Strict construction of taxing statute: deduction for arrack purchase tax depends on actual tax paid, subject to proof and procedure.

Section 7(14) of the Kerala General Sales Tax Act was construed according to its plain wording: the deduction for tax on purchase of arrack at the first sale point refers to the actual tax paid, not a notional amount merely payable under the Fifth Schedule. The court noted that in a taxing provision no words may be added or substituted by implication unless the text is unworkable or absurd. Relief by refund or adjustment is available only if the assessee proves actual payment and complies with the prescribed procedure, including the formalities under rule 30.

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Issues: Whether, under section 7(14) of the Kerala General Sales Tax Act, the expression "tax paid by him for the purchase of arrack on the first sale point" means the actual tax paid at the first sale point or only the tax payable under the Fifth Schedule; and whether the assessee is entitled to refund or adjustment of excess tax paid on proof of payment and compliance with prescribed formalities.

Analysis: Section 7(14) permits a dealer holding a retail arrack licence to opt to pay tax at twenty per cent of twice the rental amount, less the tax paid on purchase of arrack at the first sale point. The language used is plain and specific. In a taxing provision, the words employed must be given their natural meaning, and no words may be added, altered, or read in by implication unless the text is rendered unworkable or absurd. The phrase "tax paid" cannot be rewritten as "tax payable" merely because the first point rate under the Fifth Schedule is 50 per cent in the case of sales to a registered dealer. The statutory scheme shows that the deduction is linked to the actual tax suffered on purchase, and where the applicable rate for an unregistered dealer is 62.5 per cent, that amount is capable of being deducted if in fact paid. However, the assessee must establish payment of the amount and compliance with the prescribed procedure, including the formalities under rule 30, before refund or adjustment can be granted.

Conclusion: The deduction under section 7(14) is of the actual tax paid on purchase at the first sale point and not a notional tax payable at 50 per cent; the assessee is entitled to relief if actual payment and compliance with the required formalities are proved.

Ratio Decidendi: A taxing provision must be construed strictly according to its plain language, and where the statute grants deduction for "tax paid", the court cannot substitute that expression with "tax payable" by implication.

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