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TMI Blog1993 (3) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... State for the period of two years from the date of starting production of the newsprint by the said plant". The appellant, Hindustan Paper Corporation Ltd., entered into an agreement with the Government of Kerala in the year 1974 reiterating the said exemption. The relevant portion of the agreement reads thus: "The Government of Kerala, with a view to help the project to tide over the difficulties in the initial stages and to establish itself, agree to exempt the turnover relating to the sale of the products by the corporation from the payment of sales tax for a period of two years from the date of starting of production of the newsprint." A major portion of the newsprint manufactured at the factory located within Kerala is sold in the course of inter-State trade and commerce. During the assessment years relevant to the period of the two years from the date of commencement of production at the Kerala factory, the appellant claimed exemption not only from the State sales tax by virtue of the aforesaid notification and agreement but also from Central sales tax under and by virtue of sub-section (2-A) of section 8 of the Central Sales Tax Act. The Sales Tax Officer accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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." What does sub-section (2-A) say. It opens with a non obstante clause which gives it an overriding effect over the provisions contained in section 6(1-A) and over sub-section (1) as well as clause (b) of sub-section (2) of section 8. The sub-section seeks to provide exemption to a dealer with respect to his turnover in so far as his turnover or any part thereof relates to (a) sale of any goods, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri G. Vishwanatha Iyer, puts his case thus: if one is asked whether the exemption granted under the aforesaid notification is a general exemption, his obvious answer would be, no. It is not an exemption which operates generally but an exemption limited to two years from the date of commencement of the production of newsprint in the factory. Similarly, if a person is asked whether newsprint is exempt generally from the State sales tax in Kerala, none would answer in the affirmative. He would say that the sale of newsprint in Kerala is exempt only in certain circumstances or subject only to a condition, viz., that that newsprint is produced within two years of the commencement of the production in the factory located in Kerala. It is, therefore, idle to contend, says Sri Iyer, that the sale of newsprint within Kerala is exempt generally from the State sales tax. In such a case, says the counsel, the provision contained in sub-section (2-A) does not come into operation and the inter- State sales of such newsprint cannot be said to be exempt from the Central sales tax. Sri Iyer further says that the exemption notification issued by the Government of Kerala under section 10 of the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , learned counsel for the appellant-corporation submits, adopting the reasoning in Pine Chemicals [1992] 85 STC 432 (SC); [1992] 2 SCC 683 that the circumstances or conditions contemplated by the Explanation to sub-section must be the circumstances and conditions attaching to the sale and not to the dealer. The exemption notification merely serves to identify the dealer and the goods entitled to exemption but it does not lay down any circumstances or conditions attaching to the sale of goods (newsprint). Sri Nambiar says that once the goods are identified, viz., that it is a newsprint manufactured by a factory within two years of its commencing production, there is no further condition attaching to the exemption; the goods are exempt generally. It is not a case where the exemption is hedged in by certain conditions nor is it a case where the exemption operates only in certain circumstances. The learned counsel submits that the decisions of this Court in Indian Aluminium [1976] 38 STC 108 and International Cotton Corporation [1975] 35 STC 1 have been considered and explained by this Court in Pine Chemicals [1992] 85 STC 432 (SC); [1992] 2 SCC 683 and, therefore, the principle of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or otherwise of the three limitations under the explanation above referred to on claiming exemption under section 8(2-A) of the Central Sales Tax Act will, therefore, have to be tested with reference to the transaction of sale or purchase as the case may be of the dealer who claims the exemption in respect of his intra-State sale or purchase of the same goods. Thus the specified circumstances and the specified conditions referred to in the explanation should be with reference to the local turnover of the same dealer who claims exemption under section 8(2-A) of the Central Sales Tax Act. The learned Advocate-General for the State contended that the conditions that the industry should have been set up and commissioned subsequent to the Government Orders 159 and 414 above referred to and the commodity sold by it in order to claim the exemption under the said Government orders, shall be those manufactured by that industry are conditions or specified circumstances within the meaning of the explanation and, therefore, the dealer (Pine Chemicals) is not entitled to any exemption under section 8(2-A) of the Central Sales Tax Act. We are unable to agree with this submission of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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