Local sales tax exemption carried into Central sales tax assessment, allowing statutory exclusion of disputed turnover.

An exemption granted to goods under the local sales tax law was treated as available for Central sales tax assessment before the 1969 amendment, following the principle that the State exemption carried through to the central levy in that pre-amendment period. On that footing, the assessee's inter-State sales of country oil chekkus were not liable to tax, and the condition under section 10 of the Central Sales Tax (Amendment) Act, 1969, requiring that no tax was levied or collected on such sales, was satisfied. The assessee was therefore entitled to exclude the disputed turnover under the amending provision.

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Issues: (i) whether the exemption granted to the goods under the local sales tax law was available for assessment under the Central Sales Tax Act before its amendment in 1969; (ii) whether, on the facts, the assessee satisfied the conditions for exclusion of the disputed turnover under section 10 of the Central Sales Tax (Amendment) Act, 1969.

Issue (i): Whether the exemption granted to the goods under the local sales tax law was available for assessment under the Central Sales Tax Act before its amendment in 1969.

Analysis: The turnover related to inter-State sales of products of country oil chekkus, which were exempt from levy under the local sales tax law. The governing principle applied was that, as declared by the Supreme Court, where the State law exempts sales of particular goods, that exemption is automatically available in an assessment under the Central Sales Tax Act as well, before the 1969 amendment.

Conclusion: The local-law exemption was available for the Central sales tax assessment.

Issue (ii): Whether, on the facts, the assessee satisfied the conditions for exclusion of the disputed turnover under section 10 of the Central Sales Tax (Amendment) Act, 1969.

Analysis: The assessee had not collected tax on the sales. Since the exemption was available under the pre-amendment position, the statutory condition that no tax could have been levied or collected in respect of such sales was satisfied. The earlier decisions relied on by the revenue were distinguished because they dealt with retrospective deletion of an exemption and not with a case where the underlying exemption continued to exist.

Conclusion: The assessee satisfied the conditions under section 10 and was entitled to exclude the disputed turnover.

Final Conclusion: The petitions failed, and the revenue was not entitled to the relief sought against the assessee.

Ratio Decidendi: An exemption granted under the local sales tax law is automatically available for Central sales tax assessment before the 1969 amendment, and where no tax was collected because the sales were not liable to levy, the assessee can claim the statutory exclusion under the amending provision.

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