The Commissioner of Income Tax - II vs. M/s. Kumar Raja Associates

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI WEDNESDAY, THE EIGHTH DAY OF MAY TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE RAVI NATH TILHARI AND THE HONOURABLE SRI JUSTICE HARINATH.N TAX REVISION CASE Nos.83.135,149 & 191 of 2008 TAX REVISION CASE No.83 of 2008 Petition under Section 22 (1) under Rule 10 of APGST Rules under Section APGST Act, to revise the order dated 21.01.2008 made in T.A. No.61 of 2007 passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad preferred against the order of the Deputy Commissioner (CT), Eluru in R.F.No.8/2007-2008 (CST Act), dated 23.05.2007 preferred against the proceedings of the Commercial Tax Officer, Nidadavole, passed in Gl No.7591/2001-02(CST)dated 26.05.2007. Between: The State of Andhra Pradesh, rep by the State Representative before Floor, Opp.Gurudware Bus Stop, th STAT, 0/o.Meghana Towers, 4 Visakhapatnam. ... Petitioner AND M/S.PULP-N-PACK [P] Limited, Tadimalla ... Respondent : Sri T.C.D.Sekhar, GP for Commercial Tax Counsel for the Respondent : Sri S Suribabu, representing on behalf of Sri S R R Viswanath Counsel for the Petitioner

IT' TAX REVISION CASE No.135 of 2008 Petition under Section 22 (1) R/w Rule 10 of APGST Rules under Section APGST Act, to revise the order dated 18.02.2008 made in T.A. No.60 of 2007 passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad preferred against the order of the Deputy Commissioner (CT), Eluru in R.F.No.1/2007-2008, dated 24.05.2007 preferred against the proceedings of the Commercial Tax Officer, Nidadavole, passed in Assessment No. 7591/2004-05(RC No.ELR/03/1/1212) dated 29.03.2006. Between: The State of Andhra Pradesh, rep by the State Representative before STAT, 0/o.Meghana Towers, 4 Visakhapatnam. th Floor, Opp.Gurudware Bus Stop ... Petitioner AND M/S.PULP-N-PACK [P] Limited, Tadimalla ... Respondent : Sri T.C.D.Sekhar, GP for Commercial Tax Counsel for the Respondent : Sri S Suribabu, representing on behalf of Sri S R R Viswanath Counsel for the Petitioner TAX REVISION CASE No.149 of 2008 Petition under Section 22 (1) R/w Rule 10 of APGST Rules under Section APGST Act, to revise the order dated 18.02.2008 made in T.A. No.57 of 2007 passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad preferred against the order of the Deputy Commissioner (CT), Eluru in R.F.No.7/2007-2008 (CST Act), dated 23.05.2007 preferred against the proceedings of the Commercial Tax Officer, Nidadavole, passed in Assessment No.7591/2001-02 dated 14-02-2003.

Between: The State of Andhra Pradesh, rep b y the State Representative before STAT, 0/o.Meghana Towers, 4*^ Floor, Opp.Gurudware Bus Stop, Visakhapatnam. ... Petitioner AND M/S.PULP-N-PACK [P] Limited, Tadimalla ... Respondent : Sri T.C.D.Sekhar, GP for Commercial Tax Counsel for the Respondent : Sri S Suribabu, representing on behalf of Sri S R R Viswanath TAX REVISION CASE No.191 of 2008 Counsel for the Petitioner Petition under Section 22 (1) R/w Rule 10 of APGST Rules under Section APGST Act, to revise the order dated 18.02.2008 made in T.A. No.59 of 2007 passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad preferred against the order of the Deputy Commissioner (CT), Eluru in R.F.No.1/2007-2008, dated 23.05.2007 preferred against the proceedings of the Commercial Tax Officer, Nidadavole, passed in Assessment No.7591/2003-04 (RC No.ELR/03/1/1212) dated 27.03.2006. Between; The State of Andhra Pradesh, rep b y the State Representative before Floor, Opp.Gurudware Bus Stop, th STAT, 0/o.Meghana Towers, 4 Visakhapatnam. ... Petitioner AND M/S.PULP-N-PACK [P] Limited, Tadimalla ... Respondent : Sri T.C.D.Sekhar, GP for Commercial Tax Counsel for the Respondent : Sri S Suribabu, representing on behalf of Sri S R R Viswanath Counsel for the Petitioner The Court made the following:

