2000 (9) TMI 1021 - HC - VAT and Sales Tax

Summary

Issues:
Levy of purchase tax on paddy remaining stock as on April 1, 1978 and not purchased on or after April 1, 1978.

Analysis:
The case involved a dispute regarding the levy of purchase tax on paddy remaining in stock as of April 1, 1978, which was not purchased on or after that date. Before April 1, 1978, paddy was taxable at both the sale and purchase points under specific notifications. However, with amendments effective from April 1, 1978, paddy purchased for conversion into rice or broken rice became taxable at the purchase point. The petitioner, a mill, had purchased paddy for conversion purposes before April 1, 1978, and had a significant quantity in stock. The assessing officer included the value of this paddy in the taxable turnover, leading to a challenge by the petitioner.

The High Court analyzed the statutory notifications and concluded that paddy purchased before April 1, 1978, for conversion into rice or broken rice was not taxable at the purchase point. The change in tax liability occurred from April 1, 1978, making paddy taxable at the purchase point regardless of its intended use. Citing a Supreme Court decision, the Court emphasized that purchases made before a tax rate change should be taxed at the rate applicable at the time of purchase. As the petitioner's stock of paddy was acquired before the tax amendment date, it was not subject to purchase tax under the revised regulations.

In light of the legal provisions and precedents, the Court held that the Tribunal was not justified in confirming the levy of purchase tax on the paddy remaining in stock as of April 1, 1978, which was purchased before that date. The reference application was allowed, and the Court ruled against the Revenue department, stating that the petitioner was not liable to pay purchase tax on the pre-April 1, 1978, paddy stock. Both judges concurred with this decision, and the application was allowed accordingly.