Temporary sales tax exemption does not negate taxability, and demand cannot rest on notifications beyond the show cause notice.

A temporary sales tax exemption or concession does not mean the imported goods cease to be chargeable to tax; the condition in Notification No. 34/98-Cus. was therefore treated as satisfied, and denial of that benefit was not justified. The demand also failed because the show cause notice alleged only breach of that notification, while the adjudicating authority relied additionally on Notifications No. 57/98-Cus. and No. 22/99-CX, which were outside the notice. On that basis, the duty demand and penalty were set aside and consequential relief followed.

---

---

Issues: (i) Whether the denial of the benefit of Notification No. 34/98-Cus. to the imported goods was justified on the ground that the goods were sold in areas where sales tax was exempted. (ii) Whether the demand could be sustained by reference to notifications not alleged in the show cause notice.

Issue (i): Whether the denial of the benefit of Notification No. 34/98-Cus. to the imported goods was justified on the ground that the goods were sold in areas where sales tax was exempted.

Analysis: The exemption notifications under the Delhi and U.P. sales tax laws only granted relief from payment of tax for the relevant period. They did not alter the character of the goods as goods otherwise chargeable to tax. A temporary exemption or concession from payment of tax is not equivalent to a situation where no tax is chargeable on the sale or purchase of the goods. The condition in Notification No. 34/98-Cus. was therefore not violated.

Conclusion: The denial of the benefit of Notification No. 34/98-Cus. was not justified, and the demand founded on alleged breach of that condition could not be sustained against the assessee.

Issue (ii): Whether the demand could be sustained by reference to notifications not alleged in the show cause notice.

Analysis: The show cause notice alleged violation only of Notification No. 34/98-Cus. The adjudicating authority, however, confirmed demand by relying on Notifications No. 57/98-Cus. and No. 22/99-CX as well. Since these notifications were not part of the notice, the authority could not travel beyond its scope to confirm demand on that basis.

Conclusion: The demand could not be sustained by reference to notifications not put to notice, and the impugned order was unsustainable on this ground as well.

Final Conclusion: The assessee succeeded on both issues, the duty demand and penalty were set aside, and the appeals were allowed with consequential relief.

Ratio Decidendi: A tax exemption that merely suspends or relieves payment of tax does not mean the goods are not chargeable to tax, and an adjudicating authority cannot sustain a demand on grounds or notifications not alleged in the show cause notice.

---