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TMI Blog2002 (6) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and therefore deleted the levy of purchase tax on the said turnover of Rs. 2,38,239. The third respondent in exercise of suo motu revisional power under section 22A of the Act, passed an order dated September 4, 2001 reversing the decision of the second respondent and restoring the order of the assessing authority, in regard to the said turnover of Rs. 2,38,239 on the ground that no tax had been paid under section 5(1) or 5(3)(a) in respect of the articles manufactured from out of such old gold articles purchased by the assessee from unregistered dealers. 3.. Feeling aggrieved, the appellant has filed this appeal under section 24(1) of the Act aggrieved by the subjecting of the said turnover to tax. The appellant claims exemption from purchase tax in regard to gold articles purchased from unregistered dealers to an extent of Rs. 2,38,239 used in the manufacture of mangalasutras (sold by it at a price not exceeding Rs. 5,000 per piece) relying on the exemption Notification No. FD 283 CSL 70(IV) dated September 10, 1970. 4.. The notification dated September 10, 1970 relied on by the appellant, issued under section 8A of the Act exempts the tax payable under section 6 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 87 issued under section 8-A of the Act, the State Government exempted the tax payable under section 5 of the Act by a dealer on groundnuts/seeds as the last purchaser liable to tax, if such groundnuts/seeds were consumed by him in the manufacture of non-refined groundnut oil in the State and produced proof of payment of tax on the sales of such oil. By an earlier notification dated March 31, 1983, issued under section 8-A(1)(b) of the Act, the State Government had exempted from tax payable under the Act, the turnover of goods manufactured in Karnataka and sold by all tiny sector industrial units for a period of five years from the date of commencement of commercial production. In view of the exemption granted under the notification dated March 31, 1983, the assessee which was a tiny sector industrial unit, did not pay tax on the sale of non-refined groundnut oil manufactured and sold by it. Consequently when it claimed the benefit of exemption under the notification dated March 28, 1987, it was not possible for it to produce proof of payment of tax on sale of such non-refined groundnut oil manufactured from out of groundnuts/ seeds purchased by it (as last purchaser in the State). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unreasonable." The said decision of the learned single Judge was upheld in appeal by a division Bench of this Court on the following reasoning: "The benefit of exemption from payment of sales tax on manufactured goods granted under notification dated March 31, 1983 was available to all tiny sector industries, which included also ground-nut oil industries. But the notification dated March 28, 1987 granting exemption from payment of purchase tax on the purchase turnover of groundnuts on proof of payment of sales tax on the oil manufactured from it, is in respect of all groundnut oil industries. Therefore, unless the benefit of exemption from payment of sales tax given to tiny sector groundnut oil industries under the notification dated March 31, 1983 is treated as proof of payment of sales tax, it would place the tiny sector industries, in a disadvantageous position compared to bigger groundnut oil industries. The tiny sector groundnut oil industries would be deprived of the exemption from purchase tax, whereas the bigger groundnut oil industries would be entitled to such exemption. An interpretation which leads to such discriminatory results should be eschewed. Therefore, it shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 111 STC 254 (SC) makes it clear that the interpretation placed on one notification cannot be relied on to interpret another notification if the content and intent of the notification is different. In Sri Neelakanteshwar Oil Industries v. State of Karnataka [1995] 98 STC 303 (Kar); ILR 1995 Kar 52 the principles relating to interpretation of exemption provisions under tax laws were stated thus: (i) The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the Legislature. When the words used are plain and clear, they have to be construed in the ordinary sense. There is no occasion to resort to any interpretative process, if the words clearly, unambiguously and directly convey the meaning. (ii) All taxing laws should be strictly construed and the assessee shall not be liable to be taxed unless the language of the statute clearly imposes the liability to pay the tax. Similarly all exemptions from tax must also be strictly construed and limited to the exemption itself; that is, there can be no extension or widening of the ambit of exemption at the stage of applicability of exemption. But, once the subject of exemption is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notification dated March 28, 1987, the dealer was exempt from payment of tax on groundnut as last purchaser, if it manufactures non-refined groundnut oil from out of the said groundnuts. Proof of payment of tax on sale of non-refined groundnut oil was insisted under the notification dated March 28, 1987 to ensure that only manufacturers of non-refined groundnut oil in Karnataka (and not manufacturers of refined groundnut oil or exporters of groundnut/seeds), got the benefit of exemption from payment of tax as last purchaser on purchase of groundnut/seeds used in such manufacture. But insistence on the production of proof of payment of tax on sale of non-refined groundnut oil manufactured by a tiny scale industry for availing exemption under the notification dated March 28, 1987 and refusal to grant exemption if tax had not been paid on such sales because of exemption under notification dated March 31, 1983, defeated the very purpose of granting the exemption to manufacturers on non-refined groundnut oil, under notification dated March 28, 1987. 9.1 In Virupaksha Enterprises [1990] 77 STC 28 the court therefore considered a situation where the intention of both notifications was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beral" meaning which will defeat the very purpose of the notification. 9.3 It is not therefore possible to construe the notification dated September 10, 1970 in this case, as in the manner in which notification dated March 28, 1987 was construed in Virupaksha Enterprises, v. Commercial Tax Officer [1990] 77 STC 28 (Kar); ILR 1989 Kar 3163, as that case dealt with two distinct exemptions intended to benefit the dealer, whereas this case relates to one exemption intended to benefit the dealer and another exemption intended to benefit the purchaser from the dealer. In Virupaksha case [1990] 77 STC 28; ILR 1989 Kar 3163 the notification granted exemption to the last purchaser of groundnut/seeds, if it was used in production of non-refined groundnut oil, and production of proof of bills showing payment of tax was basically to ensure that nuts/seeds have been used in the manufacture of non-refined oil. On the other hand, in this case, payment of tax under section 5(1) or 5(3)(a) on the manufactured gold articles is the condition for availing the exemption of purchase tax on purchase of gold items used in such manufacture. A case where payment of tax is only a method of proving the fulf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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