1997 (3) TMI 497 - SC - VAT and Sales Tax

Whether the appellant who carries on business of buying paddy and after getting it husked sell the rice becomes liable to pay tax under section 5A of the Kerala General Sales Taxes Act, 1963? Held that - Appeal dismissed. Even though rice is produce out of paddy, paddy does not continue to be paddy even after dehusking. Rice and paddy are tow different things in ordinary parlance. Therefore, when paddy is dehusked and rice is produced there has been a change in the identity of the goods. this court, therefore, took the view that the assessee is liable to pay tax on the goods purchased from the market. As that rice and paddy are two distinct assessee on the purchase of paddy becomes liable to pay purchase tax.

Summary

The Supreme Court held that a business buying paddy and selling rice after husking is liable to pay tax under section 5A of the Kerala General Sales Taxes Act. The court ruled that rice and paddy are distinct goods, and the purchase of paddy is subject to tax. The appeal was dismissed with no order as to costs. (Case citation: 1997 (3) TMI 497 - Supreme Court)