1977 (7) TMI 106 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the turnover of the assessee was exempt from tax generally under the U.P. Sales Tax Act and consequently for inter-State sales under section 8(2A) of the Central Sales Tax Act.
2. Whether the amendment of the notification by U.P. Act No. 38 of 1975 narrowed the exemption to intra-State sales alone.

Detailed Analysis:

Issue 1: General Exemption from Tax under U.P. Sales Tax Act and Inter-State Sales under Central Sales Tax Act
The primary issue was whether the turnover of the assessee, a manufacturer of tin containers, was exempt from tax generally under the U.P. Sales Tax Act and if this exemption extended to inter-State sales under section 8(2A) of the Central Sales Tax Act. The relevant notifications were:
- Notification No. ST-2409/X-902(15)-68 dated 28th May, 1969: Exempted the turnover of sanitary cans manufactured by the assessee from sales tax for three years.
- Amended by Notification No. ST-6996/X-902(15)-68 dated 27th August, 1969: Expanded the exemption to include "open top sanitary cans and lithographed/plain general line tin containers."

The court examined whether this exemption was general or conditional. The Judge (Revisions), Sales Tax, Meerut, had ruled that the exemption was only for intra-State sales due to the amendment by U.P. Act No. 38 of 1975. However, the court disagreed, stating that the exemption granted by the notifications was indeed general and not limited by any specific conditions or circumstances. This general exemption under the U.P. Sales Tax Act meant that the inter-State sales of tin containers by the assessee were also exempt under section 8(2A) of the Central Sales Tax Act.

Issue 2: Impact of the Amendment by U.P. Act No. 38 of 1975
The second issue was whether the amendment to the notification by U.P. Act No. 38 of 1975, which substituted the words "the turnover in respect of" with "the turnover of sales made within the State by the manufacturing dealer in respect of," narrowed the exemption to intra-State sales only. The court held that this amendment did not alter the general nature of the exemption. The exemption was still considered general under the U.P. Sales Tax Act, and thus, the inter-State sales of the assessee's tin containers remained exempt from Central sales tax.

Legal Precedents and Interpretations
The court referred to several precedents to support its judgment:
- Hindustan Safety Glass Works (P.) Ltd. v. State of U.P.: Established that a notification exempting turnover for a period did not constitute a conditional exemption.
- Indian Aluminium Cables Ltd. v. State of Haryana: Differentiated between general exemptions and exemptions under specified conditions or circumstances.
- Commissioner of Sales Tax v. Kapoor Dori Niwar and Co.: Affirmed that exemptions granted universally to registered dealers were considered general exemptions.

The court concluded that the exemption granted to the assessee was general and not conditional. Therefore, the inter-State sales of tin containers by the assessee were exempt from Central sales tax under section 8(2A) of the Central Sales Tax Act.

Conclusion
1. The turnover of the assessee was exempt generally from State sales tax under the U.P. Sales Tax Act, and consequently, its inter-State sales were exempt from Central sales tax under section 8(2A) of the Central Sales Tax Act.
2. The amendment by U.P. Act No. 38 of 1975 did not narrow the exemption to intra-State sales only.

The court directed the parties to bear their own costs and answered the reference accordingly.