Laxmi Rice Mills and Others vs State of Haryana and Others

Gokal Chand Mital J.—In this bunch of writ petitions the question involved is whether paddy and rice are one and the same commodity or two different commodities for the purposes of State and Central Sales Tax Act. Our answer is that they are two different commodities.

The Petitioners are the last purchasers of paddy. They husk paddy and produce rice. The rice produced by them is sold either within the State or in inter state sale or exported out of country.

It is not disputed that the rice which is exported out of the country is not leviable to tax. On this very analogy the claim of the Petitioner is that the paddy out of which such rice is produced is not liable to purchase tax. We have to consider this point alone in these writ petitions, which have been filed before the Assessing Authority proceeded to frame the assessment. The writ petitions were filed either on the receipt of notices from the Assessing Authority or without receipt of any notice. In view of the interim orders passed by this Court the assessments could not be framed.

It has been settled by the highest Court in Ganesh Trading Company Karnal v. State of Haryana 32 (1973) S.T.C. 623. and Babu Ram Jagdish Kumar and Company v. The State of Punjab (1979) 44 S.T.C. 159. that paddy and rice are two different commodities in the ordinary parlance and on dehusking change in the commodity of goods is brought out and that if paddy and rice are taxed it cannot be said that there is double taxation.

Similarly, in Ben Corn Nilgiri Plantations Company v. The Sales Tax Officer, Special Circle, Ernakylam (1964) 15 S.T.C. 753. and Sterling Goods v. The State of Karnataka (1986) 63 S.T.C. 239 the highest Court has held that processing changes the identity of goods. All processing may not change the identity but paddy and rice are two marketable commodities and rice cannot be called paddy and vice versa.

Without dilating any further, in view of the aforesaid decisions we hold that paddy and rice are two different marketable commodities and if there is no tax on the export of rice it cannot be said that paddy out of which rice was produced was not liable to purchase tax.

For the reasons recorded above, Civil Writ Petition Nos. 2669, 3017 to 3019, 3111, 3112, 3371, 3372, 3760, 4283, 4409, 4479, 4480, 5207, 5553, 5680, 5766, 7577, 10027 to 10033, 12352, 12559, lb990 and 16991 or 1989, are dismissed with no order as to costs. While the Assessing Authority will proceed to make assessment in accordance with law, it will be open to the Petitioners to raise all other points before the Assessing Authority and in appeals therefrom.