1995 (9) TMI 350 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of exemption notification for bakery products under G.O.P. No. 822 dated July 25, 1983.

Analysis:
The State, as the petitioner, challenged the decision of the Appellate Tribunal granting exemption to the assessee, Arasan Ice Creams and Sweets Restaurant, on the turnover of bakery products amounting to Rs. 1,94,076 for the assessment year 1987-88. The State contended that the Tribunal erred in granting the exemption, arguing that the exemption under the notification is intended for small dealers exclusively dealing in bakery products. The State's position was that if a dealer sells bakery products along with other items, they should not be eligible for exemption, even if the bakery turnover is below Rs. 2 lakhs. The State emphasized that the notification specifies that the exemption for bakery products does not apply if the dealer's total turnover exceeds Rs. 2 lakhs in a year. The State relied on the definition of turnover under section 2(q) of the Act to support its argument that the exemption is based on the entire turnover of the assessee in all articles, not just bakery products.

In response, the High Court analyzed the notification under G.O.P. No. 822, dated July 25, 1983, which states that the exemption for bakery products applies if the dealer's turnover in bakery products is within Rs. 2 lakhs. The Court noted that the word "turnover" in the notification refers to the total turnover from business transactions related to bakery products specifically, excluding turnover from other goods. The Court disagreed with the State's contention that the exemption was meant only for dealers exclusively dealing in bakery products, highlighting that the notification did not explicitly state such a restriction. The Court observed that the objective of the notification, although not expressly mentioned, appears to benefit consumers ultimately. The Court also noted the change in language from "any dealer" to "a dealer" in the notification, but held that this change does not preclude dealers selling other products from claiming exemption for bakery turnover below Rs. 2 lakhs.

After considering these arguments, the High Court upheld the Tribunal's decision to grant exemption to the assessee on the bakery product turnover of Rs. 1,94,076, which was below the Rs. 2 lakhs threshold. The Court concluded that the Tribunal's interpretation of the exemption notification was correct and dismissed the State's revision petition, ruling in favor of the assessee. The Court also ordered no costs to be paid.