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TMI Blog2001 (11) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of exemption is not available in respect of the inter-State sales in terms of section 8(2A) of the Central Sales Tax Act, 1956 (hereinafter referred to as "the CST Act"). The Deputy Commissioner, therefore, after issuing show cause notice and giving an opportunity of being heard, revised the assessments holding that the turnover which was exempted by the assessing officer was in fact liable to tax at the rate of 4 per cent since it is covered by "C" declaration forms. The said order was assailed before the Sales Tax Appellate Tribunal, unsuccessfully. Hence, the present tax revision cases before this Court. 3.. The learned Senior Counsel Sri C. Natarajan, appearing for the dealers in T.R.C. Nos. 8 and 9 of 1994, contended that the exemption granted in terms of G.O. Ms. No. 1067, dated September 19, 1985 issued under section 9(1) of the State Act is a general exemption with reference to the sales to all the registered dealers in the State, apart from the consumers specified therein. When once the exemption granted by the said G.O., issued under section 9(1) of the State Act, is a general exemption with reference to transactions within the State, the said general exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified points and by any specified class of persons in regard to the whole or any part of their turnover. As the said notification was not issued under subsection (2) of section 9, the restrictions or conditions specified and referred to in that sub-section are not applicable. Therefore, in respect of the specified goods, by specified class of persons dealing with such goods, are entitled for exemption without fulfilling any conditions. In other words, the exemption does not depend upon the fulfilment of any specific conditions. According to the learned counsel, the restrictions or conditions, if any, stipulated should be read from the notification and cannot be inferred from outside. According to the learned counsel, the relief of exemption cannot also be denied on any extraneous considerations. In support of his contention the learned counsel relied upon the following decisions: State of Madras v. N.K. Nataraja Mudaliar [1968] 22 STC 376 (SC), Indian Aluminium Cables Ltd. v. State of Haryana [1976] 38 STC 108 (SC), State of Haryana v. Dalmia Dadri Cement Ltd. [1988] 68 STC 173 (SC), Bashir Oil Mills v. Maharashtra Sales Tax Tribunal [1993] 90 STC 195 (Bom), Commissioner of Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the dealers in question. The learned Government Pleader relied upon the following decisions, in support of his contention: State of Uttar Pradesh v. Hindustan Safety Glass Works (P.) Ltd. [1996] 101 STC 529 (SC), Union of India v. Southern Distributors [1996] 102 STC 509 (Mad.), Bangarimath Brothers v. State of Tamil Nadu [1999] 113 STC 503 (Mad), Union of India v. Rapidur (India) Pvt. Ltd. [2000] 119 STC 18 (SC), and Atlas Engineering Works (Pvt.) Ltd. v. Commissioner of Commercial Taxes [2000] 120 STC 588 (Orissa). 7.. The learned counsel also contended that in case of any ambiguity in the exemption notification issued by the Government, the benefit of the said ambiguity must be given to the State. In support of the said contention, he relied upon the decision of the Supreme Court in the case of Novopan India Ltd. v. Collector of Central Excise and Customs, Hyderabad (1994) Supp 3 SCC 606. 8.. The common issue that arises for consideration in this batch of tax revision cases is "whether the exemption granted by the State Government under section 9(1) of the State Act (under notification in G.O. Ms. No. 1067, dated September 19, 1985) qualifies exemption under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale and also includes motor spirit; Explanation.-....". "Section 2(n): 'Sale' with all its grammatical variations and cognate expressions means every transfer of the property in goods whether as such goods or in any other form in pursuance of a contract or otherwise by one person to another in the course of trade or business, for cash, or for deferred payment, or for any other valuable consideration or in the supply or distribution of goods by a society (including a co-operative society), club, firm or association to its members, but does not include a mortgage, hypothecation or pledge of, or a charge on goods." "Section 9: Power of State Government to notify exemptions and reductions of tax (or interest).-(1) The State Government may, by notification in the Andhra Pradesh Gazette, make an exemption, or reduction in rate, in respect of any tax or interest payable under this Act (i) on the sale or purchase of any specified class of goods, at all points or at any specified point or points in series of sales or purchases by successive dealers; or (ii) by any specified class of persons, in regard to the whole or any part of their turnover. (2) Any exemption from tax or int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such restrictions and conditions as may be specified in the notification. From the above it is clear that sub-section (1) of section 9 provides for exemption in respect of tax payable by any specified class of persons; whereas sub-section (2) provides the specified restrictions or conditions for the grant of exemption or reduction in the rate of tax. 11.. The G.O. Ms. No. 1067 referred to earlier was issued under sub-section (1) of section 9 of the State Act, exempting the tax payable under section 6 of the State Act, on the sales of hank yarn in plain reels to two classes of purchasers-(i) registered dealers in the State, and (ii) to weavers, master weavers, co-operative societies or other recognised associations of weavers for consumption in their industry in the