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of <h1>Court Upholds 4% Purchase Tax on Paddy; Interest Levy Issue Pending</h1> <h3>M/s. B.K. Food Products Pvt. Ltd., Versus State of Orissa represented by Commissioner of Sales Tax, Cuttack</h3> M/s. B.K. Food Products Pvt. Ltd., Versus State of Orissa represented by Commissioner of Sales Tax, Cuttack - TMI Issues:- Whether purchase tax is leviable on equivalent paddy out of which rice obtained and sold to World Food Programme under Entry-30HH of the OST ActRs.- Whether paddy used as input for exempted rice sales is subject to levy of purchase taxRs.- Whether levy of interest under Section 12(4-a) of the OST Act is lawful and validRs.Analysis:Issue 1 & 2 - Purchase Tax on Paddy and Exempted Rice Sales:The contention raised is that paddy, being a declared good, should not be subject to purchase tax as it is converted to rice for sales exempted under Entry 30HH of the OST Act. However, Section 3-B of the Act allows the State Government to declare goods liable to purchase tax, and paddy has been subjected to a 4% purchase tax through a notification. The Court rejects the argument that no purchase tax can be levied on paddy, citing previous rulings and the clear language of the law. The Tribunal's decision in favor of the Department is upheld, stating that purchase tax is indeed leviable on paddy, even if rice sales are exempt under Entry 30HH. Therefore, the purchase tax on paddy stands at 4%, irrespective of the exemption on rice sales.Issue 3 - Validity of Interest Levy:Regarding the levy of interest under Section 12(4-a) of the OST Act, the Court leaves this question open for consideration in a future case due to the substantial amount involved. No definitive ruling is provided on the lawfulness and validity of the interest levy at this stage, indicating that further examination may be required in a suitable case.In conclusion, the revision petition is disposed of with the decision in favor of the Department on the issues of purchase tax on paddy and exempted rice sales. The Court leaves the question of the validity of interest levy under Section 12(4-a) open for future consideration, emphasizing the need for a more appropriate case to address this matter.
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