Sales tax exemption notification interpreted conjunctively; earlier provisional registration protected the unit and exclusion was set aside.

The exemption notification under the Kerala General Sales Tax Act was construed to grant eligible industrial units tax concession from commencement of production, subject to the prescribed ceiling. The negative-list clause excluding power-intensive units was read conjunctively because the word "and" linked the requirements of total power consumption above 2500 KVA and power cost above 25% of production cost; treating it as disjunctive would make part of the clause redundant. The exclusion was also held to apply only to units provisionally registered on or after the stated cut-off date, and the unit's earlier provisional registration kept it within the protected class. Consistent administrative treatment of similar units supported that construction. The refusal of exemption was therefore unjustified, and the adverse orders were quashed.

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Issues: Whether the refusal to grant sales tax exemption under the government notification was justified, particularly on the interpretation of the negative-list clause, the cut-off date for provisional registration, and the effect of the administrative understanding adopted in similar cases.

Analysis: The exemption notification issued under section 10 of the Kerala General Sales Tax Act granted tax concession to eligible industrial units from the date of commencement of production, subject to the ceiling on aggregate exemption. The later government orders excluding power-intensive units were construed in the context of their language and object. The decisive clause used "and" between the requirements of total power requirement exceeding 2500 KVA and power cost exceeding 25% of production cost. That language was held to be conjunctive, not disjunctive, because reading it as "or" would make the latter part of the clause redundant and produce an unreasonable result. The court also found that the exclusion applied only to units provisionally registered on or after the specified cut-off date, while the unit in question had been provisionally registered earlier and therefore remained within the protected class. The consistent administrative treatment of similarly placed units was treated as supporting the same construction.

Conclusion: The refusal of exemption was unjustified. The assessee was held entitled to the claimed tax exemption and the adverse orders were quashed.

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