3 RNT, J & HN, J TREVC. No. 83 of 2008 & batch * THE HON'BLE SRI JUSTICE RAVI NATH TILHARI & THE HON'BLE SRI JUSTICE HARINATH NUNEPALLY + TREVC Nos. 83. 135. 149 & 191 of 2008 %o8.05.2024 Between: The Sales Tax Appellate Tribunal The State Of Andhra Pradesh PETITIONER AND M/s Pulpnpack P Limited RESPONDENT ! Counsel for the Petitioner : Sri T.C.D.Sekhar GP for Commercial Taxes Counsel for the Respondent : Sri S. Suribabu Representing Sri S.R.R.Viswanath < Gist : > Head Note: ? Cases Referred: 1) 2001 (2) ALT 286 2) WP No.4606/2010 & batch, erstwhile APHC, decided on 29.09.2015 3) (2002) 126 STC 132 (APHC) 4) (2001) 32 APSTJ 124 (.APHC) 5) (1995) 98 STC 144 (APHC) 6) (1997) 24 APSTJ 51 (APHC) 7) (1989) 8 APSTJ 148 (APHC) 8) (1995) 96 STC 355 (SC) 9) (2021) 12 see 217 10) (2018) 9 see 1 11) (2011) 1 see 236 12) (2022) 2 see 725 13) (2015) 17 see 664 14) (2022) 5 sec 62 15) (2004) 6 sec 408

RNT, J & HN, J TREVC. No. 83 of 2008 & batch 4 16) WP.No.4606of2010& batch Erstwhile APHC decided on 29.09.2015 17) (2001) 11 APCK0093 18) (1995)98 STC 144 (AP) 19) (1982)51 STC 1 (AP) 20) (2019) 18 see 126 21) (2019)20 see 17 22) (2019) 19 see 801 23) 1994 Supp(3)SCC606 24) (2023) 4 see 231 25) (2023) 6 see 451 26) (2018) 9 see 1 27) (2007) 9 see 55 28) AIR 1967 SC 389 29) (1988) 2 see 299 30) (2004) 11 see 641 31) (2003) 7 see 66 32) (1976) 4 see 27 33) (1975) 3 see 585

5 RNT, J & HN, J TREVC. No. 83 of 2008 & batch THE HON'BLE SRI JUSTICE RAVI NATH TILHARI & THE HON'BLE SRI JUSTICE HARINATH NUNEPALLY TREVC Nos. 83, 135. 149 & 191 of 2008 COMMON JUDGMENT: (oer Hon'ble Sri Justice Ravi Nath Tilhari) Heard Sri T.C.D Sekhar, learned Government Pleader for Commercial Tax for petitioners and Sri S. Suribabu, learned counsel, representing Sri S.R.R. Viswanath, learned counsel for the respondent. 2, The petitioner the State of Andhra Pradesh in all the revisions is challenging the orders dated 18.02.2008, passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, Visakhapatnam Bench (for short, "the Appellate Tribunal") of the same nature in different 4 appeals for the assessment years from 2001-2002 to 2004-2005 under A.P. General Sales Tax Act, 1957 (for short, "the APGST Act, 1957") arising out of different assessment orders with respect to the same respondent on the same subject. Facts of the Case: 3. The respondent Pulp-N-Pack (P) Limited, Tadimalla is a trader in Pulp Moulded Egg Trays, (the Commodity in short) manufactured by a Small Scale Industries (SSI) Units. The respondent was finally assessed by the Commercial Tax Officer (CTO) granting exemption on the sales turnover of Pulp Moulded Egg Trays from the levy of turnover tax pursuant to G.O.Ms.No.l091 Revenue (CT-II) Department dated 31.10.1994, issued under Section 9(1) read with Section 5A(l)(vi) of the APGST Act. The Deputy Commissioner (CT) in suo

