M/S. Casio India Co. Pvt. Ltd. v. State of Haryana
C DIPAK MISRA, J. 1. Regard being had to the similitude of the
issue in all the appeals, they were heard together and disposed of by a
common judgment. As the principal principle that constitutes the bedrock
of the decision in the subject matterofassail in Civil Appeal No. 1410 of
2007, we shall advert to the facts exposited therein and also dwell upon
0 . the legal issue and, needless to say, that would govern the fate of all the
appeals.
2. Presently to the layout of facts in Civil Appeal No. 1410 of
2007. The appellant-company is engaged in the business of manufacture
and sale of Radio Pagers having its unit at plot No. 4, Phase-I, Udyog
E Vihar, Gurgaon, Haryana. It is registered under the provisions ofHaryana
General Sales Tax Act, 1973 (for short, "the Act"),.Hilryana General
Sales Tax Rules, 1975 (for short, "the Rules") and the Central Sales Tax
Act, 1956 (for brevity, "CST Act") In the year 1995-96, the assessee
company after purchase of Radio Pagers from Mis Bharati Telecom
Limited was also engaged in inter-state sale of the said Radio Pagers
F and in course of the said transaction, did not charge any sales tax from
the purchasers on the basis of Notification No. SO 89/CA. 74/56/S.8/95
dated 04.09.1995 issued under Section 8(5) of the CST Act read with
Rule 28A(4)(c) of the Rules. The appellant filed its return and claimed
exemption placing reliance on the said notification, but the claim of
G exemption put forth by the assessee was not accepted by the assessing
officer vide assessment order dated October 05, 2001. Being aggrieved
by the order of assessment, the appellant preferred an appeal before the
Joint Excise and Taxation Commissioner (Appeal), Rohtak Circle, Rohtak
who dismissed the appeal vide order dated May 2, 2002.
3. Being dissatisfied with the order passed in appeal, the appellant
MIS. CASIO INDIA CO. PVT. LTD. v. STATE OF HARYANA
[DIPAK MISRA, J.]
knocked at the doors of the Sales Tax Tribunal, Chandigarh (for short
'the tribunal') which dismissed the appeal by its order dated September
9, 2002. The dismissal of the appeal by the tribunal compelled the appellant
to prefer Writ Petition No. 2346 of2003, seeking a direction to the tribunal
to make a reference to the High Court. The High Court accepting the
prayer of the assessee called for a reference from the tribunal, and the
tribunal vide its order dated 14.10.2003 in S.T.M. No. 82 of 2002-03
made a reference to the High Court for its opinion.
4. After stating the case, the tribunal referred the following
questions for the_ opinion of the High Court:-
797
"(i) Whetherthe notification dated 04.09.1995 issued under Section c
8(5) of the CST Act is relatable to the exemption of goods or the
person selling it?
(ii) Whether in view of the notification dated 04.09.1995 issued
under Sestion 8(5) of the CST Act and Rule 28Aofthe Rules, the
inter-state sales of the goods manufactured by an "exempted unit", D
even by any other dealer, is exempted from the levy of the Central
Sales Act?"
5. Before the High Court it was contended by the assessee that
the notification dated 04.09.1995 issued by the State Government provides
for grant of exemption on the sale of goods manufactured in the State of E
Haryana by any dealer holding valid exemption certificate under Rule
28 of the Rules and not to the·dealer and, therefore, the goods sold by
the assessee in the course of inter-state trade were not liable to be
taxed. In support of the said proposition, reliance was placed on
International Cotton Corporation (P) Ltd. v. Commercial Tax Officer,
Hubli', Pine Chemicals Ltd. and others v. Assessing Authority and F
otflers', Khadi and Village Soap Industries Association and another
v. State of Haryana and others', State of Rajast/1an v. Sarvotam
Vegetables Products' and Commissipner of Sales Tax v. Industrial
Coal Enterprises'.
