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M/s. Casio India Co. Pvt. Ltd. v. State of Haryana

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 1410 of 2007)Decided 29 Mar 2016
Civil Appeal No. 1410 of 2007
Justice Dipak Misra · Justice Shiva Kirti Singh

Background

Casio India, a Haryana-registered dealer, purchased Radio Pagers from another company (which held a sales-tax exemption certificate as an "eligible unit") and resold them in inter-state trade without charging sales tax, relying on a 1995 government notification exempting such goods. The tax authorities, the appellate officer, and the Sales Tax Tribunal all rejected this exemption claim, and a reference to the High Court on the legal question also went against the assessee. Casio then appealed to the Supreme Court, along with two tagged appeals raising the identical issue.

Decision Breakdown

The Supreme Court held that the exemption notification of 04.09.1995, read with Rule 28A(4)(c) of the Haryana Sales Tax Rules, exempts the goods themselves (not merely the first seller), meaning any dealer selling goods originally manufactured by an eligible exempted unit, including in inter-state trade, can claim the exemption, provided the proviso's condition (that the manufacturing dealer itself had not charged tax) is met. The Court reasoned that a proviso only carves out a narrow exception and should not be read so expansively as to defeat the main exemption; since an inter-state sale from Haryana typically happens only once, there was no basis to read in a "subsequent sale" restriction that applies to intra-state sales. The Court allowed the appeals, set aside the orders of the Tribunal and High Court, and held the assessee entitled to the exemption, with no order as to costs.

Lesson Learnt

Tax exemption notifications tied to goods (rather than to a specific seller) generally travel with the goods through the chain of sale: a reseller buying from an exempted manufacturer can still claim the same tax exemption on a later sale, as long as the manufacturer did not itself already charge tax on the goods.

Official source (sci.gov.in)View Judgment (PDF)

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