The Division Bench of the Orissa High Court, while pointing out the error in the decision of the Tribunal on confirming the 4% tax on the sale of Wheat Bran or Chokad mentioned that according to the Odisha Value Added Tax Act, 2004, Chokad comes under Entry 3 and it is exempted from VAT irrespective of any condition.
Brief Facts
The Sales Tax Officer (STO), Koraput I Circle, Jeypore imposed a 4% tax on Wheat Bran (Chokad) as it was an industrial input in terms of Entry 74 of Schedule – B of Part-II of the Odisha Value Added Tax Act, 2004, particularly when Wheat Bran generally is exempted under Entry 3 of Schedule – A, the same order has been found to be justified by the Tribunal and this petition challenged the same.
The petitioner is a dealer carrying business in cattle feed, poultry feed, salt, rice, and broken rice and effects purchases both from inside and outside the State of Odisha. Pursuant to an audit visit report, according to which a sale of certain quintals of wheat bran was made to M/s. NALCO Ltd., Damanjodi and the Assessee had claimed exemption by referring to Entry ‘3’ of Schedule ‘A’ of the Odisha Value Added Tax Act,2004. The STO made an interference here that because NALCO was an industrial organisation, the goods sold to it has been used as industrial input and hence is subject to tax at 4%., accordingly the gross turnover and taxable turnover were recomputed and a demand of tax was raised along with penalty.
Observations of the Court
This Hon’ble Court noted that the petitioner dealer sold, Wheat Bran or Chokad to NALCO during the period in question and the petitioner had contended that such sale was exempted from VAT because it came in Entry 3 in Schedule ‘A’ of the Odisha Value Added Tax Act. The court further noted that this Entry was substituted and the list of goods included ‘ Chokad’, with effect from 1st July 2005. Further, the Conditions of exemptions have been left blank here for Chokad in the entry, which means that the sale is exempted from VAT without any conditions. Then the court compared this entry with other entries of Meat, fish, etc, and noted how they have certain conditions for them to be exempted from VAT.
Further, the court also pointed out that an entry in a taxation statute admits only strict interpretation and if the legislative intent was there to put some conditionality then it should have been expressly stated. And since, there is no conditionality as far as in Entry 3, the only conclusion that can be drawn is that irrespective of the purpose for which ‘Chokad’ is being purchased it is exempted from VAT. There hasn’t been any notification by the State Government stating that ‘Chokad’ is an industrial input and that is why the STO as well as the Joint Commissioner of Sales Tax (JCST) have errored in inferencing that the ‘Chokad’ sold to NALCO is naturally an industrial input and would be taxable at 4%.
Judgment of the Court
The Court concluded that the State Tax Officer (STO), the Joint Commissioner of Sales Tax (JCST), and the Tribunal have errored in treating the sale of ‘Chokad’ by the petitioner to NALCO as an industrial input attracting VAT at 4 %.
Case Title: M/s/ Kamadhenu Cattle & Poultry Feed Unit v. The State of Odisha
Coram: Chief Justice Dr. S. Muralidhar and Justice M.S. Raman
Case No.: STREV No.33 of 2014
Advocate for the Appellant:Mr. R.P. Kar, Advocate
Advocate for the Respondent:Mr. Sunil Mishra, ASC
Read Judgment @LatestLaws.com
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