Tax exemption for fishermen's diesel sales was held to include dependent cess, defeating the additional levy.

A notification exempting tax on diesel sold to fishermen under section 5 of the Karnataka Sales Tax Act, 1957 was held to extend to cess under section 6D as well. Section 6D imposed cess only in addition to tax payable under the charging provisions, so the cess was dependent on an existing tax liability and was not an independent levy in this context. Although exemption notifications are construed strictly, the wording of section 6D and the object of the notification showed that exemption from the basic tax necessarily carried exemption from the related cess. The cess could not be sustained once the section 5 tax stood exempted.

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Issues: Whether the notification exempting tax payable under section 5 of the Karnataka Sales Tax Act, 1957 on diesel sold to fishermen also exempted cess payable under section 6D of the Act.

Analysis: The notification issued under section 8A exempted only the tax payable under section 5 on diesel sold for fishing activities. Section 6D provided for cess in addition to the tax payable under sections 5, 5B, 5C and 6, making cess dependent on the existence of tax liability under the charging provisions. The levy was not treated as an independent impost in the context of the exemption. Although exemption notifications are generally construed strictly, the wording of section 6D and the object of the notification showed that exemption from the basic tax necessarily carried exemption from the incremental cess. The authorities failed to give effect to the express dependency built into section 6D.

Conclusion: The notification did exempt cess under section 6D, and the levy of cess could not be sustained once the basic tax under section 5 stood exempted.

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