Plain-language fiscal exemption and first-point sales tax rules govern small-scale industry sales and inter-dealer transactions.

A fiscal exemption under item 68 of the Second Schedule was construed according to its plain language: goods manufactured, processed or assembled by a small-scale industry were exempt for five years from the first sale made after registration as a small-scale industry, provided sales tax registration was valid. The text also notes that section 8 and a valid first-point notification fixed tax incidence at the first sale in the series, so sales by one registered dealer to another remained taxable where the notification so provided, including liquor and other alcoholic beverages. The result described is that the exemption applied on the stated terms, while inter-dealer sales remained exigible to tax.

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Issues: (i) Whether the assessee was entitled to exemption from sales tax under item 68 of the Second Schedule to the Goa, Daman and Diu Sales Tax Act, 1964 for the relevant periods; (ii) Whether sales of goods by one registered dealer to another registered dealer were exigible to tax under section 8 of the Goa, Daman and Diu Sales Tax Act, 1964.

Issue (i): Whether the assessee was entitled to exemption from sales tax under item 68 of the Second Schedule to the Goa, Daman and Diu Sales Tax Act, 1964 for the relevant periods.

Analysis: Item 68 granted exemption to goods manufactured, processed or assembled by a small-scale industry for a period of five years from the date of the first sale effected by such industry on or after the date of validity of its registration under the Sales Tax Act. The provision was read as requiring both registration as a small-scale industry and registration as a dealer, and the five-year period was held to commence from the first sale after registration as a small-scale industry during the validity of sales tax registration. The language was treated as clear and unambiguous.

Conclusion: The assessee was entitled to exemption from the date of its first sale after registration as a small-scale industry during the validity of its registration under the Sales Tax Act.

Issue (ii): Whether sales of goods by one registered dealer to another registered dealer were exigible to tax under section 8 of the Goa, Daman and Diu Sales Tax Act, 1964.

Analysis: Section 8 fixed the taxable point of sale, and its proviso empowered the Government to specify the first or any other point of sale in a series of sales of successive dealers. The notification issued under that proviso made liquor and other alcoholic beverages liable to tax at the first point only, showing that the taxable incidence applied even where the purchaser was a registered dealer.

Conclusion: Sales by one registered dealer to another registered dealer were exigible to tax.

Final Conclusion: The exemption issue was decided in favour of the assessee, while the taxability of inter-dealer sales was upheld in favour of the revenue, resulting in a mixed outcome on the references.

Ratio Decidendi: A fiscal exemption expressed in clear terms must be applied according to its plain language, and where the taxing statute with a valid notification fixes the first point of sale, the tax applies notwithstanding that the purchaser is a registered dealer.

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