Bharucha, J. - (1.) The order under appeal, of the High Court of Madhya Pradesh, allowed the writ petitions filed by the respondents, following the High Court's earlier judgment in the case of M/s. New Shakti Iron Steel Re-rolling Mills v. State of M. P. The State is in appeal by special leave. The State had preferred a petition for special leave to appeal against the judgment in the case of New Shakti Iron Steel and Re-rolling Mills but this Court had declined to interfere in view of the comparatively small amounts involved in the assessments. It left it open to the State to urge its contentions in an appropriate case.
(2.) By a notification dated 8th October, 1978 issued in exercise of powers conferred by Section 12 of the M.P. General Sales Tax Act, 1958, the State exempted "in whole or in part the purchases of the class of goods specified in column (1) of the Schedule. . . . . . . . . . from the payment of tax under Section 7 of the State Act so as to reduce it to the total rate of tax specified in column (2) for the periods specified in column (3) of the said Schedule subject to the restrictions and conditions specified in column (4) thereof". What we are concerned with is item 2(b) of the Schedule. It relates to the purchase of iron and steel as specified in clause (4) of Section 14 of the Central Sales Tax Act, 1956. Under column 2, relating to the reduced total rate of tax, it is said "Zero per cent (exemption from tax under Section 7 in whole)." Column (4) in relation to item 2(b) reads: "Subject to the same conditions specified against serial No. 2(a) and subject to the further condition that the goods referred to in column 1 had suffered entry tax under the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, before they were purchased by the registered dealer." (Emphasis supplied)
(3.) By reason of a notification issued on 9th February, 1977 under Section 10 of the M. P. Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, the State exempted in whole the class of dealers specified in column (1) of the Schedule thereto from the payment of entry tax for the period and subject to the conditions stated therein. The exemption thereunder applied to new industries and, by reason thereof, the respondents were exempted from the payment of entry tax in respect of the period with which we are concerned. The petitioner in the earlier matter before the High Court, New Shakti Iron and Steel Re-rolling Mills, stood in the same situation as the petitioners. In its writ petition it contended that it was, therefore, exempted also from the payment of purchase tax under item 2(b) of the Schedule to the notification under the State Sales Tax Act. The High Court took the view that it was "a matter of no consequence that the petitioner had not actually to pay, by virtue of the exemption granted under Section 10 of the Entry Tax Act any amount by way of entry tax. That means that although the petitioner would otherwise have been liable to pay entry tax under the provisions of that Act at the rate of 2.5%, it is exempted from doing so by virtue of the special Notification issued by the State Government granting such an exemption to a class of dealers to which the petitioner belongs for a period of 5 years by virtue of incentive. When the provisions of the Sales Tax Act talk of the rate on which the purchase tax would be payable by a registered dealer as one which is prescribed under the Notification (Annexure 'C' for our present purpose) it is a different matter altogether that the petitioner has not actually had to discharge the liability of payment under the Entry Tax Act." The writ petition was, accordingly, allowed.;