6. On behalf of the revenue, it was urged that the notification in G
1 (1975) 35 STC I
. 2 (1992) 85 STC 432
'(1992) 85 STC 432
4 (1996) IOI STC547
'(1999)114STC365 H
798
question provided for grant of exemption only on the sale of goods
manufactured in the State by a dealer holding valid exemption certificate
under Rule 28 of the Rules, subject to the condition that such dealer had
not charged tax under the CST Act on the sale of goods manufactured
by it, and not in respect of the sale of goods by other dealers in the
course of inter-state trade. It was the stand of the revenue that the
assessee had not been granted exemption certificate under Rule 28A of
the Rules and as such, the goods sold by it in course of inter-state trade
were not exempted from the tax under the CST Act merely because the
same had been purchased from Mis Bharati Telecom Limited which
possesses a valid exemption certificate. Reliance was placed on the
decision of this Court in Sf{lfe Level Committee "nd {111otfler v.
Morg{lrdfls"mm{lr Indi" Ltd. 6 •
7. The High Court referred to Section 8(2A) and 5 of the CST Act
and Rule 28A(2)(n) and (4)(c) of the Rules and notification dated
04.09.1995; distinguished the authorities cited by the assessee and came
to hold that the expression "notional sales tax liability" as used in Rule
28A(2)(n) takes within its fold not only the amount of tax payable on the
sales of finished goods of the eligible industrial unit under the Act but
also the amount of tax payable under the CST Act on the sales of finished
products of the eligible industrial units made in the course of inter-state
trade or commerce and branch transfers or consignment sales outside
the State ofHaryana. Reference was made to clause (c) of sub-rule (4)
of Rule 28A of the Rules to opine that the scope of exemption was
extended to the goods manufactured by an eligible industrial unit availing
exemption under Rule 28A at all successive stage(s) of sak or purchase
subject to the condition that the dealer effecting successive purchase or
sale furnishing a certificate in form ST-14A which is required to be
obtained from the assessing authority duly filled in and signed by the
registered dealer to whom such goods were sold. Thereafter, the High
Court analysed the Rules and in that context stated thus:-
"A reading of the provisions reproduced above shows that the
expression "notional sales tax liability" takes within its fold not
only the amount of tax payable on the sales of finished goods of
the eligible industrial unit under the State Act, but also the amount
of tax payable under the Central Act on the sales of finished
products of the eligible industrial unit made in the course of inter-
----
H 6 (1996) IOI STC I
M/S. CASIO INDIA CO. PVT. LTD. v. STATE OF HARYANA
[D!PAK MISRA, J.]
state trade or commerce and branch transfers or consignment
sales outside the State of Haryana (Rule 28A (2) (n)). Clause (c)
of sub-rule (4) of Rule 28A extends the scope of exemption to
the goods manufactured by an eligible industrial unit availing
exemption under Rule 28A at all successive stage( s) of sale or
purchase subject to the condition that the dealer effecting
successive purchase or sale furnishes to the Assessing a certificate
in form ST-14A which is required to be obtained from the
Assessing Authority duly filled in and signed by the Registered
dealerto whom such goods were sold. Sub-rule (6) of Rule 28A
lays down the mechanism for grant of exemption/entitlement
certificate. Sub-rule (7) envisages renewal of exemption certificate
and lays down the procedure for grant ofrenewal. Section 8(2A)
of the Central Act contains a non-obstante clause. It lays down
that notwithstanding anything contained in Section 6( 1 A) or sub
section (I) or clause (b) of sub-Section (2) of Section 8, the tax
payable under the Central Act by a dealer on his turnover in so
far as the turnover or a part thereof relates to the sale of any
goods, the sale or purchase of which is exempted from tax under
the State Act or is subjected to tax at a rate lower than 4% shall
be nil or shall be calculated at the lower rate. Sub-section (5) of
Section 8 also begins with a non-obstante clause. It empowers
the State Government to grant exemption from payment of tax or
levy of tax at a lower rate on the dealer having his place of business
in respect of the sales made by him in the course of inter-State
trade or commerce. It also empowers the State Government to
direct that no tax shall be payable under the Central Act or tax
shall be calculated at lower rates in respect of all sales of goods
or classes of goods as may be specified in the notification which
are made in the course of inter-State trade or commerc.e by any
dealer having his place of business' in the State or class of dealers
specified in the notification. Notification dated 4.9.1995 declares
tnat no tax shall be payable under the Central Act w.e.f. 1.4.1988
on the sale of goods manufactured in the State ofHaryana by any
dealer holding a valid exemption certificate under Rule 28A of the
Rules, provided that such dealer has not charged tax under the
Central Act on the sale of goods manufactured by him."
