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TMI Blog2008 (12) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... Advs., Aarohi Bhalla, Manoj Dwivedi, Gunnam Venkateswara Rao, Praveen Kumar, Anil Kumar Sangal, Nalin Sangal, Deba Prasad Mohanty, Surya Kant, Rajesh Kumar, K.K. Mohan, Prakash Kumar Singh and Rajeev Sharma, Sarva Mitter, Advs. for Mitter Mitter Co., Ajay Majithia, Kailash Chand, Shekhar Kumar, Yash Pal Dhingra, K.C. Due, Aruneshwar Gupta, P.K. Jain, P.K. Goswami, K.K. Mishra and Himanshu Shekhar Advs For the Respondent : Yash Pal Dhingra JUDGMENT S.B. SINHA, J. 1. Leave granted. Question 2. Whether Paddy Husk and Rice Husk connote the same commodity or not is the question involved herein. An overview 3. Respondents, who own and operate their manufacturing units, use Paddy Husk as fuel in their respective factories. They were assessed for payment of sales tax in terms of various notifications issued by the State of Uttar Pradesh (for short, `the State') from time to time under Section 3D of the Uttar Pradesh Trade Tax Act (for short, `the Act'). 4. Before we advert to the rival contentions of the parties, we may notice certain statutory provisions. Section 3 of the Act is the charging provision. The rate of tax is determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 15. Rice polish, Rice bran, Rice husk and paddy husk but excluding deoiled rice bran, deoiled rice polish, deoiled rice husk and deoiled paddy husk. However, an amendment was carried out in the description of goods as also the rate of tax by a notification issued on 30th September, 2000. Precedents 6. The procedure relating to manufacture of rice from paddy vis- -vis the exemption clauses contained in the relevant notifications came up for consideration before the High Court from time to time. 7. We would refer to a few of the decisions rendered by the Allahabad High Court and Madhya Pradesh High Court to which our attention has been drawn by the learned Counsel for the parties. One of such decisions is Commissioner of Sales Tax, U.P. v. Naveen Traders 36 Sales Tax Cases 440 wherein, the High Court of Allahabad, while determining the question in regard to the meaning of the words `Bhusa' and `Bhusi' for which exemption was claimed, held as under: The assessee owns a rice mill. It purchased paddy and after processing it obtained rice. Thereafter, the rice so obtained is subjected to polishing process. As a result of this process, the outer surface of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lordship then was) speaking for the Bench, opined: The notification dated 16th July, 1956, exempts from sales tax cattle fodder, which term is defined to include green fodder, chuni, bhusi, chhilka, chokar, cotton seed, gowar and oil-cake. In Commissioner of Sales Tax, U. P., Lucknow v. Naveen Traders, Etawah 1973 U.P.T.C. 215, a Division Bench of this Court has held that rice with its outer husk is known as paddy and after the husk is removed the product is known as rice. Rice does not have any inner husk. The rice bran in respect of which exemption was claimed was nothing but powdered rice. Bhusa and bhusi as understood in common parlance are commodities obtained from stalk, leaves and husk of grains. Rice bran cannot be treated as bhusi of rice . In view of this decision, the question referred to us has to be answered against the assessee. The contention of the assessee therein that rice bran was cattle fodder, however, was directed to be considered afresh on the premise that the same involves a wider question. The Madhya Pradesh High Court had also an occasion to consider the said question in Chordia Kavelu Udyog v. State of M.P. and Two Ors. (1988)69 STC 49. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion at the instance of the Revenue, affirmed the majority decision of the Tribunal. These appeals are against the judgments of the High Court. Submissions 8. Mr. Sunil Gupta, learned senior counsel appearing on behalf of appellant, would contend whether factually or conceptually and/or legally decided or judicially determined, Paddy Husk and Rice Husk denote the same commodity and in that view of the matter, the word `Paddy Husk' must be held to have been notified by the State of Uttar Pradesh from the very beginning for the purpose of levy of sales tax, Dehusking of paddy, Mr. Gupta would contend, is a crushing process which when undertaken, the grain is left which is rice and the second process thereof is the sheathing of the rice (grain) whereby the brown coating on the rice is eliminated which is commonly known as Rice Bran, Rice Husk or Rice polish. The decisions of Allahabad High Court and the Madhya Pradesh High Court, it was argued, having categocially noticed the process of husking and having laid down that rice does not have any other husk, the impugned judgment cannot be sustained. Mr. Gupta urged this Court to agree with the minority opinion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006]283ITR1(SC) , stated the law, thus: A finding of fact has been arrived at by the High Court that no service was being rendered by the State. If no service is being rendered, even no fee could have been levied. It has been so held by a Constitution Bench of this Court in Jindal Stainless Ltd. and Anr. v. State of Haryana and Ors. [2006]283ITR1(SC) in the following terms: 40. Tax is levied as a part of common burden. The basis of a tax is the ability or the capacity of the tax payer to pay. The principle behind the levy of a tax is the principle of ability or capacity. In the case of a tax, there is no identification of a specific benefit and even if such identification is there, it is not capable of direct measurement. In the case of a tax, a particular advantage, if it exists at all, is incidental to the State's action. It is assessed on certain elements of business, such as, manufacture, purchase, sale, consumption, use, capital, etc. but its payment is not a condition precedent. It is not a term or condition of a licence. A fee is generally a term of a licence. A tax is a payment where the special benefit, if any, is converted into common burden. If an entry con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, difficult to agree with Mr. Gupta that rice husk and paddy husk denote the same commodity. 12. We may place on record that schedule was annexed to the notification prescribing rate to the U.P. Value Added Tax Ordinance, 2007 specifying the exempted goods, item No. 4 whereof is as under: Acquatic feed; poultry feed including balanced poultry feed; cattle feed including balanced cattle feed; and cattle fodder including green fodder, chuni, bhusi, Chhilka, choker, javi, gower, de- oiled rice polish, de-oiled paddy husk or outer covering of paddy; acquatic, poultry and cattle feed supplement, concentrate and additives thereof; wheat bran and deoiled cake but excluding oil cake; rice polish; rice bran and rice husk. (Emphasis supplied) It is, therefore, evident that rice husk is still considered by the Government of Uttar Pradesh to be a different commodity. Even from the perusal of the Decision of the Chordia Kavelu Udyog v. State of Madhya Pradesh and Two Ors. 1988 (69) STC 49, it would appear that `A Class Book of Botany' was referred to therein which indicated that on removing the husk, a brownish membranous layer is seen adherent to the grain and that t ..... 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