Judgment

VENKATARAMIAH, J.:- The question which arises for consideration in these appeals by certificate is whether the respondents (hereinafter referred to as the assessees) are liable to pay purchase tax under Section 6 (i) of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act) on the turnover consisting of the price paid by them for purchasing paddy for the purpose of converting it into rice, for sale, in their respective rice mills.

2. The assessees are owners of rice mills in the State of Karnataka and are registered dealers under the Act. In the course of their business, they purchase paddy and after milling paddy sell the resultant rice. During the assessment years, the assessees purchased paddy from agriculturists who were not liable to pay sales tax. The assessing authority under the Act levied on the assessee in each of these cases purchase tax on the purchase turnover of paddy under Section 6 (i) of the Act. The appeals filed by the assessees against the said assessments were dismissed by the appellate authority. The Karnataka Sales Tax Appellate Tribunal allowed the appeals filed by the assessees against the orders of the appellate authority except the one filed by the assessee who is the respondent in Civil Appeal No. 1805 of 1975 holding that the conversion of paddy into rice did not involve any manufacturing process and that the purchase turnovers of paddy in those cases were not liable to tax under Section 6 (i) of the Act. In the case of the assessee who is the respondent in Civil Appeal No. 1805 of 1975, the Tribunal held that the turnover was liable to be taxed as he had manufactured boiled rice out of the paddy purchased by him. Aggrieved by the decisions of the Tribunal, the State Government filed revision petitions before the High Court under Section 23 (1) of the Act in the first four cases and the assessee filed a revision petition in the last case. The High Court after holding that the turnovers in question were not liable to tax under Section 6 (i) of the Act dismissed the petitions filed by the State Government and allowed the petition of the assessee who is the respondent in Civil Appeal No. 1805 of 1975. Thereafter the High Court granted by a common order a certificate of fitness in all these cases to prefer appeals before this Court to the State Government. On the basis of the said certificate, these appeals have been filed by the State Government against the orders of the High Court. Since these appeals involve a common question of law, they are disposed of by this common judgment.

3. The relevant part of Section 6 of the Act reads :

"6. Levy of purchase tax under certain circumstances. - Subject to the provisions of sub-section (5) of Sec. 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under Section 5 is leviable on the sale price of such goods and,

(i) either consumes such goods in the manufacture of other goods for sale or otherwise or disposes of such goods in any manner other than by way of sale in the State, or

(ii) .....................................................

shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under Section 5."

4. The contention of the State Government before the High Court was and before us is that the sale price of paddy which is a taxable commodity having not been subjected to tax under Sec. 5, the assessees are liable to tax under Section 6 (i) of the Act as they had consumed it in the manufacture of rice which was a different commodity for sale. The assessees contention which was accepted by the High Court is that paddy and rice being the same it cannot be said that they had manufactured other goods out of paddy and hence Section 6 (i) is not attracted.

5. Paddy and rice have been held to be different commodities by this Court in Ganesh Trading Co., Karnal v. State of Haryana, (1973-32 STC