1. At the instance of the assessee, the Board of Revenue has under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958, referred to this Court the following questions of law.
'(i) Whether 'Batasa', Chiranji', 'Mishri', etc. are only crystallised sugar and sales thereof are not liable to tax under item No. 41 of Schedule 1 to the Act or whether they are products manufactured out of sugar and come under item No. 1 of Schedule III to the Act and sales thereof are liable to tax at 2 per cent?
(ii) Whether, in the facts and circumstances of the case, the rejection of the account books of the applicant as unreliable was justified and assessment of the applicant according to best judgment was in order?
(iii) Whether, in the facts and circumstances of the case, the assessment of tax on sales of products of sugar estimated at Rs. 80,750/- by this Tribunal was legal and in order ?'
2. The assessee is, in the main, a dealer in sugar and sugar products known as 'Batasa', 'Chiranji', 'Mishri' etc. He has two shops at Jabalpur, one for wholesale sales and another for retail sales. For each of the shops, he has a separate set of account books. He used to transfer from time to time sugar from his wholesale shop to his retail shop for manufacturing the aforesaid sugar products. The relevant period for which sales were taxed is 1 November 1959 to 19 October 1960. During this period, sugar was a controlled commodity till 10 March 1960. Upto that date, the asses-see received sugar only for manufacturing sugar products. The stock register of his retail shop showed that the sugar which he had received upto 10 March 1960, amounting in all to 207 bags, was utilised for manufacturing the sugar products, but sugar received in the retail shop after that date was not so utilised at all and was sold as sugar in retail. The explanation of the applicant that the sugar products already manufactured upto 10 March 1960 were sufficient for sales made after that date was not trusted and, therefore, the Sales Tax Officer did not accept the applicant's account books as correctly showing the quantity of sugar utilised for manufacturing sugar products and assessed the sales of sugar products made during the period to the best of his judgment The Sales Tax Officer overruled the applicant's further contention that 'Batasa', Chiranji' and 'Mishri' were really sugar and, therefore, exempt from taxation under Entry 41 of Schedule I to the Act and levied the tax on those products as falling under Entry 1 'Sweetmeats' of Schedule III. Being aggrieved, the applicant appealed to the Assistant Commissioner of Sales Tax who, however, dismissed that appeal. The two contentions were again pressed in the second appeal taken to the Board of Revenue which too rejected them. The Board, however, reduced the estimated taxable turnover from Rs. 1,23,958/- to Rs. 80,750/- Thereupon, at the instance of the assessee the Board has made this reference.
3. In regard to the first question, the Government Advocate, who appeared for the revenue, conceded that sugar is the only constituent of the products called 'Batasa'. 'Chiranji'. 'Mishri' etc. The point, therefore, is whether these products, which are wholly made of sugar, can be regarded as sugar within the meaning of Entry 41 of the list of goods exempted from tax as enumerated in Schedule I to the Act. The applicant's counsel, Shri R. S. Dabir, forcefully urged that these products, which were made of sugar only, could not be regarded as anything other than sugar only because they were given other forms. In support of this view, the counsel drew our attention to Punamchand Dalichand v. State of Bombay, 3 Bom S. T. T. D. 63, a decision of the Bombay Sales Tax Tribunal mentioned at page 367 of S. V. Aiyar's Sales Tax Digest, Third Edition (1959), the view taken in that case was that if loaf sugar and sugar cubes were exempted, there was no reason why batashas ought not to be exempted also. Even apart from the consideration that the judgment of that case is not before us, we think that the view taken in that case is distinguish able as grounded on the wide meaning of the relevant, entry 'Sugar as defined in Item No. 8 of the First Schedule to the Central Excises and Salt Act, 1944' in Schedule A to the Bombay Sales Tax Act, 1946. Sugar in the aforesaid Item No. 8 means 'any form of sugar containing more than ninety per cent of sucrose' We are also of opinion that a word like sugar, which has not been defined in the Act and which is a word of every day use must be understood in the sense in which it is understood in general usage. As Craies observed in his Statute Law, Sixth Edition, at page 163, it must be construed in its popular sense meaning 'that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it'. This rule of construction was accepted and applied by the Supreme Court in Ramavatar v. Assistant Sales Tax Officer, Akola, AIR 1961 SC 1325, and also in Planters Nut Chocolate Co. Ltd. v. The King, 1952-1 Dom LR 385, and Commissioner of Sales Tax, Madhya Pradesh v. Laddumal Jangilal, Misc. Civil Case No. 276 of 1962 D/-21-12-1962 (MP). It is obvious that sugar as understood in the popular sense does not include products of sugar like 'Batasa'. 