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TMI Blog1984 (12) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under this Act on the sale of goods specified in the Second Schedule, subject to the conditions and exception, if any, set out therein ". Second Schedule to the said Act contains several entries specifying exemption from sales tax. In exercise of powers contained in section 10(2) of the said Goa Sales Tax Act by a notification dated 4th February, 1971 the Government of Goa incorporated entry 68 in the said Second Schedule. The said entry 68 was thereafter amended by another notification dated 2nd November, 1982. It inter alia exempted totally from local sales tax the sales of all goods manufactured by a small-scale industry registered with the Government under the Goa, Daman and Diu Sales Tax Act, 1964 as amended from time to time, for a period of five years from the date of first sale on or after the validity of the registration. 3.. The petitioners who are the registered small-scale industry, having their sales totally exempt from local sales tax, claimed also exemption from Central sales tax, in respect of their such part of turnover as related to inter-State sales of their said goods, under section 8(2A) of the Central Sales Tax Act. Accordingly the petitioners by their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2A) of the Central Act to exemption from sales tax also under the Central Sales Tax Act in respect of that part of their turnover as related to inter-State transaction. In support of his said contention the learned counsel has relied on various decisions of different Courts, including a decision of the Supreme Court. It may be pointed out at the outset that all the said decisions were concerned with the provisions of section 8(2A) along with the explanation of the Central Sales Tax Act prior to its amendment which came into force on 1st April, 1973 constituting a change in the structure of the said section 8(2A) leaving the explanation intact. 7.. As against this, the contention of the learned Government Pleader was that in view of the amended section 8(2A), the exemption granted to the petitioners under the said entry 68 of the Second Schedule to the Goa Sales Tax Act was not general and hence without going to the qualifications laid down in the explanation to that section, the petitioners would not be entitled to the benefit of section 8(2A) itself. 8.. To appreciate the said basic rival contentions initially the provisions of section 8(2A) as it stood before the amendment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said entry 68 of the Second Schedule to the Goa Sales Tax Act so far relevant reads as follows: "Any goods manufactured processed or assembled in this territory by any small-scale industry, at the point of sale made by such industry, for a period of five years from the date of first sale of the goods manufactured, processed or assembled, effected by the said small-scale industry on or after the date of validity of its registration under the Goa, Daman and Diu Sales Tax Act, 1964 as amended from time to time." 9.. It is not disputed in this case that the petitioners' industry is a registered small-scale industry, a certificate of which has been annexed to the petition and that the assessment year in respect of which exemption is claimed was within five years from date of the first sale on the registration. Therefore the petitioners can claim under the said entry 68 total exemption for local sales tax in respect of sales effected by them of their produce. 10.. On these admitted facts therefore it would now be convenient to first deal with the various decisions relied upon by the learned counsel for the petitioners, which as pointed out above, are admittedly based on the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that under the said notification the exemption was not general but was under specified circumstances or specified conditions falling under the explanation. Negativing the said contention of the Government the Court observed: No doubt under the notification sales effected by an unregistered dealer were not exempted from tax. The exemption was granted in respect of sales of niwar by a class of dealers, namely, registered dealers. So far as sales of niwar by registered dealers are concerned, the exemption is general, universal and without any restriction or condition. The expression "exempt only in specified circumstances or under specified conditions occurring in the explanation to subsection (2A), means such circumstances or conditions the non-existence or non-performance of which precludes the grant of exemption; so that if those circumstances do not exist or those conditions are not Performed, then the sales of goods cannot be exempted from tax even if they are effected by a class of dealers to whom exemption is granted and during the period for which exemption is granted". The said notification does not prescribe any such conditions or circumstances with regard to grant of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h a category the turnover of the sales of those goods in the hands of the petitioner was not liable to tax even under the Central Act. The stipulation in the notification that the turnover of such sales would, for a period of three years, be exempt from payment of sales tax did not amount to exempting the turnover of such goods from tax under specified circumstances or specified conditions". 15.. The Court further pointed out that "although the exemption was granted to a particular person in respect of certain goods, it was general in respect of the sales effected by that person and although it was for a particular period, such exemption cannot fall within the explanation 'specified circumstances or specified conditions' appearing in the explanation to the said section". 16.. While dealing with the qualifications in the explanation to section 8(2A) the Court pointed out, "the exemption under section 4-A has been granted in respect of a particular class of goods, i.e., mirrors and safety glasses manufactured by the petitioner. So far as this class of goods is concerned, it has not been laid down anywhere that the sale of goods would be liable to be taxed on the fulfilment or non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be totally exempt from tax before similar exemption from the levy of Central sales tax can become available. Where the exemption from taxation is conferred by conditions or in certain circumstances, there is no exemption from tax generally." 