Strict construction of exemption notification under sales tax law left turnover tax and purchase tax payable for a small-scale unit.

A notification granting exemption from sales tax could not be extended by implication to turnover tax under the separate, self-contained charging provision, so liability to turnover tax continued. The same notification also did not cover purchase tax on purchases from unregistered dealers, because purchase tax is a distinct levy and the exemption language was confined to sales by the notified small-scale unit. Applying strict construction to taxing exemptions, the challenge to both levies failed and the tax demand was sustained.

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Issues: (i) Whether a newly set up small-scale industrial unit holding an eligibility certificate under the exemption notification was exempt from turnover tax under section 4AAA of the West Bengal Sales Tax Act, 1954. (ii) Whether the same notification extended to purchase tax on purchases from unregistered dealers during the period of exemption.

Issue (i): Whether a newly set up small-scale industrial unit holding an eligibility certificate under the exemption notification was exempt from turnover tax under section 4AAA of the West Bengal Sales Tax Act, 1954.

Analysis: Section 4AA empowered the State Government to exempt tax payable under section 4 or section 23A by notification, but section 4AAA was a separate charging provision beginning with a stronger non obstante clause and operating as a complete code for turnover tax. The notification issued under section 4AA could not be read as a prescription under section 4AAA(2)(d), and no rule had been framed to exempt turnover tax by way of deduction under that clause. A taxing notification must be construed strictly, and exemption cannot be extended by implication beyond its language.

Conclusion: The unit was not exempt from turnover tax, and liability to turnover tax subsisted.

Issue (ii): Whether the same notification extended to purchase tax on purchases from unregistered dealers during the period of exemption.

Analysis: The notification granted exemption only in respect of sales by a newly set up small-scale industry of notified commodities. Purchase tax is a distinct levy arising from a different taxing event, and the language of the notification did not cover purchases or purchases from unregistered dealers. The notification could not be expanded to include purchase tax by treating purchases as sales, nor could section 4AA be used to override the operation of section 4AAA.

Conclusion: The unit was not exempt from purchase tax, and liability to purchase tax subsisted.

Final Conclusion: The exemption notification did not displace the levy of turnover tax or purchase tax, so the challenge to the tax demand failed.

Ratio Decidendi: A notification issued under a provision granting exemption from tax on sales cannot be extended by implication to turnover tax or purchase tax where the later charging provision is self-contained and operates notwithstanding the earlier exemption power.

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