General sales tax exemption for registered dealers can extend to inter-State sales under CST section 8(2A).

An exemption notification for hank yarn in plain reels, issued under the State sales tax law, was treated as a general exemption for sales to registered dealers because it was tied to a specified class of goods and dealers without additional qualifying conditions. On that basis, the note states that section 8(2A) of the Central Sales Tax Act, 1956 applies where local law grants a general exemption, and the inter-State sales of hank yarn in plain reels also qualified for the benefit. Exemptions limited by special use conditions, industrial unit restrictions, or similar circumstances were distinguished as materially different.

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Issues: Whether the exemption granted under G.O. Ms. No. 1067, issued under section 9(1) of the Andhra Pradesh General Sales Tax Act, 1957, was a general exemption so as to attract section 8(2A) of the Central Sales Tax Act, 1956 for inter-State sales of hank yarn in plain reels.

Analysis: The notification exempted sales of hank yarn in plain reels to registered dealers in the State and also to specified weavers and societies for consumption in their industry in the State. The exemption, so far as sales to registered dealers were concerned, was linked to a specified class of goods and not to any further condition or circumstance. The statutory scheme of section 9 of the State Act distinguished between exemption notifications under sub-section (1) and restrictions or conditions under sub-section (2). Section 8(2A) of the Central Sales Tax Act, 1956 applies where the local law grants exemption generally and not where exemption is confined to specified circumstances or conditions. As dealers dealing in hank yarn were required to be registered under section 12(2)(a) read with section 12(5), the class of registered dealers constituted the relevant class for the notification, and the exemption could not be treated as conditional merely because the notification mentioned registered dealers. The authorities relied upon for the Revenue concerned exemptions tied to industrial units, use conditions, periods, or other special restrictions, which were materially different.

Conclusion: The exemption under the notification was a general exemption in respect of sales to registered dealers, and the benefit extended to inter-State sales under section 8(2A) of the Central Sales Tax Act, 1956. The issue was decided in favour of the assessee.

Ratio Decidendi: Where a State exemption notification grants relief with reference to specified goods and a class of dealers without imposing additional qualifying circumstances or conditions, the exemption is general for the purposes of section 8(2A) of the Central Sales Tax Act, 1956 and applies to inter-State sales also.

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