Strict construction of exemption notifications limits deemed turnover fictions and bars exemption for earlier purchases.

Exemption under S.R.O. No. 319 of 1984 applied only to coir yarn purchases actually made on or after 1 April 1984. The Kerala High Court explained that the deeming fiction in the explanation to section 2(xxvi) of the Kerala General Sales Tax Act, 1963 treated closing stock as part of the subsequent year's turnover only for the limited purpose stated, and could not be extended to recharacterise purchases made in 1983-84 as exempt purchases of 1984-85. Because exemption provisions must be strictly construed, entitlement had to be shown within the notification's actual scope.

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Issues: Whether the assessee could claim exemption under S.R.O. No. 319 of 1984 for coir yarn purchases actually made in 1983-84, on the footing that the closing stock was deemed to form part of the total turnover of 1984-85 under the explanation to section 2(xxvi) of the Kerala General Sales Tax Act, 1963.

Analysis: The notification exempted purchases of coir yarn with effect from 1 April 1984, and exemption was therefore available only for purchases in fact made during 1984-85. The explanation to section 2(xxvi) created a legal fiction only to the extent that closing stock of goods taxable at the last purchase point would be treated as part of the dealer's total turnover of the subsequent year until the goods were sold or became liable at the last purchase point. That fiction did not extend to treating earlier purchases as if they were made in the subsequent year. Exemption provisions must be strictly construed and the claimant must establish entitlement clearly.

Conclusion: The assessee was not entitled to exemption for purchases admittedly made in 1983-84 merely because they formed part of the subsequent year's turnover by legal fiction.

Final Conclusion: The exemption notification could not be invoked for purchases made before its effective date, and the revision failed on that sole question.

Ratio Decidendi: A statutory fiction deeming closing stock to be part of the subsequent year's turnover cannot be extended beyond its express purpose to convert earlier actual purchases into exempt purchases of the later year; exemption applies only to transactions actually falling within the notification.

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