2014 (4) TMI 225 - HC - VAT and Sales Tax

Tax Exemption - Whether Paddy husk falls under exemption - paddy husk versus rice husk Interpretation Held that - Judgment in Commissioner of Trade Tax, U.P. Vs. S.S. Ayodhya Distillery & others, 2008 (12) TMI 394 - SUPREME COURT OF INDIA followed - As paddy and rice are considered to be the separate commodities, paddy husk cannot be treated to be rice husk - Paddy husk is not mentioned in both the notifications dated 7.9.1981 5.6.1985 - By notification dated 6.6.1996 paddy husk was inserted - Even then, the rice husk was not deleted - No explanation was offered therefor. Interpretation Held that - Two expressions having been used ordinarily two different meanings should be assigned thereto - If by reason of a notification taxes are sought to be imposed upon a new commodity applying Haydon s Rules it must be held that the mischief was sought to be remedied thereby - It is, thus, difficult to agree that rice husk and paddy husk denote the same commodity - If, according to the Government of UP, rice husk is this cover which further requires husking, no exception thereto can be taken - When a paddy is dehusked, it becomes paddy husk and when the rice is dehusked, it becomes rice husk - If something is included in the Schedule which is non-existent, no tax can be levied thereupon - Furthermore, if there is a doubt or dispute as to whether paddy husk or the rice husk denotes the same commodity or not, the benefit thereof shall be given to the assessee - Furthermore, it is not the case of the appellant that the respondent extracts any oil out of paddy husk - Decided against Revenue.

Summary

Issues:
1. Whether the Tribunal was justified in holding that the purchased paddy husk was deoiled.
2. Whether the Trade Tax Tribunal was legally justified in exempting the purchase of paddy husk from tax based on specific court decisions.

Analysis:
1. The court referred to a previous decision where it was established that paddy husk and rice husk are distinct commodities. The subsequent notification treated them as separate items, indicating that paddy husk, being the outer covering of paddy, cannot be considered rice husk. This distinction was further confirmed by the Supreme Court in a related case, emphasizing that paddy husk and rice husk are not the same commodity. The court concluded that the purchased paddy husk was not deoiled, thereby ruling against the Revenue on this issue.

2. The court based its decision on the clear differentiation between paddy husk and rice husk in various notifications. It highlighted that even though paddy husk was subjected to tax in a later notification, this did not change the fact that paddy husk and rice husk were considered separate commodities. The court emphasized that if there is any doubt regarding whether paddy husk and rice husk refer to the same commodity, the benefit of the doubt should be given to the assessee. Additionally, since there was no evidence of oil extraction from paddy husk, the court ruled in favor of the assessee on this issue as well.

In conclusion, the court dismissed the revision, upholding the decisions against the Revenue on both issues.