2005 (8) TMI 639 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the difference between "rice husk" and "paddy husk" for tax assessment purposes.

Analysis:
The case involves a sales tax revision transferred to the Uttarakhand High Court from the Allahabad High Court under the U.P. Reorganisation Act, 2000. The revision challenges an order by the Sales Tax Tribunal regarding the classification of "rice husk" and "paddy husk" as separate commodities for tax assessment. The dispute arises from the assessing officer treating the purchase of paddy husk as rice husk, resulting in a tax imposition of 4.4 percent. The Tribunal, however, deemed paddy husk as an unclassified item, concluding that the dealer was not liable for tax on its purchase. The Revenue argued that paddy husk and rice husk are the same, citing a previous case law, but the court found no such equivalence in the cited case. The court clarified that rice bran is distinct from rice husk and paddy husk, as per the precedent.

The court examined Notification No. 3712 dated June 5, 1985, which levied tax on the purchase of "rice husk," not paddy husk. Referring to another case law, the court established that rice husk and paddy husk are indeed different commodities. Paddy husk, obtained during de-hulling, lacks oil content, while rice husk, containing oil, is derived after the removal of paddy husk during rice polishing. The court emphasized that the tax is applicable to rice husk, not paddy husk, as clarified in the notifications and previous judgments. Consequently, the court upheld the Tribunal's decision, affirming that paddy husk and rice husk are distinct items, leading to the dismissal of the revision in favor of the assessee.