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2000 (1) TMI 811 - SC - VAT and Sales TaxWhether the dealer is eligible to avail of the exemption under Separate Revenue Department Notification No. A-3-41-81 (31)-ST-V, dated June 29, 1982 in respect of the inter-State sale of goods manufactured by him, by virtue of his holding an eligibility certificate in fulfilment of one of the conditions laid down in the said notification for eligibility of the said exemption, although he was not holding a registration certificate under sub-section (1) of section 7 of the Central Sales Tax Act, 1956? Held that - Appeal dismissed. The question referred for the opinion of the High Court is answered in favour of the assessee. The assessee has rightly pointed out that the certificate of registration valid from November 12, 1981, until cancelled was secured by the respondent though on the date of registration it was not liable to pay tax under the Central Act. Liability to pay tax arose on commencement of production and business on January 10, 1984, whereafter exemption from payment of sales tax was claimed under the notification.
Issues:
1. Interpretation of a notification granting exemption from tax under the Central Sales Tax Act, 1956. 2. Requirement of registration under sub-section (1) or (2) of section 7 of the Central Sales Tax Act for availing exemption. 3. Validity and conclusiveness of eligibility certificate issued by the Directorate of Industries for exemption eligibility. Issue 1: Interpretation of Exemption Notification The Supreme Court analyzed a notification issued by the Government of Madhya Pradesh granting exemption from tax under the Central Sales Tax Act, 1956. The notification specified conditions for exemption for certain dealers who had set up industry in specified districts of Madhya Pradesh. The Court examined the language of the notification to determine the eligibility criteria for exemption, focusing on the requirement of registration under the State and Central Acts. Issue 2: Registration Requirement for Exemption The case involved a respondent, a new industrial unit, engaged in the manufacture and sale of paper in a specified district. The dispute arose regarding the type of registration required under the Central Sales Tax Act for availing the exemption. The Assistant Commissioner contended that registration under sub-section (1) of section 7 was necessary, while the respondent was registered under sub-section (2). The Board of Revenue reversed this decision, holding that the respondent was entitled to exemption based on the eligibility certificate issued by the Directorate of Industries. Issue 3: Validity of Eligibility Certificate The High Court's opinion favored the respondent, emphasizing the conclusiveness of the eligibility certificate issued by the Directorate of Industries. The Court deliberated on the significance of the registration under sub-section (1) or (2) of section 7 of the Central Sales Tax Act. The appellant argued that only registration under sub-section (1) was relevant for exemption, but the Court disagreed, stating that registration under sub-section (2) also fulfilled the notification's requirements. The Court upheld the respondent's entitlement to exemption based on the registration and eligibility certificate, dismissing the appeal filed by the Revenue. In conclusion, the Supreme Court dismissed the appeal, affirming the respondent's eligibility for exemption from tax under the notification, despite being registered under sub-section (2) of section 7 of the Central Sales Tax Act. The Court emphasized the clarity of the notification's language and upheld the validity of the eligibility certificate issued by the Directorate of Industries as conclusive evidence of eligibility for the exemption.
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