Inter-State sales exemption for manufactured goods extended beyond the manufacturer's own sale under the Haryana notification.

Section 8(5) of the Central Sales Tax Act permits a State notification to exempt specified inter-State sales, and the commentary explains that the 04.09.1995 notification was read by the Supreme Court as extending to goods manufactured by an exempted industrial unit, not only to the unit's own inter-State sales. The proviso was treated as preventing tax from being charged by the manufacturing dealer, rather than as limiting the exemption to the first sale by that dealer. The discussion also notes that Rule 28A could not cut down the notification's scope, because the exemption turned on the manufactured goods and the dealer's valid exemption status.

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Issues: Whether the notification dated 04.09.1995 issued under Section 8(5) of the Central Sales Tax Act, 1956 exempted inter-state sales of goods manufactured by an exempted industrial unit only when the sale was made by that very unit, or also when the goods were later sold in inter-state trade by a purchaser from that unit.

Analysis: Section 8(5) of the Central Sales Tax Act, 1956 empowers the State Government to direct, by notification, that no tax shall be payable on specified inter-state sales, subject to conditions. The notification in question exempts tax on the sale of goods manufactured in Haryana by any dealer holding a valid exemption certificate under Rule 28A of the Haryana General Sales Tax Rules, 1975, provided such dealer has not charged tax under the Central Sales Tax Act on the sale of goods manufactured by him. Rule 28A(2)(n) treats the inter-state sales of finished products of an eligible industrial unit as part of its notional sales tax liability, and Rule 28A(4)(c) extends exemption to goods manufactured by such unit at successive stages of intra-state sale or purchase. The proviso to the notification was read as an exception that prevents charging tax by the manufacturing dealer, but not as restricting the substantive exemption only to the first inter-state sale by that dealer. The reference to successive stages in Rule 28A(4)(c) did not cut down the notification, because inter-state movement from Haryana occurs only once and does not require a successive-sale mechanism like intra-state trade.

Conclusion: The notification granted exemption on the sale of goods manufactured by an exempted unit, and the benefit was not confined to inter-state sales made only by the manufacturing dealer. The assessees were entitled to the exemption.

Final Conclusion: The appeals succeeded and the impugned orders were set aside, leaving the assessees entitled to the benefit of the exemption notification.

Ratio Decidendi: Where an exemption notification is framed with emphasis on the manufactured goods and the dealer's exemption status, a proviso requiring that tax not be charged by the manufacturer cannot be construed to restrict the exemption to the manufacturer's own inter-state sale unless the notification expressly says so.

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