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TMI Blog1985 (9) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... n agreement with the Government of Kerala, as per which agreement the petitioner-company's turnover on the sale of newsprint was exempted from the sales tax under the State Act. The relevant portion of the agreement is quoted hereunder: "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 starting the production of the newsprint." For the assessment year 1982-83 the petitioner-company had filed returns declaring their turnover for the inter-State sales running into crores of rupees. The petitioner-company claimed that they are not liable to pay the sales tax for such inter-State sales under the Central Act in view of section 8(2A) of the Central Act. The Sales Tax Officer has rejected this claim. In the appeals filed by the petitioner before the Appellate Assistant Commissioner of Agricultural Income-tax and Sales Tax, and in the further appeals filed before the Sales Tax Appellate Tribunal the aforesaid claim made by the petitioner-company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods." The sub-section was not in that form before an amendment brought to it as per Act 61 of 1972. Since both sides have argued much on the implications of the said amendment, and since the Appellate Tribunal has also sought to place significance on this amendment, we would reproduce here that sub-section as it stood before the said amendment. "Notwithstanding anything contained in sub-section (1A) of section 6 or sub-section (1) or sub-section (2) of this section, if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent (whether called a tax or fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate. Explanation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons as may be prescribed, a dealer who deals in the goods specified in the Third Schedule shall not be liable to pay any tax under this Act in respect of the sale or purchase of such goods." Section 10 provides that "the Government may make an exemption in respect of any tax payable if the Government consider it in the public interest " by notification in the Gazette. Such exemption can either be (1) on the sale or purchase of any specified goods or class of goods, or (2) of any specified class of persons in regard to the whole or any part of their turnover. Thus, under section 9, the exemption to be granted is with reference to specified goods and such exemption is granted by the statute itself, while under section 10(1), the Government is empowered to grant exemptions either in respect of goods or in respect of "specified class of persons" in regard to their turnover wholly or in part. 8.. At this stage, a turning back to the Central Act will be beneficial. Section 8(5) of that Act empowers the State Government to exempt a dealer from tax liability and it also empowers the State Government to exempt sale of certain goods from the tax liability and in either of such cases the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards. Their Lordships repelled the contention that the change of the expression "sale of any goods by a dealer" before its amendment to "sale of which is under the sales tax law of the appropriate State exempt from tax generally" as now appearing in the amended provision would constitute a total 'change in the concept of general exemption. At the same time, it has been observed in the judgment that the absence of the word "dealer" in the amended section 8(2A) in connection with the general exemption from sales tax would not make any difference in the purport or effect of the said sub-section before and after the amendment. The argument that the words "sale of any goods by a dealer" in section 8(2A) before its amendment meant a sale by a specified dealer while the absence of the said words after the amendment meant the sale of goods being exempted generally irrespective of the sale being made by a dealer, has not been found favour with their Lordships. In other words, the Bombay High Court in that decision has held that the exemption generally granted to sale of goods by a dealer under the State Act would attract the exemption benefit envisaged under section 8(2A) of the Central Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the Central Act cannot be claimed if the exemption granted under the State Act is to dealers or to class of dealers only, even if such an exemption is general in character. 13.. The next contention is that the exemption granted in these cases pertains to the goods manufactured by the petitioner and hence the exemption is as a matter of fact not for the class of dealers but for the specified goods. Assume it is so (but not conceding), exemption granted under the sales tax law if it should be of any advantage under the Central Act, must be an exemption "generally" made under the State Act. It is contended that an exemption to be within the ken of the expression "generally", it is sufficient if it is outside the three areas mentioned in the explanation to section 8(2A) of the Central Act. In other words, the contention is that, if the exemption is not brought within specified circumstances or under specified conditions or at specified stages, then the exemption would be general in character. Support was sought to be drawn for this contention also from the same decision of the Bombay High Court cited earlier. The learned counsel for the petitioner has given accentuation to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no exemption from tax 'generally'." The above observation was quoted with approval by a Division Bench of this High Court in the decision reported in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. N.S. Moos [1975] 36 STC 169. In that case the exemption granted under the State Act was "in respect of the tax payable under the said Act on the sale of medicines dispensed by a medical practitioner owning a dispensary and dispensing medicines to his patients from his own dispensary". It was held that the exemption is not general but is only for a specified purpose and under specified circumstances. The assessee in that case was found not entitled to exemptions under the Central Act. In 1971, the Mysore High Court has adopted a similar interpretation in Basappa v. Deputy Commissioner [1971] 27 STC 241. The relevant passage can be found at page 267, which reads thus: "In our opinion, the object of sub-section (2A) of section 8 is to exempt transactions of sale of any goods if they are wholly exempt from tax under the sales tax law of the appropriate State and to make the said sales chargeable at lower rates, where under the sales tax law of the State, the sale tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering in that decision was only the sub-section as it stood before the amendment). A.N. Ray, C.J., was one of the 3 Judges who decided the case. Even though the earlier Supreme Court decision in International Cotton Corporation (P.) Ltd. v. Commercial Tax Officer [1975] 35 STC 1 (SC) was not referred to in this subsequent judgment, still the Supreme Court has reiterated the same principle. The following observations are worthy of note in this context: "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 exemption from taxation is conferred by conditions or in certain circumstances, there is no exemption from tax generally." 17.. Therefore the weight of authorities is clearly in favour of interpretation which we have adopted now. In the light of the clear pronouncement on the subject by the Supreme Court, it admits of no doubt that this alone is the correct interpretation of section 8(2A) of the Central Act. In view of the aforesaid interpretation we find no scope for interference with the impugned orders. These revisions are accordingly dismissed. No costs. Immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X
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