r 6 RNT, J & HN, J TREVC. No. 83 of 2008 & batch motu revision, vide separate orders dated 23.05.2007 and 24.05.2007 levied the turnover tax under Section 5-A, (g) 10% holding that the respondent was liable to the turnover tax on the second sales of Pulp Moulded Egg Trays which fell under Item 19 of the First Schedule. The Appellate Tribunal allowed the respondent's four appeals vide separate orders dated 18.02.2008 restoring the order of the Commercial Tax Officer, holding that the respondent was entitled for exemption. 4. The details of all such cases is being given in a Tabular Form as under: Disputed Turnover (Rs.) Particulars of Orders of CTO Years of Assessment under the Act Particulars of the Orders of DC SI.No. TREVC TA No.& Order of STAT No. G.l.No.7591/2001-02 APGST Dated 14-2- 2001-02 3,16,16,871 RF No:7/2007- 08 Dated 23-05-2007 149 Of 57/2007 Dated 18.08.2008 1 2008 2003 2003-04 2,78,89,240 RF No: 1/2007 08 Dated 23-05-2007 G.I.No.7591/2003-04 APGST Dated 27-3- 191 Of 59/2007 Dated 18.08.2008 2 2008 2006 3,69,44,360 RF No:3/2007-08 Dated 24-05-2007 G.I.No.7591/2004-05 APGST Dated 29-3- 2004-05 60/2007 Dated 18.08.2008 3 135 Of 2008 2006 2001-02 1,58,77,005 RF No:8/2007- 08/CST ELR/03/1/1217/2001- 83 Of 2008 61/2007 Dated 18.08.2008 4 02 5. As Common Questions are involved and common submissions have been advanced in all the aforesaid revision we proceed to decide all the revisions by this common judgment. 6. The Deputy Commissioner (CT) took the view that the respondent was a small scale industry unit, but the commodity sold was not manufactured by the respondent unit. The Pulp Moulded Egg Trays were purchased by the respondent from the other registered dealers. The assesse unit not being a

7 RNT, J & HN, J TREVC. No. 83 of 2008 & batch manufacturer, exemption on sales turnover vide G.O.Ms.No.l091 dated 31.10.1994 was not applicable. The turnover was liable to tax under Section 5- A of the APGST Act, 1957. It further observed that, allowing exemption by the CTO was prejudicial to the interest of the State revenue. The contention of the dealer respondent that the sale of Egg Trays are generally exempted under Section 9(1) of the APGST Act vide G.O.Ms.No.l091 dated 31.10.1994 was rejected. The Deputy Commissioner (CT) took the view that the exemption only applied to the small scale inoustries unit (SSI), manufacturing and selling such commodity. 7. The Appellate Tribunal took the view that the exemption vide G.O.Ms.No.1091 was a general exemption and not conditional, observing that when the exemption is given under Section 9(1) of APGST Act without any restriction, it is a general exemption. The respondent was not liable to tax. The Appellate Tribunal further concluded that what are exempted is Pulp Moulded Egg Trays manufactured by SSI Units. The G.O.Ms.No.l091 does not say that such commodity sold by manufacturing unit alone is exempted. Submissions of the learned GPi 8. Sri T.C.D Shekar submitted that the exemption granted to Pulp Moulded Egg Trays in terms of G.O.Ms.No.l091 dated 31.10.1994 issued under Section 9(1) of the APGST Act is not a general exemption. He further submitted that in any case, such exemption is not available to the respondent as it is not a manufacturing SSI Unit of such commodity. He placed reliance in

8 RNT, J & HN, J TREVC. No. 83 of 2008 & batch Anandi Roller Flour Mills Ltd., Vs. Commissioner of Commerciai Taxes, A.P^ in support of his submissions. Submissions of the learned counsel for Respondent: 9. Sri S. Suri Babu, learned counsel for the respondent submitted that the exemption granted vide G.O.Ms.No.l091 dated 31.10.1994 is a general exemption as it was issued under Section 9(1) of the APGST Act, 1957 and it does not contain any condition or restriction contemplated by Sub Section (2) of Section 9. Consequently, it cannot be a conditional exemption. He further submitted that the exemption being general exemption under Section 9(1), no tax under Section 5A (l)(vi) shall be payable on that part of the turnover which related to sale of the commodity exempted from tax generally. 10. Sri S. Suri Babu further submitted that there would also be no liability for payment of Central Sales Tax in view of Section 8(2-A) of the Central Sales Tax Act, 1956 (for short, "the CST Act, 1956"). 11. Sri S. Suri Babu further submitted that the G.O.Ms.No.l091 applies to the sale of the commodity by its manufacturing SSI unit as also its sale by other SSI units i.e. other than the manufacturing unit. 12. Learned counsel for the respondent placed reliance in the following cases. i) Medha bio Technologies Pvt Ltd., vs. The Commerciai Tax Office!^ ii) SLS Textiles Ltd and another vs. State ofA.P^. ' 2001(2) ALT 286 ^ WP No.4606/2010 & batch, erstwhile APHC, decided on 29.09.2015

