Conditional sales tax exemption and concessional rate benefits fail when tied to specific use and later diversion defeats the condition.

Section 8(2A) of the Central Sales Tax Act, 1956 applies only where the State law grants a general exemption or general lower rate; a conditional, certification-based exemption for sales to UNICEF did not qualify, so the exemption claim failed. Goods purchased at a concessional rate for a specified end-use also remained bound by that condition; when diverted and sold to a registered dealer for a different purpose, the concessional 4% rate could not be retained and normal tax applied. The writ petition therefore failed on both substantive issues, and the impugned tax demands were upheld.

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Issues: (i) whether sales made to UNICEF were entitled to the benefit of Section 8(2A) of the Central Sales Tax Act, 1956 in view of the State exemption notification; (ii) whether store materials purchased at a concessional rate and later sold to a registered dealer could continue to be taxed at the concessional rate of 4% rather than the normal rate.

Issue (i): Whether sales made to UNICEF were entitled to the benefit of Section 8(2A) of the Central Sales Tax Act, 1956 in view of the State exemption notification.

Analysis: Section 8(2A) applies only where the relevant sale or purchase is exempt from tax generally under the sales tax law of the appropriate State, or is generally taxable at a lower rate. An exemption operating only upon certification and only for sales to UNICEF is not a general exemption. The State notification issued under Section 6(3)(c) of the Bihar Sales Tax Ordinance, 1976 created only a conditional exemption, not one available generally to the goods as such. Such a conditional exemption falls outside the scope of Section 8(2A).

Conclusion: The claim to exemption under Section 8(2A) was not available, and the finding was against the assessee.

Issue (ii): Whether store materials purchased at a concessional rate and later sold to a registered dealer could continue to be taxed at the concessional rate of 4% rather than the normal rate.

Analysis: Goods purchased at a concessional rate for a specified end-use remain subject to the conditions attached to that concession. If such goods are diverted and sold for a different purpose, the concession cannot be retained. The availability of penalty provisions for breach of conditions does not prevent the levy of tax at the normal rate on goods no longer used for the intended purpose. The sale of such diverted goods to a registered dealer did not justify continuation of the concessional rate.

Conclusion: The goods were liable to tax at the normal rate and not at the concessional rate, and the finding was against the assessee.

Final Conclusion: The writ petition failed on both substantive questions and the tax demands under the impugned orders were upheld.

Ratio Decidendi: An exemption under Section 8(2A) of the Central Sales Tax Act, 1956 applies only to a general exemption under the State law, while a conditional or circumstance-specific exemption does not qualify; similarly, goods purchased under a concessional regime remain liable to normal tax when diverted from the condition attached to the concession.

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