Strict construction of tax exemptions kept imported sugar within the sales tax exemption and barred levy.

Imported sugar fell within the exemption for sugar under entry 5 of the Third Schedule to the Kerala General Sales Tax Act, 1963, because the reference to sugar from the Central Excise schedule was used only to identify the commodity. The Court held that, in a fiscal statute, the exemption could not be narrowed by adding words or a limitation that the legislature had not expressed, including a restriction to sugar manufactured in India. Payment of customs duty and additional excise duty did not alter the construction of the exemption. Imported sugar was therefore not liable to sales tax, and the assessment was quashed.

---

---

Issues: Whether imported sugar fell within the exemption for sugar under entry 5 of the Third Schedule to the Kerala General Sales Tax Act, 1963, and whether sales tax could be levied on such imported sugar.

Analysis: The exemption entry in the Sales Tax Act incorporated the description of sugar from item 1 of the First Schedule to the Central Excises and Salt Act, 1944, only for the limited purpose of identifying the commodity. The imported character of the sugar did not justify adding words to the statutory description or restricting it to sugar manufactured in India. In a fiscal statute, the wording must be construed strictly, and the Court could not supply omissions or read in limitations not expressed by the legislature. The fact that customs duty and additional excise duty had been paid did not alter the interpretation of the sales tax exemption entry.

Conclusion: Imported sugar was covered by the exemption entry and was not exigible to sales tax under the Kerala General Sales Tax Act, 1963.

Final Conclusion: The writ petition succeeded and the assessment order was quashed, with no order as to costs.

Ratio Decidendi: An exemption entry incorporated by reference in a fiscal statute must be construed strictly according to its text, and the court cannot narrow it by reading in words or limitations not found in the legislation.

---