1989 (5) TMI 298 - SC - VAT and Sales Tax

Exemption on hand-made country bricks manufactured by the potters - Held that - Having regard to the purpose of the notification and the expression used the High Court came to correct conclusion. After all, exemption is to be strictly construed. In the premises, the judgment and order of the High Court do not call for any interference. Shri Shanti Bhushan, learned counsel, submission that the country bricks or country tiles need not be produced by village artisans or co-operative societies, majority of which is village artisans & The requirement of production by village artisans was not required in respect of country tiles or country bricks is unable to be accepted this construction. Grammatically, this construction is not permissible. Indeed, it would also defeat the purpose intended to be served by the exemption notification if this construction is accepted. Shri Shanti Bhushan submitted that the country bricks need not be produced by the members of the petitioner-association themselves. The expression produced , Shri Shanti Bhushan submitted, would not apply to the expression country bricks . It is difficult, as mentioned hereinbefore, to accept this submission in the context of the expression used.

Issues:
1. Interpretation of exemption notification for sales tax on hand-made country bricks.
2. Eligibility criteria of village artisans for exemption under the notification.
3. Grammatical interpretation of the exemption notification.
4. Scope of production by village artisans for exemption eligibility.

Interpretation of Exemption Notification:
The case involved the interpretation of a notification exempting hand-made country bricks from sales tax. The petitioner-association claimed that their members, who manufactured bricks without the aid of power, were eligible for this exemption. The notification initially exempted pottery made of baked clay and stoneware by village artisans. Subsequently, an amendment included "country bricks and country tiles" in the exemption. The High Court dismissed the writ petition, stating that the members of the petitioner-association did not qualify as village artisans, and the exemption was intended for genuine village artisans. The Supreme Court upheld the High Court's decision, emphasizing strict construction of exemptions and rejecting the petitioner's argument that production by village artisans was not a requirement.

Eligibility Criteria of Village Artisans:
The High Court concluded that the members of the petitioner-association did not meet the criteria of village artisans as intended by the exemption notification. The court held that the exemption was specifically aimed at aiding poor village artisans and not individuals like the members of the petitioner-association. The Supreme Court agreed with this interpretation, highlighting the importance of adhering to the intended purpose of exemptions and dismissing the petitioner's claim that production by village artisans was not a prerequisite for eligibility.

Grammatical Interpretation of Exemption Notification:
The Supreme Court analyzed the grammatical construction of the exemption notification and rejected the petitioner's argument that the expression "produced" did not apply to country bricks. The court emphasized that such a narrow interpretation would defeat the purpose of the exemption notification. By considering the language used in the notification and its intended purpose, the court affirmed the High Court's decision and upheld the strict interpretation of the exemption.

Scope of Production by Village Artisans:
The petitioner argued that the country bricks did not need to be produced by the members of the association themselves to qualify for the exemption. However, both the High Court and the Supreme Court disagreed with this interpretation. They emphasized that the exemption notification was intended to benefit genuine village artisans and required a strict adherence to the conditions specified. The courts held that the exemption should be narrowly construed, and production by village artisans was a crucial factor in determining eligibility for the exemption.

In conclusion, the Supreme Court dismissed the application for special leave to appeal, affirming the High Court's decision and upholding the strict interpretation of the exemption notification for hand-made country bricks.

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