State. By virtue of the above, local sales of hank yarn in plain reels effected by the petitioners in favour of persons mentioned in the said notification during the present assessment years are admittedly eligible for exemption from the payment of tax contemplated under section 6 of the State Act. Now the claim of the petitioners is that even with reference to the inter-State sales they are entitled to the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear that if the exemption from tax under the State Act is not subjected to the specified circumstances or specified conditions, then the exemption shall be deemed to be a general exemption. Therefore the G.O., issued under section 9(1) of the State Act has to be examined whether the exemption granted under the said G.O., is available under the specified circumstances or under specified conditions or of general in nature. 13.. Reverting back to the notification, the exemption contemplated under the abovesaid G.O. relates to the sale of hank yarn in plain reels to the registered dealers in the State. If we omit the other part of the notification, which confers the benefit of exemption, to the purchasers for their consumption in the State, there is no condition or restriction as to the exemption available in respect of the sales effected to the registered dealers in the State. But the contention of the learned Government Pleader is that there are many classes of dealers, but only one class of dealers are exempted from tax, i.e., with reference to the registered dealers in the State. But, as noticed earlier the provisions of section 9(1) provides for the grant of exemption to a speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red dealers in the State is a general exemption. When once the exemption contemplated under the notification issued under section 9 is a general exemption, the petitioners are therefore entitled for exemption in terms of section 8(2A) of the Central Sales Tax Act. Though the learned Government Pleader contended by referring to the term "dealer" that there are a variety dealers, such as unregistered dealers, the State Government and the Central Government, etc., who could also deal with the item in question. But the exemption was granted by the notification only in respect of the sales effected to the registered dealers in the State. But the learned Government Pleader, could not dispute the claim of the learned counsel for the petitioners that in terms of section 12(2)(a) read with section 12(5) that only registered dealers in the State could alone deal with sale and purchase of hank yarn. In the light of the above, the contention of the learned Government Pleader is clearly devoid of merit. 14.. Coming to the other category of purchasers referred in the notification, the sale of which is also exempt from the tax, are weavers, master weavers, co-operative societies and other recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the exemption granted under the said provision of the Act under specified circumstances and conditions. Therefore it is not a general exemption within the meaning of section 8(2A) of the Central Act and the dealer is therefore not entitled for the benefit of the said provisions of the State Act. 16.. The next decision is in the case of State of Haryana v. Dalmia Dadri Cement Ltd. [1988] 68 STC 173 (SC). In this case also the apex Court considered the provisions of the same section 5(2)(a)(iv) of the Punjab General Sales Tax Act, 1948, but with reference to the sale of cement. In this case the respondent-dealer supplied cement in the years 1964-65 and 1965-66 to the Punjab State Electricity Board on the basis of the certificates issued by the Board to the effect that cement was required for the use in the generation or distribution of electrical energy. In the original assessment proceedings the sales of cement were exempted on the basis of those certificates in view of section 5(2)(a)(iv) of the Act. Thereafter, the assessments were sought to be reopened by the Deputy Commissioner on the ground that the deduction had been wrongly granted as the respondent was not able t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... better position than the consumers outside." 18.. In the case of Commissioner of Sales Tax, Jammu and Kashmir v. Pine Chemicals Ltd. [1995] 96 STC 355, the apex Court considered the exemption under a G.O., issued by the State of Jammu and Kashmir. Under the said G.O., the Government accorded sanction for granting incentives and facilities to large and medium scale industries in the State of Jammu and Kashmir. The incentives relate to the grant of exemption from the State sales tax both on the raw materials and finished products for a period of five years from the date the unit goes into production. For attracting the exemption provided by the State Government, it has to be established that the goods, the sale or purchase of which is claimed to be exempt from tax, are manufactured by a large or medium scale industry and that the said goods are manufactured and sold within five years from the date the said industrial unit has gone into production. The claim of the assessee was rejected by the High Court. However, on appeal the Supreme Court accepted the claim of the dealer as per its decision in Pine Chemicals Ltd v. Assessing Authority [1992] 85 STC 432 (SC). But, however, on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption under section 8(2A) of the Central Act. By a notification, dated July 24, 1981, issued by the State of Maharashtra under section 41 of the Bombay Sales Tax Act, the State Government exempted all sales of oil-cakes including oil-cakes for the purpose of cattle feed within the State of Maharashtra from payment of the whole of tax payable under the provisions of the Act. The petitioner claimed