General State sales tax exemption extends to inter-State sales under CST law unless limited by statutory conditions.

Where a dealer's goods are exempt from State sales tax generally, the same exemption extends to inter-State sales under section 8(2A) of the Central Sales Tax Act unless the exemption is confined to specified circumstances, conditions or stages. The State notification in question was treated as a general exemption of the assessee's turnover in Uttar Pradesh, so the inter-State sales also qualified for nil tax under the Central Act. The subsequent amendment was held not to change that character or limit the exemption to intra-State sales only.

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Issues: (i) Whether the assessee's turnover was exempt from State sales tax generally, so as to attract exemption for its inter-State sales under section 8(2A) of the Central Sales Tax Act. (ii) Whether the amendment made by clause 30(3) of U.P. Ordinance No. 12 of 1975 and section 31(3)(a) of U.P. Act No. 38 of 1975 confined the exemption to intra-State sales only.

Issue (i): Whether the assessee's turnover was exempt from State sales tax generally, so as to attract exemption for its inter-State sales under section 8(2A) of the Central Sales Tax Act.

Analysis: The exemption granted by the State notification, as amended, was treated as a general exemption of the assessee's turnover in Uttar Pradesh and not as an exemption confined to specified circumstances or conditions. The Court read section 8(2A) of the Central Sales Tax Act with its explanation and held that the material inquiry was whether the goods of the dealer were exempt from tax generally under the appropriate State law. On that basis, the inter-State sales also qualified for nil tax under the Central Act.

Conclusion: Yes. The assessee's turnover was exempt generally, and the inter-State sales were also exempt under section 8(2A) of the Central Sales Tax Act.

Issue (ii): Whether the amendment made by clause 30(3) of U.P. Ordinance No. 12 of 1975 and section 31(3)(a) of U.P. Act No. 38 of 1975 confined the exemption to intra-State sales only.

Analysis: The amendment substituted words relating to sales made within the State, but the Court held that this did not alter the essential character of the exemption. In the Court's view, the amended notification still continued to grant a general exemption from State sales tax on the assessee's sales in Uttar Pradesh and did not convert the exemption into one limited only to intra-State sales for the purpose of denying Central sales tax relief.

Conclusion: No. The amendment did not narrow the exemption to intra-State sales only.

Final Conclusion: The reference was answered in favour of the assessee, and the inter-State sales of the goods remained entitled to exemption under the Central Sales Tax Act on the footing of general State exemption.

Ratio Decidendi: Where a dealer's sales of particular goods are exempt from State sales tax generally under the appropriate State law, the same exemption extends to inter-State sales under section 8(2A) of the Central Sales Tax Act unless the exemption falls within the statutory exceptions of specified circumstances, specified conditions, or specified stages.

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