Statutory sales tax exemption cannot be denied by adding an unprescribed proof-of-duty condition to the exemption entry.

The exemption under entry 3 of the Fifth Schedule to the Karnataka Sales Tax Act could not be denied by adding a requirement that the dealer produce proof of payment of additional excise duty by the manufacturer, because that condition was not stated in the exemption entry or the statutory scheme. The revisional notice and order rested only on the absence of such proof, without any finding that the goods fell outside entry 3 or were not used in manufacture. On that basis, the revisional order was unsustainable, the assessment granting exemption was restored, and the assessee remained entitled to the claimed exemption.

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Issues: Whether the revisional order denying exemption under entry 3 of the Fifth Schedule to the Karnataka Sales Tax Act, 1957 on the ground of non-production of proof of payment of additional excise duty by the manufacturer was sustainable.

Analysis: The exemption under entry 3 did not stipulate as a condition that the dealer must produce proof of payment of additional excise duty by the original manufacturer. The Court held that such a requirement was not contemplated by the scheme of the Act and could not be imposed as an additional condition for exemption. The revisional notice and the revisional order proceeded only on the absence of such proof, and not on any finding that the goods were outside the description in entry 3 or that they had been used in manufacture. On that basis, the order denying exemption and directing reassessment could not be sustained.

Conclusion: The revisional order was unsustainable and was set aside; the assessment order granting exemption was restored in favour of the assessee.

Final Conclusion: The assessee remained entitled to the exemption claimed under entry 3, and the Revenue could not insist upon proof of payment of additional excise duty as a precondition for that exemption.

Ratio Decidendi: A revisional authority cannot deny a statutory sales tax exemption by adding a condition that the dealer must prove payment of additional excise duty by the manufacturer when such a requirement is not prescribed by the exemption entry itself.

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