2013 (10) TMI 1275 - HC - VAT and Sales Tax

Sales tax liability - Sale of rice - Held that - units of Khadi Gram Udyog Board were entitled for exemption of trade tax on the sale of rice under the Government Order dated 31.01.1985 and Government Order dated 27.02.1997. Accordingly, the exemption from trade tax liability on the sale of rice claimed on the basis of Government Order dated 27.02.1997, was rightly given - sale of rice is not exempted Khadi and Gramodyog units from imposition of trade tax after 1.10.2004 - Decided against assessee.

Summary

Issues:
1. Interpretation of exemption notifications for sale of rice by registered society.
2. Applicability of retrospective government orders on trade tax liability.
3. Exclusion of rice from exemption under specific government orders.
4. Assessment validity based on notification dates.
5. Imposition of trade tax on sale of rice post-2004.

Analysis:

1. The petitioner, a registered society under U.P. Societies Registration Act engaged in rice manufacturing, faced a tax imposition notice despite exemption for sales up to Rs. 50 lakhs by a previous notification.

2. The judgment referred to previous cases where the exemption for Khadi Gram Udyog Board units on rice sale was upheld based on specific government orders, emphasizing the difference between processing and manufacturing of rice.

3. The Special Counsel argued that the exemption was wrongly granted as per Supreme Court decisions, citing a clarificatory government order from 2004 excluding rice from the exemption clause.

4. The Court clarified that the exemption was based on the processing of cereals, including rice, and not paddy specifically. The retrospective application of the exclusion clause from 2004 was deemed invalid for assessments prior to its issuance.

5. Based on previous judgments and legal interpretations, the Court held that the sale of rice post-2004 was not exempt from trade tax for Khadi and Gramodyog units, allowing the petitioner to respond to the notice for the relevant assessment year.

6. The petitioner was directed to follow the guidelines of the court and the 2004 notification regarding the sale of manufactured rice, and the writ petition was disposed of accordingly.