2002 (8) TMI 806 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the exemption claimed by the petitioner under Entry 81 of Part B of the Third Schedule to the TNGST Act, 1959, read with Section 8(2-A) of the CST Act, 1956, is general or conditional.
2. Whether the petitioner is entitled to the exemption from sales tax for the assessment year 1996-97.
3. Interpretation of Section 8(2-A) of the CST Act, 1956, regarding the nature of the exemption.

Detailed Analysis:

1. Nature of Exemption under Entry 81 of the TNGST Act, 1959:
The petitioner, a dealer in pulses and grams, claimed exemption on the turnover under Entry 81 of Part B of the Third Schedule to the TNGST Act, 1959, read with Section 8(2-A) of the CST Act, 1956. The first respondent disallowed this claim, stating that the exemption was conditional and not general. This decision was upheld by the Appellate Assistant Commissioner and the Tamil Nadu Sales Tax Appellate Tribunal. The petitioner argued that the exemption should be considered general, citing the interpretation of "otherwise than" in Section 8(2-A) and referencing judgments that distinguish between general and conditional exemptions.

2. Entitlement to Exemption from Sales Tax:
The petitioner contended that their turnover of Rs. 16,01,210/- for the assessment year 1996-97 should be exempt from sales tax. The Assessing Officer rejected this claim, stating that there was no specific exemption issued by the Government under Section 8(5) of the CST Act for the relevant period. The petitioner's subsequent appeals were dismissed, confirming that the exemption was conditional and not applicable to the petitioner's case.

3. Interpretation of Section 8(2-A) of the CST Act, 1956:
The petitioner argued that Section 8(2-A) provides for a general exemption from tax if the goods are exempt under the state law. The petitioner cited two judgments to support their case:
- Preston Industries vs. Commercial Tax Officer: This judgment emphasized that general exemption means goods should be totally exempted from tax, and if the exemption is conditional, it does not qualify as a general exemption.
- Commissioner of Sales Tax, Jammu and Kashmir vs. Pine Chemicals Limited: This judgment clarified that exemptions under specified conditions or circumstances are not general exemptions. For an exemption to be considered general, it must apply to the goods themselves, not the conditions of their manufacture or sale.

Court's Findings:
The court analyzed the facts and the legal provisions, including Entry 81 of the TNGST Act and Section 8(2-A) of the CST Act. The court noted that the exemption under Entry 81 is conditional, requiring the dealer's turnover to not exceed Rs. 100 Crores in a year. The court agreed with the respondents that the exemption was not general but conditional, as it depended on specific criteria being met.

Conclusion:
The court concluded that the petitioner did not fulfill the conditions for a general exemption under Section 8(2-A) of the CST Act. The exemption claimed by the petitioner was conditional and not applicable to their case. The court dismissed the writ petition, stating that the petitioner failed to establish any legal right to the exemption or any arbitrary rejection of their claim by the authorities.

Judgment:
- The writ petition is dismissed.
- No order as to costs.

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