IMPORTANT POINT
Where one of the conditions for being entitled to exemption from CST was that the assessee should have been registered under CST and GST and the assessee got registration under GST and under Section 7(2) but not under Section 7(1) of CST, exemption could not be denied on the ground registration under Section 7(2) was not sufficient and registration under Section 7(1) of CST must have been obtained.

Headnote:(i) M.P. General Sales Tax Act, 1958 r/w Central Sales Tax Act, 1956-Section 8 r/w Section 7-Exemption from inter-State sales tax to New Industrial Unit in backward District-Exemption notification required that assessee should be registered both under GST and CST-Directorate of Industries issued Certificate of eligibility for exemption from sales tax to assessee-Sales tax department denying exemption on ground assessee was not registered u/s 7(1) of CST though registered u/s 7(2) of CST-Registration u/s 7(2) of CST is certainly a registration under CST-Requirement of Exemption Notification satisfied-Assessee entitled to exemption.
       Held : A bare perusal of Section 7 of CST goes to show that every dealer liable to pay tax under the Central Sales Tax Act shall secure a registration under sub-section (1) of Section 7. Such dealers as have a place of business in a State and are not liable to pay tax under the Central Act may still have themselves registered under sub-section (2) of Section 7 of the Central Sales Tax Act if (i) they are dealers liable to pay tax under the Sales Tax law of the appropriate State (notwithstanding the fact that the sales or purchases made by them are exempt from tax or a refund or a rebate of tax is admissible in respect thereof), or (ii) there is no State Legislation attracting liability to pay tax on such dealers. Such a prayer for registration shall be made to the same authority who grants registration under sub-section (1). Registration under sub-section (1) is compulsory; registration under sub-section (2) is optional. For the purpose of securing a registration under sub-section (2) abovesaid the dealer need not necessarily be liable to pay any amount of tax. (Para 8)
       The argument that the dealers liable to pay tax under the Central Act have been dealt with only under sub-section (1) of Section 7; sub-section (2) refers to registration under the sales-tax law of the appropriate State if there be one in force and in as much as the relevant notification dated 29.6.1982 deals with exemption from payment of tax under the Central Act, it is necessary that the dealer should have been registered under sub-section (1) of Section 7 of the Act, cannot be accepted. The language of the notification is plain and simple. It admits of no ambiguity. The requirement of Column (1) is satisfied if the dealer is registered under the State Act and the Central Act-both; it is immaterial whether the registration under the Central Act is under sub-section (1) or sub-section (2) of Section 7. A registration under sub-section (2) of Section 7 is certainly a registration under the Central Sales Tax Act. This is clear from the language of sub-section (2) of Section 7 which speaks, inter alia,- "....may, notwithstanding that he is not liable to pay tax under this Act, apply for registration under this Act to the authority referred to in sub-section (1)...". (Para 9)
       Without regard to the fact whether the assessing authority was entitled to go behind the certificate of eligibility issued by the Directorate of Industries, the entitlement of the respondent for exemption from payment of tax under the notification was clearly made out as the requirements of Column (1) of the notification were also satisfied. (Para 10)

JUDGMENT

R.C. Lahoti, J.-In exercise of the powers conferred by sub-section (5) of Section 8 of the Central Sales Tax Act, 1956, the Government of Madhya Pradesh issued a notification No.F.No. A3-41-81(31) -ST-V Dated the 29th June, 1982 allowing exemption from payment of tax to certain dealers subject to satisfying the requirements of the notification. The relevant part of the notification reads as under :-

NOTIFICATION

F.No.A3-41-81(31)-ST-V Dated the 29th June, 1982.

Whereas, the State Government is satisfied that it is necessary so to do in the public interest;

Now, therefore, in exercise of the powers conferred by sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (No.74 of 1956), the State Government hereby directs that no tax under the said Act shall be payable with effect from the 1st July, 1982, by the dealers specified in column (1) of the Schedule below, who have set up industry in any of the districts of Madhya Pradesh specified in the annexure to this notification (..........) in respect of sales in the course of inter-state trade or commerce of goods produced/ manufactured by them, for the period specified in column (2), subject to the restrictions and conditions specified in column (3) of the said Schedule :-

SCHEDULE

Restrictions and conditions subject to which exemption has been granted.

(3)

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The dealer specified in column (1) shall continue to furnish the prescribed returns under the Central Sales Tax Act, 1956 (No.74 to 1956), and shall produce before the assessing authority at the time of his assessment a certificate issued by the (Industries Commissioner) Madhya Pradesh, or any officer authorised by him for the purpose, certifying that such dealer is eligible to claim the exemption from payment of tax and that he has opted for the scheme of exemption from payment of tax under the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959) Under the separate Revenue Department Notification No. A-3-41-81(35)-ST-V dated 23.10.81.

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2. The respondent, a public limited company, is a new industrial unit engaged in manufacture and sale of paper at Champa in the backward tribal area of District Bilaspur in the State of Madhya Pradesh. It is not disputed that the respondent industrial unit satisfies the requirements of Columns (2) and (3) of the notification. It is also not disputed that the respondent was registered as a dealer under the M.P. General Sales Tax Act, 1958 as also under Section 7(2) of the Central Sales Tax Act, 1956. The registra tion under the Central Sales Tax Act is dated 12.11.1981. Having taken into consideration the two sales tax registrations as dealer under the two Acts i.e., the State and the Central and Acts, the Directorate of Industries issued a certificate of eligibility dated 19.2.1985 for exemption from payment of sales tax whereby it was certified that the respondents was a new unit having gone into production on 10.1.1984 i.e. after 1.4.1981 and as such eligible for exemption from payment of sales tax. It was also certified that the unit being located in District Bilaspur-category Backward A was eligible for exemption for the period upto 9.1.1987.

3. The Assistant Commisioner of Sales Tax formed an opinion that for the purpose of claiming benefit of the exemption notification a dealer registered under the State Act has also to be registered under sub-section (1) of Section 7 of the Central Sales Tax Act but the respondent was registered under sub-section (2) and not sub-section (1) of Section 7 of the Central Sales Tax Act and therefore was not entitled to the benefit of the exemption notification dated 29.6.1982. The Appellate Deputy Commissioner agreed with the Assistant Commissioner. In appeal preferred by the respondent the Board of Revenue reversed the finding of the authorities below and held that on the basis of the certificate of eligibility issued by the Directorate of Industries, the respondent was entitled to exemption f

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