The Orissa High Court in the case M/s. Kamadhenu Cattle & Poultry Feed Unit versus The State of Odisha observed and has quashed the order wherein a 4% value-added tax (VAT) is being imposed on the wheat bran (chokad) as the same being not an industrial input.
The division bench comprising of Chief Justice S. Muralidhar and Justice M. S. Raman in the case observed that it was being necessary for the Department to show that there being a notification which is issued by the State Government wherein identifying ‘Chokad’ as an ‘industrial input’. The court stated that in the absence of such notification, no inference could have been drawn that the “chokad” being sold to NALCO was in fact an “industrial input’.
In the present case, the petitioner-dealer carries on business in cattle feed, poultry feed, salt, rice, and broken rice and which affects the purchases of both inside and outside the state of Odisha and as per the report of audit visit, the petitioner in the plea affected the sale of 8463.30 quintals of wheat bran worth Rs. 50,53,137 during 2005-06 to M/s. NALCO Ltd., Damanjodi. It has been claimed by the assessee the exception which is being referred to Entry ‘3’ of Schedule ‘A’ of the OVAT Act. An interference was being made by STO that since NALCO being an industrial organization, the “chokad” sold to it has been used as an industrial input, which being subject to 4% VAT with effect from 01.07.2005.
Therefore, the gross turnover and taxable turnover were being recomputed and the demand for the tax was raised along with a penalty under Section 42(5) of the OVAT Act. It has also been contended by the petitioner in the plea that there is no conditionality being attached to the exemption which is granted from VAT on the sale of ‘Chokad’. In the said case it has also been contended by the department that the very nature of the goods in Entry 3 reflecting the legislative intent of exempting them from VAT only where they are used “as such” and not as the “inputs” in the manufacture for some other commodity.