that since by virtue of the notification, all sales of oil-cakes in the State of Maharashtra were exempted from tax under the Bombay Sales Tax Act, no sales tax could be levied on the inter-State sales of oil-cakes by virtue of the provisions contained in section 8(2A) of the Central Sales Tax Act. The Tribunal held that since under notification issued under section 41, sales of oil-cakes alone were exempt, without mentioning anything about the tax on purchases thereof, it could not be termed as a general exemption which would attract section 8(2A) of the Central Sales Tax Act. When the said order was assailed before the Bombay High Court, while allowing the writ petition, it was held "(i) that looking at the notification dated July 24, 1981, it was clear that all sales of oil-cakes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court found that there are no conditions or restrictions to be fulfilled by the roller flour mills in order to get the benefit of exemption. Therefore in the absence of any such conditions or circumstances under which the exemption is available, the exemption shall be construed as general and was available even in respect of the inter-State sales in terms of section 8(2A) of the Central Act. 21.. In the case of Pinakini Seeds v. State of Andhra Pradesh [1995] 98 STC 144, this Court considered the notification issued in G.O. Ms. No. 604, Revenue, dated April 9, 1981. In terms of the said notification, sales or purchases of all varieties of certified or truthfully labelled seeds for agricultural purposes, are exempt under the State Act. This Court accepted that the exemption granted under the said G.O., is a general exemption and as such it qualifies for exemption under sub-section (2A) of section 8 of the Central Act. According to this Court, the requirement of certified or truthfully labelled seeds for agricultural purposes is a concept borrowed from the Seeds Act, 1966, which is a Central Act enacted with the object of regulating the quality of seeds of any kind or variety to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as High Court considered the notification issued under section 19 of the Pondicherry General Sales Tax Act, 1967. Under the notification issued in G.O. Ms. No. 37/70/ Finance (ST) dated August 21, 1970 the exemption was granted in respect of the tax payable under the local Act on the sales of pesticides meant for agricultural purpose in the whole of the Union Territory of Pondicherry. The assessee claimed that the said exemption is a general exemption and therefore the inter-State transactions are also entitled to exemption in terms of section 8(2A) of the Central Act. The Madras High Court after considering the terms of the notification held that the exemption granted under the Pondicherry General Sales Tax Act, 1967 was conditional, i.e., for agricultural use in the Union Territory of Pondicherry and therefore no exemption could be allowed under the Central Act. 24.. In the case of Bangarimath Brothers v. State of Tamil Nadu [1999] 113 STC 503, the Madras High Court considered the notification issued in G.O.P. No. 1433, C.T. R.E., dated December 17, 1983 with reference to the nature of the exemption. The Government of Tamil Nadu have exempted the purchase of coconuts from lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Commercial Taxes [2000] 120 STC 588, the Orissa High Court considered the notification issued under the Orissa Sales Tax Act, 1947 with reference to the claim on the inter-State sales under section 8(2A) of the Central Act. In this case the petitioner is a private limited company, registered under the Companies Act, manufacturing and selling of T.V. receiver sets. It had originally disclosed a gross turnover of Rs. 16,700 in the annual return for the year 1986-87. In the course of assessment proceedings, it had submitted a revised return indicating gross sale turnover at Rs. 11,77,677.50 paise and claimed that the entire sales disclosed in the revised return are exempted sales on the ground that they were tax free sales, in as much as it has not charged or collected sales tax in the course of inter-State. The assessing officer found that the State Government in the Finance Department had not extended the benefit of tax exemption to the petitioner on sales on T.V. receiver sets and accordingly taxed the entire turnover. As the petitioner was unsuccessful in appeals, the petitioner filed writ petition before the Orissa High Court and relied upon a judgment of the same Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State in view of the provisions of section 12(2) read with section 12(5) of the Act, viz., the registered dealers. Therefore, the exemption under the notification could be inferred as a general exemption, as it relates to a particular goods, viz., hank yarn in plain reels. When once it is held that the exemption granted under the notification in question is a general exemption, the benefit of such exemption would get extended to the inter-State transactions by virtue of the provisions of section 8(2A) of the Central Act. We, therefore, hold that the exemption under the notification in G.O. Ms. No. 1067, dated September 19, 1985 issued under section 9(1) of the Act is a general exemption in so far as the sales effected to the dealers are concerned and extend the benefit of exemption in respect of inter-State transactions also by virtue of the provisions of section 8(2A) of the Central Act. 29.. Under the above circumstances, we set aside the impugned orders of the Sales Tax Appellate Tribunal in all the T.R.Cs., and restore the orders of the assessing officer. 30.. In the result all the tax revision cases are allowed. No costs. Petitions allowed. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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