2015 (4) TMI 251 - SC - VAT and Sales Tax

Benefit of the exemption under the notification SRO No.1727 of 1993 - entire turnover from sales of chicks and chicken are exempt from the levy of tax under the KGST Act - Whether one-day chicks that the dealer purchases from the State of Tamil Nadu and rears in the State of Kerala are exempted from payment of tax in view of Notification No.1723 of 1993 which has come into effect from 04.11.1993 - Held that - Object of the notification ought to be considered in placing correct interpretation on the entries employed thereunder and thus, must receive a liberal construction. It is well settled that a provision providing for an exemption has to be construed strictly. In cases wherein the language of the exemption contained in the notification is simple, clear and unambiguous, the exemption notification must be given its natural meaning and the object and purpose of the notification need not be looked into. CCE v. Favourite Industries, (2012 (4) TMI 65 - SUPREME COURT OF INDIA) . - Entry 24 of the notification contemplates two categories of dealers, (i) a poultry farmer and (ii) hatcheries. What is exempted under the notification is the turnover from sales of chicks and chickens by both types of dealers. It is not specified that if a poultry farmer imports or effects inter-State purchase of chicks and chickens, it would be ousted from the purview of the notification and thus, not be entitled to the benefits of the notification. In our considered opinion, language of the notification is clear and precise. The plain reading of the entry in the notification herein neither reflects any ambiguity nor creates confusion as to contents of the notification and therefore, we need not look into the object and purpose of the notification which prompted the State authorities to frame and issue the aforesaid notification. - High Court were not justified in allowing the Revision Petition and upsetting the order passed by the Tribunal - Decided in favour of assessee.

Summary

Issues:
Interpretation of exemption notification for poultry farmers and hatcheries under the Kerala General Sales Tax Act, 1961.

Analysis:
The Supreme Court, in a judgment delivered by H. L. Dattu, CJ and Arun Mishra, JJ, addressed the issues raised in Civil Appeal No.1654 of 2008 concerning the interpretation of an exemption notification under the Kerala General Sales Tax Act, 1961. The case involved M/s. Selvam Broilers Pvt. Ltd., a registered dealer engaged in poultry farming activities. The assessing authority had considered the one-day chicks purchased from outside the State and reared within the State as taxable under the KGST Act. The Tribunal partially allowed the appeal by granting exemption under a notification for sales of chicks and chickens. However, the High Court, considering the objective of the notification to promote local poultry farmers, overturned the Tribunal's decision, leading to the appeal before the Supreme Court.

Upon examining the notification, the Court emphasized that the language was clear and unambiguous, exempting the turnover from sales of chicks and chickens by poultry farmers and hatcheries within the State. The Court rejected the State's argument to consider the object of the notification for interpretation, citing precedents that exemption provisions must be construed strictly. The Court highlighted that the notification did not exclude dealers who imported or purchased chicks from outside the State, as long as they reared and sold them within the State, as per the notification's terms.

Consequently, the Supreme Court held that the High Court erred in allowing the Revision Petition and reinstated the Tribunal's order. The Court concluded by setting aside the High Court's judgment and restoring the Tribunal's decision in favor of the appellant, M/s. Selvam Broilers Pvt. Ltd. The Civil Appeals were disposed of accordingly, affirming the applicability of the exemption notification to the dealer's activities as per the clear language of the notification without delving into the object and purpose behind its issuance.