2016 (12) TMI 310 - HC - VAT and Sales Tax

Exemption from payment of tax on rice sold in the course of inter- State trade/commerce - payment of full tax on paddy from which rice is manufacture - Held that - reliance placed in the judgement of the case of CTO v. M/s. Nav Bharat Rice & General Mills 2000 (3) TMI 1044 - RAJASTHAN HIGH COURT where it was held that the petitioner was entitled to avail the benefit of Notification No.25 (Annexure/6) u/s. 8(5) of the CST where direction was not to pay any tax on the sales of rice made in the circumstances in which the petitioner has made - petition dismissed - decided in favor of assessee.

Summary

Issues:
Assessment year 1998-99 - Exemption from tax on rice sold in inter-State trade/commerce - Benefit not granted by Assessing Officer - Contention accepted by Dy. Commissioner (Appeals) - Tax Board also dismissed Revenue's appeal - Applicability of previous judgments - Pending appeal before the Apex court.

Analysis:
In the present case, the primary issue revolves around the assessment year 1998-99, where the petitioner, a manufacturer of rice from paddy, claimed exemption from tax on rice sold in the course of inter-State trade/commerce. The petitioner had paid full tax on paddy from which rice was manufactured. However, the Assessing Officer did not grant the necessary benefit, leading to the matter being taken up before the Dy. Commissioner (Appeals), who accepted the petitioner's contention based on the judgment in the case of Nav Bharat Rice and General Mills v. CTO. Subsequently, the Tax Board also considered the same judgment and dismissed the appeal of the Revenue.

The respondent's counsel argued that the judgments in Nav Bharat Rice and General Mills v. CTO, M/s Mahesh Industries, and R.T. Export Ltd. by the High Court support the petitioner's claim. The counsel highlighted that the petitioner had paid full tax on paddy and was entitled to exemption as per Notification No.F.4(67)FD/Gr.IV/76-24. The petitioner's counsel, while unable to contradict the previous judgments, mentioned that the Revenue had appealed before the Apex court, suggesting that the matter should be deferred or disposed of based on the Apex court's judgment in CTO v. M/s. Nav Bharat Rice & General Mills.

Upon considering the arguments, the court noted that the issue had been consistently addressed by the High Court in previous cases, particularly in Nav Bharat Rice and General Mills, where the court elaborated on the tax implications of paddy and rice transactions. The court emphasized the interpretation of relevant notifications and clarified that the petitioner was entitled to the benefit of Notification No.25 under the CST Act. Consequently, the court dismissed the present petition, stating that it does not survive in light of the previous judgments. However, the court added a rider that the final decision would be governed by the Apex court's judgment in the pending appeal of CTO v. M/s. Nav Bharat Rice & General Mills.

In conclusion, the court found the petition devoid of merit and dismissed it, maintaining that the issue would ultimately be determined by the outcome of the appeal before the Apex court.