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2014 (2) TMI 1003 - ALLAHABAD HIGH COURTLiability to tax - Exemption from Central Sales Tax - Goods exempted in U.P. Sales Tax Act, 1948 however, taxable under the United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 - Tribunal following the judgment in Oudh Sugar Mills Ltd. Vs. CST [1986 (10) TMI 313 - ALLAHABAD HIGH COURT] granted exemption - Whether sale of alcohol during the relevant period was exempt under 'sales tax law' of the State of U.P. hence, there would be no liability of payment of central sales tax in accordance with the provisions of Section 8 (2-A) of the Central Sales Tax Act - Whether the judgment of learned Single Judge in Oudh Sugar Mills Vs. CST 1987 U.P. Tax Cases 1034 and other three judgements following the said judgment as noted above lay down the correct law. Section 8(2-A) makes it clear that if the sale or purchase of any goods is exempt from tax generally under the sales tax law of the appropriate State there shall be no liability of payment of central sales tax - provisions of 1939 Act were amended by U.P. Act No. 12 of 1974 by which amendment under Section 3 of the 1939 Act alcohol become taxable w.e.f. 2.5.1974. Similarly by U.P. Act No. 8 of 1975 payment of tax under the 1948 Act on alcohol was exempted under section 4 of the 1948 Act. By virtue of amendments made in Section 4 by U.P. Act No. 8 of 1975, the tax on alcohol was exempted under section 4 w.e.f. 2.5.1974. The exemption from the Central Sales Tax Act under the repealed provision was in respect of 'sales or purchases ........ of any goods by a dealer'. The section granted exemption to any goods of a dealer when such goods were 'exempt from tax generally .......'. In order to take advantage of this Section 8(2A), a dealer will have to establish that sale or purchase of the goods in question was exempt from tax generally. If it was a special exemption granted to him because his undertaking was a new industrial undertaking or for any other reason for a limited period, then the exemption will not be of general nature and he will not be entitled to get the benefit of this sub-section. There was an Explanation to the old sub-section (2A) of Section 8, which made it clear that if the exemption was only in specified circumstances or under specified conditions or in relation to which the tax was levied at specified stages or otherwise than with reference to the turnover of goods, then the sale or purchase of goods shall not be deemed to be exempted from tax generally. United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 is a 'sales tax law' within the meaning of Section 2(i) of Central Sales Tax Act, 1956. The alcohol being taxable under the 1939 Act, payment of central sales tax on inter-State sale of alcohol was not exempted as per provisions of Section 8(2-A) of the 1956 Act even though there was general exemption under section 4 of the 1948 Act - The judgment of learned Single Judge in Oudh Sugar Mills Vs. Commissioner of Sales Tax (supra) does not lay down the correct law - The Tribunal fell in error in taking the view that assessee was not liable for payment of central sales tax on the inter-State sale of alcohol. The orders of the Tribunal impugned in these revisions are hereby set aside - Decided in favour of Revenue.
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