Case: Indian Aluminium Cables Limited Vs. State of Haryana

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 8(2A) of the Central Act, and, therefore, the assessees 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 8(2A) 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.In the Madhya Pradesh case (supra) there was no dispute that the sales effected by the assessee fell under section 8(1) 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 exempt ion 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.9. The other decision on which the appellant relied is of the Allahabad High Court in Hindustan Safety Glass Works (P.) Ltd. v. The State of Uttar Pradesh &Anr.(1) 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 8(2A) of the Central Act. It was held that for purposes of section 8(2A) 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 8(2A) 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.10. 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 n o tax is payable. Section S of the State Act deals with what has to be excluded from the taxable turnover of the dealer.11. Both the sections deal with goods which do not suffer from sales tax. A Section 8(2A) of the Central Act exempts good s from inter State sales tax where a tax law of the State has exempted them from sales tax. The Explanation to section 8(2A) 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 Indian Electricity Act, 1910. 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 5(2)(a)(iv) 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.12. 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 8(2A) of the Central Act read with section 5(2)(a)(iv) of the State Act.

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

Explanation:
0[ds]Both the sections deal with goods which do not suffer from sales tax. A Section 8(2A) of the Central Act exempts good s from inter State sales tax where a tax law of the State has exempted them from sales tax. The Explanation to section 8(2A) 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 underthe Indian Electricity Act, 1910. 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 5(2)(a)(iv) of the State Act are descriptive of goods is unacceptable. The expression "generation or distribution of such energy" specifies the condition under which exemption isthese 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 8(2A) of the Central Act read with section 5(2)(a)(iv) of the State Act.