined as crystallised sugar obtained from sugarcane having not less than 96. 5 per cent of sucrose. It would thus appear that misri is a purer form of cane-sugar because it has a higher sucrose content. Then refined sugar is defined in A. 07, 01. 01. It is obtained from the juice of sugarcane or sugar-beet. In this case, the sucrose content is not less than 99. 8 per cent. Then bura is defined in A. 07. 02 as containing not less than 96.5 percent of total sugar. In this definition khandsari is mentioned as having minimum sugar content of not less than 90 per cent. Gur or jaggery is defined in A. 07. 05 as having total sugar content not less than 60 per cent. In A. 07. 06 cube sugar is defined as sugar in the form of cubes or cuboid blocks with not less than 99. 8 per cent sucrose content. In A. 07. 09 icing sugar is defined as sugar with or without edible starch. The total of starch and sucrose not less than 99. 0 per cent.
11. It, therefore, appears from the definitions of various types of sugars above, that the market knows of a number of different kinds of sugar. The question for our consideration is whether the exemption specified in entry No. 9 of the Second Schedule is confined only to one of these types of sugar, i.e, crystallised and refined sugar or to other sugars also.
12. The point of view that has prevailed with the Madhya Pradesh High Court and in the other judgments referred to therein is that if a person goes to the market to buy sugar, he will not be satisfied with obtaining misri or batasha or any such like product. But the real question which has to be posed is whether misri and batasha are sugar or not. If there is a product made entirely of sugar which has 98. 5 per cent purity as per the definition, it may be distinguishable from ordinary sugar as used in the household, but nevertheless, it cannot be described as anything but sugar.
13. There are two points of view on the question as to how the exemption is to be interpreted. Either it is to be understood from the common parlance point of view which has prevailed in several reported cases or it has to be from the point of view of determining the nature of the thing with which we are concerned. If the common parlance point of view is used, it is at once obvious that “sugar” is a word of the English language whereas misri and batasha are words of either Hindi or some other Indian languages. There is no English word corresponding to misri or batasha, though they may be described as a kind of sugar-candy of some sort. Either of the two points of view just mentioned can be applied to the circumstances of this case. But we are really concerned with whether the legislature intended to use the words “sugar and molasses” in the special way in which “sugar” only means chini and no other form of sugar.
14. To our mind, the problem should be resolved from the point of view of the producers and consumers. Sugar can be manufactured in various ways. If it is done in the factory, it will lead to the production of refined sugar. If it is done in a slightly less sophisticated manner, cane-sugar will result. If it is done in a little more cruder form, bura sugar will be produced. And finally if the product is even less sophisticated, khandsari will be produced. The two words in common use for sugar in the Indian language are chini or khandsari. The translation of khandsari and chini is “sugar” in English. Bur a, if it had to be translated into English would also be translated as “sugar” as there is no corresponding word to describe bura sugar. Therefore, it appears that the legislature could not have intended to the use of the word “sugar” as meaning only refined cane-sugar. It meant to use the word as commercial sugar as normally understood in any form.
15. If we accept this interpretation, then the question will still remain whether misri and batasha are sugar within the meaning of the words used in entry No. 9.
16. As already mentioned, misri is actually mentioned in the Food Adulteration Rules to mean the crystallised juice of cane-sugar. It has to have 96. 5 per cent sucrose content. It is, therefore, a purified and crystallised form of sugar.
17. The test for determining whether a thing is sugar or not can be more conveniently made by asking the question whether the article in question can be used as a substitute for the factory product. If you have to sweeten a cup of tea, it seems quite plain that you can do it just as easily with misri and batasha as with ordinary powdered sugar purchased from the shopkeeper. Merely because these articles misri and batasha are in a different form do not mean that they ˜ cease to be sugar. It is quite clear from what has been explained to us that misri and batasha are prepared from ordinary sugar and they do not contain any additional article. Therefore, it is merely sugar made into another shape. In the case of misri, the sugar is made into a lump and no longer remains powdered. In the case of such lumps, it appears that the same can be preserved for long periods. In the case of batasha, the sugar is converted into a hollow marble shaped mass. Sugar in this form is generally used for religious offerings.
