Patna HC upholds Classification of Korai with Wheat Bran, Taxable at 4% [Read Order]

The Patna High Court upheld the classification of Korai with Wheat Bran and held that it is taxable at 4%.The counsel for the appellant argued that the goods dealt with by him, that is ‘Korai’ is exempted as cattle feed and hence, there can be no levy of tax on the exempted goods. Further, it is contended that the first Appellate Authority erred in applying the tax of ‘Korai’ at the rate of 4% equating the goods dealt with by the assessee to Wheat Bran. It was also argued that the dictum in Hotel Balaji does not apply to the earlier year.

The Government Advocate, however, pointed out that Hotel Balaji upheld the legislative competence insofar as purchase tax is concerned and the same applies across the board from the date of inception of the levy. As far as the tax levied on ‘Korai’ is concerned, it is a by-product obtained from the processing of pulses and is an unspecified goods taxable at 8%. The equation to Wheat Bran was done by the first Appellate Authority, by which a lesser tax levy of 4% was imposed. It is pointed out that there is nothing on facts to indicate that the goods sold by the assessee was cattle feed.

A Division Bench comprising Chief Justice K. Vinod Chandran and Justice Rajiv Roy observed that “There is nothing to show that ‘Korai’ was sold as a cattle feed. As to ‘Korai’ being not equivalent to Wheat Bran, since it is a processed item which is obtained as a byproduct it is taxable as an unspecified residuary item at the rate of 8%.”

“The Appellate Authority equated it with Wheat Bran and taxed it at 4%, against which no appeal is filed by the State. We find absolutely no reason to interfere with the levy of tax on the sale of ‘Korai’, which was not shown to be sold as cattle feed. In the context of the appellate authority’s order modifying the rate of tax to 4% having not been challenged by the State, there is no reason to upset the said modification” the Court noted.

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