GULATI, J. - (1.) THIS case and the connected cases were listed again today for further hearing. After hearing the counsel for the parties we are now giving this judgment.
(2.) THIS is a reference under section 11(3) of the U.P. Sales Tax Act by the Commissioner of Sales Tax, U.P., Lucknow. It relates to the assessment year 1956-57. The connected cases are also references which relate to the assessment years 1957-58, 1965-66 and 1966-67. A common question of law has been referred in all these cases. The question is : "Whether on the facts and circumstances of this case, kulia khand is taxable under Notification No. 4064/X-960(4)-58 dated 25th November, 1958, in the hands of the opposite party or not ?" One of the commodities in which the assessee deals is what is known as kulia khand. Kulia khand is prepared out of khandsari sugar by a simple mechanical process. Khandsari sugar is dissolved in water and to the solution are added certain purifying agents. The mixture is then heated and the impurities come to the surface in the form of scum which is removed. The refined solution is then poured into wooden moulds and the moulds are allowed to cool when the liquid takes a solid shape. This substance is then taken out of the moulds and is called kulia khand. The assessee claimed that the turnover of such kulia khand was not liable to tax. This contention of the assessee has been allowed by the revising authority which has held that kulia khand is only a different form of khandsari sugar and as khandsari sugar is taxable at the point of sale by the manufacturer or the importer, the assessee is not liable to tax, because it is neither the importer nor the manufacturer of khandsari sugar.
(3.) NOW , in the question which has been referred by the revising authority, there is reference to the notification of 25th November, 1958. That notification is under section 4(1)(a) and unconditionally exempts from the payment of tax the turnover of certain commodities including sugar containing more than ninety per cent. of sucrose, but excluding khandsari sugar, sugar candy, batasha, cooked food, confectionary and sweetmeats. It is difficult to understand as to how the taxability or otherwise of kulia khand depends on this notification. In the first place, the notification seeks to exempt rather than to tax certain commodities. Secondly, this notification takes effect from 1st July, 1958. It can have no application to the assessment years 1956-57 and 1957-58. Accordingly, our answer to the question so far as it relates to these assessment years is that kulia khand is not taxable under the notification of 25th November, 1958.;