State exemption cannot cover inter-State sales taxable under the Central Sales Tax Act despite the section 8(2) fiction.

Section 8(2) of the Central Sales Tax Act creates a limited fiction for computing the rate and manner of tax as if an inter-State sale had occurred inside the appropriate State, but it does not subject the dealer to the State sales tax law for all purposes. A State exemption notification issued under section 9(1) of the Andhra Pradesh General Sales Tax Act applies only to goods liable to tax under the State Act and cannot extend to inter-State sales taxable under the Central Act. On that basis, the assessee could not claim the State exemption for the transactions in question.

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Issues: Whether an assessee whose inter-State sales fall under section 8(2) of the Central Sales Tax Act, 1956 can claim exemption under a State notification issued under section 9(1) of the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The statutory fiction in section 8(2) operates only for the limited purpose of calculating the rate and manner of tax as if the sale had taken place inside the appropriate State. It does not place the dealer under the State sales tax law for all purposes. The State notification granted exemption only in respect of goods liable to tax under the State Act, whereas the transactions in question were inter-State sales taxable under the Central Act. The State Government therefore had no power under section 9(1) to exempt those transactions from Central sales tax liability.

Conclusion: The assessee was not entitled to the benefit of the State exemption notification, and the revision was dismissed.

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