LexHINDUSTAN PAPER CORPN. LTD. ETC. ETC. versus STATE OF KERALA AND OTHERS
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HINDUSTAN PAPER-CORPN. LTD. ETC. ETC. A V, STATE OF KERALA AND OTHERS MARCH 26, 1993 [B.P. JEEVAN REDDY AND N. VENKATACHALA, JJ.] B Central Sales Tax Act 1956: Section 8(2A). Kera/a General Sales Tax Act 1963: Section JO & Notification RSO 415 of 1971, Central Sales TaJt-Exemptiott-Whether available for inter state sales a/sir-Exemption contained in the 1971 Notificatiott-Wliether an exemption from tax 'generally'. c The State of Kerala issued Notification RSO 415 of 1971 under D Section 10 of the Kerala General Sales Tax Act providing for an exemption in respect of tax in regard to the tum over of the sales of newsprint for a period of two years from the date of starting production of the newsprint plant. The appellant entered into an agreement with the State Government in 1974 giving the said exemption. A major portion of the newsprint manufactured at the factory lo- cated within the State was sold in the course of inter-state trade and - commerce, and during the assessment years relevant to the period of the two years from the date of the commencement of the production, the- appellant claimed exemption not only from the State Sales Tax, by virtue of the 1971 Notification and the 1974 agreement but also from the Central Sales Tax under and by virtue of sub-section (2A) of Section 8 of the Central Sales Tax Act. The Sales Tax Officer accepted the claim under the State Sales Tax E F Act but rejected the claim under the Central Sales Tax Act. G -y Appeals preferred by the appellant to the Appellant Assistant Com- missioner and the Sales Tax Appellant Tribunal were dismissed, and when the appellant approached the High Court by way of revision under Section 41 of the State Sales Tax Act the High Court also dismissed the revisions petitions. H 655 656 SUPREME COURT REPORTS (1993) 2 S.C.R. A In the appeals to this Court It was contended on behalf of the appellant relying on Pine Chemicals Limited v. Assessing Authority, (1992) 2 S.C.C. 683 that the exemption granted to It by the 1971 State Government notification Issued under the Kerala Sales Tax Act Is a general exemption within the meaning of Section 8(2A) and, therefore, the inter- state sales ~ - B effected by it are equally exempt from Central Sales Tax by virtue of Section 8(2A). The Staie contested the appeals by contending that the exemption granted to the appellant under the State Sales Tax Is not a general exemption but a conditional one, and that the exemption operates only In C certain specified circumstances, and that the provision contained In Sec· lion 8(2A) does not go to exempt the Inter-state sales of the appellant. -----.?"" On the question whether the exemption granted under the 1971 State notification exempting the produce oflhe appellant factory manufacturing D newsprint from the State Sales Tax for a jleriod of two years from the date of commencement of production in the factory can be called iln exemption from tax 'generally'. E F Allowing the appeals, this. Court, HELD: 1. The inter-state sales effected by the appellant are those falling under Section 3(a) of the Central Sales Tax Act. The liability to pay Central Sales Tax on inter-state sales arises by virtue of sub-section (1) of Section 6. Sub section (2A) of section 8 seeks to provide exemption to a dealer with respect to his turnover. The explanation appended to the sub· section is couched in negative terms and seeks to define the words 'exempt from tax generally", and indicates when a sale or purchase . of any goods shall not be deemed to be exempt from tax generally under the State Sales Tax Law. [ 659 B, 660 B-C) 2. An inter-state sale or purchase of a commodity shall not be G 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 condl· lions or limitations are with reference to the transaction of sale or pur· H chase. [663 F -GI • . ,...__, HINDUSTANPAPERCORPN. v. STATE[REDDY,J.] 657 3. The existence or otherwise or the aforesaid three limitations OD A claiming exemption the explanation under Section S(2·A) or the Central Sales T1<x Acfwill have to be tested with reference to the transaction or sale or purchase as the case may be or the dealer who claims the exemption
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