M/S. CASIO INDIA CO. PVT. LTD.versusSTATE OF HARYANA

                         [2016] 2 S.C.R. 791



               . MIS. CASIO INDIA CO. PVT. LTD.                            A
                                  V.

                       STATE OF HARYANA
                   (Civil Appeal No. 1410 of2007)
                          MARCH29,2016.                                    B

           [DIPAK MISRA AND SHIVA KIRTI SINGH, JJ.)
      Central Sales Tax Act, 1956: s.8(5) - Whether the notification
dated 04.09.1995 issued under s.8(5) of the CST Act is relatable to
the exemption of goods or the person selling it - Whether in view of
the notification dated 04.09.1995 issued under s.8(5) of the CST           c
Act and r.28A of the Rules, the inter-state sales of the goods
manufactured by an "exempted unit", even by any other dealer, is
exempted from the levy of the Central Sales Act - Held: On all inter
state sales, no tax is chargeable as the said transactions are treated
as exempt - There is no stipulation in the notification that only the      D
first sale or the sale by the eligible industrial unit in inter state or
trade would be exempt - r.28A(4)(c) supports the interpretation - It
exempts all intra state sales including subsequent sales - 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 - Haryana General Sales Tax Act, 1973 - Haryana.            E
General Sales Tax Rules, 1975 - r.28A(4)(c)
    Haryana General Sales Tax Rules, 1975 - r.28A - Object and
purpose, discussed.
     Interpretation of statutes: Proviso - Significance of proviso in      F
a provision, discussed.
     Allowing the appeals, the Court
       HELD: 1. As per the notification, no tax is payable under
· the Central Sales Tax Act, 1956 w.e.f. 1" April, 1988 on sale of
  goods during the period of exemption that are manufactured in G
  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. CST Act on the sale of goods
                                                                           H
                                  791
792          SUPREME COURT REPORTS                       [2016] 2 S.C.R.


A   manufactured by him. Sub-section (5) to Section 8 of the CST Act
    begins with the non-obstante clause and empowers State
    Governments 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-
B
    state trade or commerce, etc. and under clause (b) in respect of
    all sales of goods or classes of goods, etc. Rule 28A as per heading
    relates to class of industries, period and other conditions for
    exemption/deferment from payment of tax. Sub-rule (1) makes
    it clear that industries are covered under this rule and the said
c industries would not be entitled to any deferment or exemption
    from payment of tax under any other provisions of these rules •
  . 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
D
    course of inter-state trade or commerce.(Paras 14, 15, 16] ( 804-
    B-D; 806-D-F]             I
        2. 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
 E 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
 F under this Rule shall be exempt from levy of tax on all successive
   stage/stages of sale or purchase, subject to the dealer affecting
   the said purchase or sale furnishing a certificate in the form of
   ST-14A 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.
 G 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
 H conditions being satisfied. [Para 171 [806-G-H; 807-A-B]
  MIS. CASIO INDIA CO. PVT. LTD. v. STATE OF HARYANA                      793



     3. It is not disputed that on all intra-state sales no tax has        A
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
aud available only if the manufacturer i.e. the eligible industrial
unit makes sale in inter-state trade or commerce, but if a third
                                                                           B
party, who had procured the goods from the eligible industrial
unit makes inter-state sale, such trade or commerce would not
be exempt. The couteution of the State suffers from incorrect
appredation 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               c
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
                                                                           D
by a dealer holding a valid exemption certificate. The emphasis
is ou the goods manufactured. However, it b confined by the
condition that the said manufacture should be within the
exemption period and by a deal.er holding an exemption certificate.
[Para 18] [807-C-F]                              I
     4. Clause (ii) of sub-rule (n) refers to sale of finished products    E
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, in the proviso to the notification which states          F
that the manufacturer-dealer should not have charged tax.
Provisos can serve various purposes. The normal function is to
qualify something enacted therein but for the said proviso would
fall within the purview of the enactment. It is in the nature of
exception. Proviso should not be normally construed as nullifying
the enactment or as taking away completely a right conferred.              G
Read in this manner, the proviso should not 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. manufacturing dealer should not have charged the tax. The             H
794            SUPREME COURT REPORTS                       [2016] 2 S.C.R.


A     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 implied interpretation to
B
      the proviso in the notification will nullify and unreasonably restrict
      the general and plain words of the main notification. Such
      construction is not warranted.[Paras 19, 20] [808-A-C; F-G; 809-
      A]
       5. Quite apart from the above, Rule 28A(4)(c) supports the
c 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 ofHaryana and the eligible product
  can be sold a number of times, without payment of tax. Intra-
D state sales refer to sale between two parties within the State of
  Haryana. 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/
E purchase in the other State cannot be made subject matter of
  Rule 28A or the notification. Inter-State sale from the State of
  Haryana will be only once or not a repeated one. Therefore, there
  is no requirement of reference to subsequent sale. In this context,
  there is only one inter-State sale from the State of Haryana and
F 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 ofHaryana. It will be counter-productive.
  [Para 21] [809-A-D]
         Kedarnath Jute Manufacturing Co. Ltd v. Commercial
G
         Tax Officer AIR 1966 SC 12:1965 SCR 626; Shah
         Bhojraj Kuverji Oil Mills and Ginning Factory v.
         Subhash Chandra Yograj Sinha AIR 1961 SC 1596;
         CIT, Mysore etc. v lndo Mercantile Bank Ltd AIR 1959
         SC 713: 1959 Suppl. SCR 256 - relied on.
H
 MIS. CASIO INDIA CO. PVT. LTD. v. STATE OF HARYANA                 795


