TaxTMI 
TaxTMI 
1978 (2) TMI 184
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....a Pradesh General Sales Tax Act, 1957 (hereinafter referred to as "the Act"). Section 5(1) of the Act provides: "5. Levy of tax on sales or Purchases of goods.-(1) Every dealer (other than a casual trader and an agent of a non-resident dealer) whose total turn- over for a year is not less than Rs. 25,000 and every agent of a non-resident dealer whatever be his turnover for the year, shall pay a tax for each year at the rate of four paise on every rupee of his turnover." Section 5(2) enacts: "Notwithstanding anything contained in sub-section (1), the tax under this Act shall be levied- (a) in the case of the goods mentioned in the First Schedule, at the rates and only at the point of the sale specified as applicable thereto, effected in the State by the dealer selling them, on his turnover of sales in each year relating to such goods irrespective of the quantum of turnover; (b) in the case of the goods mentioned in the Second Schedule, at the rates and only at the point of the purchase specified as applicable thereto, effected in the State by the dealer purchasing them, on his turnover of purchase in each year relating to such goods irrespective of the quantum of t....
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....e. We find that the answer given by the High Court was that, in any case, such rice would be taxable under section 5, sub-section (1), of the Act set out above. It was also pointed out before us that paddy out of which the products in question become available, had already been taxed, as admitted by both sides, under item 8 of the Second Schedule, which imposes a tax of 5 paise in the rupee on paddy at the point of first purchase in the State. The entry also says: "Provided that a rebate of 2 paise in the rupee shall be allowed on the paddy purchased and consumed in the State in accordance with such rules as may be prescribed." The Second Schedule is meant for goods in respect of which a single point tax is leviable under section 5(2)(b) of the Act. The difference between taxation under the First Schedule under section 5(2)(a) and under the Second Schedule under section 5(2)(b) appears to be that whereas the first is a tax at the point of sale the second is a tax at the point of purchase. The dealer's turnover may include purchases as well as sales. Therefore, as is assumed in the instant case, the dealer had paid a tax at the time of purchase of rice under item 8 of t....
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....hough the raw materials may have been taxed already in a different form earlier. The question, therefore, before us is whether "rice", which is obtained from paddy, already taxed under item 8 of the Second Schedule, ceases to be "rice " falling prima facie under item 66(b) as rice on which a tax was already paid when it was in the form of paddy. Does heating or parching only to make it edible have that effect. It is clear that there is a distinction between "paddy" as found in item 8 of the Second Schedule, and "rice", as mentioned under item 66 of the First Schedule. Apparently, the removal of the huck makes this difference. It is true that the First Schedule, which contains as many as 136 items, includes a number of separate fairly detailed entries. Entry 58 is for bran or huck of "rice", and entry 59 is for "deoiled bran of rice". It appears, therefore, that "rice in husk" is "paddy". When it is removed from husk, the husk and rice become separately taxable. But, there are no separate entries for rice and rice reduced into an edible form by heating or parching without any addition of ingredients or appreciable changes in chemical composition. The term "rice" is wide enough....
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.... all rice even though it was puffed. "Atukulu" even though parched was still called rice. We must also remember that the schedule which we have to interpret is in the English language where the term "rice" is still found in the rendering or description of "pelalu" as well as that of "muramaralu" in the English language. And, in any case, if two interpretations of a provision are passible, we think that we ought to, in such a case, apply the principle that the interpretation which favours the assessee should be preferred. It was possible for the Government to lay down a separate category for parched rice and puffed rice, but it has not done so. Section 40 of the Act lays down the power of the State Government to modify, to alter or to cancel any item in the schedule. It can also notify, under section 9 of the Act exemptions and reductions of tax. In this connection, it is worth remembering that both "pelau" and "muramaralu" were previously exempted completely from tax under a notification of the State Government probably because they are largely consumed by the poorer sections of the public. But, the exemption had been withdrawn before the assessment years under consideration.....