Leasehold manufacturing can still qualify for exemption when the notification protects goods produced by specified industries.

An exemption notification granting tax relief for goods manufactured by specified industries was held to apply even where the industrial unit was taken on lease, because the notification did not limit the benefit to owner-operated units and attached to the qualifying manufacture itself. The assessee therefore succeeded on the exemption issue. On the separate question whether brine fell within "salt" in Entry 10 of Schedule III of the Pondicherry General Sales Tax Act, the appellate tribunal's reversal was found to lack adequate reasoning for judicial scrutiny, so the commodity-identity issue was remitted to the Tribunal for fresh determination.

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Issues: (i) Whether exemption under the Government notification applied to goods manufactured in a leasehold industrial unit; (ii) whether brine fell within the expression "salt" in Entry 10 of Schedule III of the Pondicherry General Sales Tax Act, 1967.

Issue (i): Whether exemption under the Government notification applied to goods manufactured in a leasehold industrial unit.

Analysis: The notification exempted tax on turnover from sales of goods manufactured by specified categories of industries located in the Union Territory and certified by the Director of Industries. Its language did not restrict the benefit to industries owned by the assessee, nor did it exclude manufacture carried on in a unit taken on lease. The exemption attached to the goods manufactured by the qualifying industry, not to ownership of the industrial unit.

Conclusion: The exemption was available to the assessee and this issue was decided in favour of the assessee.

Issue (ii): Whether brine fell within the expression "salt" in Entry 10 of Schedule III of the Pondicherry General Sales Tax Act, 1967.

Analysis: The lower authorities had held that brine and salt were commercially different commodities and had recorded reasons on that basis. The appellate tribunal, however, reversed that view without giving a clear reasoned analysis or dealing with the rival contentions and authorities in a manner that enabled judicial scrutiny. As the finding on identity of commodities was unsupported by adequate reasoning, the matter required reconsideration by the fact-finding authority.

Conclusion: The issue was not finally decided on merits and was remitted to the Tribunal for fresh determination.

Final Conclusion: The assessee succeeded on the exemption notification issue, while the question whether brine was covered by the entry for salt was sent back for a reasoned fresh decision by the Tribunal.

Ratio Decidendi: An exemption notification is construed according to its terms and, where it exempts goods manufactured by specified industries, the benefit is not denied merely because the manufacturing unit is taken on lease unless the notification expressly so provides; a fact-finding conclusion on commodity identity must be supported by reasons adequate for judicial review.

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