I am a first year PhD student. I asked my advisor if we could send a paper to a leading conference being held next year. This question was presented a couple of times (its time for panel A , then again for Panel B). When I asked him the first time, he did show a bit of interest, but didn;t pursue it. I asked again for Panel B and he was irritated. And told me that it was not a good idea. So I took his advice. During my year end proposal submission, he blindsided me. He said my proposal didn't have sufficient merit and rejected it outright. The year end proposal submission is nothing more than a mere formality, but he claims it is. To top it all, I will not receive a stipend from my school till I clear this mark. He also said that I should have focused on the proposal , instead of thinking about conferences. But during the semester, not once did he ask about my proposal. I am utterly demotivated. I thought showing interest, wanting to present are good, but apparently they are not. Should I keep quiet? Drop the course/advisor?Any suggestion?

This might be subject specific but in my subject, it would be unusual for a first year student to present at anything other than a postgrad specific conference, simply because at that stage you are lacking meaningful results and often are still struggling to come to grips with the state of the literature. I have seen enough embarassingly bad presentations by early stage PhD students now to understand why this is the case. Better to mess up in front of your peers than in front of people you need to impress...
The end of year proposal (or 9 months in our case) is also not a formality in my experience, but something that gets you kicked out if it's not good enough. It is really not something to mess around with. Is it possible that your supervisor has a point about your priorities and that this is something you just have to learn from? It sounds like your choice is simple though - if you want to continue a funded PhD then you have to put the necessary work in on the proposal, if you're not prepared to do that then you can just walk away but I doubt you'll find any advisor willing to let you skimp on the formal PhD proposal process.

I have to say I agree with bewildered here. If your stipend is witheld until you have successfully completed the year end proposal, then this implies that it is much more important than a mere 'formality'. In my university, the 1st year report is vital, as if you fail to produce work of a suitably high standard, you will get kicked off the PhD.
I have been to many national/international conferences, and I have never seen a first year student present work. It is rare for enough work to have been produced in the first year to justify a presentation. My first presentation was a poster after about 18 months. Is it possible that you just don't have enough data yet, and so your supervisor is discouraging you as he doesn't think the paper will be accepted? I am sure he has your best interests at heart, as if he thought your work was ready to present he would want you to do so, as it would reflect well on him.
There is nothing wrong with showing enthusiasm and initiative; however, sometimes you also have to believe what you are being told and get your priorities straight. I'm sure your supervisor is only trying to help you, so if he says forget about presentations and focus on the proposal, then that is what I would do.