Purchase tax incidence on paddy turned on the purchase date, excluding pre-existing stock from the new levy.

Purchase tax under section 3-B of the Orissa Sales Tax Act, 1947 applied only to paddy purchased on or after 1 April 1978, when tax incidence shifted to the purchase point. Paddy already bought before that date could not be treated as a post-1 April 1978 purchase merely because it remained in stock on that date. The earlier notification regime had taxed such paddy at the sale point, and the change in incidence could not be extended to pre-existing stock. The governing principle was that tax liability is determined by the law and rate prevailing at the time of purchase, so levy on the stock was not justified.

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Issues: Whether purchase tax could be levied on paddy already in stock on 1 April 1978 though it had been purchased before that date and not on or after that date.

Analysis: The liability under section 3-B of the Orissa Sales Tax Act, 1947 arose only in respect of purchases made on or after 1 April 1978 when paddy became taxable at the purchase point. Paddy already purchased before that date could not be treated as a later purchase merely because it remained in stock on that date. The prior notification regime had placed such paddy at the sale point, and the change in incidence could not be extended to pre-existing stock. The cited principle that tax is attracted according to the law and rate prevailing at the time of purchase supported this view.

Conclusion: The levy of purchase tax on the paddy remaining in stock as on 1 April 1978 was not justified, and the question was answered against the Revenue.

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