The appellant- company is an assessee under the Haryana General Sales Tax Act, 1973, Haryana General Sales Tax Rules, 1975 and the Central Sales Tax Act, 1956. In the year 1995-96, the assessee-company after purchase of Radio Pagers from M/s Bharati Telecom Limited was also engaged in inter-state sale of the said Radio Pagers and in course of the said transaction, did not charge any sales tax from the purchasers on the basis of Notification No. SO 89/CA.74/56/S.8/95 dated 04.09.1995 issued under Section 8(5) of the CST Act read with Rule 28A(4)(c) of the Rules. The appellant filed its return and claimed exemption certificate placing reliance on the said notification, but the claim of exemption put forth by the assessee was not accepted by the assessing officer vide assessment order dated October 05, 2001. Being aggrieved by the order of assessment, the appellant preferred an appeal before the Joint Excise and Taxation Commissioner (Appeal), Rohtak Circle, Rohtak who dismissed the appeal vide order dated May 2, 2002. The matter was then brought before the Tribunal and then to the High Court.
The issues raised before the High Court to be decided was that whether the notification dated 04.09.1995 issued under Section 8(5) of the CST Act is relatable to the exemption of goods or the person selling it? Secondly, whether in view of the notification dated 04.09.1995 issued under Section 8(5) of the CST Act and Rule 28A of the Rules, the inter-state sales of the goods manufactured by an “exempted unit”, even by any other dealer, is exempted from the levy of the Central Sales Act?”
The High Court referred to Section 8(2A) and 5 of the CST Act and Rule 28A(2)(n) and (4)(c) of the Rules and notification dated 04.09.1995; distinguished the authorities cited by the assessee and came to hold that the expression “notional sales tax liability” as used in Rule 28A(2)(n) takes within its fold not only the amount of tax payable on the sales of finished goods of the eligible industrial unit under the Act but also the amount of tax payable under the CST Act on the sales of finished products of the eligible industrial units made in the course of inter-state trade or commerce and branch transfers or consignment sales outside the State of Haryana. Reference was made to clause (c) of sub-rule (4) of Rule 28A of the Rules to opine that the scope of exemption was extended to the goods manufactured by an eligible industrial unit availing exemption under Rule 28A at all successive stage(s) of sale or purchase subject to the condition that the dealer effecting successive purchase or sale furnishing a certificate in form ST-14A which is required to be obtained from the assessing authority duly filled in and signed by the registered dealer to whom such goods were sold.
The High Court further observed that it was not happily worded and thereafter, it proceeded to hold that the tribunal was correct in following its earlier order for arriving at the conclusion that the notification did not exempt the goods sold in the course of inter-state trade by dealer other than those who held valid exemption certificate granted under Rule 28A of the Rules. It further ruled that if the State Government wanted to extend the benefit of exemption from payment of tax under the CST Act to the sale of goods effected by a dealer in the course of inter-state trade irrespective of the fact that such dealer did not hold valid exemption certificate under Rule 28A of the Rules, then it would have incorporated the language of Rule 28A(4)(c) of the Rules in the notification and would not have put a rider that such dealer should not have charged tax under the CST Act on the sale of goods manufactured by it.
Thus, the ultimate conclusion recorded by the High Court is that successive sales of goods manufactured by dealer holding valid exemption certificate were exempt from payment of sales tax so long as they were inter-state sales but in respect of sale of goods by a dealer not holding exemption certificate under Rule 28A in the course of inter-state trade, the benefit of exemption envisaged under notification dated 04.09.1995 was not available to such dealer.
While deciding the case in favour of the assessee, it was observed by Deepak Misra. J, that the said rule exempts all intra-state sales including subsequent sales. The reason for enacting this clause is obvious. The intention is to exempt all subsequent stages in the State of Haryana and the eligible product can be sold a number of times, without payment of tax. Intra-state sales refer to sale between two parties within the State of Haryana. Inter-state transaction results in movement of goods from State of Haryana to another State. Thus, clause (ii) of sub-rule 2(4) refers to inter-state trade or commerce and the notification does not refer to subsequent sales as in case of Rule 28A(4). The Court invalidated all the impugned orders and hold that the assessee is eligible for the benefit under the said notification.
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