Tax reduction on rice procured from taxed paddy was held mandatory where State tax had already been paid.

Where tax has already been levied under State law on paddy, the tax leviable on rice procured from that paddy must be reduced by the amount of tax levied on the paddy. On the stated facts, the assessee purchased paddy within the State, paid State tax, converted it into rice, and sold the rice in inter-State trade. The statutory language was read as clearly mandating the reduction under section 15(c), so the assessee was entitled to the benefit and the revision failed.

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Issues: Whether the assessee was entitled to reduction of tax on rice procured from paddy on which tax had already been levied under the State law, where the rice was sold in the course of inter-State trade or commerce.

Analysis: The relevant provision requires that where tax has been levied under State law on the sale or purchase inside the State of paddy referred to in section 14, the tax leviable on rice procured out of such paddy shall be reduced by the amount of tax levied on the paddy. The assessee had purchased paddy within the State, paid tax under the State law, converted it into rice, and sold the rice in inter-State trade. The statutory language was held to clearly support reduction of the tax leviable on the rice by the amount already levied on the paddy.

Conclusion: The assessee was entitled to the tax reduction under section 15(c), and the revision failed.

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