Case: Indian Aluminium Cables Limited Vs. State of Haryana

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 S(2)(a)(iv) of the Punjab Sales Act hereinafter referred to as the State5(2) (a) (iv) of the State Act is asIn this Act the expression "taxable turnover" means that part of a dealers gross turnover during any period which remains after deducting there from-(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 underthe Indian Electricity Act, 1910, of goods for use by it in the generation or distribution of suchsection 8 of the Central Sales Tax Act hereinafter referred to as the Central Act, 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 t o pay tax under this Act, which shall be three per cent of his turnover.The provisions in section 8(2A) of the Central Act are asanything 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.EXLANATION: 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 stage s or otherwise than with reference to the turnover of the goods."

Court's reasoning:
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.