The Orissa high court has held that sale of ‘chokad’ (wheat bran) irrespective of the purpose for which it is purchased by a buyer, is exempt from value added tax (VAT). The ruling came recently in a dealer’s case in which tax was imposed at 4% for chokad supplied to Nalco by treating it as an industrial input under the Odisha Value Added Tax Act, 2004.
The two-judge bench of Chief Justice S Muralidhar and Justice M S Raman said if the law intended that there should be some conditionality attached to granting exemption from VAT on the sale of chokad, then it should have been expressly stated in the Act.
“As no such conditionality is laid out in the statute, the only conclusion that can be drawn is that sales of ‘chokad’ irrespective of the purpose for which such ‘chokad’ has been purchased by the buyer, would be exempt from VAT,” the bench ruled.
The bench said in order to make the sale of chokad to Nalco to be taxed at 4%, it was necessary for the department to show that there was a notification issued by the state government identifying it as an ‘industrial input’. “In the absence of such notification, no inference could have been drawn that ‘chokad’ sold to Nalco was in fact an ‘industrial input’.
The court is, therefore, satisfied that the sales tax officer, the joint commissioner, sales tax, and the Sales Tax Tribunal erred in treating the sale of ‘chokad’ by the petitioner to Nalco as an ‘industrial input’ attracting VAT at 4%,” the bench observed.
Source : THE TIMES OF INDIA