9 RNT, J & HN, J TREVC. No. 83 of 2008 & batch iii) Anandi Roller Flour Mills Ltd., Hyderabad Vs. Commissioner of Commercial Taxes, A.P., Hyderabad*. iv) Pinakini Seeds vs. State ofAndhra PradestF v) Sri Venkateshwara Hybrid Seeds Co., Adoni vs. State ofAndhra Pradesh^ vi) VinodSolvent Extracts Pvt Ltd Vs. State ofA.P^. vi i) Commissioner of Sales Tax, Jammu and Kashmir and other Vs. Pine Chemicals Ltd and other^. Questions of law for determination: 13. The questions of law to be decided are as under:- Whether the G.O.Ms.No.l091 dated 31.10.1994 under Section 9(1) of the APGST Act, 1957 grants 'general' exemption, from levy of turnover tax under Section 5A(1) 2'^^ proviso (vi) of the APGST Act, 1957 on the sales of Pulp Moulded Egg Trays manufactured by Small Scale Industrial Units? A. Whether the exemption from levy of tax under G.O.Ms.No.l091 dated 31.10.1994 on the sale of Pulp Moulded Egg Trays manufactured by S.S.I is available to the manufacturing unit alone or it would also be available to the sales of such commodity by other Small Scale Industrial Units? B. C. Whether the Respondent Assessee-Dealer is entitled for exemption from levy of tax under Section 8(2-A) of the Central Sales Tax Act 1956?" ^ (2002) 126 STC 132 (APHC) ■* (2001) 32 APSTJ 124 (APHC) ^(1995) 98 STC 144 (APHC) "(1997) 24 APSTJ 51 (APHC) ’(1989) 8 APSTJ 148 (APHC) *(1995)96 STC 355 (SC)

10 RNT, J & HN, J TREVC. No. 83 of 2008 & batch Analysis: 14. We have considered the submissions advanced by the learned counsels for the parties and perused the material on record. Question 'A': 15. Section 5A (1) of the A.P. General Sales Tax Act, 1957 reads as under: “5A. Levy of tax on turnover: (l)Notwithstanding anything contained in this Act, tax shall be levied at the rate of [one paise on every rupee of turnover of a dealer, other than the dealers mentioned in sub-section (1-A)] [Substituted 'one paise in every rupee of turnover of a dealer' by Act No. 3 of 2002.] whose total turnover in a year exceeds rupees ten lakhs: Provided that the tax shall not be levied under this section on that part of the turnover of any dealer on which the dealer is liable to pay tax at the point of levy [specified in the First Schedule, except petrol, diesel oil, aviation turbine fuel, engine oils, lubricating oils, greases, brake fluids, furnaces oil and all kinds of motor vehicles,] [Substituted 'specified in the First Schedule' by Act No. 3 of 2002.J Second Schedule, Fifth Schedule and Seventh Schedule to the Act;Provided further that no tax under this section shall be payable on that part of turnover which relates to:- (i}sale or purchase of goods specified in Third Schedule; (iilsale or purchase of goods specified in Fourth Schedule; (iiilsale or purchase of goods specified in Sixth Schedule; (iv)sale or purchase of goods in the course of inter-State trade or commerce; fvlsale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India; (vi) sale or purchase of goods exempt from tax generally under sub section (1) of Section 9 of the said Act. (viilall amounts collected by way of tax under the provisions of the Central Sales Tax Act, 1956.

