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2006 DIGILAW 2284 (MAD)

SRI RAJALAKSHMI STORES v. UNION OF INDIA

2006-09-04

M.E.N.PATRUDU

body2006
ORDER M. E. N. Patrudu, J. - The petitioner is a dealer in jaggery. It is paying tax under the Tamil Nadu General Sales Tax Act, 1959, and is also covered under the Central Sales Tax Act, 1956 (in short, "the CST Act"). The respondents are the Union of India, State of Tamil Nadu, the Special Commissioner and Commissioner of Commercial Taxes and the Commercial Tax Officer, Salem. The prayer of the petitioner is to restrain the fourth respondent, the Commercial Tax Officer, Gugai Circle, Salem from levying and collecting one per cent Central sales tax, on inter-State sale of jaggery and gur including jaggery powder and nattusakkarai, as it is exempted. The contention of the petitioner is that the jaggery is exempted from the provisions of the Tamil Nadu General Sales Tax Act, 1959 (TNGST) from July 17, 1996. Hence the petitioner is claiming the benefit of section 8(2A) of the CST Act, as it is exempted under the State Act. Thus, the basis for the claim of exemption is that as per entry 81(c) of the Third Schedule to the TNGST jaggery was generally exempted. The forceful contention of the petitioner is that when there is a general exemption under the State Sales Tax Act, statutory exemption for inter-State sale for such goods was also given. The contention of the respondents is that the jaggery is not exempted "generally" under the State tax law and the exemption under section 8(2A) of the CST Act for the sale or purchase of goods is available only where the sale or purchase of the said goods is exempted "generally" under the State Sales Tax Act. It is contended by the respondents that the exemption generally in section 8(2A) which has been defined in Explanation thereto, is to be applied and the general exemption means that the goods which are totally exempted from tax. Therefore, the petitioner is liable to pay the tax. Shri S. Sivanandam, learned counsel appeared for the petitioner and Shri Haja Nazirudeen, learned Special Government Pleader appeared for the respondents. The short points for determination is, whether the petitioner is entitled for exemption. Therefore, the petitioner is liable to pay the tax. Shri S. Sivanandam, learned counsel appeared for the petitioner and Shri Haja Nazirudeen, learned Special Government Pleader appeared for the respondents. The short points for determination is, whether the petitioner is entitled for exemption. Section 8(2A) of the Central Sales Tax Act reads as follows : "Notwithstanding anything contained in sub-section (1A) of section 6 or sub-section (1) or clause (b) or 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 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." (i) Plain reading of the above provision clarifies that a tax payable under Central Sales Tax Act by dealer on his turnover which is under the sales tax law of the appropriate State, exempt from tax "generally" or subject to tax "generally" at the rate which is lower than four per cent, shall be nil or as the case may be. (ii) The explanation clarifies that any goods shall not be deemed to be exempted "generally" under the sales tax law of the appropriate State, if under that law, sale or purchase of such goods is exempt, only : (a) in specified circumstances; (b) or under specified conditions; (c) or the tax is levied on the sale or purchase of such goods at specified stages; (d) or otherwise than with reference to the turnover of the goods. (iii) Therefore, it is clear that under section 8(2A) of the CST the exemption of tax can be claimed when the State tax law exempts the goods 'generally'. (iv) The Explanation clarifies that if the said goods are exempted only in specified circumstances or if such goods are exempted only under specified conditions, or if such goods are exempted at specified stages or if such goods are exempted otherwise than with reference to the turnover of the goods. Then the situation is different. At this stage, it is necessary to look into the necessary provisions in the State law. The Tamil Nadu Act 37 of 1996 published in a Gazette on September 17, 1996, with an amendment in Part B to the Third Schedule to the Tamil Nadu General Sales Tax Act. The entry regarding jaggery is amended and exemption is granted by adding the commodity in Third Schedule from July 17, 1996 by Notification G.O.Ms. No. 250, dated July 17, 1996 reported in [1996] 102 STC Statutes 25, at page 47. The relevant portion is as follows : "(3) After item 74 and the entries relating thereto, the following items and entries shall be added, namely : 82. Jaggery and gur including jaggery powder and nattusakkarai." (i) An amendment was made in Part B of the Third Schedule to the TNGST Act which reads as follows : The following, for sale, by any dealer whose total turnover does not exceed Rs. 100 crores in a year - Under sub-clause (c), jaggery and gur including jaggery powder and nattusakkarai are included. (ii) Thus a plain reading of the above amendment clarifies that the sale of jaggery within the State is exempted from tax with effect from July 17, 1996, if the total turnover of the dealer does not exceed Rs. 100 crores in a year. Now it is to be seen whether there is a general exemption or conditional exemption. In my considered opinion, it is not a general exemption, because the amendment clearly says that the exemption is provided only when the total turnover does not exceed Rs. 100 crores in a year. Therefore, it is a condition imposed with reference to the turnover of the goods. Explanation to section 8(2A), CST Act clarifies that if exemption is given under any specific condition, the dealer cannot claim any benefit. 100 crores in a year. Therefore, it is a condition imposed with reference to the turnover of the goods. Explanation to section 8(2A), CST Act clarifies that if exemption is given under any specific condition, the dealer cannot claim any benefit. In the instant case, the exemption under the State law, has been granted subject to the condition that the total turnover of the dealer does not exceed Rs. 100 crores in a year. Therefore, I hold that the exemption provided under item 81(c) of Part B of the Third Schedule to the TNGST Act is an exemption under specified condition and the petitioner cannot claim any relief by canvassing that the exemption from tax is generally granted. All the decisions relied on by the counsel for the petitioner are on the point that when there is exemption from tax "generally", then section 8(2A), CST Act is applicable. In State of Uttar Pradesh v. Hindustan Safety Glass Works (P.) Ltd. [1996] 101 STC 529 (SC), the question of exemption from tax generally was considered and their lordships have held that when the goods were not generally exempted from sales tax, the benefit of the Central Sales Tax Act is not applicable. The learned counsel for the petitioner relied on the following decisions : (i) Commissioner of Sales Tax, Madhya Pradesh v. Kapoor Dori Niwar and Co., Gwalior [1968] 22 STC 152 (MP). (ii) Hindustan Safety Glass Works (P.) Ltd. v. State of Uttar Pradesh [1974] 34 STC 209 (All). (iii) Indian Aluminium Cables Ltd. v. State of Haryana [1976] 38 STC 108 (SC). (iv) Commissioner of Sales Tax, Jammu and Kashmir v. Pine Chemicals Ltd. [1995] 96 STC 355 (SC). (v) State of Orissa v. Arun Trading Company [2002] 125 STC 335 (Orissa). (vi) Anandi Roller Flour Mills Ltd. v. Commissioner of Commercial Taxes [2001] 122 STC 597 (AP). (vii) S.L.S. Textiles Ltd. v. State of A.P. [2002] 126 STC 132 (AP). In all these cases, the courts held that whenever the registered dealer was exempted from tax "generally", then the benefit under section 8(2A) of the Central Sales Tax Act is available to the said dealer. In the instant case, there is no general exemption. The specific condition imposed by the State is that only when the total turnover of the dealer does not exceed Rs. 100 crores in a year, it is exempted. In the instant case, there is no general exemption. The specific condition imposed by the State is that only when the total turnover of the dealer does not exceed Rs. 100 crores in a year, it is exempted. This does not speak about the turnover of the goods. This is dealing with the turnover of the dealer and it is a specific condition. Therefore, the petitioner is not entitled for any relief. With the result the writ petition is dismissed.