Tax treatment of rice from taxed paddy follows the lower scheduled rate, not the general inter-State rate.

Rice obtained from paddy that had already suffered tax was treated as a distinct category under the State schedule and was taxable at the lower rate specified for that category. The expression "subject to tax generally" was read in light of the State levy and the separate scheduled treatment of rice, so the general inter-State rate under section 8(2-A) of the Central Sales Tax Act, 1956 was not applied to ignore that distinction. The construction preserved the scheme of differentiated taxation for rice derived from taxed paddy and rejected the contention that rice was only generally taxable at the higher rate.

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Issues: Whether rice sold in inter-State trade, where the rice was obtained from paddy already subjected to tax under the State Act, was taxable at the lower rate specified for such rice under the State schedule or at the general inter-State rate under section 8(2-A) of the Central Sales Tax Act, 1956.

Analysis: The statutory scheme distinguished between rice not covered by the lower-rate entry and rice obtained from paddy that had already suffered tax. The expression "subject to tax generally" was construed in the context of the State levy and the scheduled classification of rice into two categories with different rates. The interpretation urged by the State, namely that rice was generally taxed at 4 nP. and therefore section 8(2-A) did not apply, was rejected because it would ignore the distinct treatment given to rice derived from taxed paddy. The construction adopted preserved the validity of the levy by recognising that the two categories of rice were separately taxable at different rates under the State Act.

Conclusion: Rice obtained from paddy that had already suffered tax was liable to be taxed at the lower rate specified for that category, and the State's contention for application of the higher general rate was rejected.

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