11 RNT, J & HN, J TREVC. No. 83 of 2008 & batch 16. Section 9 of the A.P General Sales Tax Act, 1957 reads as under: “Section 9: Power of State Government to notify exemptions and reductions of tax or interest (1) The State Government may, by notification in the Andhra Pradesh Gazette, make an exemption, or reduction in rate, in respect of any tax or interest payable under this Act- (i) on the sale or purchase of any specified class of goods, at all points or at any specified point or points in series of sales or purchases by successive dealers; or (ii)by any specified class of persons, in regard to the whole or any part of their turnover. (2) Any exemption from tax or interest or reduction in the rate of tax notified under sub-section (1) (a) may extend to the whole of the State or to any specified area or areas therein; (b) may be subject to such restrictions and conditions as may be specified in the notification, including conditions as to licenses and license fees.” 17. Section 9 of the APGST Act provides for the power of the State Government to notify the exemptions and reductions of tax or interest. Section 9 (l)(i) refers to the exemption on the sale or purchase of any specified class of goods at all points or at any specified point or points in series of sales or purchases by successive dealers. Section 9(l)(ii) refers to any specified class of persons, in regard to the whole or any part of their turnover. Section 9(2) provides for the exemption from tax or interest or reduction in the rate of tax or interest notified in sub section (1), which (a) may extend to the whole of the State or to any specified area or areas therein and (b) may be subject to such restrictions and conditions as may be specified in the notification, including conditions as to license and license fees.

12 RNT, J & HN, J TREVC. No. 83 of 2008 & batch 18. In exercise of the powers conferred by Section 9(1) of the Andhra Pradesh General Sales Tax Act, 1957, the State Government issued Notification- I in G.O.Ms.No.1091 dated 31.10.1994 granting exemption from the tax payable under A.P.G.S.T Act on the sale of Pulp Moulded Egg Trays manufactured by the Small Scale Industries (SSI). The G.O.Ms.No.l091 is reproduced as under: “In exercise of the powers conferred by Sub Section (1) of Section 9 of APGST Act, 1957 (Act IV of 1957, the Government of Andhra Pradesh hereby exempts from the tax payable under the said Act on the sale of Pulp Moulded Egg Trays manufactured by the Small Scale Industries Units (SSI)”. 19. The G.O.Ms.No.1091 thus grants exemption on the sale of the Pulp Moulded Egg Trays manufactured by the small scale industrial units. The Pulp Moulded Egg Trays which are manufactured by the small scale industrial units. only, call for exemption. If not manufactured by the small scale industrial units it would not be exempted. Consideration of Precedents on interpretation of taxing statute / Exemption provision: 20. In Ramnath and Company vs. Commissioner ofIncome Taj^, the Hon'ble Apex Court observed that it remains trite that any process of construction of a written text primarily begins with comprehension of the plain language used. In such process of comprehension of a statutory provision, the meaning of any word or phrase used therein has to be understood in its ’(2021) 12 see 217

13 RNT, J & HN, J TREVC. No. 83 of 2008 & batch natural, ordinary or grammatical meaning unless that leads to some absurdity or unless the object of the statute suggests to the contrary. In the context of taxing statute, the requirement of looking plainly at the language is more pronounced with no room for intendment or presumption. In this process, if natural, ordinary or grammatical meaning of any word or phrase is available unquestionably and fits in the scheme and object of the statute, the same could be, rather need to be, applied. The other guiding rules of interpretation would be the internal aides like definition or interpretation clauses in the statute itself. 21. In Ramnath and Company the Hon'ble Apex Court also referred to the Constitution Bench Judgment in Commisioner of Customs 10 (Import)^ Mumbai v. Dilip Kumar & Co. with reference to the relevant principles for interpretation of a taxation statute. 22. While interpreting a taxation exemption provision/notificati on when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax, it was observed that, the principles were stated in clear terms that, the question as to whether a subject falls in the notification or in the exemption clause has to be strictly construed; and once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the exemption clause liberally. (2018) 9 see 1

