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TMI Blog2009 (3) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... was carrying on wholesale business in pulses, grams, paddy, rice and other items at Tiruvarur. Similarly the other petitioners were also carrying on similar trades at Tiruvarur, Kumbakonam and Papanasam. According to the petitioners, in terms of section 3 of the TNGST Act, every dealer whose total turnover per year exceeds Rs. 3 lakhs and every casual trader or agent of a non-resident dealer, whatever be his turnover for the year, shall pay tax for each year in accordance with the provisions of the Act. Section 8 of the TNGST Act exempts certain commodities from payment of tax subject to the terms and conditions prescribed. A dealer who deals in goods specified in the Schedule is not liable to pay any tax in respect of such goods. Section 59(1) of the TNGST Act empowers the Government to issue notification to alter, add or to cancel any of the Schedules. The Third Schedule to the TNGST Act describes various goods that are exempt from tax under section 8 of the Act. It is also further stated that the pulses and grams attract single point levy of tax under the TNGST Act on the first sale in the State. In exercise of the power under section 59(1) of the TNGST Act, the State Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vying tax was sought to be challenged. The G. O. as notified in the Tamil Nadu Gazette reads as follows: "'LEVY OF CENTRAL SALES TAX ON CERTAIN ITEMS G.O. Ms. No. 339, Commercial Taxes and Religious Endowments, 13th September 1996 No. II(1)/CTRE/111/96.-In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), the Governor of Tamil Nadu, having been satisfied that it is necessary so to do in the public interest, hereby directs that the tax payable by any dealer in respect of the sale by him of- (a) Pulses and grams, the following, including brokens, splits, husk and dust thereof: (i) Gram or gulab grain (ii) Tur or arthar (iii) Moong or green gram (iv) Mastur or lentil (v) Urad or black gram (vi) Moth (vii) Lekh or kesari (b) Chillies, tamarind, coriander, turmeric, pepper and shikakai (c) Asafoetida (d) Jeera including black jeera (cumin seeds) (e) Palmyrah sugar candy In the course of inter-State trade or commerce shall be calculated at the rate of four per cent with or without 'C' form. Sd/- K. DHARMARAJAN Secretary to Government." In the counter-affidavit filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Explanation the conclusion deducible would be this: where the intraState sales of certain goods are liable to tax, even though only at one point, whether of purchase or of sale, a subsequent inter-State sale of the same commodity is liable to tax, but where that commodity is not liable to tax at all if it were an intra-State sale the inter-State sale of that commodity is also exempt from tax. Where an intra-State sale of a particular commodity is taxable at a lower rate than three per cent then the tax on the inter-State sale of that commodity will be at that lower rate. A sale or purchase of any goods shall not be exempt from tax in respect of inter-State sales of those commodities if as an intraState sale the purchase or sale of those commodities is exempt only in specific circumstances or under specified conditions or is leviable on the sale or purchase at specified stages. On this interpretation section 6(1A) as well as section 8(2A) can stand together." The learned Senior Counsel also referred to the decision of the Division Bench of the Andhra Pradesh High Court in Vinod Solvent Extracts (P.) Ltd. v. State of Andhra Pradesh reported in [1989] 73 STC 175. Reliance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generally under the State sales tax enactment? The answer can only be in the negative. Such goods are exempt from tax only when they are manufactured in a large or medium industrial unit within five years of its commencement of production and sold within the said period, i.e., in certain specified circumstances alone. The exemption is not a general one but a conditional one. The exemption under the Government Order No. 159 is not with reference to goods or a class or category of goods but with reference to the industrial unit producing them and their manufacture and sale within a particular period. For the purposes of the Government order, the nature, class or category of goods is irrelevant; it may be any goods. It is concerned only with the industrial unit producing them and the period within which they are manufactured and sold. Can it be said in such a case that it is an instance where the sale is of goods, the sale or purchase of which is under sales tax law of the appropriate State, exempt from tax generally? Certainly not. Exemption provided by Government Order No. 159, to repeat, is not with reference to goods but with reference to the industrial unit. So long as it is (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STC): 'General exemption means that the goods should be totally exempt from tax before similar exemption from the levy of Central sales tax can become available. Where the exemption from taxation is conferred by conditions or in certain circumstances there is no exemption from tax generally'. In our respectful opinion, the ratio of this decision clearly concluded the question arising in Pine Chemicals [1992] 85 STC 432 (SC); [1992] 2 SCC 683 against the assessees inasmuch as it was not a case where goods were 'totally exempt from tax'. It was a case where the exemption operated or was attracted only if it was established that such goods were manufactured in a large or medium industrial unit within five years of its going into production and were sold within that period. As pointed out hereinbefore, the exemption was not with reference to goods but with reference to the unit manufacturing the goods." It is not clear as to how the above passages are of any assistance to the petitioners. Per contra, Mr. Radhakrishnan, learned Government Advocate (Taxes) relied on following passage found in the judgment of this court M.A. Abbas and Co. v. State of Madras reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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