1982 (12) TMI 177 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of item 68 of the Second Schedule to the Goa, Daman and Diu Sales Tax Act for exemption from sales tax.
2. Exigibility of sales tax on goods sold by one registered dealer to another registered dealer under section 8 of the Sales Tax Act.

Detailed Analysis:

Issue 1: Interpretation of item 68 for exemption from sales tax
The case involved a concern manufacturing Indian-made foreign liquor claiming exemption from sales tax for specific periods. The concern shifted locations and registered under the Sales Tax Act. The Sales Tax Officer granted partial exemption but denied further exemption. The Sales Tax Tribunal ruled that the exemption period expired, making subsequent sales taxable. The High Court analyzed item 68 of the Second Schedule, stating that the exemption applies to goods manufactured by a small-scale industry for five years from the date of the first sale post-registration under the Sales Tax Act. The Court emphasized the clear and unambiguous wording of item 68, granting exemption from the date of the first sale after registration as a small-scale industry.

Issue 2: Exigibility of sales tax on sales between registered dealers
The Sales Tax Officer had rejected the contention that sales between registered dealers were exempt under section 8 of the Act. The Sales Tax Tribunal upheld this decision, stating that sales by the concerned manufacturer to another registered dealer were not exempt from sales tax. The High Court examined section 8, which specifies the point at which sales are taxed. A notification under the proviso to section 8 indicated that sales of Indian-made foreign liquor were taxable at the first point only, regardless of the buyer being a registered dealer. Therefore, sales between the concerned manufacturer and another registered dealer were not exempt from sales tax.

In conclusion, the High Court affirmed that the concern was entitled to exemption under item 68 from the date of its first sale as a small-scale industry. Additionally, the Court ruled that sales between registered dealers were exigible to tax based on the notification specifying taxation at the first point for certain goods. The respondents were directed to pay the costs of the references.