      International Cotton Corporation (P) Ltd v. Commercial         A
      Tax Officer. Hubli (l97S) 3S STC 1; Pine Chemicals
      Ltd. and Ors. v. Assessing Authority and others (1992)
      8S STC 432; Khadi and Village Soap Industries
      Association and Anr: v. State of Haryana and Ors.
      (1992) 8S STC 432; State of Rajasthan v. Sarvotam
                                                                     B
      Vegetables Products (1996) 101 STC S47;
      Commissioner ofSales Tax 1( Industrial Coal Enterprises
      (1999) 114 STC 36S;'State Level Co111111ittee and another
      v. Morgardhsammar India Ltd. (1996) 101STC1; Govt.
      of A.P & Ors. v. P. Laxmi Devi (2008) 4 SCC 720:2008
      (3) SCR 330; Ranbaxy Laboratories Ltd. v. Union of             c
      India and Ors. (2011) 10 SCC 292: 2011 (13) SCR 1;
      Bansal Wires Industries Ltd. & another v. State of Uttar
      Pradesh and Ors. (2011) 10 SCC 292:2011 (7) SCR
      416; Parle Biscuits (P) Ltd. v. State of Bihar & Ors.
      (200S) 9 SCC 669; NOVOPAN India Ltd., Hyderabad
                                                                     D
      v. Collector of Central Excise and Customs, Hyderabad
      (1994) Suppl. 3 SCC 606: 1994 (3) Suppl. SCR S49 -
      referred to.
                       Case Law Reference
  (197S) 3S STC 1                  referred to            Paras
  (1992) 8S STC 432                referred to                       E
                                                          Paras
  (1992) 8S STC 432               referred to             Paras
  (1996) 101 STC S47               referred to            Paras
  (1999) 114 STC 36S               referred to            Paras
  (1996) 101 STC 1                referred to             Para6
  .2!108 (3) SCR 330              referred to             Para 10    F
  2011 (13) SCR 1                 referred to             Para 10
  2!111 (7) SCR 416                referred to            Para 10
  (2005) 9 sec 669                 referred to            Para 10
   1994 (3) Suppl. SCR S49         referred to        · · Para 11
   196S SCR 626                    relied on              Para 19    G
   Am 1961 SC 1S96                 relied on              Para 19
   19S9 Suppl. SCR 2S6             relied on              Para 19
    CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1410 of
2007.
     From the Judgment and Order dated 06.01.2005 passed by the      H
796            SUPREME COURT REPORTS                         (2016] 2 S.C.R.


A     High Court of Punjab & Haryana at Chandigarh in Sales Tax Reference
      No. 3 of2004.
                                         WITH
          C.A. No. 1411 of2007, C.A. No. 5430 of2013.
B         Balbir Singh, Sr. Adv., Rupender Sinhmar, Abhishek Singh Baghel,
      Yash Pal Dhingra, Rajiv Agnihotri, Praveen Kumar, Advs. for the
      Appellant.
          Sanjay Kumar Visen, Kamal Mohan Gupta·, Advs. for the
      Respondent.
 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
  . the legal issue and, needless to say, that would govern the fate of all the
0
    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
 H
        MIS. CASIO INDIA CO. PVT. LTD. v. STATE OF HARYANA                      797
                         [DIPAK MISRA, J.]

knocked at the doors of the Sales Tax Tribunal, Chandigarh (for short            A
'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
                                                                                 B
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:-
           "(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            SUPREME COURT REPORTS                           [2016] 2 S.C.R.


A     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
B
      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
c     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
D     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
 E    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
 F    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
 G          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                            799
                   [D!PAK MISRA, J.]

      state trade or commerce and branch transfers or consignment                A
      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
                                                                                 B
      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       c
      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( 1A) 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
                                                                                 D
      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             E
       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
                                                                                 F
      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            G
      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,           H
800             SUPREME COURT REPORTS                             [20 I 6] 2 S.C.R.


A     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
B
      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
c     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
D     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
 E    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
 F    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
 G    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                           801
                   [DIPAK MISRA, J.]

another v. State of Uttar Pradesh and others' and Parle Biscuits (P) A
Ltd. v. State of Bi/tar & otflers 10 • 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
                                                                            B
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 c
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
                                                                            D
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 E
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.
                                                                                 F
      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      G
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                                                               H
802                SUPREME COURT REPORTS                             [2016] 2 S.C.R.


A     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
B
      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
 c    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
 D              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
 E              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                            803
                   [DIPAK MISRA, J.]

      (b) That in respect of all sales of goods or sales of such classes of      A
      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
                                                                                 B
      ·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
                                                                                 c
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     D
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           E
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"                                        F
       "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       G
       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             ]{
804             SUPREME COURT REPORTS                             [2016] 2 S.C.R.


A            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
B     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.

c           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
D     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
 E    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:
 F
             (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
 H
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           c
   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              D
   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      G
   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.
                                                                               H
806             SUPREME COURT REPORTS                              (2016) 2 S.C.R.


A            (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.
B
             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-
c            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
D     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
 E    (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
 F    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
 G    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/
 H
   MIS. CASIO INDIA CO. PVT. LTD. v. STATE OF HARYANA                           807
                    [DIPAK MISRA, J.]

stages of sale or purchase, subject to the dealer affecting the said             A
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
                                                                                 B
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
                                                                                 c
 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         D
 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      E.
 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       F
 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      G
  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
                                                                                 H
808            SUPREME COURT REPORTS                          [2016] 2 S.C.R.


A 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
B
  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
c 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
D
  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
E 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                            809
                   [DIPAK MISRA, J.]

Such construction is not warranted.                                              A
      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,               B
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
                                                                                 c
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        D
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            E
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.