Statutory set-off for tax on rice procured from taxed paddy must follow the central law's reduction mandate.

Section 15(c) of the Central Sales Tax Act required the tax on rice procured from paddy to be reduced by the tax already levied on that paddy. The stated State position could not deny this statutory set-off where the central law mandated reduction for declared goods, and article 286 reinforced the restriction on inconsistent State taxation. The assessee was therefore entitled to claim the set-off on rice procured from taxed paddy, and the authorities had to give effect to that entitlement for the relevant period.

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Issues: (i) Whether the tax paid on paddy was required to be given set-off while computing tax on rice procured out of such paddy under section 15(c) of the Central Sales Tax Act, 1956. (ii) Whether the State provision could be applied in a manner inconsistent with article 286 of the Constitution of India and section 15(c) of the Central Sales Tax Act, 1956.

Issue (i): Whether the tax paid on paddy was required to be given set-off while computing tax on rice procured out of such paddy under section 15(c) of the Central Sales Tax Act, 1956.

Analysis: The dispute concerned levy of tax on rice procured from paddy that had already suffered purchase tax. Section 15(c) requires that where tax has been levied on the sale or purchase inside the State of paddy, the tax leviable on rice procured out of such paddy shall be reduced by the amount of tax levied on the paddy. The State also accepted that set-off of tax paid on paddy would be allowed in the stated circumstances.

Conclusion: The set-off was required to be allowed and section 15(c) was to be given effect for the period in dispute.

Issue (ii): Whether the State provision could be applied in a manner inconsistent with article 286 of the Constitution of India and section 15(c) of the Central Sales Tax Act, 1956.

Analysis: Article 286 and section 15(c) place restrictions on State taxation of declared goods and mandate reduction of tax on rice by the tax levied on the paddy from which it is procured. A State enactment could not be applied so as to deny the statutory reduction where the central law required it to operate.

Conclusion: The inconsistent State position could not stand and section 15(c) had to prevail for the relevant period.

Final Conclusion: The assessee was entitled to claim the statutory set-off on rice procured from taxed paddy, and the matter was disposed of by directing the authorities to act in accordance with that entitlement.

Ratio Decidendi: Where a central statutory restriction mandates reduction of tax on a finished declared good by the tax already levied on the raw declared good from which it is procured, the State must give effect to that mandate and cannot deny the corresponding set-off.

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