8. After so stating, the High Court referred to the notification dated
04.09.1995 and observed that it was not happily worded and thereafter,
799
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SUPREME COURT REPORTS [20 I 6] 2 S.C.R.
it proceeded to hold that the tribunal was correct in following its earlier
order for arriving at the conclusion that the notification did not exempt
the goods sold in the course of inter-state trade by dealer other than
those who held valid exemption certificate granted under Rule 28A of
the Rules. lt further ruled that ifthe State Government wanted to extend
the benefit of exemption from payment of tax under the CST Act to the
sale of goods effected by a dealer in the course of inter-state trade
irrespe&tive of the fact that such dealer did not hold valid exemption
certificate under Rule 28A of the Rules, then it would have incorporated
the language ofRule28A(4)(c) of the Rules in the notification and would
not have put a rider that such dealer should not have charged tax under
the CST Act on the sale of goods manufactured by it.
9. Thus, the ultimate conclusion recorded by the High Court is that
successive sales of goods manufactured by dealer holding valid exemption
certificate were exempt from payment of sales tax so long as they were
inter-state sales but in respect of sale of goods by a dealer not holding
exemption certificate under Rule 28A in the course of inter-state trade,
the benefit of exemption envisaged under notification dated 04.09.1995
was not available to such dealer. The Division Bench proceeded to clarify
that in respect of stages of sale which are exempt from payment of tax
under the Act are covered by Rule 28A(4)(c) but notification dated
04.09.1995 was applicable only to sale of goods manufactured by the
exempted unit. Being of this view, it answered the reference in favour
of the revenue and against the assessee.
10. Mr. Balbir Singh, learned senior counsel appearing for the
appellant, has submitted that though the notification was made under the
CST Act, it exempts goods as well as manufacture. Learned senior
counsel would submit that on a plain reading of the notification, it is
demonstrable that the exemption is on the sale of goods and there is no
reference to unit or category of dealers for the purpose of extending the
exemption. Once the language is clear, submits Mr. Singh, there is no
scope of searching for intendment and, in fact, a bare perusal of the
notification is sufficient to determine its applicability or non-applicability.
To sustain the submission, he has drnwn our attention to the authority in
Govt. of A.P & others. v. P. Laxmi Devi'; Ra11bttxy Laboratories
Ltd. v. Union of India a11d others'; Bansal Wires Industries Lill &
'(2008) 4 sec no
H '(2011) IOSCC292
MIS. CASIO INDIA CO. PYT. LTD. v. STATE OF HARYANA
[DIPAK MISRA, J.]
another v. State of Uttar Pradesh and others' and Parle Biscuits (P)
Ltd. v. State of Bi/tar & otflers10• Learned senior counsel has further
contended that the High Court has committed an error in noting that in
the notification, there is no similar expression as used in Rule 28A( 4) of
the Rules. According to him, the reasoning given by the High Court is
fallacious on two scores, namely, (i) Rule 28A(4)(c) of the Rules exempts
all subsequent sales made in the State of Haryana, as one product can
be sold any numberoftimes within the State, whereas there can be only
one inter-state sale from the State of Haryana, and corsequently there
is no requirement of any reference to subsequent sale in notification··
dated 04.09.1995; and (ii) Rule 28A(4)(c) of the Rules provides a
mechanism to confirm that goods are manufactured by a person holding
exemption certificate in terms of Rule 28A by providing the requirement
to furnish a certificate in the form of certificate ST-14A. Section 8(5) of
the CST Act mandates the requirement of issuance of Form C by the
buying dealer which is to be issued by the sales tax authorities of
purchasing State and, therefore, there is no requirement for such
mechanism to be provided in the notification. 1t is highlighted by him that
if the interpretation placed by the High Court is accepted, it would
tantamount to making exempted goods chargeable to tax and further,
the goods manufactured by eligible manufacturer would not remain
competitive in spite of exemption being given to such manufacturer unless
all subsequent stages including inter-state sales are exempt from payment
of tax. The emphasis is on exemption at subsequent stages including
ii1ter-state sale. Mr. Singh has drawn immense inspiration from the
proviso to the notification dated 04.09.1995 to bolster the submission
that it restrains the eligible manufacturer from charging any tax on its
sales as otherwise it would amount to unjust enrichment.