14 RNT, J & HN, J TREVC. No. 83 of 2008 & batch 23. Referring to the Constitution Bench decision in CCE v. Hari Chand Shri Gopat^, the Hon'ble Apex Court in Ramnath and Company {su^vdi) in para 16.3 and 16.4 observed as under: “16.3. In view of above and with reference to several other decisions, in Dilip Kumar & Co., the Constitution Bench summed up the principles as follows:- “66. To sum up, we answer the reference holding as under: 66.1. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. 66.2. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue. 66.3. The ratio in Sun Export case is not correct and all the decisions which took similar view as in Sun Export case stand overruled. 16,4. Obviously, the generalised, rather sweeping, proposition stated in Sun Export Corpn. [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] as also in other cases that in the matters of taxation, when two views are possible, the one favourable to the assessee has to be preferred, stands specifically disapproved by the Constitution Bench in Dilip Kumar & Co. [Commr. of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1] It has been laid down by the Constitution Bench in no uncertain terms that exemption notification has to be interpreted strictly; the burden of proving its applicability is on the assessee; and in case of any ambiguity, the benefit thereof cannot be claimed by the subject/assessee, rather it would be interpreted in favour of the Revenue.” 24. Thus, the law declared is that the exemption notification should be interpreted strictly. The burden of proving the applicability would be on the (2011) 1 see 236

15 RNT, J & HN, J TREVC. No. 83 of 2008 & batch assessee to show that his case comes within the parameters of the exemption clause or exemption notification. When there is ambiguity in exemption notification which is subject to a strict interpretation, the benefit of such ambiguity cannot be claimed by the assessee and it must be interpreted in favour of the revenue. 25. In State of Maharashtra vs. Shri Vile Parie Keivani Mandat and others^^, the question was whether the charitable educational institution was entitled to the exemption from payment of electricity duty post 01.09.2016 i.e. as per the provisions of the Maharashtra Electricity Duty Act, 2016? The Hon'ble Apex Court while answering the aforesaid question/issue laid down as to how to interpret and/or consider the statutory provisions in the taxing statute and the exemption notifications. Paras 12 to 17 read as follows: "12. In Dilip Kumar [Commr. of Customs v. Dilip Kumar & Co., (2018) 9 see 1], five-Judge Bench of this eourt has held that in every taxing statute— the charging, the computation and exemption provisions at the threshold stage should be interpreted strictly. In case of ambiguity in case of charging provision, the benefit necessarily must go into favour of the subject/assessee. This means that the subject of tax, the person liable to pay tax and the rate at which the tax is to be levied have to be interpreted and construed strictly. If there is any ambiguity in any of these three components, no tax can be levied till the ambiguity or defect was removed by the legislature. However, in case of exemption notification or clause, same is to be allowed based wholly by the language of the notification, and exemption cannot be gathered by necessary implication, or on a construction different from the words used by reference to the object and purpose of granting exemption. (2022) 2 see 725

16 RNT, J & HN, J TREVC. No. 83 of 2008 & batch 13. Further it is for the assessee to show by construction of the exemption clause/notification that it comes within the purview of exemption. The assessee/citizen cannot rely on ambiguity or doubt to claim benefit of exemption. The rationale is not to widen the ambit at the stage of applicability. However, once the hurdle is crossed, the notification is constructed liberally [sQQ CCEv. Parle Exports (P) Ltd. [CCE\. Parle Exports (P) Ltd., (1989) 1 see 345 : 1989 See (Tax) 84] and Union ofIndia v. Wood Papers Ltd. [Union ofIndia V. Wood Papers Ltd, (1990) 4 See 256 : 1990 See (Tax) 422] ] Thus, distinction can be made between the substantive requirements that require strict compliance, non-compliance of which would render the assessee ineligible to claim exemption, and the procedural or compliance provision which can be interpreted liberally [see SCC paras 64 to 65 in Dilip Kumar [Commr. of Customs V. Dilip Kumar & Co., (2018) 9 SCC 1] ]. 4.Essar Steel [Essar Steel (India) Ltd. y. State of Gujarat, (2017) 8 SCC 357] was a case relating to grant of exemption under Section 3{2){a){vii)(a) from payment of electricity duty under the 1958 Act. The Court relied on several decisions on interpretation of notification in the nature of exemption, to hold that the statutory conditions for grant of exemption can neither be tinkered with nor diluted. The exemption notification must be interpreted by their own wordings, and where the wordings of notification with regard to the construction is clear, it has to be given effect to. If on the wordings of the notification benefit is not available, then the court would not grant benefit by stretching the words of the notification or by adding words to the notification. To interpret the exemption notification one should go by the clear, unambiguous wordings thereof These principles were applied in Essar Steel [Essar Steel (India) Ltd. v. State of Gujarat, (2017) 8 SCC 357] to deny benefit of Section 3(2)(a)(v//)(a) of the 1958 Act, as the condition of generating energy jointly with another undertaking was not fulfilled. 15. In Star Industries [Star Industries v. Commr. of Customs, (2016) 2 SCC 362] , it was held that the eligibility criteria laid down for exemption notification is required to be construed strictly, and once it is found that applicant satisfies the same, the exemption notification should be construed

