Profits from Sale of Jaggery is Taxable under Tamil Nadu Sales Tax: Madras HC

E.Palaniappan Vs ITO (Madras High Court)

In a recent ruling Madras HC decided the issue in favour of revenue that the essential characteristic of sugarcane in its original form, stands converted after processing, into jaggery and both the commodities are different and distinct from one another.

The issue pertains to whether ‘gur’ and ‘jaggery’ as per Schedule III of the Tamil Nadu General Sales Tax Act, 1959 are different commodities or whether they are one and the same for the purpose of determining taxability of the profits from sale of jaggery.

Assessee argued that the product which had been sold is sugarcane which was an agricultural commodity and not jaggery.

Finally, HC concluded that the Tribunal has decided the issue adverse to the assessee holding that profits from sale of jaggery will be taxable, as such activity has no nexus with agricultural operations. The assessment order categorically records that the assessee was in possession of machinery to convert sugarcane into jaggery. Assessee was unable to corroborate its submission that the sales effected to third parties was of sugarcane and not jaggery. Assessee did not argue that the commodity sold was sugarcane and not jaggery but instead of that he has only been keep on about the distinction between ‘gur’ and ‘jaggery’, contending that the two are different commodities.