Case: Commr. Of S.T., M.P Vs. Madhya Bharat Papers Ltd

No. A-3-41-81-(31)-ST-V dated 29.6.82 in respect of Inter State sale of goods manufactured by him by virtue of his holding an eligibility certificate in fulfilment of one of the conditions laid down in the said notification for eligibility, although he was not holding a Registration Certificate under sub-section (1) of Section 7 of the Central Sales Tax Act, 1956." 5. The High Court of Madhya Pradesh has answered the question in favour of the respondent-assessee forming an opinion that the eligibility certificate issued by the Directorate of Industries was conclusive and binding on the assessing authorities and they could not go into the question whether the respondent-assessee was eligible for the benefit of exemption inspite of his holding the eligibility certificate by entering into the question of the respondents registration whether it was under sub-section (1) or (2) of Section 7 of the Central Sales Tax Act. Feeling aggrieved the Revenue has come up in appeal before this Court. 6. It was submitted by the learned counsel for the appellant that on a full reading of the notification and placing a reasonable construction thereon the expression "...... registered under the Central Sales Tax, 1956", as employed in the first column of the notification should be understood as meaning the registration under sub-section (1) of Section 7 of the Central Sales Tax Act registration under sub-section (2) of Section 7 of the Central Sales Tax Act is not covered by the expression and is of no relevance for the purpose of claiming exemption under the notification. 7. Section 7 of the Central Sales Tax Act (relevant part thereof) reads as under : Registration of dealers - (1) Every dealer liable to pay tax under this Act shall, within such time as may be prescribed for the purpose, make an application for registration under this Act to such authority in the appropriate State as the Central Government may, by general or special order specify, and every such application shall contain such particulars as may be prescribed.(2) Any dealer liable to pay tax under the sales tax law of the appropriate State, or where there is no such law in force in the appropriate State or any part thereof, any dealer having a place of business in that State or part, as the case may be, 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), and every such application shall contain such particulars as may be prescribed.Explanation. - For the purpose of this sub-section, a dealer shall be deemed to be liable to pay tax under the sales tax law of the appropriate state notwithstanding that under such law a sale or purchase made by him is exempt from tax or a refund or a rebate of tax is admissible in respect thereof. xxx xxx xxx 8. A bare perusal of the above quoted provision 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) obovesaid the dealer need not necessarily be liable to pay any amount of tax. 9. The learned counsel for the appellant submitted 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. However, we find no merit in the contention. 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 (1) 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) ....." 10. The learned counsel for the respondent-assessee has rightly pointed out that the certificate of registration valid from 12.11.1981 until cancelled was secured by the respondent though on the date of registration it was not liable to pay tax under the Central Act. Liability to pay tax arose on commencement of production and business on 10.1.1984 whereafter exemption from payment of sales-tax was claimed under the notification. 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. 11.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]A bare perusal of the above quoted provision 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) obovesaid the dealer need not necessarily be liable to pay any amount ofwe find no merit in the contention. 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 underion (1) of Section 7 is certainly a registration under the Central Sales Tax Act. This is clear from the language of(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 inty to pay tax arose on commencement of production and business on 10.1.1984 whereafter exemption from payment ofwas claimed under the notification. 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.