COMMISSIONER OF SALES TAX, M.P. v. MADHYA BHARAT PAPERS LTD.

The Judgment of the Court was delivered by H

264 SUPREME COURT REPORTS (2000] l S.C.R. A 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 Prade&h 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. B The relevant part of the notification reads as under :

NOTIFICATION

F. No. A3-41-81(31)-ST-V Dated the 29th June, 1982.

c Wher cas, 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-sec- D tion (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 iliall be payable with eftect 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 :

F SCHEDULE

Class of dealers ~--- Period - -I Restrictions r - - - -and- conditions subject to 1

G (1) - ----- - (2) -- - - - -- J - i ___J__ - - which exemption has been granted. -- -- (3) -- --

xxx xxx xxx xxx

2. Dealers who - H

COMMR OFSALFSTAX v. MADHYA BHARAIPAPERSLTD. [RC. LAHUTl,J.) 265

(a) are registered in the case of an The dealer specified in Ii A under the Madhya industry located in a column (1) shall Pradesh General Sales district. specified in continue to furnish the Tax Act, 1958 (No. 2 category 'A' of Part-II pre1>cribed returns 1

of 1959) and the [of the Anncxure, up to under the Central Central Sales Tax Act, : the date on which Sales Tax Act, 1956 B 1956 (No. 1956). period of 3 years, (No. 74 to 1956), and · beginning from the I shall produce before I ; date · of the assessing authority commencement of; at the time of his I production, expires. assessment a I I certificate issued by c the (Industries ,Commissioner) Madhya 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). F Under the separate Revenue Department Notification No. A3- I 41-81 (35)-ST-V dated .l23.10.81. G = = = = The respondent, a public limittd 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 nut H

266 SUPREME COURT REPORTS [ 2(,'{)() J 1 s. C.R. A disputed that the respondent industrial unit satisfit:s 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 dakd 12.11.1981. B Having taken into consideration the !Wo 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. afkr 1.4.1981 and as such eligibk: for exemption from payment of saks tax. It was also certified that the unit being located in District Bilaspur - cakgory Back- ward '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 undt:r 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 D1;;puty Com- missioner agreed with the Assistant Commissioner. In an appeal pn:frrred by the respondtnt the Board of Rtwnue rev.:rsed 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 th1;;refore the assessment and consequential penalty were unwarrantt:d. F 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 Act:-

''Whether on the facts and circumstances of the case, the G Tribunal was justified in holding that the dealer is eligible to avail of the exemption under Separate Revenue Department Notifica- tion No. A3-41-81-(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 th<: conditions laid H down in the said notification for eligibility, although he was not

C0!\1\1R. OF SALES TAX v. .'.\[ADHY A BHARA1 PArtRS; I;J. :Re. !AHm·~ J.) 267

holding a Registration Certificate under sub-section (1) of Section A 7 of the Central Sales Tax Act, 1956."

The High Court of Madhya Pradesh has answered the question in favour of the respondcnt-assessee forming an opinion that the eligibility certificate issued by the Directorati: of Industries was conclusive and binding on the assessing authorities and they could not go into the question B whether the respondcnt-assesset: was digibk for the benefit of exemption inspitt: of his holding the eligibility certificate by entering into the question of the respondent's r.:gistration whether it was under sub-Section {1) or {2) of Section 7 of the Central Sales Tax Act. Feding aggrieved the Revenue has come up in appeal bdore this Court. c lt was submitted by the learned counsd for the appellant that on a full reading of the notification and placing a reasonable construction then:on the t:xpression" ....... registered under tht: Ct:ntral Sales Tax, 1956", as employed in the first column of the notification should be undt:rstood as meaning the registration under sub-Section (1) of Section 7 of the D Central Sales Tax Act; registration under sub-Section (2) of section 7 of tht: Central Sales Tax Act is not covered by the expression and is of no relevance for the purpose of daiming ext:mption under the notification.

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

Registration of dealers : -

(1) Ewry dealer liable to pay tax under this Act shall, within such time as may be prescribt:d for the purpose, makt: an application for registration under this Act tu 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 Statt: or part, as the case may be, may, not- withstanding that he is not liable tu pay tax undt:r this Act, apply for registration under this Act to the authority referred to in H

p. 268 Copy page pinpoint

A sub-section (1), and every such application shall contain such particulars as may be prescribed.

Explanation - For the purpose of this sub- section, a 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 aboVt: quoted provision goes to show that every dealer liable to pay tax under the Central Sales Ta:x 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 tbe Central Sales Tax Act if (i) they are dealers liable to pay tax under the Salt::s 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 n:gistration 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 neces- sarily 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 betn 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 tht 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. G However, we find no merit in the contention. The language of the notifica- tion 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 ( L) or sub-section (2) of Section 7. A H registration under sub-section (2) of Section 7 is certainly a registration

COMMROFSALES'!AXv. MADHYABHARATPAPERS:.J:J. )RC:. LAHOTU.J 269

under the Central Sales Tax Act. This is clear from the language of sub-section (2) of Section 7 which speaks, inter alia," - ·· ...... may, not- withstanding that he is not liable to pay tax under this Act, apply for n:gistration 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 respondt:nt though on the dak of rngistration it was not liabk to pay tax under the Central Act. Liability to pay tax arose on commencement of production and business on 10.1.1984 whereaftcr ex- emption from payment of sales-tax was claimed· under the notification. Without regard to the fact whether the assessing authority was entitled to c go behind the certificate of eligibility issued by the Directorate of In- dustries, 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 notifications were also satisfo:d. D The appeal is held liable to be dismissed though for a reason dif- ferent from the om: assigned by the High Court The question referred tu for the opinion of the High Court is answered in favour of the assesst:e and against the Revenue. Accordingly, the appeal is dismissed. No order as tu costs.

v.s.s. Appt:al dismissed.