Strict construction of fiscal exemption notifications limits relief to expressed taxable events and excludes raw material purchase tax.

Fiscal exemptions must be read strictly, and a notification exempting tax payable on goods manufactured and sold by new industrial units does not extend by implication to purchase tax on raw materials. The Karnataka HC noted that the language of the notification was clear and could not be widened to create a second stage of exemption not expressed in the text. The earlier cashew decision was distinguished because, on its special facts, the exemption would otherwise have been illusory. Here, the notification was confined to manufactured goods, so purchase tax on raw materials remained payable.

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Issues: Whether the exemption notification covering tax payable in respect of goods manufactured and sold by new industrial units extends to purchase tax on raw materials purchased for manufacture; whether the earlier decision concerning exemption on raw cashew applies to the present notification.

Analysis: Exemption provisions in fiscal statutes are to be construed strictly at the stage of determining whether the subject falls within the notification. Where the words used are clear and unambiguous, there is no scope to widen the exemption by interpretation. The notification under section 8-A of the Karnataka Sales Tax Act, 1957, specifically exempts tax payable in respect of goods manufactured and sold by new industrial units. That language does not extend to purchase tax on raw materials. Reading such a wider exemption into the notification would amount to adding words that are not there and would amount to granting exemption at two stages, which the notification does not contemplate. The earlier cashew decision was distinguished because, on its peculiar facts, the manufactured goods were not liable to tax at all, making the exemption illusory unless purchase tax on raw material was also exempted.

Conclusion: The notification does not exempt purchase tax on raw materials. The petitioner remains liable to pay purchase tax on groundnuts, and the impugned endorsement was upheld.

Final Conclusion: The challenge to the demand for purchase tax failed because the exemption was confined to tax on the manufactured and sold goods and could not be extended to raw materials by implication.

Ratio Decidendi: A fiscal exemption must be confined to the clear language of the notification and cannot be enlarged to cover matters not expressly included, unless the notification becomes inoperative or illusory on its own terms.

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