The central legal point established in the judgment is that bagasse, as residue of sugarcane, should be treated as sugarcane and is tax-free under the Bombay Sales Tax Act, 1959.

S.C. Dharmadhikari, J.

1. This reference by the tribunal vide its order dated 24th November, 2006 seeks, according to the tribunal, opinion and answer by this court on a question of law. That question, as framed in the order of reference dated 24th November, 2006 in Reference Application Nos. 105 and 106 of 2006 reads as under:-

“Whether on the facts and the circumstances of the case, the Tribunal was justified in holding that the sale of 'bagasse' is a tax free sale under section 5 of the Bombay Act covered under schedule entry A-44?”

2. Since this question is common to both these references, we would take the facts from Sales Tax Reference No. 6 of 2009.

3. The tribunal had before it two appeals being Second Appeal Nos. 558 and 869 of 2005. It delivered a common judgment therein on 24th February, 2006.

4. The Revenue sought a reference of the above question because, according to it, the respondent dealer is a co-operative society manufacturing sugar. It is duly registered under the Bombay Sales Tax Act, 1959 (for short “the BST Act”). The respondent has maintained books of accounts, which are duly audited. These books were produced in the assessment proceedings. No discrepancies were noticed. The assessing officer took the figures from the books of accounts and passed the assessment order. The tribunal was approached because there were two issues, on which the assessment order and the first appellate order was adverse to the dealer. The first one is of levying tax on the sales of bagasse at 13% and rejecting the contention that it is a tax free commodity. The only point before the tribunal was whether this levy on sales of bagasse at 13% is in accordance with law. The tribunal heard the rival contentions. The respondent dealer contended that it is manufacturing sugar. It is purchasing sugarcane for the purpose of manufacturing sugar. The sugarcane is crushed and juice is taken out. Even after the juice extracted and taken out, some of it still remains in the residuary of the sugarcane. The Allahabad High Court in the case of Dhampur Sugar Mills Limited vs. Commissioner of Sales Tax, U.P. Lucknow, 1996 STC (Vol. 100) 434, has held that bagasee is a residue of sugarcane left after its processing and does not become a different commodity. The SLP against this judgment was rejected by the Hon'ble Supreme Court of India.

5. The Revenue, on the other hand argued that bagassse is a different commercial commodity. Once it is a different and distinct commodity known to the commercial world, then, the judgment and order of the Allahabad High Court would not be applicable and is distinguishable. The tribunal had before it Entry – 44 of Schedule 'A' appended to the BST Act. That entry reads thus:-

Serial No.	Description of goods	Conditions and exemptions, subject to which exemption is granted	Period
44	Sugarcane, Khandsari sugar and Palmara sugar.	Except when sold under a brand name in sealed, capsuled or corked containers.	01-10-1995

6. The argument was whether the word “sugarcane” can also include “bagasse”. Schedule 'A' is titled as “Goods, the sale or purchase of which is free from all taxes”.

7. As far as the U. P. Sugarcane (Purchase Tax) Act, 1961 is concerned, there, a specific exemption from tax on sugarcane was provided. While dealing with such an issue, the Allahabad High Court held that:-

“..... The learned counsel for the assessee has argued on the 2nd point that the bagasee being the residue of the sugarcane should not be treated as a different commodity exigible to the sales tax but the learned Tribunal has committed an error of law by treating it as a different commodity attracting liability of sales tax. He has further submitted that the revisionist had paid purchase tax on the purchase of sugarcane out of which bagasse has been left out in the manufacturing process and no tax on sal