SUBRAMANIAM BROTHERS Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE petitioner-firm is a dealer in papers and boards. For the assessment year 1963-64 it has been assessed under the Central Sales Tax act. In the course of the assessment, the assessee claimed that a turnover of rs. 3, 98, 029. 63 represented the second or subsequent inter-State sales by transfer of documents of title to the goods during the movement of the same from this State to the State of Andhra pradesh and that, therefore, the entire turnover is exempt from tax under section 6 (2) of the Central Sales Tax Act, 1956. It also contended that in any event the said turnover is liable to be taxed at the concessional rate of 2 per cent. and not at the general rate of 10 per cent. as it has produced the D form certificate from the buying department.

(2.) THIS claim was rejected both by the assessing as well as appellate authority. The Tribunal has, however, upheld the claim of the assessee to the concessional rate of two per cent; but it rejected the claim for exemption of the entire turnover on the ground of the sales being second and subsequent inter-State sales. According to the Tribunal, the mere fact that the sales in question are second or subsequent inter-State sales will not be sufficient to attract the provision for exemption contained in section 6 (2), and that for getting the exemption under section 6 (2), the assessee must show that the second and the subsequent inter-State sales in respect of all these transactions have been supplied to the text-books department of the Andhra Pradesh Government and that the said department has not been registered as a dealer under the Central Sales tax Act either under section 7 (1) or under section 7 (2 ). In view of the fact that the buying department was not a dealer registered under the Central Sales tax Act, the Tribunal held that the assessee is not entitled to the benefit of complete exemption under section 6 (2) in respect of the inter-State sales in question. The decision of the Tribunal that the assessee is not entitled to the benefit of section 6 (2) is being challenged in this case. The learned counsel for the assessee contends that section 6 (2), which provides for exemption in respect of second and subsequent inter-State sales, should be reasonably construed so as to confer the benefit of the exemption to dealers who deal with government departments who do not normally register themselves as dealers under the Act. According to the learned counsel, section 7 (2) gives only an option to the Government department to register and it is not obligatory on the part of the Government departments to register themselves under the Act and in such cases, the selling dealer cannot be deprived of the benefit of the exemption merely because the Government departments have not registered themselves under the Act. We are not in a position to accept the above contention advanced on behalf of the assessee. Section 6 (2) is very categoric and it is as follows : "notwithstanding anything contained in sub-section (1), where a sale in the course of inter-State trade or commerce of goods of the description referred to in sub-section (3) of section 8 - (a) has occasioned the movement of such goods from one state to another; or (b) has been effected by a transfer of documents of title to such goods during their movement from one State to another; any subsequent sale to a registered dealer during such movement effected by a transfer of documents of title to such goods shall not be subject to tax under this Act."