1983 (3) TMI 237 - HC - VAT and Sales Tax

Interpretation of Tax Entries on Rice Products under Sales Tax Act: Puffed rice and beaten rice taxed at 3%

The court addressed the interpretation of tax entries regarding puffed rice and beaten rice under the M.P. General Sales Tax Act, 1958. It determined that ... - Issues:1. Interpretation of entry No. 1(i) in Part V of Schedule II to the M.P. General Sales Tax Act, 1958 regarding taxation of puffed rice and beaten rice.2. Whether beaten rice and puffed rice fall under the definition of 'rice' as specified in section 14(i) of the Central Sales Tax Act.3. Taxability of sales of paddy husk known as konda under the M.P. General Sales Tax Act.Analysis:The petitions under article 226 of the Constitution involve the construction of entry No. 1(i) in Part V of Schedule II to the M.P. General Sales Tax Act, 1958. The dispute revolves around whether puffed rice and beaten rice should be taxed at 3% or 10% under the respective entries. The contention by the petitioners is that these items should be taxed at 3%, contrary to the department's stance of taxing them at 10%. The period in question is from 1st November, 1978, to 21st October, 1979, and assessment orders were made by different authorities at varying tax rates (10% and 4%). The question at hand is purely a legal one, and the court decides to address it without insisting on the alternative remedy of appeal or revision, given its general importance to both dealers and the department.The primary issue is the interpretation of the relevant entries in the tax schedule. Entry No. 1 of Part V of Schedule II imposes a tax of 3% on specified items, excluding paddy, while the residuary entry in Part VI levies a 10% tax rate. The crux of the matter lies in whether beaten rice and puffed rice fall under the definition of 'rice' as specified in section 14(i) of the Central Sales Tax Act. The court analyzes the definition of 'cereals' under the Central Act and concludes that beaten rice and puffed rice should be considered part of the term 'rice' based on the broad interpretation of the Supreme Court in a similar case. The court rejects the argument that only raw material should be included, as it would create an anomaly in the tax structure.Another issue addressed is the taxability of sales of paddy husk known as konda. The court clarifies that sales of paddy husk are completely exempt from tax by a previous notification, and the Assistant Commissioner erred in taxing them. Consequently, the court allows the petitions, quashes the assessment orders, and grants the assessing authorities the liberty to pass fresh assessment orders in accordance with the law. The request for a certificate for appeal to the Supreme Court is refused.