JUDGMENT
S. Rajendra Babu, J.
1. This appeal arises out of the order [Reported as Manish Plastics v. Commissioner of Commercial Taxes in Karnataka [1995] 99 STC 293 (Kar).] made by the learned single Judge on the question of interpretation of section 8(2-A) of the Central Sales Tax Act, 1956 and whether the exemption granted under the Karnataka Sales Tax Act, 1957 in respect of footwear costing less than Rs. 30 per pair, is available to transactions covered by the said provision. The petitioner is a dealer in footwear and has effected inter-State sales of the same, and contends that under entry No. 46 in the Fifth Schedule to the Karnataka Sales Tax Act, footwear costing less than Rs. 30 per pair is exempted from tax and that exemption is general in character and not subject to any conditions or with reference to any circumstance. The State contends that the term “exemption from tax generally” in section 8(2-A) of the Central Sales Tax Act, does not cover the goods which are exempted only on specified conditions or any specified circumstances. It is urged that the exemption of footwear under entry No. 46 of the Fifth Schedule at the relevant period was an exemption only with reference to the conditions that the cost of footwear was less than Rs. 30 and therefore any such exemption could not be deemed to be an unconditional or general exemption, as would entitle the appellant to the benefit flowing from section 8(2-A) of the Central Sales Tax Act, 1956. The appellant challenged the assessment order in so far it related to the levy of tax under the Central Sales Tax Act in respect of footwear costing less than Rs. 30 per pair. The assessing authority relied upon the circular issued by the Commissioner of Commercial Taxes, that Central sales tax is payable in inter-State sales on footwear costing less than Rs. 30 per pair, even though the sale of these goods are exempted at Sl. No. 46 of Fifth Schedule, and that is how he brought the goods to tax. The appellant having no other efficacious and alternative remedy, approached this Court, by way of writ petition, in view of the circular issued by the Commissioner. The learned single Judge took the view that footwear sold by the appellant were only under certain conditions or specific circumstances of selling them at Rs. 30 and the footwear whether it costs Rs. 30 or more would nevertheless be footwear and the exemption granted under the Fifth Schedule to Karnataka Sales Tax Act, is not a general exemption or is subject to the condition of sale of goods costing less than Rs. 30. On that basis, the learned single Judge held that the appellant is not entitled to the benefit of section 8(2-A) of the Central Sales Tax Act, and consequently dismissed the writ petition. That is how this appeal is filed.
2. The arguments advanced before the learned single Judge are reiterated before us, to which, we have already made reference.
3. The question that falls for our consideration is that whether the goods sold by the appellant in this case are exempted from tax generally under the Karnataka Sales Tax Act. The test applicable to verify whether the exemption granted is general in nature or arose in specific circumstance or subject to conditions, could be illustrated with reference to the decision of Commissioner of Sales Tax v. Pine Chemicals Ltd. [1995] 96 STC 355, wherein the Supreme Court has stated that in ascertaining the true meaning of section 8(2-A) of the Act, providing for exemption of Central sales tax on sale or purchase of goods where the sale or purchase of such goods is exempt generally under the State sales tax law, the expression “generally” which occurs in the said provision, will have to be ascertained with reference to the class of goods dealt with by the dealer. As long as the reference is to a class or category of goods, the exemption must be treated as general and if it is with reference to either manufacture or the circumstances under which the manufacturer sold the goods to the dealer or customer, then it would not be general and if it is with reference to the goods then such exemption, it is treated as general. In that case, the exemption provided by the Government was not with reference to the goods or class or category of goods, but with reference to the industrial unit producing them and their manufacture and sale within a particular period. At more than one place in the said decision, the learned Judges referred to this aspect of the matter and stated that the exemption was with reference to the unit manufacturing goods and not with reference to the goods. It was emphasised that general exemption means the goods should be totally exempted from tax before similar exemption from the levy of Central sales tax can become available. Where the exemption from taxation is conferred by conditions or in certain circumstances there is no exemption from tax generally. The specific circumstances and specific conditions referred to therein should be with reference to the transactions and not with reference to the goods. If it is subject of exemption, qua the dealer or qua the manufactured goods then exemption would not be available, but if it is with reference to the goods, such benefit would be available.
4. The intention of the Government in exempting goods by bringing the same under the Fifth Schedule to the Karnataka Sales Tax Act is to exempt cheap variety of footwear and the same may be identified with reference to its cost and in this case, it is less than Rs. 30. The Legislature classified the goods in two categories – one costing more than Rs. 30 and the other less than Rs. 30. Thus, if the Legislature makes classification into two categories of goods, one category attracts tax and the other does not attract the tax, this is with reference to description of goods and not with reference to any specific conditions or circumstances. This is the essence of the matter. The learned Judge no doubt, adverted to the decision of the Supreme Court and copiously extracted different portions to which we have made reference. After quoting the decision in Pine Chemicals’ case , he missed to appreciate the point raised by the appellant. No doubt, it is true that the learned Judge did refer to another decision of this Court in W.P. No. 32104 of 1994, disposed of on 15th November, 1994 (reported as Shashtha Industries v. Additional Deputy Commissioner of Commercial Taxes [1995] 98 STC 219), to which one of us (Raveendran, J.), is a party. But, in that decision, it is held that the exemption is not with reference to footwear in general, but the goods are exempted under specific condition or circumstance. The Supreme Court has clearly and categorically stated in Pine Chemicals’ case [1995] 96 STC 355, that as long as such exemption is with reference to goods, the exemption could be treated as general in nature. Hence, whatever views might have been expressed earlier by this Court will be of no benefit or use. Therefore, that view expressed, being contrary to the decision of the Supreme Court in Pine Chemicals’ case [1995] 96 STC 355 we think requires reconsideration and in our view, therefore, for the reasons putforth earlier, when the goods are classified into two categories, and the description is only with reference to the goods, we do not think that we can say section 8(2-A) of the Act is not attracted.
5. It is brought to our notice that the department itself took inconsistent views in so far as this aspect of the matter is concerned. On one occasion, the department has issued notice initiating penalty proceedings, when tax had been collected under the Central Sales Tax Act in respect of identical goods, stating that such goods are exempted from tax, but subsequently, the department revised this rule, that way, the department is not sure of the legal position of the matter.
6. In the result, we allow this appeal and set aside the order made by the learned single Judge, allowing the writ petition filed by the appellant-petitioner. The order made by the assessing authority in so far as it relates to footwear costing less than Rs. 30 per pair under the Central Sales Tax Act, is quashed. In other respects, the order made by the assessing authority remains undisturbed. The circular issued by the Commissioner, contrary to what we have expressed, is of no efficacy, and stands quashed. If the appellant makes appropriate application, whatever monies have been deposited by the appellant shall be refunded in accordance with law.
7. Writ appeal allowed.