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PETITIONER: COMMISSIONER OF SALES TAX, M.P.

       Vs.

RESPONDENT: MADHYA BHARAT PAPERS LTD.

DATE OF JUDGMENT:       18/01/2000

BENCH: R.C.Lahoti, N.Santosh Hedge

JUDGMENT:

R.C.LAHOTI, J.

     In exercise of the powers conferred by sub-Section (5) of  Section  8  of  the Central Sales  Tax  Act,  1956,  the Government   of  Madhya  Pradesh   issued   a   notification No.F.No.A3-41-81(31)-ST-V Dated the 29th June, 1982 allowing exemption  from payment of tax to certain dealers subject to satisfying  the  requirements  of   the  notification.   The relevant part of the notification reads as under:-

     NOTIFICATION

     F.No.A3-41-81(31)-ST-V  Dated  the  29th  June,  1982. Whereas,  the  State  Government  is satisfied  that  it  is necessary so to do in the public interest;

     Now, therefore, in exercise of the powers conferred by sub-section  (5) of Section 8 of the Central Sales Tax  Act, 1956  (No.74  of 1956), the State Government hereby  directs that  no tax under the said Act shall be payable with effect from  the Ist July, 1982, by the dealers specified in column (1)  of the Schedule below, who have set up industry in  any of the districts of Madhya Pradesh specified in the annexure to  this  notification (...........) in respect of sales  in the  course  of  inter-  state trade or  commerce  of  goods produced / manufactured by them, for the period specified in column  (2),  subject  to the  restrictions  and  conditions specified in column (3) of the said Schedule:-

     SCHEDULE

     Class  of  dealers Period Restrictions and  conditions subject to which exemption has been granted.

     (1)                       (2)                      (3) ______________________________________________________________

     xxx xxx xxx xxx

     2.  Dealers who -

     a)  are  registered in the case The  dealer  specified under  the Madhya of an industry in column (1) shall Pradesh

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General  located  in  a continue to furnish Sales  Tax  Act, district  the  prescribed 1958 (No.2 of 1959)  specified  in returns  under  the  and the Central  Sales  category  ‘A’of Central  Sales  Tax  Tax  Act, 1956  (No.   Part-II  of  the Act,1956  (No.74 to 1956).  Annexure, up to 1956), and shall the  date  on  produce  before the  which  period  assessing authority  of  3  years, at the time of his  beginning  from assessment   a  certi-  the  date   of  ficate   issued   by commencement    the    (     Industries    of    production, Commissioner)Madhya   expires.   Pradesh,  or  any   officer authorised  by  him  for the  purpose,certifying  that  such dealer is eligible to claim

     the  exemption  from  payment of tax and that  he  has opted  for the scheme of exemption from payment of tax under the Madhya Pradesh General Sales Tax Act, 1958(No.2 of 1959) Under  the  separate  Revenue  Department  Notification  No. A-3-41-81(35)-ST-V dated 23.10.81.

     xxx xxx xxx xxx

     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 Columns  (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  registrations as ‘dealer’ under the two Acts i.e.,  the State  and  the Central Acts, the Directorate of  Industries issued  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 upto 9.1.1987.

     The  Assistant  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 Central 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.

     At  the instance of the Revenue the following question was  stated for the opinion of the High Court under  Section

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44 of the M.P.  General Sales Tax Act:-

     "Whether  on 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.    A-3-41-81-(31)-ST-V,  dated 29.6.82  in  respect  of  the  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 sub-section (1) of Section 7 of the Central Sales Tax Act, 1956."

     The  High  Court  of Madhya Pradesh has  answered  the question  in  favour of the respondent-assessee  forming  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  the respondent-assessee was eligible  for the  benefit  of  exemption  inspite   of  his  holding  the eligibility certificate by entering into the question of the respondent’s  registration whether it was under  sub-Section (1)  or  (2)  of  Section 7 of the Central  Sales  Tax  Act. Feeling  aggrieved the Revenue has come up in appeal  before this Court.

     It  was  submitted  by  the learned  counsel  for  the appellant  that  on a full reading of the  notification  and placing  a reasonable construction thereon the expression  - "......registered  under  the Central Sales Tax,  1956",  as employed in the first column of the notification

     should be understood as meaning the registration under sub-  Section (1) of Section 7 of the Central Sales Tax Act; registration  under  sub-Section  (2) of Section  7  of  the Central  Sales Tax Act is not covered by the expression  and is  of  no relevance for the purpose of  claiming  exemption under the notification.

     Section  7 of the Central Sales Tax Act (relevant part thereof) reads as under:

     Registration of dealers -

     (1)  Every  dealer  liable to pay tax under  this  Act shall,  within  such  time  as may  be  prescribed  for  the purpose, make an application for registration under this Act to  such  authority in the appropriate State as the  Central Government  may,  by general or special order, specify,  and every such application shall contain such particulars as may be prescribed.

     (2)  Any dealer liable to pay tax under the sales  tax law  of the appropriate State, or where there is no such law in  force in the appropriate State or any part thereof,  any dealer  having a place of business in that State or part, as the  case may be, may, notwithstanding that he is not liable to pay tax under this Act, apply for registration under this Act  to  the authority referred to in sub-section  (1),  and every such application shall contain such particulars as may be prescribed.

     Explanation  - For the purpose of this sub-section,  a

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dealer  shall  be deemed to be liable to pay tax  under  the sales  tax law of the appropriate state notwithstanding that under such law a sale or purchase made by him is exempt from tax  or a refund or a rebate of tax is admissible in respect thereof.

     xxx xxx xxx

     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)  abovesaid the dealer need not necessarily be liable  to pay any amount of tax.

     The  learned counsel for the appellant submitted  that the  dealers  liable to pay tax under the Central  Act  have been  dealt  with only under sub-section (1) of  Section  7; sub-section  (2) refers to registration under the  sales-tax law of the appropriate State if there be one in force and in as  much as the relevant notification dated 29.6.1982  deals with exemption from payment of tax under the Central Act, it is  necessary  that the dealer should have  been  registered under  sub-section (1) of Section 7 of the Act.  However, we 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 under sub-section (1) or sub-section (2) of  Section  7.   A registration under  sub-section  (2)  of Section  7  is  certainly a registration under  the  Central Sales  Tax  Act.   This is clear from the language  of  sub- section  (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 in sub-section (1)...."

     The  learned  counsel for the respondent-assessee  has rightly  pointed  out that the certificate  of  registration ‘valid  from 12.11.1981 until cancelled’ was secured by  the respondent  though  on the date of registration it  was  not liable  to pay tax under the Central Act.  Liability to  pay tax  arose  on  commencement of production and  business  on 10.1.1984 whereafter exemption from payment of sales-tax was 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

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were also satisfied.

     The appeal is held liable to be dismissed though for a reason  different  from the one assigned by the High  Court. The  question referred to for the opinion of the High  Court is  answered  in  favour  of the assessee  and  against  the Revenue.  Accordingly, the appeal is dismissed.  No order as to the costs.