Tax notification and exemption interplay: later specific levy was treated as withdrawing an earlier class exemption for beltings.

A later tax notification fixing a rate for beltings of all kinds was treated by the majority as withdrawing an earlier exemption covering cotton fabrics of all varieties, because the same authority had power both to grant exemptions and to vary tax rates. The two notifications were read together, and the later specific notification prevailed for the identified goods, making them taxable without a separate express recall of the exemption. The dissent held that the earlier exemption continued to protect cotton beltings and that any ambiguity in the taxing scheme had to be resolved in favour of the taxpayer.

---

---

Issues: Whether a later notification issued under the rate-modifying provision of the U.P. Sales Tax Act, 1948 could bring beltings of all kinds to tax despite an earlier exemption notification covering cotton fabrics of all varieties.

Analysis: The relevant scheme comprised the charging provision, the power to vary the rate of tax by notification, and the separate power to grant exemption by notification, all vested in the State Government. The later notification specified a tax rate for beltings of all kinds, and the goods in question were accepted as a kind of belting material. The majority treated the later notification as indicating a clear intention to withdraw the earlier exemption and to levy tax at the notified rate, without requiring a separate express recall of the exemption. It held that the two notifications could be read together as a combined exercise of power, and that the later notification prevailed to the extent of the specified item.

Conclusion: The later notification made the goods taxable and the assessee's claim to continue the exemption failed.

Dissenting Opinion: The dissent held that the earlier exemption for cotton fabrics continued to protect cotton beltings, and that specification of beltings of all kinds under the later notification did not override the existing exemption. It applied the principle that ambiguity in taxing provisions must be resolved in favour of the subject and concluded that the exemption prevailed.

Ratio Decidendi: Where the statute vests in the same authority both the power to grant exemption and the power to vary the rate of tax, a subsequent notification expressly fixing tax on a class of goods may be construed as withdrawing the earlier exemption for that class, even without a separate notification of recall.

---