Plain-language interpretation of exemption entry protects VSF hank yarn from proposed VAT levy, while other notice issues remain open.

The exemption entry in the Tamil Nadu VAT schedule, read on its plain language, could not be confined by implication to cotton hank yarn alone when it had already been construed to cover yarn sold in hank form, including Viscose Staple Fibre hank yarn. On that interpretation, the proposed levy of tax on sale of VSF hank yarn was unsustainable and was set aside. The notice was interfered with only to that extent, and the assessee was left free to respond on any other distinct issue raised.

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Issues: Whether Viscose Staple Fibre hank yarn was entitled to exemption under Entry 44 of the Fourth Schedule to the Tamil Nadu Value Added Tax Act, 2006, and whether the proposal to levy tax on its sale could be sustained.

Analysis: The exemption entry had already been construed to cover cotton hank yarn as well as other yarns sold in hank form, including VSF and PFA hank yarn. The plain language of the entry did not justify confining the exemption only to cotton hank yarn, and the interpretation adopted earlier left no basis to read into the provision a restriction not found in its text. On that footing, the proposed levy on sale of VSF hank yarn could not stand. The order also preserved liberty to the assessee to respond only to any other distinct issue in the notice.

Conclusion: The proposal to levy tax on sale of VSF hank yarn was unsustainable and was set aside.

Final Conclusion: The impugned notice was interfered with only to the extent of the VSF hank yarn exemption issue, while other issues in the notice were left open for reply.

Ratio Decidendi: Where the statutory exemption entry is plain and unqualified, it cannot be restricted by implication to a narrower class of goods than its language covers.

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