Wide meaning of "sales tax law" denied CST exemption for motor spirit despite general sales tax relief.

The proviso to section 8(1) of the Central Sales Tax Act, 1956 was held not to apply to inter-State sales of motor spirit merely because the goods were exempt from general sales tax under the Bombay Sales Tax Act, 1953. The expression "sales tax law" in section 2(i) was given wide amplitude and was treated as including a separate tax law levied on specified goods. Motor spirit remained liable under the Bombay Sales of Motor Spirit Taxation Act, 1946, so the exemption under the general sales tax statute did not displace that separate liability. The assessees were therefore not entitled to the claimed exemption.

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Issues: Whether the proviso to section 8(1) of the Central Sales Tax Act, 1956 exempted inter-State sales of motor spirit when such goods were exempt from general sales tax under the Bombay Sales Tax Act, 1953 but remained liable to tax under the Bombay Sales of Motor Spirit Taxation Act, 1946.

Analysis: The expression "sales tax law" in section 2(i) of the Central Sales Tax Act, 1956 was held to be of wide amplitude and to include not only a general sales tax law but also a law imposing tax on specified goods. Accordingly, the proviso to section 8(1) was not attracted merely because the goods were exempt under the general sales tax law of the appropriate State. The Court also relied on the legislative history of the Bombay enactments to show that motor spirit was continued under a separate taxation regime and that the exemption under the Bombay Sales Tax Act, 1953 was only from tax under that Act, not from liability under the separate motor spirit tax law.

Conclusion: The assessees were not entitled to exemption under the proviso to section 8(1) of the Central Sales Tax Act, 1956, and the reference was answered in the affirmative.

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