STATE OF KARNATAKA Vs. SUBHAN SAB

JUDGEMENT

(1.) The respondents in these appeals are dealers registered under the Karnataka Sales Tax Act, 1957, and engaged in the manufacture of beaten rice and parched rice. They were enjoying the benefit of exemption upto 1981 as provided under 25-A of the Karnataka Sales Tax Rules (hereinafter referred to as the Rules) as covered by Entry 28 of V Schedule to the Karnataka Sales Tax Act. When they again applied for grant of recognition certificates, the Commissioner of Commercial Taxes issued notices proposing to refuse grant of recognition certificate. Some of the respondents filed their objections to the said notice issued to them. They explained the process of making beaten rice as follows:-That the paddy is cleaned and then soaked in water. Afterwards the soaked paddy is friend in Cast. Iron pans and this fried paddy is pressed into beaten rice in 'poha' machines run by electric power. They have stated that the intention of the said provision was to give benefit not only for hand pounding paddy but to all types of industries which manufacture beaten rice and parched rice and submitted that at all stages beaten rice is manufactured by hand except at the stage of pressing the paddy and only when the paddy is pressed to make beaten rice machines are used and at no other stage they use machines. However, the Commissioner was not impressed by this line of reasoning and he took the view that the object of exemption was only to encourage hand-pounding of paddy along with it the manufacture of beaten rice not by using machine run by electricity. He held that the expression of manufacture of "beaten rice and parched rice" was added to the "industry of hand pounding of paddy" only to encourage the manufacture of beaten rice and parched rice where only hand pounding is in practice. The respondents are not entitled to that benefit and refused to grant certificate of recognition as provided under Rule 25 of the Rules.

(2.) Aggrieved by that order, the respondents filed Writ Petitions before this Court. The learned Single Judge who heard the matter allowed the Writ Petitions. The State being aggrieved by the order of the learned Single Judge has filed these appeals.

(3.) Under Section 8 of the Karnataka Sales Tax Act read with V Schedule, certain goods are exempted from taxation under the Act. Item 28 of the V Schedule refers to the products of village industry which satisfy prescribed conditions and limitations when sold by a bona fide producer recognised by the Commissioner and Rule 25-A of the Rules provides, for the purpose of Item 28 of the V Schedule, conditions and also enumerates the types of industries in respect of which such exemption could be granted and a table is appended thereto. For the purpose of proper understanding of this aspect, the table is set out hereunder:Village IndustriesSI. No.