Strict compliance with exemption conditions defeats canteen tax relief where subsidy proof is not established.

A fiscal exemption for canteen sales under the Government Order was held to require strict compliance with the subsidy condition, including employer contribution of at least 25% of total running expenses even where the canteen was run by the employer. The court found that the assessee had not proved such subsidy on the record, and the burden of establishing entitlement to the exemption was not discharged. The exemption claim therefore failed, and tax on the canteen turnover was restored in favour of the revenue.

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Issues: (i) Whether the Government Order exempting sales by canteens run by an employer or by employees on a co-operative basis applied to a canteen run by the employer himself only if the employer subsidised at least 25 per cent of the total running expenses. (ii) Whether the assessee had established that it satisfied the subsidy condition and was therefore entitled to exemption on canteen sales.

Issue (i): Whether the Government Order exempting sales by canteens run by an employer or by employees on a co-operative basis applied to a canteen run by the employer himself only if the employer subsidised at least 25 per cent of the total running expenses.

Analysis: The exemption was framed to cover canteens run under a statutory obligation without profit motive, and the condition of employer subsidy formed part of the exemption scheme. The same requirement applied even where the canteen was run by the employer himself, and not merely where it was run by employees on a co-operative basis.

Conclusion: The subsidy condition was mandatory even for an employer-run canteen.

Issue (ii): Whether the assessee had established that it satisfied the subsidy condition and was therefore entitled to exemption on canteen sales.

Analysis: The record did not show proof that the assessee subsidised at least 25 per cent of the total expenses incurred in running the canteen. That factual finding had not been displaced by the appellate authorities, and the assessee had not discharged the burden of proving compliance with the exemption condition.

Conclusion: The assessee was not entitled to exemption on the canteen sales.

Final Conclusion: The exemption claim failed, and the assessment order restoring tax on the canteen turnover stood reinstated in favour of the revenue.

Ratio Decidendi: Where a fiscal exemption is conditional, every stipulated condition must be strictly proved by the claimant, and failure to establish compliance with the subsidy requirement disentitles the assessee to the exemption.

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