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2010 (1) TMI 1124 - ALLAHABAD HIGH COURTWhether in view of the finding of fact recorded by the assessing authority which has been confirmed by the Tribunal that entire basmati rice manufactured by the applicant, for which recognition certificate was granted, have been sold in the course of export and rice so manufactured has not been sold otherwise, the Tribunal was not justified in confirming imposition of tax on the purchase of paddy alleged to have been used in obtaining broken rice during process of manufacture of rice sold within the State of U.P. in the course of inter-State sale? Whether in view of the facts that entire rice manufactured out of paddy having admittedly been sold in the course of export, no tax can be legally imposed on the purchase merely because some waste product and by-products obtained during the process of manufacture of rice, have been sold either in the State of U.P. or in the inter-State trade and commerce? Whether no rice mill is established for manufacture of by-products which included broken rice, etc., and the recognition certificate having also not been granted for manufacture of by-products, namely, broken rice, the Tribunal was not justified in confirming imposition of tax on the alleged purchases of paddy which is said have been sold in connection of the broken rice obtained during manufacturing process of rice? Held that:- while it is open to the tax Department to tax the assessee on the sale of broken rice either in U.P. or outside U.P. the intention under the notification is clear. The exemption has been granted, the raw materials used and therefore, in this case the imposition of tax on the purchase of paddy to the extent of 4.75 per cent is bad and not justified and it is set aside by this court. The questions referred to are answered in favour of the assessee and against the Department. While it is open to the tax Department to tax the assessee on the sale of broken rice either in U.P. or outside U.P. the intention under the notification is clear. The exemption has been granted, the raw materials used and therefore, in this case the imposition of tax on the purchase of paddy to the extent of 4.75 per cent is bad and not justified and it is set aside by this court. The questions referred to are answered in favour of the assessee and against the Department.
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