Statutory tax exemption cannot be replaced by a policy-based government order, leaving the cotton purchase tax exemption claim rejected.

A Government order issued under a textile policy could not substitute a statutory exemption under the Karnataka Sales Tax Act, 1957 for purchase tax on cotton purchases. The Court applied its earlier principle that tax exemption must flow from the Act itself and cannot be created by executive order, even where the order is linked to a State policy. On that basis, the dealer's claim to exemption for cotton used in the spinning mill was rejected, and the appeal failed.

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Issues: Whether a Government order issued pursuant to a textile policy could substitute a statutory exemption provision under the Karnataka Sales Tax Act, 1957 so as to confer exemption from purchase tax on cotton purchases.

Analysis: The dispute arose from revision under section 24 of the Karnataka Sales Tax Act, 1957 in relation to the assessment year 1997-98 and the turnover representing the value of cotton purchased for use in the spinning mill. The dealer's claim to exemption rested on a Government order said to have been issued in furtherance of the State's textile policy. The Court followed its earlier view that exemption from tax must rest on a provision contained in the Act and that an executive Government order cannot take the place of a statutory exemption.

Conclusion: The claim to exemption failed and the appeal was dismissed.

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