Paddy-derived goods and sales tax treatment under the Andhra Pradesh General Sales Tax Act turn on prior purchase tax.

Powa, muramura and pelalu were treated as products derived from paddy, so they were not subject to multipoint sales tax under section 5(1) of the Andhra Pradesh General Sales Tax Act. Because paddy had already suffered purchase tax under section 5(2)(b) and entry 8 of the Second Schedule, the goods were instead regarded as falling within the category of rice obtained from taxed paddy and were taxable under entry 66(b) of the First Schedule. The applicable tax treatment depended on whether purchase tax on the paddy had already been paid; if not, the relevant entry had to be applied accordingly.

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Issues: Whether sales tax on the sale of powa, muramura and pelalu was leviable under section 5(1) of the Andhra Pradesh General Sales Tax Act or only under section 5(2) with entry 66(b) of the First Schedule.

Analysis: Powa, muramura and pelalu were treated as products of paddy. Paddy had already suffered tax at the purchase point under section 5(2)(b) and entry 8 of the Second Schedule. The scheme of section 5(2) drew a distinction between goods taxable at the sale point under the First Schedule and goods taxable at the purchase point under the Second Schedule. Since the goods in question were derived from paddy, they did not attract multipoint tax under section 5(1). They were, however, within the category of rice obtained from taxed paddy and therefore fell for levy under entry 66(b), and where purchase tax on paddy had not been paid, the applicable treatment was to be worked out under the relevant entry.

Conclusion: Sales tax was not leviable under section 5(1), but was leviable under entry 66(b) of the First Schedule as applicable depending on whether paddy had already suffered purchase tax.

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