General local sales tax exemption triggers Central sales tax relief for inter-State foodgrain sales under section 8(2A).

Inter-State sales of foodgrains were held exempt from Central sales tax because the corresponding local sales were covered by a general exemption under the U.P. Sales Tax Act. The Court treated the exemption for sales by State and Central Government departments as unconditional and not limited to specified circumstances, and therefore a general exemption for section 8(2A) of the Central Sales Tax Act. The 1969 amendment did not change that position on the facts considered, so the inter-State sales were not liable to Central sales tax.

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Issues: Whether inter-State sales of foodgrains were exempt from Central sales tax under section 8(2A) of the Central Sales Tax Act because the corresponding local sales were covered by a general exemption under the U.P. Sales Tax Act.

Analysis: The exemption under section 4(1)(b) of the U.P. Sales Tax Act applied to sales of foodgrains by departments of the State Government and the Central Government without any condition restricting its duration or confining it to specified circumstances. Such an exemption was treated as a general exemption. A general exemption was sufficient to attract section 8(2A) of the Central Sales Tax Act, and the amendment of 1969 did not alter that position on the facts of the case.

Conclusion: The inter-State sales were not liable to Central sales tax and the question was answered in favour of the assessee.

Ratio Decidendi: An exemption from local sales tax that operates generally and not under specified circumstances qualifies for the benefit of section 8(2A) of the Central Sales Tax Act in relation to inter-State sales.

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