Exemption from Central sales tax applied to inter-State rice sales where paddy tax was paid under the general State rate.

Inter-State sales of rice were treated as exempt from Central sales tax where the dealer had already paid tax on paddy under the Rajasthan Sales Tax Act at the general rate, rather than the concessional rate under section 5C. The article explains that three notifications issued on the same date operated in distinct fields: one fixed the State tax rate on paddy, rice and wheat at 3 per cent, another prescribed the inter-State rate with adjustment for tax already levied on paddy, and a third granted complete exemption from Central sales tax where tax had been paid under the State Act otherwise than under section 5C. The exemption notification was held applicable, and the revenue's contrary reading was rejected.

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Issues: Whether the dealer was entitled to exemption from Central sales tax on inter-State sale of rice under the notification issued under section 8(5) of the Central Sales Tax Act, 1956, where tax on paddy had been paid at the general rate under section 5 of the Rajasthan Sales Tax Act, 1954 and not at the concessional rate under section 5C of that Act.

Analysis: The scheme of the three notifications issued on the same date was read with the enabling provisions of the Central Sales Tax Act, 1956 and the Rajasthan Sales Tax Act, 1954. One notification fixed the rate of tax on paddy, rice and wheat at 3 per cent under the State Act, another notification under section 8(5) of the Central Sales Tax Act, 1956 prescribed the inter-State rate at 3 per cent with adjustment of tax already levied on paddy, and the third notification under section 8(5) granted complete exemption from Central sales tax where tax on the goods had been paid under the Rajasthan Sales Tax Act, 1954 otherwise than under section 5C. The dealer had paid tax on paddy at the general rate under section 5 of the State Act and had not availed the concessional rate under section 5C. The notifications were held to operate in distinct fields, and the exemption notification was held applicable to the dealer's case. The revenue authorities were found to have misconstrued the notification scheme.

Conclusion: The dealer was entitled to exemption under the notification issued under section 8(5) of the Central Sales Tax Act, 1956, and the levy of Central sales tax on the inter-State sale of rice could not be sustained.

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