Sales tax exemption for authorised dealers upheld where statutory wording extended the benefit to authorised representatives and stockists.

A restrictive reading of sales tax exemption provisions was rejected where the statutory Schedule expressly extended the benefit to goods manufactured by the Khadi and Village Industries Commission and sold by its authorised representatives. The Court held that administrative circulars, though imperfectly drafted, could not be used to exclude duly authorised private dealers or stockists when the exemption language did not clearly impose such a limitation. The exemption was therefore treated as attaching to the products and covering authorised sellers, making the revisional order unsustainable and restoring the earlier appellate relief.

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Issues: Whether authorised dealers or stockists of Khadi and Village Industries Commission products were entitled to sales tax exemption under the State circulars and Schedule V of the Karnataka Sales Tax Act, 1957.

Analysis: The revisional authority had proceeded on a narrow reading of the exemption material and had treated the benefit as confined to the Commission's own manufacturing and selling units. The Court held that the circulars, though not happily worded, did not expressly prohibit authorised private licensees from selling the specified products, and that such dealers could not be arbitrarily excluded when they were duly authorised by the Commission. More importantly, Schedule V contained a clear and unambiguous exemption extending to goods manufactured by the Khadi and Village Industries Commission and sold not only by it but also by its authorised representatives. On that basis, the legislative exemption was held to attach to the products and to cover authorised dealers and stockists like the appellants.

Conclusion: The appellants were entitled to the exemption and the revisional order was unsustainable.

Final Conclusion: The appeal succeeded and the earlier appellate relief granting exemption was restored.

Ratio Decidendi: Where a statutory exemption expressly extends to authorised representatives or dealers, such beneficiaries cannot be denied the concession by a restrictive reading of administrative circulars that do not clearly impose such exclusion.

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