1996 (3) TMI 419 - SC - VAT and Sales Tax

Gazette notification dated January 9, 1970, issued by the Government of Uttar Pradesh granting exemption from payment of sales tax to various newly set up industrial undertaking challenged Held that - Appeal allowed. The purpose behind the amendment of section 8(2A) was to make the existing provisions clearer. Thus the object was not to bring about any change in the existing law but to set it out in clearer words. For all these reasons it is unable to uphold that the law laid down in the case of Commissioner of Sales Tax v. Pine Chemicals Ltd. 1994 (10) TMI 262 - SUPREME COURT OF INDIA will not apply to a case governed by section 8(2A) before its amendment on April 1, 1973.

Summary

Issues Involved:
1. Interpretation of Section 8(2A) of the Central Sales Tax Act before and after its amendment.
2. Applicability of exemption notifications under the U.P. Sales Tax Act to the Central Sales Tax Act.
3. General vs. specific exemptions under sales tax laws.

Issue-wise Detailed Analysis:

1. Interpretation of Section 8(2A) of the Central Sales Tax Act before and after its amendment:
The case revolves around the interpretation of Section 8(2A) of the Central Sales Tax Act, both before and after its amendment by Act No. 61 of 1972, effective from April 1, 1973. The respondent argued that under the old Act, the exemption was in respect of a dealer, whereas the amended Act provided for exemption in respect of goods. The Court, however, concluded that even under the old Act, the exemption was granted to goods generally and not to specific dealers or under specific conditions. The explanation to the old sub-section (2A) clarified that exemptions granted under specified circumstances or conditions would not be considered as general exemptions.

2. Applicability of exemption notifications under the U.P. Sales Tax Act to the Central Sales Tax Act:
The notification issued by the Government of Uttar Pradesh on January 9, 1970, granted a three-year exemption from sales tax to specified newly set up industrial undertakings. The respondent claimed exemption from the Central Sales Tax Act under Section 8(2A) based on this notification. The Court referred to the case of Commissioner of Sales Tax v. Pine Chemicals Ltd., which held that exemptions not of a general nature do not qualify for benefits under Section 8(2A). Since the U.P. notification was specific to certain industrial units and not a general exemption for all goods, the Court held that the respondent was not entitled to the exemption under the Central Sales Tax Act.

3. General vs. specific exemptions under sales tax laws:
The Court examined whether the exemption granted by the U.P. notification could be considered a general exemption. It was determined that the exemption was specific to certain goods produced by specified companies for a limited period. This specificity meant that the exemption was not of a general nature. The Court emphasized that general exemptions apply to all goods or a class of goods under the State sales tax law, whereas specific exemptions are limited to particular circumstances or conditions.

The Court also referred to the case of Indian Aluminium Cables Ltd. v. State of Haryana, which reinforced that exemptions granted under specified circumstances or conditions do not qualify as general exemptions under Section 8(2A) of the Central Sales Tax Act. The Court concluded that the exemption in the instant case was not generally applicable to all industries or similar goods in Uttar Pradesh, thereby disqualifying it from being considered a general exemption.

Conclusion:
The Court allowed the appeal, ruling that the respondent was not entitled to the benefit of Section 8(2A) of the Central Sales Tax Act based on the specific exemption granted by the U.P. notification. The judgment clarified that exemptions must be general in nature to qualify under Section 8(2A), both before and after its amendment. The Court also dismissed related civil appeals in view of this judgment, with no order as to costs.