Statutory tax exemption cannot be overridden by later executive clarification or departmental notification issued outside the taxing statute.

A statutory sales tax exemption granted under section 10 of the Kerala General Sales Tax Act, 1963 could not be curtailed by a later departmental notification or clarificatory letter issued outside the taxing statute. The exemption notification operated on its own terms, and any alteration to that scheme had to be made only in the manner authorised by the statute. The later executive materials, which did not refer to the statutory sales tax notification, could not override or amend the statutory exemption. On the stated facts, the unit was also registered before the cut-off date in the later notification, and the negative-list conditions were not shown to co-exist.

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Issues: Whether the rejection of exemption from sales tax on the basis of the subsequent departmental notification and clarificatory letter was valid, and whether the appellant remained entitled to exemption under the statutory notification issued under section 10 of the Kerala General Sales Tax Act, 1963.

Analysis: The exemption notification under section 10 of the Kerala General Sales Tax Act, 1963 granted tax exemption to eligible industrial units and prescribed its own conditions and limits. The subsequent departmental notification relating to subsidy and the later clarificatory letter did not refer to the statutory sales tax notification, were not issued under the taxing statute, and could not be treated as modifying the statutory exemption scheme. The Court held that a statutory notification can be altered only in the manner provided by the statute and not by an executive communication. On the facts, the appellant's unit had been registered much earlier than the cut-off date in the subsequent notification, and in any event the power-load and cost conditions were not shown to coexist so as to bring the unit within the negative list.

Conclusion: The rejection order was unsustainable, the appellant was not governed by the later departmental clarification as a matter of law, and the appellant was entitled to reconsideration of exemption in accordance with the statutory notification.

Final Conclusion: The appeals succeeded, the impugned order was set aside, and the authority was directed to reconsider the exemption claim under the governing statutory notification.

Ratio Decidendi: An executive clarification or a departmental notification issued outside the taxing statute cannot curtail or modify a statutory exemption notification, and the later general policy instrument cannot override a specific tax exemption granted under the statute.

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