Vikas Poha Mill vs Divisional Deputy Commissioner of Commercial Tax and Others

Satish K. Agnihotri, J.—WP Nos. 4328, 4330, 4333 & 4334 of 1999 involve common question of law as to whether Poha (Parched Rice) and Murmura (Puffed Rice) are entitled to exemption from payment of Sales Tax under the Madhya Pradesh General Sales Tax Act, 1959 (for short "the State Act") and under the Central Sales Tax Act, 1956 (for short "the Central Act") under the notification No. A-5-I/94/ST-V (55) dated 30-3-1994. The assessment period involved in this batch of matters are of 1-4-1994 to 31-3-1995. The facts, in brief, as projected by the petitioners, are that the petitioners are the manufacturers of Poha & Murmura. The petitioners claimed exemption under the above-stated notification. The Additional Commissioner, Sales Tax, rejected the claim of the petitioners and directed to deposit the tax at the rate fixed for Poha & Murmura holding that Poha & Murmura are not cereals, as there is a separate entry. Poha & Murmura are separately exigible to tax in Entry 23 Part IV of Schedule II of the State Act. The assessment order was affirmed by the Divisional Deputy Commissioner, Salex Tax. Thus, these petitions.

Shri Dubey, learned senior counsel appearing with Shri Tiwari, learned counsel for the petitioners, would submit that the notification should be construed de hors the entry made in the State Act. Even if the rice as well as Poha & Murmura are exigible to taxes separately, Poha & Murmura are entitled to exemption from taxation under the notification. Shri Dubey relies on a decision of the High Court of Madhya Pradesh, on this very issue, rendered in Shri Kishan Satyanarain Vs. State of Madhya Pradesh and Others,

On the other hand, Shri Bajaj, learned Govt. Advocate appearing for the State, would submit that after the decision rendered in Shri Kishan Satyanarain (supra) on March 11, 1983 the schedule has been amended. Thus, the aforesaid decision of the High Court of Madhya Pradesh in Shri Kishan Satyanarain (supra) is not applicable to the facts of the present cases.

For the sake of convenience, the relevant entries & notification are quoted below:

NOTIFICATION

A-5-1/94/ST-V (55)

Bhopal dated 30-3-94

In exercise of the powers conferred by section 12 of the Madhya Pradesh General Sales Tax Act, 1958, (No. 2 of 1959), the State Government hereby exempts from Ist April 1994 the class of goods specified in column (2) of Schedule below from payment of whole of tax under the said Act.

SCHEDULE

Clause (i) of Section 14 of the Central Act reads as under:-

Certain goods to be of special importance in inter-State trade or commerce-It is hereby declared that the following goods are of special importance in inter-State trade or commerce:-

(i) cereals, that is to say-

i. Paddy (Oryza sativa L)

ii. rice (Oryza sativa L)

iii. wheat (Triticum vulgare, T. compactum, T. sphaerococcum, T. durum, T. aestivum L., T. dicoccum)

iv. Jowar or milo (sorghum vulgare pers)

v. bajra (Pennisetum typhoideum L.);

vi. maize (Zea mays L.)

vii. ragi (Eleusine coracana Gaertn.);

viii. Kodon (Paspalum scrobiculatum L.);

ix. Kutki (Panicum miliare L.)

x. barley (Hordeum vulgare L.)

Entry for tax in respect of Poha and Murmura i.e. Entry 23, Part IV Schedule II of the State Act reads as under:-

Parched gram (Bhume Chane), Murmura, Poha and Lai ........ 3%

By amendment, separate entry has been notified in respect of Poha & Murmura w.e.f. 1-4-1987. Paddy was also excluded from Entry I Part V Schedule II of the State Act w.e.f. 1-4-1994. Notification was issued on 30-3-1994 wherein it was provided that cereals as specified in clause (i) of Section 14 of the Central Act would be exempted from payment of whole of tax. ''Cereal'' has been defined in Section 14 of the Central Act.

The question was considered by the Division Bench of the High Court of Madhya Pradesh in Shri Kishan Satyanarain (supra) wherein it was observed that the word ''rice'' includes both Parched Rice (Poha) and Puffed Rice (Murmura). (Also see: Alladi Venkateswarlu and Others Vs. Govt. of Andhra Pradesh and Another,

In Padinjarekara Agencies Limited Vs. State of Kerala, the Supreme Court observed that exigibility to tax is a concept which is different from the concept of exemption/concession. One cannot confuse the terms used in the notification by comparing the language of the notification with the language of the taxing statute.

The meaning of word ''cereal'' has been given in Webster''s Encyclopedic unabridged Dictionary of the English Language, which reads as under:

''Cereal''.-n. 1. any gramineous plant yielding an edible farinaceous grain, as wheat, rye, oats, rice or corn. 2. The grain itself. 3. Some edible preparation of it, esp. in a breakfast food-adj. 4. of or pertaining to grain or the plants producing it.

In the cases on hand, the State has placed Poha & Murmura in the separate entry for the purpose of exigibility to taxation. However, in the exemption notification the word includes, inter alia, ''rice'' as enumerated from (i) to (x), as aforestated. All the terms used are the basic product, not other forms of the product. Paddy, rice, wheat, jowar or milo, bajra, maize, ragi, kodon, kutki & barley are the basic products. As observed hereinabove, rice includes beaten and puffed rice both. Thus, since the exemption is granted to all the goods, as specified in the State Act, the State cannot get any advantage from the fact that there has been a separate entry for exigibility of tax in respect of Poha & Murmura. Accordingly, Poha & Murmura are one form of rice and entitled to exemption under the above-stated notification.

The exemption has been granted to cereals, which are enumerated after, ''that is to say''. Cereals used in Section 14(i) of the Central Act clearly means ''rice'' and other like products of rice like Poha & Murmura. Thus, rice including Poha & Murmura are included within the definition of ''cereals''. The notification dated 30-3-1994 is not issued on the basis of entries made in the State Act for the purpose of exigibility to tax and, as such, Poha & Murmura are covered under the notification dated 30-3-1994 for the purpose of exemption.

In view of the above, the matter is referred back to the Assessing Officer to make assessment afresh in the light of above-stated law. As a sequel, all the writ petitions are allowed to the extent indicated above. No order as to costs.