18. It appears that sugar used in this form cannot be anything but sugar because there is no conversion except in the shape. It would, therefore, appear that misri and batasha being pure sugar with no additional mixtures or anything else added must also be described as sugar, although in common parlance they may be distinguishable from powdered sugar. They have to be so distinguishable because they are deliberately converted into a different shape, but the conversion does not convert the sugar into some other product. The sugar merely takes a different form from the normal powdered form in which it is sold. To our mind, sugar remains sugar just as sugar remains sugar if sold in cubes. Nobody can deny that tube sugar or brown sugar or any other type of sugar remains sugar. Hence, it is only sugar converted into something else by mixing another ingredient which will cease to be sugar.
19. The learned counsel for the Commissioner of Sales Tax referred to the decision in Commissioner of Sales Tax, Delhi v. Puran Chand & Sons, Delhi (S.T.R Nos. 6 and 7 of 1973 decided on 27th August, 1979). In that case, the item under consideration was “icing sugar” which consisted of 5 per cent of starch and 95 per cent of sugar. The court observed:
“The item which can be considered to be exempt is sugar simpliciter and not sugar with any additives, like icing sugar, which has an additive of starch.”
20. We agree with this view. If the item we are now considering had any additive in addition to sugar, we would have also held that they are not sugar. But, there are no additives, so the articles continued to be sugar. Two other judgments need now be referred to.
21. In Paro & Co. v. State of Andhra Pradesh, the question arose whether sugar-candy was exempt as being sugar. In that case, the Appellate Tribunal had held that sugar-candy and bura sugar were chargeable to additional duties of excise and were, therefore, not subject to tax under the Andhra Pradesh General Sales Tax Act. There are certain observations in the judgment which are of assistance in the present case. At page 37, it was stated:
“Apart from all other considerations, prima facie, it is 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 appears to us that sugar-candy is somewhat similar to batasha,. Then the judgment continues as follows:
“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 would 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.”
22. We do not see any reason to hold any differently from what is observed above. It appears to us that the exemption provided to sugar and molasses was intended to cover all items which could be so described and not only to sugar as used in the English language. The exemption was in the interest of the public and there is no reason why the exemption should apply to some types of sugar and not to others.
23. Then there is a decision of the Allahabad High Court reported as Commissioner of Sales Tax, Lucknow v. Roshan Lal Balram. This was a case in which batashas were directly involved. The contention of the assessee was that batasha and khandsari sugar are one and the same commodity and in fact batasha was another form of khandsari sugar. This contention was not accepted by the Sales Tax Officer, who levied tax on the turnover of batasha at the rate of 2 per cent. In the final revision, the assessee contended that batasha and khandsari were not different commodities, but the same. This was accepted and then a reference was brought to the court. It was contended by the assessee that he was neither an importer nor a manufacturer of khandsari; he merely prepared batashas from sugar and batashas were nothing more than khandsari sugar in a different form. The court accepted this contention and held that batashas were not different from khandsari sugar.
24. Per curiam, it is necessary also to note a notification dated 25th November, 1958, issued under the U.P Act, which granted exemption to tax regarding certain commodities. The exemption was granted to “sugar containing more than ninety per cent of sucrose, but excluding khandsari sugar, sugar-candy, batasha, cooked food, confectionery and sweetmeats”. This form of notification shows that batasha, khandsari sugar as well as sugar-candy, etc., had been specifically excluded from the exemption under “sugar” and, therefore, khandsari sugar was taxed at that rate of 2 per cent but was not fully exempt; The case really involved the question whether khandsari sugar which had once been taxed could again be taxed when converted into batasha which the court said could not be done.
25. 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 itelf been defined as sugar in the Central Excises 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 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 much 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, 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.
26. Turning now to the questions 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 definition is to be found in the Central Excises Act. We would accordingly answer the first question in the affirmative.
27. As regards 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.
28. In the result, both the questions are answered in favour of the assessee and against the department. But, in view of the complexity of the questions, we leave the parties to bear their own costs.
29. Reference answered accordingly.