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

The respondent a public limited company, is a new industrial unit engaged in manufacture and sale of paper at Champa in the backward tribal area of District Bilaspur in the State of Madhya Pradesh. It is not disputed that the respondent industrial unit satisfies the requirements of Column (2) and (3) of the notification. It is also not disputed that the respondent industrial unit satisfies the requirements of Column (2) and (3) of the notification. It is also not disputed that the respondent was registered as a dealer under the M.P. General Sales Tax Act, 1958 as also under Section 7(2) of the Central Sales Tax Act, 1956. The registration under the Central Sales Tax Act is dated 12.11.1981. Having taken into consideration the two sales tax registration as `dealer under the two Acts i.e., the State and the Central Acts, the Directorate of Industries issues a certificate of eligibility dated 19.2.1985 for exemption from payment of sales tax whereby it was certified that the respondent was a new unit having gone into production on 10.1.1984 i.e. after 1.4.1981 and as such eligible for exemption from payment of sales tax. It was also certified that the unit being located in District Bilaspur category Backward `A was eligible for exemption for the period uptoAssistant Commissioner of Sales Tax formed an opinion that for the purpose of claiming benefit of the exemption notification a dealer registered under the State Act has also to be registered under sub-section (1) of Section 7 of the General Sales Tax Act but the respondent was registered under sub-section (2) and not sub-section (1) of Section 7 of the Central Sales Tax Act and therefore was not entitled to the benefit of the exemption notification dated 29.6.1982. The Appellate Deputy Commissioner agreed with the Assistant Commissioner. In an appeal preferred by the respondent the Board of Revenue reversed the finding of the authorities below and held that on the basis of the certificate of eligibility issued by the Directorate of Industries, the respondent was entitled to exemption from payment of sales tax and therefore, the assessment and consequential penalty were unwarranted.4. At the instance of the Revenue the following question was stated for the opinion of the High Court under Section 44 of the M.P. General Sales Tax Acton the facts and circumstances of the case, the Tribunal was justified in holding that the dealer is eligible to avail of the exemption under Separate Revenue Department Notification No.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(1) of Section 7 of the Central Sales Tax Act, 1956.The High Court of Madhya Pradesh has answered the question in favour of theforming 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 thewas 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(1) or (2) of Section 7 of the Central Sales Tax Act. Feeling aggrieved the Revenue has come up in appeal before this Court.

Court's reasoning:
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.