General sales tax exemption under State law can extend to inter-State sales under CST section 8(2A) when no real condition limits it.

Oil-cakes were generally exempt from tax under the Bombay Sales Tax Act by notification issued under section 41, and that exemption extended to inter-State sales under section 8(2A) of the Central Sales Tax Act. The State-level exemption was unconditional in substance; the phrase 'within the State of Maharashtra' did not impose a restrictive condition because the State could grant exemption only for intra-State transactions. Section 13 of the Bombay Sales Tax Act did not alter this result, as purchase tax under that provision arose only where sales tax was otherwise payable. Inter-State sales of oil-cakes were therefore not liable to Central sales tax.

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Issues: Whether oil-cakes, being generally exempt from tax under the Bombay Sales Tax Act by virtue of the notification issued under section 41, were also exempt from tax on inter-State sales under section 8(2A) of the Central Sales Tax Act.

Analysis: Section 8(2A) provides that where the sale or purchase of goods is exempt from tax generally under the sales tax law of the appropriate State, the tax under the Central Sales Tax Act on inter-State sales of such goods shall be nil. The Explanation excludes only those cases where the State exemption is confined to specified circumstances or conditions. The notification in question exempted all sales of oil-cakes within the State without any real condition, and the words 'within the State of Maharashtra' did not constitute a restrictive condition because the State authorities could grant exemption only in respect of intra-State transactions. Section 13 of the Bombay Sales Tax Act did not alter this position, as purchase tax under that provision arose only in respect of goods otherwise liable to sales tax. The reliance on the cited Supreme Court decision was held to be misplaced because that case involved a different statutory setting where purchase tax was admittedly leviable.

Conclusion: The exemption was a general exemption within the meaning of section 8(2A) of the Central Sales Tax Act, and the inter-State sales of oil-cakes were not liable to tax.

Ratio Decidendi: Where goods are generally exempt from tax under the appropriate State sales tax law, without any operative condition limiting the exemption, section 8(2A) of the Central Sales Tax Act exempts the corresponding inter-State sales from Central sales tax.

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