Conditional State sales tax exemption did not extend to Central sales tax, and departmental clarification could not create estoppel.

Footwear exempt under the Karnataka Sales Tax Act only when its price did not exceed Rs. 30 per pair did not qualify for nil Central sales tax under section 8(2-A) of the Central Sales Tax Act, 1956, because the State exemption was conditional rather than a general exemption. The Court treated the price limit as a limiting condition, not merely a descriptive feature of the goods, so the inter-State sales were not exempt. It also held that an earlier departmental clarification could not override the statute or bind assessing authorities, and no equitable estoppel was established. The challenge to denial of Central sales tax exemption therefore failed.

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Issues: (i) Whether footwear costing not more than Rs. 30 per pair was exempt from Central sales tax under section 8(2-A) of the Central Sales Tax Act, 1956 by reason of its exemption under the Karnataka Sales Tax Act, 1957; (ii) Whether the Commissioner's earlier clarification could bind the department or found any equitable estoppel in favour of the petitioners.

Issue (i): Whether footwear costing not more than Rs. 30 per pair was exempt from Central sales tax under section 8(2-A) of the Central Sales Tax Act, 1956 by reason of its exemption under the Karnataka Sales Tax Act, 1957.

Analysis: Section 8(2-A) grants nil Central sales tax only where the relevant goods are exempt from State tax generally. The Explanation excludes goods exempt only in specified circumstances or under specified conditions. Footwear remained footwear irrespective of price, and the stipulation that the exemption applied only when the price was not more than Rs. 30 per pair was a condition attached to the exemption, not a mere descriptive identifier. The State exemption was therefore conditional and not general.

Conclusion: The footwear exemption under the Karnataka Sales Tax Act did not attract section 8(2-A) of the Central Sales Tax Act, 1956, and the petitioners were not entitled to Central sales tax exemption.

Issue (ii): Whether the Commissioner's earlier clarification could bind the department or found any equitable estoppel in favour of the petitioners.

Analysis: Clarifications or circulars issued by tax authorities represent only the executive's understanding of the law and cannot override the statute or bind courts or quasi-judicial assessing authorities. The clarification relied upon was not shown to be a statutory clarification addressed for mandatory compliance, and no factual foundation was laid to show that the petitioners altered their position to their detriment in reliance on it.

Conclusion: The clarification was not binding on the authorities and no estoppel or equitable relief was made out in favour of the petitioners.

Final Conclusion: The challenge to the denial of Central sales tax exemption failed, and the writ petitions were dismissed.

Ratio Decidendi: An exemption from State sales tax operates for purposes of section 8(2-A) of the Central Sales Tax Act, 1956 only if it is a general exemption; where the State exemption is conditional or limited to specified circumstances, the inter-State sales do not become exempt, and administrative clarifications contrary to statute cannot confer such exemption.

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