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TMI Blog1993 (3) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgment of the Court was delivered by B.P. JEEVAN REDDY, J.-These appeals arise from a common judgment of the Kerala High Court in a batch of three tax revision cases. The question relates to the interpretation of section 8(2-A) of the Central Sales Tax Act, 1956. In exercise of the powers conferred upon it by section 10 of the Kerala General Sales Tax Act, the State of Kerala issued a Notification S.R.O. No. 415 of 1971 providing for "an exemption in respect of the tax payable under the said Act in regard to the turnover of the sales of newsprint by the newsprint plant in the State for the period of two years from the date of starting production of the newsprint by the said plant". The appellant, Hindustan Paper Corporation Ltd., entered into an agreement with the Government of Kerala in the year 1974 reiterating the said exemption. The relevant portion of the agreement reads thus: "The Government of Kerala, with a view to help the project to tide over the difficulties in the initial stages and to establish itself, agree to exempt the turnover relating to the sale of the products by the corporation from the payment of sales tax for a period of two years from the date of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at which the Central sales tax is chargeable where the goods are sold to persons and authorities mentioned therein while sub-section (2) prescribes the rate in cases other than those falling under sub-section (1). Sub-section (2-A) of section 8, which is material for our purpose reads thus: "(2-A) Notwithstanding anything contained in sub-section (1-A) of section 6 or in sub-section (1) or clause (b) of sub-section (2) of this section, the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate. Explanation: For the purposes of this sub-section a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rally". The learned counsel for the appellant relies upon the decision of this Court in Pine Chemicals Ltd. v. Assessing Authority [1992] 85 STC 432; [1992] 2 SCC 683, a decision rendered by S. Ranganathan, V. Ramaswami and N.D. Ojha, JJ. According to him, the said decision is conclusive on the question. The counsel for the State of Kerala, on the other hand, seeks to distinguish the said decision. According to him, the said decision does not consider the precise question and aspect which really arise in these appeals. The learned counsel for the State of Kerala, Sri G. Vishwanatha Iyer, puts his case thus: if one is asked whether the exemption granted under the aforesaid notification is a general exemption, his obvious answer would be, no. It is not an exemption which operates generally but an exemption limited to two years from the date of commencement of the production of newsprint in the factory. Similarly, if a person is asked whether newsprint is exempt generally from the State sales tax in Kerala, none would answer in the affirmative. He would say that the sale of newsprint in Kerala is exempt only in certain circumstances or subject only to a condition, viz., that that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (2-A) of section 8 of the principal Act. The new sub-section seeks to bring out more clearly that an exemption or lower rate of levy under the local sales tax law of the appropriate State would be available in respect of an inter-State sale of goods only if such exemption or lower levy is available generally with reference to such goods or such class of goods under the local sales tax law." According to Sri Iyer the said Statement of Objects and Reasons puts the meaning, purpose and object of the sub-section beyond any doubt. On the other hand, Sri A.S. Nambiar, learned counsel for the appellant-corporation submits, adopting the reasoning in Pine Chemicals [1992] 85 STC 432 (SC); [1992] 2 SCC 683 that the circumstances or conditions contemplated by the Explanation to sub-section must be the circumstances and conditions attaching to the sale and not to the dealer. The exemption notification merely serves to identify the dealer and the goods entitled to exemption but it does not lay down any circumstances or conditions attaching to the sale of goods (newsprint). Sri Nambiar says that once the goods are identified, viz., that it is a newsprint manufactured by a factory within tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate sale or purchase of a commodity shall not be deemed as exempt from State tax generally if the exemption is given only (1) in specified circumstances or under specified conditions or (2) the tax is leviable on the sale or purchase of such goods at specified stages or (3) otherwise than with reference to the turnover of the goods. These conditions or limitations are therefore with reference to the transaction of sale or purchase. The main clause deals with the turnover of 'a dealer' which term would include 'any dealer' or 'any class of dealers'. The existence or otherwise of the three limitations under the explanation above referred to on claiming exemption under section 8(2-A) of the Central Sales Tax Act will, therefore, have to be tested with reference to the transaction of sale or purchase as the case may be of the dealer who claims the exemption in respect of his intra-State sale or purchase of the same goods. Thus the specified circumstances and the specified conditions referred to in the explanation should be with reference to the local turnover of the same dealer who claims exemption under section 8(2-A) of the Central Sales Tax Act. The learned Advocate-General for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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