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1996 Supreme(SC) 630
1996(3) Supreme 86
SUPREME COURT OF INDIA
N.P. Singh and Suhas C. Sen, JJ.
State of Uttar Pradesh & Anr. --Appellants
versus
M/s. Hindustan Safety Glass Works (P) Ltd. --Respondent
Civil Appeal No. 109 of 1977
with
Civil Appeal Nos. 110and 2961 of 1977 and Civil Appeal Nos. 4591-92 of 1996 (Arising out of SLP (C) Nos. 245-46 of 1978) and Civil Appeal Nos. 1302, 1303, 1304, 1305 of 1978 and Civil Appeal Nos. 4593-4594 of 1996 (Arising out of SLP (C) Nos. 7842 and 1522 of 1979)
All decided on 20-3-1996
Counsel for the Parties :
For the Respondent : Raja Ram Agarwal.
IMPORTANT POINT
When the exemption from payment of the sales tax has been granted only in respect of specified goods produced by certain specified newly set up undertakings, the special benefit of exemption will not be available to other industries producing goods of similar nature.
Headnote:Central Sales Tax Act-Section 8(2A)-U.P. Sales Tax Act, 1948-Section 4A--Gazette Notification dated 9.1.1970 issued by Government of Uttar Pradesh--Exemption from payment of sales tax granted to various newly set up industrial undertakings-Notified goods became exempt from sales tax for a period of three years-Claim of respondent that it was entitled to exemption from payment of tax under Section 8(2A) of Central Sales Tax before its amendment of 1972-Whether assessee would be entitled to get benefit of Section 8(2A)?-(No).
Held : In the instant case, the exemption has not been granted to the goods generally. Specified goods (mirrors and toughened glass) produced by a specified company have been exempted from payment of sales tax for a specified period of time. It is not the case of the assessee that mirrors and toughened glass have been generally exemption from payment of tax. Therefore, in view of the ratio laid down in the aforesaid case of Commissioner of Sales Tax v. Pine Chemicals Ltd., (1995) 1 SCC 58, it must be held that the assessee will not be entitled to get benefit of Section 8(2A) of the Central Sales Tax Act in the facts of this case. (Para 4)
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. (Para 7)
Further held : In the instant case, the exemption has been granted only in respect of specified goods produced by certain specified newly set up undertakings mentioned in the notification. The benefit of exemption will be available to these new undertakings for a period of three years. In other words, at a specified stage of development of these industries they will be given a special benefit which will not be available generally to other industries producing goods of similar nature. Therefore, we fail to see how the aforesaid case of Commissioner of Sales Tax v. Pine Chemicals Ltd., (1995) 1 SCC 58 can be distinguished on the ground that it was a decision given under post-amendment law. In fact, it does not appear that by the amendment of sub-section (2A) of Section 8 any change has been brought about in respect of meaning or the concept of sale or purchase of goods exempt from tax generally. (Para 8)
(ii) Central Sales Tax Act-Section 8(2A) as amended by Amendment Act of 1972-Object of Amendment was not to bring about any change in existing law but to set it out in clearer words--Law laid down in case of Commissioner of Sales Tax v. Pine Chemicals Ltd., (1995) 1 SCC 58 held applicable to a case governed by Section 8(2A) before its amendment.
Held that in the Notes on Clauses to the Bill introduced for amending the Central Sales Tax Act by the Amendment Act of 1972 (61 of 1972), it was stated that sub-clause (a) of Clause 5 sought to substitute a new sub-section for existing sub-section (2A) of Section 8 of the principal Act. The new sub-section seeks to bring out more clearly that an exemption or lower rate of levy under the local sales tax law of the appropriate State would be available in respect of an inter-State sale of goods only if such exemption or lower levy is available generally with reference to such goods or such class of goods under the local sales tax law. (Para 13)
JUDGMENT
Sen, J.--This case arises out of a Gazette Notification dated 9th January, 1970 issued by the Government of Uttar Pradesh granting exemption from payment of sales tax to various newly set up industrial undertakings.
The notification was to the following effect :-
"Whereas, it has been brought to the notice of State Government that the Seven Industrial Units mentioned in Schedule below have started the manufacture of goods mentioned in Column II of the Schedule with effect from the date noted against each;
And, whereas, the State Government is of opinion that it is necessary so to do for increasing the production of the said goods manufactured by the said Industrial Units;
Now, therefore, in exercise of the powers under section 4-A of the U.P. Sales Tax Act, 1948 (U.P. Act No. 8.XV of 1948), the Governor is pleased to declare that the turnover in respect of the said goods manufactured by the said Induatrial Units shall be exempt from payment of sales tax for a period of three years with effect from the date of publication of this notification in the official Gazette;
SCHEDULE
Sl. Name of the Goods manu- Date of No. Industrial factured starting Units Production
Column-I Column-II Column-III
1. . . . . . . . . .
2. . . . . . . . . .
3. . . . . . . . . .
4. . . . . . . . . .
5. . . . . . . . . .
6. . . . . . . . . .
7. M/s. Hindustan Mirrors and February
Safety Glass Toughened 1969.
Works Private Glass
Ltd., Allahabad.
2. As a result of this notification, the notified goods became exempt from sales tax with effect from February, 1969 for a period of three years from the date of publication of the notification in the official Gazette. The claim of the respondent, Hindustan Safety Glass Works (P) Ltd., is that it was entitled to exemption from payment of tax under the Central Sales Tax Act by virtue of the provisions of Section 8(2A) of the Central Sales Tax Act before its amendment by Act No. 61 of 1972 which came into force with effect from 1.4.1973. The position after the amendment came was examined by this Court in the case of Commissioner of Sales Tax, J & K and others v. Pine Chemicals Ltd. and others1. In that case, it was held that where the sale or purchase of the goods was exempt generally under the State Sales Tax Law, the benefit of the exemption under Section 8(2A) of the Central Sales Tax Act would be available to an assessee. But, if the exemption granted was not of general nature, then the assessee could not claim the benefit of any exemption provided by Section 8(2A). In that case, the Government Order No. 159 provided exemption to large and medium scale industries in the State of Jammu & Kashmir from payment of sales tax both on raw materials and finished products for a period of five years from the date on which the unit went into production. By a subsequent Government Order dated 25.8.1971, the earlier order was modified and it was provided that the State Sales tax paid by large and medium scale industries on the raw meterials procured by them for the initial five years of the production would be refunded to such industries. Similarly such industries were granted exemption from payment of State Sales Tax on their finished products for a period of five years from the date the unit went into production.
3. It was pointed out in that case because of the aforesaid Government Order the assessee could not claim benefit of exemption under Section 8(2A) of the Central Sales Tax Act because the exemption was not a general one, the exemption under Government Order No.159 was not with reference to goods or a class of category of goods, but with reference to an industrial u
