Exemption for student note-books extends to turnover tax under the Karnataka Sales Tax Act, with contrary clarification rejected.

The Karnataka Sales Tax Act exemption for student note-books was construed broadly to extend beyond sales tax and cover turnover tax under section 6-B. The term "tax" in section 2(1)(u) was read as wide enough to include tax leviable under the Act generally, and section 8-A was held to confer power to exempt or reduce tax on any item under the Act. The temporary explanation to section 8-A(3-A) did not curtail that power, and the second proviso to section 6-B(1) was treated as governing computation of turnover rather than excluding exemptions. On that construction, the clarification denying exemption from turnover tax was incorrect.

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Issues: Whether the notification issued under section 8-A of the Karnataka Sales Tax Act, 1957 exempting student note-books from tax also exempted the turnover tax levied under section 6-B of the Act.

Analysis: The expression "tax" in section 2(1)(u) of the Act is wide enough to include tax leviable under the Act generally, including turnover tax under section 6-B. Section 8-A empowers the State to exempt or reduce tax payable on any item under the Act, and the temporary explanation confined to section 8-A(3-A) did not cut down that general power. The second proviso to section 6-B(1) governs only the method of computing turnover and does not exclude the operation of an exemption granted under section 8-A. The notification, properly construed in the context of its subject matter and legislative purpose, showed an intention not to burden common-use educational items with tax, whether in the form of sales tax or turnover tax.

Conclusion: The exemption notification covered turnover tax under section 6-B as well, and the contrary clarification was wrong. The reassessment notices based on that clarification were liable to be quashed.

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