Directory explanation in exemption notification cannot defeat full relief where it only defines the eligibility computation.

An explanatory provision incorporated into an exemption notification was held to be directory where it operated only to define "total employment" for the employment-percentage test and did not create a separate substantive bar to exemption. The court read the exemption and restrictive notifications together and found no express consequence for every worker's failure to contribute to provident fund. On a purposive construction, the explanation was treated as aiding computation rather than defeating relief, and substantial compliance was sufficient. The exemption was therefore not denied on that basis, and the question of law was answered in favour of the assessee.

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Issues: Whether the explanation appended to the restrictive notification, incorporated into the exemption notification by proviso (ii) to clause 2, created an additional mandatory condition so as to restrict the assessee's exemption to 5% of the sale price, or whether it was only a directory definition of "total employment" that did not defeat full exemption.

Analysis: Proviso (ii) to clause 2 of the exemption notification bodily incorporated the conditions and restrictions of the restrictive notification, making those conditions part of the exemption regime by legislation by incorporation. The explanation in the restrictive notification did not add a new substantive restriction against exemption; it only defined "total employment" for applying the employment-percentage test. The record did not show that the assessee failed to satisfy the prescribed employment percentages, and there was no express consequence in either notification for non-payment of provident fund contribution by every employee. Read purposively, the explanation was intended to assist computation and to avoid an absurd denial of exemption where some workers were not contributing to provident fund. The provision was therefore directory, and the assessee had substantially complied with the requirement.

Conclusion: The explanation did not bar full exemption. The restrictive clause did not apply to the assessee, and the question of law was answered in the negative, in favour of the assessee and against the revenue.

Ratio Decidendi: A definitional explanation incorporated into an exemption notification, when it serves only to compute an eligibility condition and is not accompanied by a penal consequence for non-compliance, is directory and cannot be used to defeat otherwise satisfied exemption benefits.

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