11.Mr. Sanjay Kumar Visen, learned counsel for the respective
respondent(s), per contra, while supporting the order passed by the
High Court, would submit that benefit of exemption has been granted
for promoting new industry in the State and this is in consonance with
Rule 28A of the Rules which provides unit holding a valid exemption
certificate which sells goods purchased by it in the State without charging
any tax and the said Rule also exempts all subsequent intra-state sales
as such. Elaborating further, it is urged that notification dated 04.09.1995
issued under sub-section (5) of Section 8 of the CST Act. can extend the
'<2011) 6 sec 545
" (2005) 9 sec 669
801
802
benefit of tax exemption to only such inter-state sales of goods which
are purchased inside the State by a unit holding valid exemption certificate
and hence, the exemption from CST Act is subject to the condition that
the dealer effecting inter-state sale should hold a valid exemption
certificate irrespective of the goods sold in the course of inter-state trade
and commerce and purchased by him inside the State. Learned counsel
would submit that while interpreting a notification of the present nature,
strict interpretation has to be followed as per law laid down by this Court
in NOVOPAN lntlia Ltd., Hyderabad v. Collector of Central Excise
and Customs, Hyderabad".
12. To understand the controversy in proper perspective, it is
necessary to refer to Section 8(2A) and 5 of the CST Act. They read as
follows:-
"(2A) Notwithstanding anything contained in sub-section (1-A)
of Section 6 or sub-section (I) or clause (b) of sub-section (2) of
this Section, the tax payable under this Act by a dealer on his
turnover in so far as the turnover or any part thereof relates to the
sale of any goods, the sale or, as the case may be, the purchase of
which is, under the sales tax law of the appropriate State, exempt
from tax generally or subject to tax generally at a rate which is
lower than four percent (whether called a tax or fee or by any
other name), shall be nil, or as the case may be, shall be calculated
at the lower rate.
xx xx xx x.x
(5) Notwithstanding anything contained in this Section, the State
Government may, if it is satisfied that it is necessary so to do in
F the public interest, by notification in the official gazette, and subject
to such conditions as may be specified therein, direct
(a) that no tax under this Act shall be payable by any dealer having
his place of business in the State in respect of the sales by him, in
the course of inter-state trade or commerce, from any such place
G of business of any such goods or classes of goods as may be
specified in the notification, or that the tax on such sales shall be
calculated at such lower rates than those specified in sub-section
( 1) or sub-section(2) as may be mentioned in the notification.
H 11 ( 1994) Suppl. 3 sec 606
MIS. CASIO INDIA CO. PVT. LTD. v. STATE OF HARYANA
[DIPAK MISRA, J.]
(b) That in respect of all sales of goods or sales of such classes of
goods as may be specified in the notification, which are made in
the course of inter-state trade or commerce, by any dealer having
his place of business in the State or by any class of such dealers
as may be specified in the notification to any person or to such
class of persons as may be specified in the notification, no tax
·under this Act shall be payable or the tax on such sales shall be
calculated at such lower rates than those specified in sub-section( 1)
or sub-section (2) as may be ~entioned in the notification."
The aforesaid provision clearly enables the State Government to
exempt the tax payable under the CST Act in public interest by issuing
appropriate notification. For the said purpose, the State Government
has to be satisfied and is also entitled to impose conditions which have to
be specified in the notification.
13. Keeping in view the aforesaid provision and the notification
which we shall refer to hereinafter, the factual score is to be appreciated.·
It is not in dispute that the appellant had sold the goods in question which
were manufactured by M/s Bharati Telecom Limited that was holding a
valid exemption certificate under Rule 28A of the Rules. The appellant
had claimed central sales tax exemption of such goods in terms of
notification dated 04.09.1995 by urging that such exemption was in respect
of sale of goods which were manufactured by any dealer in the State of
Haryana who held a valid exemption certificate. The core controversy
pertains to the interpretation of notification dated 04.09 .1995 which has
been issued by the competent authority in exercise of power under Section
8(5) of the CST Act. It reads as follows:-
"Notification dated 4.9.1995"
"No.S.0.89/CA. 74/56/S.8/95 dated 4.9.1995 _,
-In exercise of the powers conferred by sub-section (5) of Section
8 of the Central Sales Tax Act, 1956 the Governor of Haryana
being satisfied that it is necessary so to do in the public interest,
hereby directs that no tax under the said Act shall be payable with
effect from 1.4.1988, on the sale of goods, manufactured in the
State ofHaryana by any dealer holding a valid exemption certificate
under Rule 28-A of the Haryana General Sales Tax Rules, 1975
during the period of exemption: provided that no tax under the
said Act has been charged by such dealer on the sale of goods
803
]{
804
manufactured by him."
