Conditional State sales tax exemption cannot reduce inter-State tax to nil under Central Sales Tax law.

Section 8(2A) of the Central Sales Tax Act extends a State sales tax exemption to inter-State sales only where the goods are exempt generally under the State law. A conditional exemption confined to specified circumstances does not qualify, and the corresponding Central tax cannot be reduced to nil. Here, the Karnataka notification exempted footwear only when the sale price did not exceed Rs. 30 per pair, so it operated as a condition-based exemption rather than a general one. The challenge therefore failed, and the State exemption could not be carried over to inter-State turnover.

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Issues: Whether the exemption granted under the notification issued under section 8-A of the Karnataka Sales Tax Act, 1957 for sale of footwear costing not more than Rs. 30 per pair could be extended to inter-State sales so as to make the tax payable under section 8(2A) of the Central Sales Tax Act, 1956 nil.

Analysis: Section 8(2A) of the Central Sales Tax Act, 1956 extends State exemption to inter-State sales only where the relevant goods are exempt from tax generally under the sales tax law of the appropriate State. The explanation withdraws that benefit where the State exemption operates only in specified circumstances or under specified conditions. The State notification did not exempt footwear in general; it granted exemption only when the sale price did not exceed Rs. 30 per pair. That made the exemption conditional and dependent on a specified circumstance. The authorities relied on the principle that a general exemption must exist under the State law before the corresponding Central tax can be reduced to nil.

Conclusion: The State notification did not create a general exemption and therefore did not entitle the petitioner to nil tax treatment under the Central Sales Tax Act, 1956.

Final Conclusion: The challenge to the notice failed because the exemption under the State notification could not be carried over to inter-State turnover.

Ratio Decidendi: An exemption under the sales tax law of the appropriate State is available for purposes of section 8(2A) of the Central Sales Tax Act, 1956 only if it is a general exemption and not one confined to specified circumstances or conditions.

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