The interpretation of the definitions of goods and the application of tax exemptions under the Delhi Sales Tax Act, 1975.

( 1 ) THE petitioner, by filing this petition, has challenged the insertion of Entry No. 46 "pan Masala and Gutka" by notification dated 31. 3. 2000 in the First Schedule of the Delhi Sales Tax Act, 1975 (hereinafter referred to as "the Act" ).

( 2 ) THE incidence and levy of sales tax is provided in Chapter II of the Act. The rate of tax is provided in Section 4 of the Act and in view of Section 4 (1 ) (a) of the Act, the tax can be levied in respect of the goods specified in the First Schedule, at the rate of twelve paise in a rupee. Tax free goods are specified in section. 7 of the Act. Sub-section (1) of Section 7 of the Act reads as under:

" (1) No tax shall be payable under this Act on the sale of goods specified in the Third Schedule subject to the conditions and exceptions, if any, set out therein. "sub-section (2) of Section 7 of the Act reads as under:

" (2) The Lieutenant Governor may, by notification in the Official Gazette, add to, or omit from, or otherwise amend, the Third Schedule either retrospectively or prospectively and thereupon the Third Schedule shall be deemed to be amended accordingly: provided that no such amendment shall be made retrospectively affecting the interests of any dealer. "

( 3 ) thus, it is clear that the items referred to in the First Schedule shall be subject to Sales Tax while those referred to in the Third Schedule will be tax free. It is also clear that the Lt. Governor is authorised to change the entries, as indicated in Section 7, that is to say, from tax free goods to taxed goods and vice versa.

( 4 ) THE learned Counsel for the petitioner submitted that Tobacco is mentioned in the Third Schedule at Sr. No. 22 and the entry reads as under: "tobacco, as defined in the Central Excises and Salt Act, 1944. "

( 5 ) THUS, for ascertaining what is meant by "tobacco", we will have to refer to the Central Excises and Salt Act, 1944 read with Chapter 24 of the Schedule to the Central Excise Tariff Act, 1985. Chapter Note 3 thereof reads as under:

"in this Chapter, tobacco means any form of tobacco, whether cured or uncured and whether manufactured or not, and includes the leaf, stalks and stems of the tobacco plant, but does not include any part of a tobacco plant while still attached to the earth. "

( 6 ) CHAPTER Note 6 reads as under:

"in this Chapter, "pan Masala containing tobacco", commonly known as gutka or by any other name, means any preparation containing betel nuts and tobacco and any one or more of the following ingredients, namely: (i) lime; and (ii) kattha (catechu), whether or not containing any other ingredients, such as cardamom, copra and menthol. "

( 7 ) CHAPTER 24 includes heading No. 2404. 49, which reads as under:

( 8 ) THE learned Counsel for the petitioner submitted that "gutka" is

"tobacco" and has placed reliance on the decision of Apex Court in Kothari Products Ltd. v. Government of A. P. , (2000) 9 S. C. C. 263 for this purpose and also on State of Orissa v. Radheshyam Gudakhu Factory, (1988) 68 STC 92. In State of Orissa s case (supra), the expression "tobacco" as defined in Section 2 (c) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 has the meaning given to it in item 9 of the First Schedule to the Central Excises and Salt Act, 1944 which is in the following terms: "tobacco means any form of tobacco, whether cured or uncured and whether manufactured or not, and includes the leaf, stalks and stems of the tobacco plant, but does not include any part of a tobacco plant while still attached to the earth. "

( 9 ) IN that case the question was whether gudaku was covered by the expression, tobacco as defined above. The Court held that "gudaku" is a form of smoking tobacco and is a product of tobacco in common parlance. Before the Court there was no dispute that "gutka" is not included in "tobacco". Thus, it is clear that "gutka" and "gudaku" are both covered by the expression "tobacco" as understood in Chapter Note 3 of t