14. The above notification has been issued in exercise of powers
conferred by sub-section (5) to Section 8 of the CST Act by the Governor
of Haryana in public interest. As per the notification, no tax is payable
under the aforesaid Act w.e.f. l "April, 1988 on sale of goods during the
period of exemption that are manufactured in the State of Haryana by
any dealer, who holds a valid exemption certificate under Rule 28A of
the Rules. Proviso to the said notification stipulates that the dealers should
have also not charged any tax under the Central Sales Tax Act on the
sale of goods manufactured by him.
15. As mentioned earlier, sub-section (5) to Section 8 of the CST
Act begins with the 11011-obsta11te clause and empowers State
Govelnments to issue a notification in the official gazette subject to the
condition(s) as may be specified and under clause (a) direct that no tax
shall be payable by any dealer having his place of business in the State in
respect of sale in the course of inter-state trade or commerce, etc. and
under clause (b) in respect ofall sales of goods or classes of goods, etc.
In this context, Rule 28A is extremely relevant. The said Rule, as per
heading relates to class of industries, period and other conditions for
exemption/deferment from payment of tax. Sub-rule 1, 2(f), (j), (k), (1),
(n) clauses (i), (ii), (iii), (4)(a) and sub-rule 4(2)(c) of Rule 28A are
relevant and reproduced below:-
"Sub-Rule (1 ): The industries covered under this rule shall not be
entitled to any deferment or exemption from payment of tax under
any other provisions of these rules.
Rule 2(f): 'Eligible industrial unit' means:
(i) a new industrial unit or expansion or diversification of the existing
unit, which-
(!) has obtained certificate of registration under the Act;
(II) is not a public sector undertaking where the Central
G Government held 5 I per cent or more shares;
2(j): "eligibility certificate" means a certificate granted in Form
ST-72 by the appropriate screening committee to an eligible
industrial unit for the purpose of grant of exemption deferment;
(k) "exemption certificate" means a certificate granted in Form
MIS. CASIO INDIA CO. PVT. LTD. v. STATE OF HARYANA 805
[DIPAK MISRA, J.)
ST-73 by the Deputy Excise and Taxation Commissioner of the A
district to the eligible industrial unit holding eligibility certificate
which entitles the unit to avail of exemption from the payment of
sales or purchase tax or both, as the case may be;
(I) "entitlement certificate" a certificate granted in Form ST-72
by the Deputy Excise and Taxation Commissioner of the district B
to the eligible industrial unit holding eligibility certificate which
entitles it to get deferment of sales tax.
(n) "notional sales tax liability" means-
(i) amount of tax payable on the sales of finished products of the
eligible industrial unit under the local sales tax law but for an
exemption computed at the maximum rates specified under the
local sales tax law as applicable from time to time; and
Explanation: The sales made on consignment basis within the State
of Haryana or branch transfer within the State of Haryana shall
also be deemed to be sales made within the State and liable to
tax;
(ii) amount of tax payable under the Central Sales Tax Act, 1956,
on the sales of finished products of the eligible industrial unit made
in the course of inter-State trade or commerce computed at the
rate of tax applicable to such sales as if these were made against E
certificate in Form Con the basis that the sales are eligible to tax
under the said Act.
Explanation: The branch transfers or consignment sales outside
the State of Haryana shall be deemed to be sale in the course of
inter-State trade or commerce. F
Note:- The expression and terms, if any appearing in this rule not
defined above shall unless the context otherwise requires carry
the same meaning as assigned to them under the Act and rules
madeJhere under.
