India: State Can Levy Tax On Paddy Purchased For Export Of Rice

GlobalTarget- Complete Job site. Post your resume or Post rice industry Jobs | El centro completo del empleo Postee su curriculum

In a judgement that could have a negative bearing on competitive pricing of rice for exports, the Supreme Court has ruled that a state government has the power to levy tax on paddy purchased by a miller for sale of rice to the exporter.

Upholding a Punjab and Haryana High Court verdict, a Bench comprising Justice Ruma Pal and Justice S H Kapadia said the benefit of non-levy of purchase tax under Section 15(ca) of Central Sales tax Act was available to miller-cum-exporters alone who purchase the paddy and themselves export the rice obtained from it.

This ruling came on a petition filed by Monga Rice Mills which challenged the decision of the Haryana government to levy tax on the purchase of paddy which it had converted into rice for sale to exporters.

In the assessment proceedings, it claimed that in view of the Article 286 of the Constitution and Section 5(3) of the Central Act, the state was not competent to levy purchase tax on paddy purchased by it for sale of rice to the exporters.

On this being rejected by the state, the miller moved the High Court, which said purchase of paddy by it for the sale of rice to the exporter was exigible to the levy of purchase tax under the Haryana General Sales Tax Act.

Press Trust Of India