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2013 (11) TMI 261 - HC - VAT and Sales TaxTax liability - Exemption from sales tax - The firm of the petitioner is financed and registered with U.P. Khadi Evam Gramodyog Board - Exemption of tax for Paddy and rice production - Held that:- Under the Government Order dated 31.01.1985, the exemption from trade tax liability has been granted on the sale of the products by the Units of the Khadi Gram Udyog Board. Specifying the products, in clause-38 of Entry-3, the words "hulling, cutting/trimming, processing, packaging and marketing of cereals" have been used and not "processing of paddy". The hulling of the cereal is nothing but hulling of the paddy for manufacture of rice. In Notification No. 709 dated 27.02.1997 the words "processing, packaging and marketing of cereals, pulses, masalas and chhonks" have been used. Thus it was processing of the cereals and not processing of paddy. The word cereal means paddy, rice and all other food grains. Thus the exemption granted to the petitioner on the sale of rice was fully covered in the word 'cereals'. By the subsequent Government Order dated 30.09.2004, "rice and it's by-product manufactured from paddy" has been specifically excluded from clause-38 of Entry-3. An exclusion clause can not be treated as a clarificatory clause, or clarification of existing clause. The exclusion of specific goods clearly proves that the excluded goods were included in this clause prior to that date of exclusion. The notification dated 30.09.2004, which carries exclusion of some goods will apply prospectively and not with retrospective effect. The reassessment under Section 21 (2) on the basis of notification dated 30.09.2004, which was not applicable for the Assessment Years 2002-03 and 2003-04, was illegal - By a notification dated 30.9.2004, Entry no. 38 was amended and by which the manufacturing of rice from paddy was specifically excluded from the words "processing, packaging and marketing of cereals, pulses, masalas and chhonks". The petitioner is, therefore, liable to pay tax (Central) on sale of rice w.e.f. 1.10.2004 - Decided partly in favour of assessee.
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