(3) Option-An eligible industrial unit may opt either to avail benefit
of tax exemption or deferment. Option once exercised shall be
final except that it can be changed once from exemption to
deferment for the remaining period and balanced quantum of
benefit.
806
SUPREME COURT REPORTS (2016) 2 S.C.R.
(4)(a) Subject to other provisions of this rule, the benefit of tax
exemption or deferment shall be given to an eligible industrial unit
holding exemption or entitlement certificate, as the case may be
to the extent, for the period, from year to year in various zones
from the date of commercial production or from the date of issue
of entitlement exemption certificate as may be opted as under.
4(2)(c) The goods manufactured by an eligible industrial unit
availing exemption under this rule shall be exempt from the levy
of tax at all the successive stage(s) of sale or purchase subject to
the condition that the dealer affecting the successive purchase or
sale furnishes to the assessing authority a certificate in Form ST-
14A to be obtained from the assessing authority as against payment
of such sum as may be fixed by the State Government from time
to time, duly filled in and signed by the registered dealer by whom
such goods were purchased."
16. Sub-rule (I) makes it clear that industries are covered under
this rule and the said industries would not be entitled to any deferment or
exemption from payment of tax under any other provisions of these
rules. The expression 'eligible industrial unit' is defined in clause (f) to
sub-rule (2). Similarly, 'eligibility certificate', 'exemption certificate', etc.
aredefined in clauses GJ and (k) to sub-rule (2). Clause (n) to sub-rule
(2) defines the expression 'notional sales tax liability' and clause (ii)
states that the amount of tax payable under the CST Act on sales of
finished product of eligible industrial unit mape in the course of inter
state trade or commerce shall be computed at the rate of tax applicable
as if the sales were made against form 'C'. In other words, inter-state
trade or commerce of finished products of eligible industrial units will be
treated as notional sales tax liability. The reference in this clause is to
the eligible industrial unit and sales of finished products made by the said
units, which are sold in the course of inter-state trade or commerce.
17. The purport and impact of Rule 28-A is with reference to eligible
industrial unit, is not only clear from the definition clauses which define
eligibility certificate, exemption certificate, etc. but ·also from sub-rule
(4)(a) which stipulates that the benefit of tax exemption or deferment
shall be given to an eligible industrial unit holding exemption or entitlement
certificate for the period specified. Clause ( c) to sub-rule ( 4 )(2) postulates
that goods manufactured by an eligible industrial unit availing of exemption
under this Rule shall be exempt from levy of tax on all successive stage/
MIS. CASIO INDIA CO. PVT. LTD. v. STATE OF HARYANA
[DIPAK MISRA, J.]
stages of sale or purchase, subject to the dealer affecting the said
purchase or sale furnishing a certificate in the form of ST-l 4A obtained
from the assessing authority. This clause has the effect of granting
exemption from levy of tax at all successive stages of sale and purchase
in intra-state trade or commerce i.e. within the State of Haryana. To
put it differently, it extends the benefit granted under clause (n)(ii) which
relates to inter-state trade or commerce to intra-state sale or purchase.
Such sales may be one or successive and tax at all stages is exempt.
The exemption, therefore, is good specific, subject of course to other
conditions being satisfied.
18. It is not disputed that on all intra-state sales no tax has been
charged as the said transactions were treated as exempt by the tax
authorities. However, in the course of inter-state sales, it is submitted
by the revenue that the exemption would be limited and available only if
the manufacturer i.e. the eligible industrial unit makes sale in inter-state
trade or commerce, but if a third party, who had procured the goods
from the eligible industrial unit makes inter-state sale, such trade or
commerce would not be exempt. The contention of the State suffers
from incorrect appreciation and understanding of the purport and objective
behind Rule 28A and the notification in question. The basic objective
and purpose is to exempt the goods manufactured in the State when
they are further transferred in the course of inter-state or intra-state
trade or commerce. Therefore, reference is made to the eligible industries
and the goods manufactured by the said industries, which are entitled to
'exemption. The exemption notification refers to the sale of goods
manufactured by a dealer holding a valid exemption certificate. The
emphasis is on the goods manufactured. However, it is confined by the
condition that the said manufacture should be within the exemption period
and by a dealer holding an exemption certificate.
