Strict construction of tax exemption notifications limits relief to the sale point expressly covered, not broader turnover

Notification S.R.O. No. 1401/92 was construed as exempting turnover tax only on the first sale point turnover expressly covered by section 5(2A)(i)(g) of the Kerala General Sales Tax Act, and not on last sale point turnover of Fifth Schedule goods. Because the notification did not refer to the Fifth Schedule itself, the exemption could not be enlarged by the explanatory note or by implication. The principle of strict construction of exemption notifications was applied, and reassessment under section 19 was upheld to the extent it brought to tax escaped turnover earlier omitted on an incorrect reading of the notification.

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Issues: Whether Notification S.R.O. No. 1401/92 exempted turnover tax only on the first sale point turnover covered by section 5(2A)(i)(g) of the Kerala General Sales Tax Act, 1963, or whether it also exempted last sale point turnover of goods falling under the Fifth Schedule; and whether the reassessment under section 19 levying turnover tax on the petitioner's turnover was liable to be quashed.

Analysis: The notification was construed as granting exemption only in respect of turnover tax payable on the turnover at the point of first sale in the State by dealers falling under section 5(2A)(i)(g), except turnover relating to goods received on consignment or by branch transfer. The text of the notification did not refer to the Fifth Schedule as such, and therefore the Court held that the exemption could not be extended to last sale point turnover merely because the goods happened to fall under the Fifth Schedule. The explanatory note could not be used to enlarge the scope of a clear notification. The Court further held that exemption notifications must be strictly construed, and that the reassessment brought to tax escaped turnover which had rightly been omitted earlier on an incorrect understanding of the notification.

Conclusion: The notification did not exempt the petitioner's last sale point turnover of Fifth Schedule goods from turnover tax, and the reassessment under section 19 was valid.

Ratio Decidendi: A clear exemption notification must be construed strictly according to its terms, and exemption cannot be extended beyond the specific turnover and sale point expressly covered by the notification.

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