Retrospective exemption notification controls purchase tax liability where its plain terms cover inter-State trade sales and no tax was collected.

A retrospective exemption notification under Section 4(2) of the Rajasthan Sales Tax Act, 1954 can override purchase tax liability according to its plain terms. The notification dated 07.03.1994 exempted specified purchases made up to 31.03.1995 by registered dealers liable under Section 5-A, subject to sale in inter-State trade or commerce and payment to the State of any tax charged or collected. It did not exclude purchases made under Form ST-17, and the prior notification dated 01.12.1986 did not defeat the later exemption. On that basis, purchase tax was stated to be not leviable where no tax had been charged or collected, and interest on such levy also could not stand.

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Issues: Whether purchase tax could be levied on goods purchased under Form ST-17 and later sold for export in view of the exemption notification dated 07.03.1994 issued under Section 4(2) of the Rajasthan Sales Tax Act, 1954.

Analysis: Section 5-A of the Rajasthan Sales Tax Act, 1954 provided for levy of purchase tax, but Section 4(2) empowered the State Government to exempt sale or purchase of goods prospectively or retrospectively by notification on such conditions as specified. The notification dated 07.03.1994 exempted purchases of goods made up to 31.03.1995 by a registered dealer liable to pay tax under Section 5-A, subject to the conditions that the goods were sold in the course of inter-State trade or commerce and that any tax charged or collected on such purchases would be paid to the State Government. The notification did not exclude purchases made under Form ST-17, and its plain terms showed that where no purchase tax had been charged or collected, no levy was to be made. The prior notification dated 01.12.1986 and the declarations in Form ST-17 did not defeat the later exemption granted by the State Government.

Conclusion: Purchase tax was not leviable on the disputed transactions, and the levy of interest on that tax also could not survive.

Final Conclusion: The revision petitions failed because the exemption notification covered the transactions and the demand of purchase tax was not justified.

Ratio Decidendi: A retrospective exemption notification issued under Section 4(2) of the Rajasthan Sales Tax Act, 1954 prevails according to its plain terms, and where it exempts purchases sold in inter-State trade or commerce without excluding purchases made under a declaration form, purchase tax cannot be levied if no tax was charged or collected.

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