Civil Appeal Nos
68 of 1974 and 936 of 1975
Appeals by Special Leave from the Judgment and order dated 5 11 1973 of the Punjab  Haryana High Court in Sales Tax Reference Nos 12 and 11 of 1969
Desai In CA No 93675 P C Bhartari R Narain K J John O C Mathur for the Appellants
B Sen In CA No 6874 and R NSachthey for the Respondent
P C Bhartari for ApplicantInterveners In CA No6874
The Judgment of the Court was delivered by RAY CJ
This appeal by special leave is on the question whether the appellant is exempt from inter State tax on the sales of poles and cables to the Delhi Electric Supply Undertaking by reason of the provisions contained in section S2aiv of the Punjab Sales Act hereinafter referred to as the State Act
Section 52 a iv of the State Act is as follows 52 In this Act the expression taxable turnover means that part of a dealer s gross turnover during any period which remains after deducting therefrom a his turnover during that period on iv sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the  of goods for use by it in the generation or distribution of such energy
 Under section 8 of the hereinafter referred to as the Central Act every dealer who in the course of inter State 994 trade or commerce sells to the Government any goods or sells to a registered dealer other than the Government goods of the description referred to in sub section 3 shall be liable to pay tax under this Act which shall be three per cent of his turnover
The provisions in section 82A of the Central Act are as follows  Notwithstanding anything contained in sub section 1A of section 6 or sub section 1 or sub section 2 of this section the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any 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 three per cent whether called a tax of 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
 The contention on behalf of the appellant is that by reason of the Explanation to section 82A of the Central Act read with section 52aiv of the State Act the appellant is exempt from payment of inter State sales tax
The words goods for use by it in the gene ration or distribution of such energy occurring in section S 2 a iv of the State Act are said by counsel for the appellant to be descriptive of the goods
In short the appellant s contention is that goods for use by the undertaking supplying electrical energy are generally exempt from taxation and therefore they should not be included in the turn over
The contention on behalf of the State is that the exemption granted under section 52aiv of the State Act is exemption in specified circumstances and under specified conditions
The specified circumstances are said to be sales to an undertaking supplying electrical energy to the public under the 
The specified conditions are that the goods are for use by the undertaking in the generation or distribution of such energy
The answer to the question in this appeal is whether the exemption mentioned in section 52 a iv of the State Act is in specified cir circumstance or under specified conditions as the Case may be or it is a general exemption as the appellant contends in cases of sales of goods to an Electric Supply Undertaking for use by it in the generation or distribution of such energy
995 The appellant referred to Schedule read with section 6 of the State Act and in particular Items 33 and 46 to illustrate what would be exemption under specified circumstances or specified conditions
In Schedule there are two columns
The first column describes the goods
The second column describes the conditions which make the goods tax free
In Item 33 in Schedule Photographs including Xrays photographs mentioned in the first column are tax free when sold by photographers and radiologists preparing them as mentioned in the second column
In Item 46 hand spun yarn mentioned in the first column becomes tax free when sold by one who deals in hand spun yarn exclusively as mentioned in the second column Section 52 of the State Act deals with taxable turnover
There is no dispute that electricity poles and cables sold to the undertaking supplying electric energy are exempt under the State Act from being included within the taxable turnover
The question is whether such sales made in the course of inter State trade are also exempt from the levy of Central Sales Tax
The appellant contends that the exemption in the State Act is general because exemption applies in respect of goods without any enumeration or classification of goods
Further it is said that exemption is general because the sales are for use in generation and distribution of electrical energy
According to the appellants sales of all goods to the undertaking supplying electrical energy are exempt from being included in the taxable turnover as long as the goods answer the description that they are for use in the generation or distribution of electrical energy
The appellant relied on the decision of the Madhya Pradesh High Court in Commissioner of Sales Tax Madhya Pradesh vs Kapoor Dori Niwar  Co Gwalior1 tn support of the meaning of the expression exempt from tax generally
In the Madhya Pradesh case supra the State Government issued a notification in the year 1959 exempting from the payment of sales tax for a period of one year sales of niwar by a dealer registered under the 1958 relevant State Act
The exemption was later on extended up to 31 March 1963
The assessee a registered dealer claimed exemption on inter State sales of niwar
The Madhya Pradesh High Court held that during the period of the exemption the sales of niwar by a registered dealer were exempt from tax generally within the meaning of section 82A of the Central Act and therefore the assessee s inter State sales of niwar were exempt from tax under the Central Act
The expression exempt only in specified circumstances or under specified conditions occurring in the Explanation to section 82A of the Central Act was held to mean such circumstances or conditions the non existence or non performance of which precludes the grant of exemption
In other words if those circumstances do not exist or those conditions are not performed then the sales of goods cannot be exempted from tax even if they are effected by a class of dealers to whom exemption is granted and during the period for which exemption is granted
996 In the Madhya Pradesh case supra there was no dispute that the sales effected by the assessee fell under section 81 of the Central Act
The State Act granted exemption from sales tax on sales of niwar effected by a registered dealer
The exemption granted to sales by a registered dealer under the notification was without any restriction or limitation so far as sales by a registered dealer were concerned
Though the period of exemption was fixed it was not regarded as a condition imposed in relation to the exemption
It was also contended there that because the exemption was granted to the registered dealers the exemption was granted to a class of dealers and therefore it should be construed to be an exemption in specified circumstances or under specified conditions
The Court repelled the contention by stating that the exemption was to all registered dealers without any restriction or condition
The other decision on which the appellant relied is of the Allahabad High Court in Hindustan Safety Glass Works P Ltd vs The State of Uttar Pradesh  Anr1 In the Safety Glass Works case supra the company manufactured toughened glasses and mirrors in its factories
