General State sales tax exemption for certified and truthfully labelled seeds extended to inter-State sales under central tax law.

State sales tax exemptions extend to inter-State sales under section 8(2-A) of the Central Sales Tax Act only where the State exemption is general and not confined to specified conditions. The Andhra Pradesh High Court treated the references to certified and truthfully labelled seeds under the Seeds Act, 1966 as identifying the class and nature of the goods, not imposing cumulative restrictions. The phrase "for agricultural purposes" was read as qualifying the seed category rather than limiting the exemption. On that construction, the State notification was a general exemption, and the inter-State turnover of the seeds qualified for exemption.

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Issues: Whether the exemption granted by the State Government to certified and truthfully labelled seeds for agricultural purposes under the State sales tax law was a general exemption so as to attract exemption under section 8(2-A) of the Central Sales Tax Act.

Analysis: The combined effect of section 9 of the State Act and section 8(2-A) of the Central Sales Tax Act is that inter-State sales enjoy exemption only where the corresponding State exemption is general and is not confined to specified circumstances or conditions. The expression used in the Government order had to be understood in the light of the Seeds Act, 1966, under which certification and truthful labelling are the recognised categories of seed regulation. Those expressions were held to describe the nature and identity of the goods, not to impose cumulative or restrictive conditions on the grant of exemption. The words "for agricultural purposes" were treated as qualifying the class of seeds and not as creating a limiting condition. On that construction, either certified seeds or truthfully labelled seeds were covered by the exemption, and the State notification did not fall within the exclusion in the explanation to section 8(2-A).

Conclusion: The exemption under the State notification was a general exemption and the assessee was entitled to exemption under section 8(2-A) of the Central Sales Tax Act.

Final Conclusion: The revision succeeded and the order under challenge was set aside because the inter-State turnover of the seeds qualified for exemption.

Ratio Decidendi: An exemption under the State sales tax law qualifies for section 8(2-A) of the Central Sales Tax Act only when it is not granted in specified circumstances or under specified conditions, and words that merely identify the class or nature of goods do not amount to restrictive conditions.

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