Strict construction of tax notifications applied to a rate-reduction entry for specified goods, not only canteen-store sales.

A taxing notification deleting specified goods from entry 34 of the Fifth Schedule and fixing sales tax at 4 per cent from 1 April 1991 applied to those goods generally, not only to two-wheelers sold through canteen stores. Read with Section 8 and the scheme of the Fifth Schedule, the deletion removed the exemption previously available to canteen-store sales, and the reduced rate operated on the plain terms of the notification itself. The court noted that a tax exemption or rate-reduction notification must be construed strictly, and no narrower limitation could be implied. A later notification operative from 1 April 1992 also confirmed that the earlier notification was not confined to canteen-store sales.

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Issues: Whether the notification dated 27 March 1991 reduced tax to 4 per cent only for two-wheelers sold through canteen stores, or whether it applied to the specified goods generally after their deletion from entry 34 of the Fifth Schedule.

Analysis: The notification was issued under Explanation IV to the Fifth Schedule and Section 8A of the Karnataka Sales Tax Act, 1957. It deleted the specified goods from entry 34 of the Fifth Schedule and reduced the sales tax on those specified goods to 4 per cent with effect from 1 April 1991. Read with Section 8 and the scheme of the Fifth Schedule, the effect was that once the goods were deleted from the canteen-stores entry, the exemption was no longer available and the reduced rate applied to the specified goods. A taxing notification must be construed strictly, and no limitation could be inferred that the 4 per cent rate applied only to canteen-store sales. The subsequent notification dated 30 March 1992, made operative from 1 April 1992, also showed that the earlier notification did not already confine the reduced rate to canteen-store sales alone.

Conclusion: The notification of 27 March 1991 applied to the specified goods generally and not merely to two-wheelers sold through canteen stores.

Final Conclusion: The assessment based on 8 per cent tax could not stand, and the petitioner was entitled to relief.

Ratio Decidendi: A tax exemption or rate-reduction notification must be construed strictly according to its text, and where the notification deletes specified goods from an exempting schedule entry and independently fixes a reduced rate, the reduced rate applies according to that notification's plain effect and not by implication of a narrower use.

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