1996 (3) TMI 484 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of eligibility for exemption under a notification for inter-State sales under the Central Sales Tax Act, 1956 based on holding a registration certificate.

Detailed Analysis:

Issue 1: Eligibility for Exemption
The case involved a question of law referred by the Board of Revenue, Madhya Pradesh, regarding the eligibility of a dealer to avail exemption under a specific notification for inter-State sales of goods manufactured by the dealer. The dealer in question, a new industrial unit for paper manufacturing, had been granted a certificate of eligibility for exemption from sales tax for a period of three years. The assessing officer denied the exemption, citing the dealer's lack of registration under section 7(1) of the Central Sales Tax Act, 1956. The Tribunal, however, held that the eligibility certificate issued by the Industries Commissioner, Madhya Pradesh, was sufficient for the dealer to claim the exemption on inter-State sales under the Central Act. The Tribunal emphasized that once the eligibility certificate is issued by the competent authority, the taxing authorities are bound to honor it unless revoked or amended. The High Court concurred with the Tribunal's decision, ruling in favor of the assessee and upholding the entitlement to exemption based on the eligibility certificate.

Issue 2: Interpretation of Notification Provisions
The High Court examined the relevant provisions of the notification issued by the State Government under section 8(5) of the Central Sales Tax Act, 1956. The notification classified dealers into different categories for exemption eligibility, with specific conditions to be fulfilled. The dealer in question fell under a category that required registration under both the Madhya Pradesh General Sales Tax Act, 1958, and the Central Sales Tax Act, 1956. The notification mandated the dealer to produce a certificate issued by the Industries Commissioner, Madhya Pradesh, certifying eligibility for exemption. The Court emphasized that the certificate's issuance, based on the recommendation of the State Level Committee, indicated fulfillment of the notification's requirements. The Court held that the authorities could not disregard the certificate's validity and must adhere to it unless revoked or amended by the competent authority.

Conclusion:
The High Court, in its judgment, upheld the Tribunal's decision and ruled in favor of the assessee, confirming the entitlement to exemption on inter-State sales based on the eligibility certificate issued by the Industries Commissioner, Madhya Pradesh. The Court emphasized the importance of honoring such certificates once issued by the competent authority and rejected the Revenue's argument against the dealer's eligibility for exemption under the notification. The reference was answered in favor of the assessee, affirming the right to claim exemption as per the provisions of the notification and the eligibility certificate issued.