Under a notification issued by the State Government under the State Act sales of mirrors and safety glasses were liable to sales tax either at the point of sale by the importer of such goods or at the point of sale by the manufacturer thereof
Subsequently a notification was issued by the State Government exempting toughened glasses and mirrors manufactured by the company at Allahabad from payment of sales tax for a period of three years
The company claimed that the turnover of sales of toughened glasses and mirrors manufactured by it being generally exempt from tax under the State Act was also not liable to Central Sales Tax because of the provisions contained in section 82A of the Central Act
It was held that for purposes of section 82A of the Central Act sale of mirrors and toughened glasses manufactured by the company was under no condition and in no circumstance liable to be taxed in the hands of the company
The reasons given were that normally it will be taken that the sale of mirrors and toughened glasses by the company was exempt from to the generally unless it could be shown that such goods belonged to the class specified in the Explanation to section 82A of the Central Act
As the toughening glasses and mirrors manufactured by the company did not fall in such a category the turnover of the sales of those goods in the hands of the company was not liable to tax under the Central Act
The stipulation in the notification in the Safety Glass Work case supra that the turnover of such sales would for a period of three years be exempt from payment of sales tax did not amount to exempting the turnover of such goods from tax under specified circumstances or specified conditions
Section 6 of the State Act does not speak of exemption but deals with tax free goods
In other words section 6 deals with specified goods on which no tax is payable
Section S of the State Act deals with what has to be excluded from the taxable turnover of the dealer
997 Both the sections deal with goods which do not suffer from sales tax
A Section 82A of the Central Act exempts goods from inter State sales tax where a tax law of the State has exempted them from sales tax
The Explanation to section 82A of the Central Act takes away the exemption where it is not general and has been granted in specified circumstances or under specified conditions
The provisions contained in section 5 2 a iv of the State Act exclude sales which are made under specified circumstances or specified conditions
The specified circumstances are that the sale must be to an undertaking engaged in supplying electrical energy to the public under a licence or sanction granted under the 
The specified condition is that the goods purchased by the undertaking must be used for the generation or distribution of electrical energy
If the circumstances do not exist or if the conditions are not performed then the sales of goods cannot be exempted from tax
General exemption means that r 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
The contention of the appellant that the words in the generation or distribution of such energy in section 52aiv of the State Act are descriptive of goods is unacceptable
The expression generation or distribution of such energy specifies the condition under which exemption is granted
For these reasons we are of opinion that the High Court was correct in holding that the sales by the undertaking supplying electrical energy were not exempt from tax generally within the meaning of section 82A of the Central Act read with section 52aiv of the State Act
The appeal is dismissed
In view of the fact that the High Court directed the parties to pay and bear their own costs similar order is made here
SR Appeal dismissed


Summary:
Under section 52aiv of the Punjab Sales Tax Act taxable turnover meant that part of a dealer s gross turnover during any period which remains after deducting therefrom his turnover during that period on sales to any undertaking supplying electrical energy to the public under a licence or sanction granted under the  of goods for use by it in the generation or distribution of such energy
Under section 8 of the Central Sales Tax every dealer
who in the course of inter state trade or commerce sells to the Government any goods or sells to a registered dealer other than the Government goods of the description referred to in sub section 3 shall be liable to pay tax under the Act which shall be three per cent of his turnover
Section 82A reads as follows Notwithstanding anything contained in sub section 1A of section 6 or sub section 1 or sub section 2 of this section the tax pay able under this Act by a dealer on his turnover in so far as the turn over or any part thereof relates to the sale of any 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 three 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 tho lower rate
Explanation For the purpose of this sub section or 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 the 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 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
 The appellants were suppliers of poles and cables to the Delhi Electric Supply Undertaking and the sales were in the course of inter state trade or commerce and admittedly exempt under the state sales tax us 52 a iv
The state assessed tax us 8 of tho on the ground that the exemption granted us 52aiv of the state Act fell under Explanation to section 82A of the 
The High Court held that the sales by the undertaking supplying electrical energy were not exempt from tax generally within the meaning of section 81A of the Central Act read with Section 52aiv of the State Act
Dismissing the appeal by special leave the Court
 HELD I General exemption means that 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
Section 6 of the State Act does not speak of exemption but deals with tax free goods
Section 6 deals with specified goods on which no tax is payable
993 Section 5 of the State Act deals with what has to be excluded from taxable turnover of the dealer
Both the sections deal with goods which do not suffer from Sales tax
Section 82A of the Central Act exempts goods from inter State Sales tax where a tax law of the state has exempted them from sales tax
The explanation to section 82A of the Central Act takes away the exemption where it is not general and has been granted in specified circumstances or under specified conditions
The provisions contained in section 52 a iv of the state Act exclude sales which are made under specified circumstances or specified conditions
The specified circumstances are that the sale must be to an undertaking engaged in supplying electrical energy to the public under a licence or sanction granted under the 
The specified condition is that the goods purchased by the undertaking must be used for the generation or distribution of electrical energy
If the circumstances do not exist or if the conditions are not performed then the sales of goods cannot be exempted from tax
The expression generation or distribution of such energy specifies the condition under which exemption is granted
996H G97A D Commissioner of Sales Tax MP vs Kapoor Dari Niwar  Co Gwalior 22 STC p 152 Hindustan Safety Glass Works P Lrd
vs The State of UP and Anr
34 STC 209 discussed