Declared goods exemption under Central sales tax depends on prior State levy on the goods, not on who paid the tax.

Exemption from Central sales tax was held to depend on whether the declared goods had already suffered State purchase tax, not on whether the assessee personally paid that levy. Reading section 8(5) and section 15(b) of the Central Sales Tax Act with the State notification, the court treated the condition as attached to the goods and the intra-State levy itself. Because the goods had been taxed at the first point and the statutory conditions were otherwise satisfied, the exemption applied and the assessment was correctly reduced to the returned figure.

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Issues: (i) Whether a dealer selling declared goods in inter-State trade is entitled to exemption from Central sales tax where purchase tax on the goods had already been levied inside the State, even if the tax was paid by the first purchaser and not by the dealer himself. (ii) Whether the Tribunal was right in allowing the exemption and reducing the assessment to the returned figure.

Issue (i): Whether a dealer selling declared goods in inter-State trade is entitled to exemption from Central sales tax where purchase tax on the goods had already been levied inside the State, even if the tax was paid by the first purchaser and not by the dealer himself.

Analysis: The statutory scheme under section 8(5) of the Central Sales Tax Act, 1956 and section 15(b) of that Act, read with the State notification, was treated as directed to the goods and the fact of intra-State levy, not to the identity of the dealer who originally paid the State tax. The goods in question had already suffered purchase tax at the first point under the State law, and the burden of that tax had merged in the price when the assessee acquired them. Since the notification required proof that tax under the State law had been levied and collected on the declared goods and that no refund would be claimed, the assessee satisfied the conditions.

Conclusion: The dealer was entitled to exemption from Central sales tax, and it made no difference that the purchase tax had been paid by the first purchaser rather than by the assessee.

Issue (ii): Whether the Tribunal was right in allowing the exemption and reducing the assessment to the returned figure.

Analysis: Once the exemption was held to be available under the notification and the statutory conditions were treated as satisfied, the assessment could not be sustained on the disallowed turnover. The Tribunal's acceptance of the claim followed directly from the conclusion that the Central tax was not payable on those sales.

Conclusion: The Tribunal was right in allowing the exemption and in reducing the assessment to the returned figure.

Final Conclusion: The reference was answered in favour of the dealer, and the State's challenge to the exemption failed.

Ratio Decidendi: Where a State notification under section 8(5) of the Central Sales Tax Act, 1956 conditions exemption on prior levy and collection of State tax on declared goods, the exemption depends on the goods having suffered the State levy and not on whether the same dealer personally paid that levy.

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