General sales tax exemption must be unconditional to trigger nil Central sales tax on inter-State sales.

Section 8(2A) of the Central Sales Tax Act applies only where the relevant goods are exempt from tax generally under the sales tax law of the appropriate State. A conditional, dealer-linked, or circumstance-specific exemption does not qualify as a general exemption for nil-rate treatment on inter-State sales. The Tamil Nadu relief for pulses and grams was treated as tied to the dealer's turnover and the local sales tax framework, not as a complete exemption from tax on the goods themselves. Accordingly, the State notification and amendment did not extend nil Central sales tax to the inter-State transactions, and the challenge to the Government Order failed.

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Issues: Whether the exemption from tax available under the Tamil Nadu General Sales Tax Act, 1959 in respect of pulses and grams amounted to a general exemption so as to attract the nil rate under section 8(2A) of the Central Sales Tax Act, 1956 for inter-State sales.

Analysis: The statutory scheme under section 8(2A) of the Central Sales Tax Act, 1956 applies only where the sale or purchase of goods is exempt from tax generally under the sales tax law of the appropriate State. An exemption that is conditional, dealer-specific, or confined to specified circumstances does not satisfy that requirement. The relief relied on by the petitioners under the Tamil Nadu enactment was not treated as a total exemption from tax on the goods themselves, but as an exemption linked to the turnover of the dealer and the terms of the local sales tax regime. The Court therefore held that the State notification and the amendment under the Tamil Nadu law did not create a general exemption capable of extending to inter-State sales under the Central Act.

Conclusion: The petitioners were not entitled to claim nil Central sales tax on the basis of the State exemption, and the challenge to the Government Order failed.

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