18-A. The same view was reiterated in two other subsequent decisions, one of the Allahabad High Court and the other of Himachal Pradesh. The decision of the Allahabad High Court was in the case of Poysha Industrial Co. Ltd. v. Commissioner of Sales Tax [1977] 40 STC 455. The Court there was dealing with a notification issued under the U.P. Sales Tax Act, 1948, providing that "the turnover was exempted from the payment of sales tax in respect of sanitary cans manufactured by the assessee during the period of three years". The question was whether the said exemption granted to the assessee was general. The Court following the aforecited decisions held that the turnover of the assessee was exempt generally from State sales tax in view of the notification and consequently, its inter-State sales were also exempt from Central sales tax under section 8(2A) of the Central Act. 18-B. The same view was taken by the Punjab and Haryana High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or specified conditions so as to be covered by the explanation. 22.. However his basic contention was that before coming to the qualifications provided under the explanation to section 8(2A) under its altered or amended provisions, the exemption from sales tax granted to the petitioners under entry 68 cannot be considered to be general so as to come under the said section 8(2A). 23.. According to the learned Government Pleader while the provisions of section 8(2A) before its amendment provided inter alia "if under the sales tax law of the appropriate State the sale of any goods by a dealer" is exempt from tax generally, the amended section 8(2A) altered the said provisions by providing "in so far as the turnover of any part thereof relates to the sale of goods, the sale of which is under the sales tax law of the appropriate State exempt from tax generally". According to him therefore while under the provisions of section 8(2A), before the amendment "sale of goods by a dealer" was to be exempt from tax generally, under the amended section 8(2A) only, sale was to be exempt generally. He has therefore argued that in order to claim general exemption under the amended section 8(2A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change in the concept of general exemption as envisaged in the said section 8(2A), before its amendment. 26.. In our view the said difference in the language of section 8(2A) both before and after its amendment would not make any difference to the concept of general exemption. 27.. The said difference in the wording of section 8(2A) before and after its amendment, was only due to the result of a complete change in the structure of section 8(2A). Under the provisions of section 8(2A) as it stood before the amendment, initial reference was to the exemption under the State Sales Tax Act which was to be general and thereafter there was reference to the Central Sales Tax Act permitting corresponding exemption from Central sales tax for inter-State sales. However in the amendment of section 8(2A) the first reference was to the exemption under the Central sales tax while making reference to general exemption under the State law in the latter part of the said section. It may be borne in mind that basis of the sales tax was, that the said tax was levied on the sale by a dealer. If one looks to the provisions of amended section 8(2A) in its first part itself reference is made to tax paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only the provisions of amended section 8(2A) in juxtaposition with the provisions of section 6(1A) both of which were inserted at the same time to get over the decision of the Supreme Court in Yaddalam's case [1965] 16 STC 231 (SC). The Supreme Court there was dealing only with the contention of the appellants that sub-section (2A) of section 8 as amended which was inserted at the same time as sub-section (1A) of section 6 had the effect of impliedly repealing section 6(1A) which provided that "notwithstanding no tax was leviable on a dealer for the sale of goods under the State sales tax law, the dealer would be liable for the inter-State sales of the said goods under the Central sales tax laws". The Court there held that both the provisions could be read harmoniously and that non obstante clause in section 8(2A) did not mean by itself that the effect of sub-section (1A) of section 6 was obliterated. In that connection only the Supreme Court dealt with the provisions of section 8(2A). After negativing the contention based on the words used in the section, that "the transactions of purchase being generally exempt from the tax whenever the goods are taxable at the point of sale and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be covered by the explanation. Use of the expression "at any stage" in the said observations appears to have reference to the qualification in the explanation, viz., tax levied at a specified stage. 30.. We may however point out that the Supreme Court in its later decision in the case of Indian Aluminium Cables Ltd. v. State of Haryana [1976] 38 STC 108 (SC) while considering the expression "exempt from tax generally", as appearing in section 8(2A) before amendment had as stated earlier, observed at page 112 of the Report: "General exemption means that the goods should be totally exempt from tax before similar exemption from the levy of Central sales tax can become available. Where the exemption from taxation is conferred by conditions or in certain circumstances, there is no exemption from tax generally." As pointed out above in that case the Court held that exemption from local sales tax to registered dealers was general and as not being circumscribed by either specified circumstances or specified conditions. Under the circumstances the said contention of the learned Government Pleader as regards the interpretation of the amended section 8(2A) cannot be accepted. 31.. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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