CST on inter-State LPG sales remains tied to local sale rates; a State exemption entry cannot create CST liability.

The amendment to Entry 69, adding the words "by the consumers of the State", was construed as affecting only the local VAT exemption and not as authorising CST on inter-State sales of LPG for domestic use. The analysis notes that LPG for domestic use is a declared good, that the State's exemption notification operated only on intra-State sales, and that after the 1.4.2007 amendment to section 8(1) of the CST Act, CST depends on the rate applicable to corresponding local sales in the State. Section 6(1A) did not override that position. On that construction, the amendment did not create CST liability and the constitutional challenge failed.

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Issues: Whether the amendment to Entry 69 of the exemption notification, adding the words "by the consumers of the State", altered the availability of nil CST on inter-State sales of LPG for domestic use, and whether the amendment could be treated as constitutionally invalid on that account.

Analysis: LPG for domestic use is a declared good and the State's power under the VAT exemption notification operated only on intra-State sales. Section 8(1) of the Central Sales Tax Act, 1956, as amended from 1.4.2007, makes the CST rate depend on the rate applicable to local sales in the appropriate State, and the earlier distinction that allowed conditional local exemptions to be disregarded for CST purposes no longer controlled the field in the same manner. The addition of the words "by the consumers of the State" in Entry 69 was held to affect only the local VAT exemption and not to authorise the State to impose CST on inter-State sales. Section 6(1A) did not override this interpretation, since it was enacted to neutralise the effect of the earlier Yaddalam ruling and not to displace the operation of section 8(1). The amendment therefore did not create CST liability, and the constitutional challenge did not survive once the entry was construed accordingly.

Conclusion: The amendment to Entry 69 did not make inter-State sales of LPG taxable under the CST Act, and the challenge to the amendment as unconstitutional failed.

Ratio Decidendi: After the 1.4.2007 amendment to section 8(1) of the Central Sales Tax Act, 1956, the CST payable on inter-State sales is governed by the rate actually applicable to corresponding local sales, and a State exemption entry affecting only intra-State sales cannot be used to impose CST on inter-State sales.

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