Case: State of Uttar Pradesh and Anr Vs. Hindustan Safety Glass Works Private Limited

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 effectit 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 4A 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 Industrial 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;SCHEDULESl. No. Name of the Industrial Units Goods manufactured Date of starting production Column-I Column-II Column-III1. . . . . . . . . . . . . . . . . . .2. . . . . . . . . . . . . . . . . . .3. . . . . . . . . . . . . . . . . . .4. . . . . . . . . . . . . . . . . . .5. . . . . . . . . . . . . . . . . . .6. . . . . . . . . . . . . . . . . . .7.M/s. Hindustan Safety Glass Works (P) Ltd., AllahabadMirrors and Toughened GlassFebruary,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 & Ors. v. Pine Chemicals Ltd. and Ors., 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 materials 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 that case, that 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 or category of goods, but with reference to an industrial unit producing them and their manufacture and sale within a particular period.

Reasoning:
4. 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 exempted 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. (supra), 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.Having regard to the language of the section before its amendment, we are unable to uphold the contention of Mr. Agarwal. The exemption from the Central Sales Tax Act under the repealed provision was in respect of sales or purchases ....... of any goods by a dealer. The section granted exemption to any goods of a dealer when such goods were exempt from tax generally ....... 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.8. 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. (supra) 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.We are unable to uphold this contention. The judgment of Allahabad High Court in the case of Hindustan Safety Glass Works (P) Ltd. (supra) and also some other judgments of some other High Courts were referred to and distinguished on facts. The distinguishing feature in the case of Hindustan Safety Glass Works (P) Ltd. was that the stipulation 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 as in the case of Indian Aluminium Cables Ltd. This Court was not called upon to hold nor did it hold that this would amount to general exemption of the goods from the sales tax.These observations completely negate the argument now advanced on behalf of the respondent. The exemption in the instant case has been granted to a few specified goods of some new industries for a specified period of time. The exemption is not generally given to all industries or all similar goods manufactured and sold in Uttar Pradesh. Similar goods produced by other industries will be taxable under the said Act.The purpose behind the amendment of Section 8(2A) was to make the existing provisions clearer. In other words, the object was not to bring about any change in the existing law but to set it out in clearer words.16 For all these reasons, we are unable to uphold that the law laid down in the case of Commissioner of Sales Tax v. Pine Chemicals Ltd. (supra) will not apply to a case governed by Section 8(2A) before its amendment on 1.4.1973.