Case: Commissioner of Trade Tax, U.P Vs. S.S. Ayodhya Distillery &amp; Others

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 determined by the State in exercise of its power conferred on it under Section 3A of the Act. Section 3D of the Act which is material for our purpose, reads as3-D - Levy of trade tax on purchase of sales of certain goods--(1) Except as provided in sub-section (2), there shall be levied and paid, for each assessment year or part thereof, a tax on the turnover, to be determined in the prescribed manner--(a) of first purchases of opium, at such rate not exceeding thirty-five percent ;(b) of first purchases of such other goods at such rate not exceeding--(i) the maximum rate for the time being specified in Section 15 of the Central Sales Tax Act, 1956 in respect of goods declared by Section 14 of the Act to be of special importance in inter-State trade or commerce, and(ii) twenty percent, in respect of other goods.and with effect from such date, as the State Government may, by notification in the Gazette, specify in relation to purchases made within Uttar Pradesh by a dealer (whether on his own account or on account of any one else), or through a dealer acting as a purchasing agent.Indisputably, the State in exercise of its power conferred upon it under clause (b) of sub-section (1) of Section 3D of the Act, had been issuing notifications from time to time specifying the rate of tax and the point thereof. One of such notifications was issued on 7.9.1981, Item No. 18 thereof reads asRice polish, rice bran and ricereason of a notification dated 5.6.1985, inter alia, the said item was amended to the following effect.Rice polish, rice bran and ricehusk, but excluding de-oiled rice bran, de-oiled rice polish or de-oiled ricesupersession of the earlier notifications, however, the State yet again amended the said item with effect from 6.6.1996 by a notification of the said date, which reads as underRice polish, rice bran, rice husk and paddy husk but excluding de-oiled rice bran,- de-oiled rice polish, de-oiled rice husk and de-oiled paddy husk. @ 4% at firston or about 15.1.2002, the said entry was given a new look and in stead and place of entry No.18, new entry being entry No.15 was inserted, pursuant whereto and in furtherance whereof the rate of interest was increased from four per cent to eight per cent. The said entry reads as underRice polish, Rice bran, Rice husk and paddy husk but excluding deoiled rice bran, deoiled rice polish, deoiled rice husk and deoiled paddyan amendment was carried out in the description of goods as also the rate of tax by a notification issued on 30th September, 2000.

Court's reasoning:
to the Government of Uttar Pradesh, 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 riceare two other aspects of the matter which cannot be lost sight of. 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. There are many other fruits which have two layers; for example Pista, Cashew Nut and Ground Nut etc. One may only remove the outer cover and take the fruit or grain with the inner cover but one may like to take out the inner cover also which will depend upon the taste of the person concerned. Some persons may like to take ‘brown rice but some other may like to take ‘white rice.