'Chiranji', 'Mishri' etc. So, in Jethmal Ramswaroop v. The State, 1959-10 STC 270: (AIR 1958 Raj 262). Wanchoo C. J. (as he then was) observed:
'Turning briefly to the merits of the case, we are of opinion that there is no force in the contention raised by the applicants. Misri, Batasa etc. are not merely sugar and the fact that sales tax has been paid on sugar is no reason for not levying sales tax on these articles made from sugar. Nor are we prepared to accept that they are Deshi sweetmeats. It would be impossible to attempt a definition of Deshi sweetmeats But it is common know ledge that no one in this part of the country would consider Misri, Batasa or toys made of sugar etc Deshi sweets. So they are not exempt under the Schedule' (Page 277)
In our view, products like 'Batasa' 'Chiranji', 'Mishri' cannot be regarded as sugar within the meaning of Item No. 41 of Schedule 1 to the Act.
4. The second part of the first question raises the point whether the aforesaid products of sugar are 'sweetmeats other than chocolates, loffees, lozenges and peppermint drops' within the meaning of Item 1 of Schedule III to the Act. According to Webster's New International Dictionary, 'sweetmeat' means any food rich in sugar as cakes, candy, sweet pastry etc. In Shorter Oxford English Dictionary, the meaning of 'sweetmeat' is sweet food as sugared cake etc., preserved or candied fruits, sugared nuts etc., also globules, lozenges, drops or sticks made of sugar with fruit or other flavouring or filling. In Chamber's Twentieth Century Dictionary, the meaning of the wont is any sweet food, a confection made wholly or chiefly of sugar. The word 'confection' means, according to Webster's New International Dictionary, 'state or product resulting from combining ingredients'. In view of the meaning given to the words 'sweetmeat' and 'confection', we are of opinion that 'Batasa', 'Chiranji' and 'Mishri' are not sweetmeats within the meaning of Schedule III to the Act. As we have already indicated, our opinion receives support from the observations made in, 1959-10 STC 270: AIR 1958 Raj 262, (supra).
5. The second and the third questions relate to rejection of the assessee's account books and the estimate of sugar utilised for manufacturing 'Batasa' etc. Having heard the counsel, we have formed the opinion that, in rejecting the books and estimating the sugar used for manufacturing 'Batasa' etc. from 10 March 1960, the taxing authorities have acted arbitrarily and without any reasonable or proper basis. The main ground on which they proceeded was that the assessee did not show in his books that, after 9 March 1960, he utilised any sugar for manufacturing 'Batasa' etc. According to them, it was difficult to believe that that was the true state of affairs. There is for this opinion no material and in our judgment it is based only upon suspicion. Since, prior to 10 March 1960, sugar was a controlled commodity, persons, who could not get sugar, purchased sugar products like 'Batasa' at a higher price. After the control was lifted as from 10 March 1960, the retail sales of those products in all probability dwindled. If, in this situation, the assessee, who is not a confectioner, continued to vend his existing stock of those products and did not manufacture a fresh stock of the products, his explanation ought in reason to have been accepted, particularly when there is nothing to show either in the account books or otherwise that, after 9th March 1960, he did not duly account for every bag of sugar received by him. In our opinion, the rejection of the assessee's account books as unreliable is arbitrary and unjustified by any material on record We are further of opinion that, in the circumstances of the case the estimate of Rs. 80,750/- grounded on the supposed utilisation of 500 bags for manufacture of these products after 9th March 1960 is based on suspicion and surmises.
6. In the result, we answer the questions referred to us in the manner indicated in the foregoing paragraphs and direct that the parties shall bear their own costs of this refer.