Case: M/s. Ganesh Trading Company, Karnal etc Vs. State of Haryana &amp; Another

1. The appellants carry on business of buying paddy and after getting it husked either in their own mills or in other mills, sell the rice to Government and other registered dealer. On the purchase of paddy they paid purchase tax as provided in the Punjab General Sales Tax Act, 1948. The question for decision is whether when they sold the rice produced out of the paddy purchased, they were entitled to exclude the turnover relating to the paddy purchased. When the Sales Tax Officer sought to levywithout excluding the turnover in question from the total turnover of the appellants, the appellants moved the High Court of Punjab and Haryana under Article 226 of the Constitution challenging the validity of the levy. The petitions filed by the appellants first went up before a learned single Judge, who rejected the same. He came to the conclusion that rice and paddy are not identical type of goods and consequently the turnover relating to paddyover which purchase tax had been paid could not be excluded in computing the assessable turnover of the appellants. Aggrieved by that order the appellants went up in appeal to the Appellate Bench of that High Court. The Appellate Bench confirmed the decision of the learned single Judge. Thereafter, after getting certificates from the High Court, these appeals have been brought.

Reasoning:
Now, the question for our decision is whether it could be said that when paddy was dehusked and rice produced, its identity remained. It was true that rice was produced out of paddy but it is not true to say that paddy continued to be paddy even after dehusking. It had changed its identity. Rice is not known as paddy. It is a misnomer to known as paddy. It is a misnomer to call rice as paddy. They are two different things in ordinary parlance. Hence quite clearly when paddy is dehusked and rice produced, there has been a change in the identity of the goods. In this view it is not necessary for us to refer to the decisions of some of the High Court read to us at the time of hearing.6. There is yet another difficulty in the way of the appellants. Both the PunjabAct as well as that Act as amended by Haryana, make a distinction between rice and paddy in their respectiveActs. Rice and Paddy are treated differently. It is true that the entries in question were brought on the statutes by Notification issued by the respective Governments, as authorised under the respective Acts. But the Acts authorised the Governments in question to either include or delete items in Schedules C and D of those Acts and it further provided that once an inclusion or deletion was made, it became a part of the law. The fact that these Acts make distinction between rice and paddy is a circumstances of great significance. Those Acts proceed on the basis that paddy is something different from rice for the purpose of