Strict construction of exemption notifications confined sales tax relief to five years, with excess benefit treated as void

Exemption notifications are construed strictly, and the concession is confined to their express terms. On a combined reading of the Kerala sales tax notifications, a unit set up before 1 April 1993 but commencing commercial production later fell within the earlier regime under SRO No. 1731/1993, not the seven-year concession under SRO No. 1730/1993. An exemption order granting seven years therefore exceeded the jurisdictional limit to the extent of the extra two years, and the assessing officer was entitled to confine relief to the valid five-year period.

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Issues: (i) Whether the assessee was entitled to a concessional rate under SRO No. 1730/1993 for seven years or was governed by SRO No. 1731/1993 for five years. (ii) Whether the assessing officer could confine the benefit to five years notwithstanding the exemption order granting seven years under the Kerala General Sales Tax regime.

Issue (i): Whether the assessee was entitled to a concessional rate under SRO No. 1730/1993 for seven years or was governed by SRO No. 1731/1993 for five years.

Analysis: Exemption notifications are to be construed strictly and the benefit must be determined by their express terms. The assessee's unit had been set up prior to 1 April 1993, though commercial production commenced later. On a combined reading of the notifications, SRO No. 1730/1993 applied to units set up on or after 1 April 1993, while the assessee's category was covered by the earlier regime preserved through the note in SRO No. 1729/1993 and reflected in SRO No. 1731/1993. The distinction between units set up on or after 1 April 1993 and units that merely started commercial production after that date was material.

Conclusion: The assessee was not entitled to the seven-year concession under SRO No. 1730/1993 and was governed by the five-year concession under SRO No. 1731/1993, against the assessee.

Issue (ii): Whether the assessing officer could confine the benefit to five years notwithstanding the exemption order granting seven years under the Kerala General Sales Tax regime.

Analysis: An authority's order cannot be disregarded by an assessing officer unless it is without jurisdiction or to the extent it exceeds jurisdiction. The exemption order had been issued by the competent authority, but the power conferred by the relevant notifications, read together, extended only to five years for the assessee's category. The additional two years granted in the exemption order went beyond the jurisdictional mandate and were therefore a nullity to that extent. The assessing officer was entitled to give effect only to the valid portion of the order.

Conclusion: The assessing officer was justified in restricting the exemption to five years and in rejecting the claim for the additional two years, against the assessee.

Final Conclusion: The legal effect of the decision is that the assessee's concessional CST benefit was limited to five years, the exemption order was ineffective only to the extent it purported to grant a longer period, and the revision failed.

Ratio Decidendi: Where an exemption notification confers concession only for a specified period, any order granting benefit beyond that period is void to the excess and may be confined to the jurisdictionally valid extent.

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