Assessment year governs paddy and rice tax liability when applying the schedule's tax-reduction explanation.

For applying Explanation III to the Third Schedule, the assessment year was the proper unit for determining tax liability on paddy and rice, rather than treating Food Corporation of India sales and open-market sales separately. Tax was levied on the turnover of the assessment year, and provisional assessments made at intervals remained subject to final yearly assessment. All paddy and rice transactions during the year were therefore relevant when applying the explanation that reduces tax on rice procured from paddy already taxed. The assessment year was accordingly treated as the basis for total liability, and the revision failed.

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Issues: Whether, for applying Explanation III to the Third Schedule, the assessee's sales to the Food Corporation of India and open market sales had to be treated separately or whether the entire assessment year had to be taken as the unit for determining the tax liability on paddy and rice.

Analysis: Tax is levied on the turnover of the assessment year, and even where provisional assessments are made at intervals, they remain subject to final assessment for the year. The entire transactions in paddy and rice occurring during the assessment year were therefore relevant for applying the explanation reducing the tax on rice procured out of paddy where tax had already been levied on the paddy.

Conclusion: The assessment year was rightly treated as the unit, and the assessee's total liability had to be determined on the basis of all transactions in that year. The revision failed.

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