TaxTMI 
TaxTMI 
2008 (12) TMI 394
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....ivered by S.B. SINHA J.-Leave granted. Question Whether paddy husk and rice husk connote the same commodity or not is the question involved herein. An overview The respondents, who own and operate their manufacturing units, use paddy husk as fuel in their respective factories. They were assessed for payment of sales tax in terms of various notifications issued by the State of Uttar Pradesh (for short, "the State") from time to time under section 3D of the Uttar Pradesh Trade Tax Act (for short, "the Act"). Before we advert to the rival contentions of the parties, we may notice certain statutory provisions. Section 3 of the Act is the charging provision. The rate of tax is determined by the State in exercise of its power conferred on it under section 3A of the Act. Section 3D of the Act which is material for our purpose, reads as under: "Section 3D. Levy of trade tax on purchase or sales of certain goods.-(1) Except as provided in sub-section (2), there shall be levied and paid for each assessment year or part thereof, a tax on the turnover, to be determined in the prescribed manner- (a) of first purchases of opium, at such rate not exceeding thirty- ....
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....urt from time to time. We would refer to a few of the decisions rendered by the Allahabad High Court and Madhya Pradesh High Court to which our attention has been drawn by the learned counsel for the parties. One of such decisions is Commissioner of Sales Tax, U.P. v. Naveen Traders [1975] 36 STC 440 wherein, the High Court of Allahabad, while determining the question in regard to the meaning of the words "Bhusa" and "Bhusi" for which exemption was claimed, held as under: "The assessee owns a rice mill. It purchased paddy and after processing it obtained rice. Thereafter, the rice so obtained is subjected to polishing process. As a result of this process, the outer surface of the rice is scraped off. The scraping so obtained, which is in powder form is called rice bran and in Etawah district, where this mill is situate, this product is also known as "polish". The bran so obtained is used for either extracting oil or for feeding cattle. By Notification No. ST-911/X dated 31st March, 1956, the State Government in exercise of powers conferred by section 4 of the U.P. Sales Tax Act exempted with effect from April 1, 1956, amongst other articles 'cattle fodder including green fodd....
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....usk is removed the product is known as rice. Rice does not have any inner husk. The rice bran in respect of which exemption was claimed was nothing but powdered rice. 'Bhusa' and 'bhusi' as understood in common parlance are commodities obtained from stalk, leaves and husk of grains. 'Rice bran' cannot be treated as 'bhusi of rice'. In view of this decision, the question referred to us has to be answered against the assessee." The contention of the assessee therein that rice bran was cattle fodder, however, was directed to be considered afresh on the premise that the same involves a wider question. The Madhya Pradesh High Court had also an occasion to consider the said question in Chordia Kavelu Udyog v. State of M.P. [1988] 69 STC 49. N.D. Ojha, Chief Justice, relied upon the decision of the Allahabad High Court in Naveen Traders See [1975] 36 STC 440. to hold: "4. 'Husk' according to dictionary means, inter alia, 'bhusi'. The question as to whether rice bran could be called 'bhusi' or husk, came up for consideration before a Division Bench of the Allahabad High Court in Commissioner of Sales Tax, U.P. v. Naveen Trad....
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....ally decided or judicially determined, paddy husk and rice husk denote the same commodity and in that view of the matter, the word "paddy husk" must be held to have been notified by the State of Uttar Pradesh from the very beginning for the purpose of levy of sales tax. Dehusking of paddy, Mr. Gupta would contend, is a crushing process which when undertaken, the grain is left which is rice and the second process thereof is the sheathing of the rice (grain) whereby the brown coating on the rice is eliminated which is commonly known as rice bran, rice husk or rice polish. The decisions of the Allahabad High Court and the Madhya Pradesh High Court, it was argued, having categorically noticed the process of husking and having laid down that rice does not have any other husk, the impugned judgment cannot be sustained. Mr. Gupta urged this court to agree with the minority opinion of the Tribunal contending that rice bran or rice polish being not husk and there being no other inner husk of rice, the view taken by the majority Members of the Tribunal and consequently by the High Court suffers from a legal infirmity. Mr. Dhruv Agrawal and Mr. Rakesh K. Khanna, senior counsel appearing on....
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.... 241 {2006] 145 STC 544 (SC). in the following terms: 40. Tax is levied as a part of common burden. The basis of a tax is the ability or the capacity of the taxpayer to pay. The principle behind the levy of a tax is the principle of ability or capacity. In the case of a tax, there is no identification of a specific benefit and even if such identification is there, it is not capable of direct measurement. In the case of a tax, a particular advantage, if it exists at all, is incidental to the State's action. It is assessed on certain elements of business, such as, manufacture, purchase, sale, consumption, use, capital, etc., but its payment is not a condition precedent. It is not a term or condition of a licence. A fee is generally a term of a licence. A tax is a payment where the special benefit, if any, is converted into common burden." If an entry contained in a notification imposing tax is ambiguous, the assessee cannot suffer therefor. In their decisions, the Allahabad and Madhya Pradesh High Courts to which we have adverted to heretobefore, while stating that nothing is known as rice husk, however, opined that rice polish and rice brown are the same thing. Although the s....
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....alanced poultry feed; cattle feed including balanced cattle feed; and cattle fodder including green fodder, chuni, bhusi, chhilka, choker, javi, gower, de-oiled rice polish, de-oiled rice bran, de-oiled rice husk, de-oiled paddy husk or outer covering of paddy; acquatic, poultry and cattle feed supplement, concentrate and additives thereof; wheat bran and deoiled cake but excluding oil cake; rice polish; rice bran and rice husk." (Emphasis supplied) It is, therefore, evident that rice husk is still considered by the Government of Uttar Pradesh to be a different commodity. Even from the perusal of the decision of Chordia Kavelu Udyog v. State of M.P. [1988] 69 STC 49 (MP), it would appear that "A Class Book of Botany" was referred to therein which indicated that on removing the husk, a brownish membranous layer is seen adherent to the grain and that this layer is made up of the seed coat and the wall of the fruit fused together. If, according to the Government of Uttar Pradesh, rice husk is this cover which further requires husking, no exception thereto can be taken. When paddy is dehusked, it becomes paddy husk and when the rice is dehusked, it becomes rice husk. There are two o....