19. We have reproduced the exemption notification above and
referred to the language employed. At this juncture, it is absolutely
necessary to understand the language employed in the proviso to the
notification.If there was no proviso to the notification there would have
been no difficulty whatsoever in holding that the exemption is qua the
goods manufactured and was not curtailed or restricted to the sales
made by the manufacturer dealer and would not apply to the second or
subsequent sales made by a trader, who buys the goods from the
. manufacturer-dealer and sells the same in the course of inter-state trade
807
E.
808
or commerce. It is pertinent to note that, clause (ii) of sub-rule (n)
refers to sale of finished products in the course of inter-state trade or
commerce where the finished products are manufactured by eligible
industrial unit. There is no stipulation that only the first sale or the sale
by the eligible industrial unit in Inter State or Trade would be exempt.
The confusion arises, as it seems to us, in the proviso to the notification
which states that the manufacturer-dealer should not have charged tax.
It needs no special emphasis to mention that provisos can serve various
purposes. The normal function is to qualify something enacted tllerein
but for the said proviso would fall within the purview of the enactment.
It is in the nature of exception. [See : Ketlarnat/1 Jute Manufacturing
Co. Lttl v. Commercial Tax Officer"]. Hidayatullah, J. (as his Lordship
then was) in Sltalt Blwjraj Kuverji Oil Mills anti Ginning Factory v.
Suh/1aslt Cltantlra Yograj Sinftal.1 had observed. that a proviso is
generally added to an enactment to qualify or create an exception to
what is in the enactment, and the proviso is not interpreted as stating a
general rule. Further, except for instances dealt with in the proviso, the
same should not be used for interpreting the main provision/enactment,
so as to exclude something by implication. It is by nature ofan addendum
or dealing with a subject matter which is foreign to the main enactment.
(See : CIT, Mysore etc. v lntlo Mercantile Bank Ltt/14). Proviso should
not be normally construed as nullifying the enactment or as taking away
completely a right conferred.
20. Read in this manner, we do not think the proviso should be
given a greater or more significant role in interpretation of the main part
of the notification, except as carving out an exception. It means and
implies that the requirement of the proviso should be satisfied i.e.
F manufacturing dealer should not have charged the tax. The proviso
would not scuttle or negate the main provision by holding that the first
transaction by the eligible manufacturing dealer in the course by way of
inter-state sale would be exempt but if the inter-state sale is made by
trader/purchaser, the same would not be exempt. That will not be the
correct understanding of the proviso. Giving over due and extended
G implied interpretation to the proviso in the notification will nullify and
unreasonably restrict the general and plain words of the main notification.
12 AIR 1966 SC 12
"AIR 1961SC1596
H "AIR 1959 SC 713
MIS. CASIO INDIA CO. PVT. LTD. v .. STATE OF HARYANA
[DIPAK MISRA, J.]
Such construction is not warranted.
21. Quite apart from the above, Rule 28A(4)(c) supports the
interpretation and does not counter it. The said. rule exempts all intra
state sales including subsequent sales. The reason for enacting this clause
is obvious. The intention is to exempt all subsequent stages in the State
of Haryana and the eligible product can be sold a number of times,
without payment of tax. Intra-stat~sales refer to sale between two parties
within the State ofHaryana. Inter-state transaction results in movement
of goods from State of Haryana to another State. Thus, clause (ii) of
sub-rule 2( 4) refers to inter-state trade or commerce and the notification
does not refer to subsequent sales as in case of Rule 28A(4)(c). Whether
or not tax should be paid on subsequent sales/purchase in the other State
cannot be made subject matter of Rule 28A or the notification. Inter
State sale from the State ofHaryana will be only once or not a repeated
one. Therefore, there is no requirement of reference to subsequent
sale. Iri this.context, it is rightly submitted by the assessee that there is
only one inter-State sale from the State ofHaryana and the interpretation
as suggested by the revenue would tantamount to making the exempted
goods chargeable to tax, and the said goods would cease to enjoy the
competitive edge given to the manufacturer in the State of Haryana. It
will be counter-productive.
22. In view of aforesaid analysis, we allow the appeals and set
aside all the impugned orders and hold that assessees shall reap the
benefit of the notification dated 04.09.1995 as interpreted by us. There
shall be no order as to costs.
Devika Gujral Appeals allowed.
809