1977 (7) TMI 105 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the turnover of inter-State sales of foodgrains by the assessee is liable to Central sales tax.
2. Whether the assessee was justified in passing a point decided against him, leading to the whole appeal being decided in his favor.

Analysis:
The judgment pertains to an appeal where the assessee, a foodgrain supplier for the Central Government, contested the taxation of their turnover of inter-State sales of foodgrains. Initially, the Judge (Appeals) ruled in favor of the assessee, citing exemption under a notification issued under the U.P. Sales Tax Act. However, the Commissioner, Sales Tax, challenged this decision in revision, arguing that the turnover was indeed liable to Central sales tax. The Judge (Revisions) overturned the earlier decision, prompting the assessee to seek clarification from the High Court.

Regarding the first issue, the High Court referenced a prior Division Bench decision in Poysha Industrial Co. Ltd. v. Commissioner of Sales Tax, which established that a general exemption from sales tax, without specified conditions, does not fall under the exemption criteria of the Central Sales Tax Act. The court noted that the exemption granted to the assessee, covering sales of foodgrains by government departments, was a general exemption applicable to all departments without any time limit specified. Consequently, the assessee was deemed entitled to exemption from Central sales tax on their inter-State sales of foodgrains.

In light of the resolution of the first issue, the second question raised by the assessee became of academic nature and was deemed unnecessary to decide. The High Court ruled in favor of the assessee on the first issue, denying the department's claim for taxation on the turnover of inter-State sales. As a result, the second question was left unanswered, and the assessee was awarded costs amounting to Rs. 200. The reference was concluded accordingly, with the judgment favoring the assessee and upholding their entitlement to exemption from Central sales tax on the specified transactions.