Liberal construction of tax exemption notifications brings maize by-products within the cereal exemption.

Maize oil and maize cake, produced during starch manufacture from maize, were treated as by-products of a cereal and therefore fell within the sales tax exemption under the 30.03.1994 notification. The Court applied the earlier interpretation in Rajaram and Brothers, which read the notification to extend to by-products of foodgrains and cereals once the base commodity is itself a cereal. The exemption was construed liberally, and the argument that maize oil and maize cake were not maize by-products was rejected.

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Issues: Whether maize oil and maize cake, generated in the process of producing starch from maize, were by-products of maize and hence exempt from tax under the exemption notification dated 30.03.1994.

Analysis: Maize was undisputedly treated as a cereal under the notification. The notification exempted, among other goods, by-products of foodgrains and cereals from sales tax under section 12 of the Madhya Pradesh General Sales Tax Act, 1958. The Court followed the earlier decision of the Division Bench in Rajaram and Brothers, which had interpreted the same notification to mean that once maize is a cereal, its by-products also fall within the exemption. The exemption notification was given a liberal construction, and the Court found no reason to take a contrary view. The contention that maize oil and maize cake were not by-products of maize was rejected.

Conclusion: Maize oil and maize cake are by-products of maize and are exempt from tax under the notification dated 30.03.1994.

Ratio Decidendi: Where a tax exemption notification expressly covers by-products of foodgrains and cereals, a commodity that is itself a cereal and its by-products must be treated as exempt, and such exemption notification is to be construed liberally.

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