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TMI Blog2010 (7) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... ct"). It is carrying on the business of manufacture and sale of petroleum products. The petroleum products dealt by the assessee-company in the State of Karnataka is either received by way of stock transfer from branches outside the State of Karnataka or by way of purchases effected in the course of inter-State trade or from the registered dealers inside the State. The assessee filed annual returns for the year ending March 31, 2002. It also filed revised returns. In response to a call notice issued calling upon the assessee to produce all its books of account and documents for verification, they were produced. On verification of the said books of account, it was noticed that the assessee had claimed exemption on a turnover of high speed diesel (HSD) of Rs. 26,34,19,619 in terms of Notification No. FD 65 CSL 2001, dated April 4, 2001/July 10, 2001 issued under section 8A of the KST Act 1957 with regard to sale of high speed diesel (HSD) to fishermen. According to the said notification, the assessee was eligible for benefit of tax exemption in terms of the above notification. However, the benefit was restricted to the tax payable under section 5 only and not section 6D of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment Advocate appearing for the respondent. submitted that, the notification issued clearly sets out the exemption, which should be strictly construed. The courts by way of process of an interpretation cannot add words, which are not used by the Government in extending the benefit of exemption. In support of his contention, he also relied on judgment of the apex court as well as the Division Bench of this court, wherein it has been held, that the notification granting exemptions cannot be interpreted in a broad sense, on the contrary, it has to be given effect to by a strict interpretation and therefore, he submits that the order passed by the authorities below is strictly in accordance with law and does not call for any interference in this revision. Therefore, the short question that arises for our consideration is: "Whether the Notification No. F.D. 65 CSL 2001 dated July 10, 2001, exempt the payment of cess under section 6D of the Act? Section 8A of the Act empowers the State Government to notify exemptions and reductions of tax. In pursuance of the power conferred on the State, Notification No. FD 65 CSL 2001, Bangalore, dated July 10, 2001 was issued which was dul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, on sale or purchase effected (. . .) by any dealer, at the rate of five per cent of tax payable under the said sections: Provided that where a dealer is selling to any person goods spec ified in serial number 12 of Part M of the Second Schedule (. . .), such dealer shall pay the case on the sale of,-- (i) petrol at the rate of twenty-five paise per litre; and (ii) diesel at the rate of ten paise per litre. (2) Nothing contained in the section shall apply to the goods specified in the Fourth Schedule. (3) The provision of this Act and the Rules made thereunder including those relating to efund or exemption from tax shall, so far as may be, apply in relation to the levy, assessment and collection of the cess payable under sub-section (1) as they apply in relation to the levy, assessment and collection of sales tax or purchase tax under this Act." A Constitution Bench of the Supreme Court in the case of Shinde Brothers v. Deputy Commissioner, Raichur reported in AIR 1967 SC I512, explained the meaning of the word "cess" at para 39 as under: "39. . . . The word 'cess' is used in Ireland and is still in use in India although the word rate has rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial administrative expense which the name indicates, may be for a temporary duration. A reading of the notification makes it clear the Legislature wanted to levy cess for a period of four years from April 1, 1998 for the purpose of equity investment in Infrastructure Development Corporation (Karnataka) Limited and Bangalore Mass Rapid Transit Limited. Most of the fishermen who are granted the benefit under the notification are residing in coastal areas adjoining Arabian Sea. Specifically they are not the beneficiaries of Bangalore Mas Rapid Transit System to be improved by the State. Even Infrastructure Development Corporation (Karnataka) Limited activities extend to whole of Karnataka. Therefore, it is not a case of any specific service rendered to a specific area or to a specific class of persons or trade or business in any local area and as a condition precedent for the said services or in return for, cess is levied against this class of persons. Therefore, it is in the nature of a tax and not a fee. In this background, when we look at the section, the opening words of section 6D makes it clear that cess is payable in addition to the tax payable under sections 5, 5B, 5C and 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose provisions, courts must give effect to each and every word used in the said provision. When the Government in order to mitigate the financial distress on the part of the poor fishermen thought it fit to exempt them from payment of tax under section 5 of the Act, which is the basic tax payable for purchase of petrol or diesel, as the cess was payable in addition to the said tax, which was in the nature of an increment on the tax, the said levy of cess also stands exempted. Any other interpretation to the said provision would not only cause inconvenience to the poor fishermen but would run counter to the State Government's intention to extend the benefit to the poor fishermen. It is a social as well as a welfare measure, to ameliorate the condition of poor fishermen in the State. The benefit is extended to a class of people who are marginalised because of their financial weakness, with the intention of bringing them to the main stream of the society. Though while interpreting fiscal legislation and the notification issued under such legislation, exemption notification has to be strictly construed and the assessee should bring himself squarely within ambit of the notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion notification must be strictly construed and the assessee should bring himself squarely within the ambit of the notification. No extended meaning can be given to the exempted item to enlarge the scope of exemption granted by the notification. There cannot be any quarrel with the aforesaid legal proposition. Exemption notification has to be construed strictly. It cannot be construed liberally so as to include items in respect of which exemption was granted by the Government. However, if exemption is granted under a notification from payment of tax and if cess payable is dependent on payment of tax and when the basic liability is exempted incremental liability by way of cess cannot be levied. The learned counsel for the respondents contended that insofar as petroleum products, i.e., petrol and diesel are concerned, it is the proviso which applies. It is not dependent on the tax payable under the main section, as under the main section, only a provision is made for levy of tax and it is mentioned that cess payable is five per cent of the tax payable. So far as the proviso is concerned, it deals only with the petrol and diesel. The tax is payable not on the basis of the rate of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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