Central sales tax exemption turns on contemporaneous evidence of non-collection, not later conduct on unrelated transactions.

Section 10 of the Central Sales Tax (Amendment) Act, 1969 granted exemption for specified inter-State sales where tax was not collected and could not have been levied or collected, with the dealer bearing the burden of proving non-collection. The Gujarat HC treated the assessee's quarterly returns and contemporaneous letters to the tax authorities as material evidence of its belief that no Central sales tax was payable after the earlier Supreme Court ruling. It found the Tribunal had ignored this relevant material and relied on innocuous or irrelevant circumstances, including later C forms and pricing references. The exemption claim had to be judged on the relevant assessment period, and tax collected on other sales did not defeat the claim for the sales in question.

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Issues: Whether the assessee was entitled to exemption from Central sales tax under section 10 of the Central Sales Tax (Amendment) Act, 1969 on the sales in question, and whether the Tribunal's finding rejecting the claim was sustainable in view of the evidence on record.

Analysis: Section 10 granted exemption where inter-State sales during the specified period were not subjected to tax because no tax could have been levied or collected, and the burden of proving non-collection lay on the dealer. The Court held that the assessee's quarterly returns claiming the sales as exempt, together with contemporaneous letters to the tax authorities explaining non-collection on the belief that no Central sales tax was payable after the Supreme Court's ruling in the earlier case, constituted important evidence of the assessee's conduct. The Tribunal failed to consider this material and instead relied on circumstances that were either innocuous or irrelevant, such as the later request for C forms, the f.o.r. destination clause, isolated references to inclusive pricing, and subsequent conduct in other transactions. The Court held that the exemption claim had to be judged on the relevant assessment period and that collection of tax on some other sales did not by itself defeat the claim for the sales on which no tax had been collected.

Conclusion: The assessee satisfied the requirements of section 10, and the Tribunal's rejection of the exemption claim was unsustainable.

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