Conditional tax exemption does not erase liability; later reduced-rate notification can still support entry tax exemption.

A conditional sales tax exemption does not extinguish the underlying tax liability where the goods remain taxable under the charging provision; it operates only at the stage of collection or quantification. On that basis, the later notification prescribing a reduced taxable rate could be applied to the goods, and the entry tax exemption notification was available if its conditions were otherwise satisfied. The adverse assessment and revisional orders were therefore treated as unsustainable, and the dealer was entitled to the entry tax exemption benefit.

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Issues: Whether a dealer who enjoyed a conditional exemption from sales tax under the industrial incentive notification remained liable to tax so that the reduced rate under the later notification could be relied upon for claiming exemption from entry tax.

Analysis: The exemption granted under the earlier sales tax notification was an exemption from payment of tax as a dealer and did not extinguish the underlying liability to tax. A conditional exemption operates only at the stage of collection or quantification and is distinct from a case where the goods are not liable to tax at all. Since the petitioner's goods continued to be taxable under the charging provision, the reduced rate under the later notification applied to those goods, and the entry tax exemption notification was attracted if its other conditions were met.

Conclusion: The petitioner was entitled to claim the benefit of the entry tax exemption notification, and the adverse assessment and revisional orders were unsustainable.

Ratio Decidendi: Where goods remain liable to tax under the charging provision, a conditional exemption from payment of tax does not extinguish the liability, and a later notification granting exemption by reference to the reduced taxable rate can be applied to those goods.

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