Harmonious construction of exemption notification preserves limited garment tax relief within the notified period.

An exemption notification for ready-made garments was construed harmoniously so that the reference to total turnover and the proviso on taxability were read consistently with the prescribed turnover limit. The Kerala HC treated the condition on the year in which turnover first crossed the threshold as applying to the initial crossing year, and not as barring the benefit in later years within the notified exemption period. On that reading, exemption remained available up to the prescribed limit during the notified period, and reassessment orders denying the benefit were unsustainable. The impugned reassessment orders were set aside, with fresh orders to be passed in line with the clarified legal position.

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Issues: Whether the exemption under Notification S.R.O. No. 1727/1993 for ready-made garments was available only in the first year in which turnover crossed the prescribed limit, or could be claimed in subsequent years within the exemption period.

Analysis: The notification granted exemption for specified goods subject to conditions based on total turnover and the year in which the turnover crossed the prescribed limit. The wording of condition (i) created an apparent inconsistency between the reference to "total turnover" and the proviso that tax would be levied only on the part of the turnover exceeding the limit. The provision had to be read in a practical and harmonious manner so that the expression "turnover" in the latter part was understood in the context of the total turnover limit fixed by the notification. Condition (ii) was also read as referring to the year in which the turnover first crossed the limit, so that the benefit could not be denied in later years merely because the earlier year had crossed the threshold.

Conclusion: The assessee was entitled to exemption up to the prescribed limit within the notified period, and the reassessment orders denying that benefit were unsustainable.

Final Conclusion: The impugned reassessment orders were set aside and the matter was left to the assessing authority to pass fresh orders in accordance with the clarified legal position.

Ratio Decidendi: An exemption notification must be construed harmoniously so that an apparent inconsistency in its conditions is reconciled in a manner that gives effect to the intended limited exemption for the notified period.

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