17 RNT, J & HN, J TREVC. No. 83 of 2008 & batch liberally. Reference was made to the decision in Novopan (India) Ltd. V. CCE [Novopan (India) Ltd. v. CCE, 1994 Supp (3) SCC 606] and the Constitution Bench decision in Hansraj Gordhandas v. CCE [Hansraj Gordhandas v. CCE, AIR 1970 SC 755] , which decisions have been noted and elucidated by this Court in Dilip Kumar [Commr. of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1] . Therefore, in the context of exemption notification there is no new room for intendment. Regard must be to the clear meaning of the words. Claim to exemption is governed wholly by the language of the notification, which means by plain terms of the exemption clause. An assessee cannot claim benefit of exemption, on the principle that in case of ambiguity a taxing statute must be construed in his favour, for an exception or exemption provision must be construed strictly. 16. In Giridhar G. Yadalam [Giridhar G. Yadalam v. CWT, (2015) 17 SCC 664] , it is observed and held that in a taxing statute, it is the plain language of the provision that has to be preferred where language is plain and is capable of one definite meaning. It is further observed that the strict interpretation to the exemption provision is to be accorded. It is observed that the purposive interpretation can be given only when there is some ambiguity in the language of the statutory provision or it leads to absurd results. In para 16, it is observed and held as under : (SCC p. 671) “7(5. We have already pointed out that on the plain language of the provision in question, the benefit of the said clause would be applicable only in respect of the building “which has been constructed”. The expression “has been constructed” obviously cannot include within its sweep a building which is not fully constructed or in the process of construction. The opening words of clause (//) also become important in this behalf, where it is stated that “the land occupied by any building”. The land cannot be treated to be occupied by a building where it is still under construction. If the contention of Mr Jain is accepted, an assessee would become entitled to the benefit of the said clause, at that very moment, the commencement of construction even with construction the moment one brick is laid. It would be too far-fetched, in such a situation, to say that the land stands occupied by a building that has been constructed

18 RNT, J & HN, J TREVC. No. 83 of 2008 & batch thereon. Even Mr Jain was candid in accepting that when the construction of building is still going on and is not completed, literally speaking, it cannot be said that the building “has been constructed”. It is for this reason that he wanted us to give the benefit of this provision even in such cases by reading the expression to mean the same as “is being constructed”. His submission was that the moment construction starts the urban land is put to “productive use” and that entitles the land from exemption of wealth tax. This argument of giving so- called purposive interpretation has to be rejected for more than one reasons. These are: (/) In taxing statute, it is the plain language of the provision that has to be preferred where language is plain and is capable of one definite meaning. (//) Strict interpretation to the exemption provision is to be accorded, which is the case at hand. (Hi) The purposive interpretation can be given only when there is some ambiguity in the language of the statutory provision or it leads to absurd results. We do not find it to be so in the present case.” 17. In Godrej & Boyce Mfg. Co. [Godrej & Boyce Mfg. Co. Ltd. v. CIT, (2017) 7 see 421] , it is observed and held by this eourt that where the words of the statute are clear and unambiguous, recourse cannot be had to principles of interpretation other than the literal view. It is further observed that it is the bounden duty and obligation of the court to interpret the statute as it is. It is further observed that it is contrary to all rules of construction to read words into a statute which the legislature in its wisdom has deliberately not incorporated.” 26. The Hon'ble Apex Court held that it is for the assessee to show by construction of the exemption clause/notification that it comes within the purview of exemption. The assessee/citizen cannot rely on ambiguity or doubt to claim benefit of exemption. The rationale is not to widen the ambit at the stage of applicability. However, once the hurdle is crossed, the notification is constructed liberally. Distinction has been made between the substantive

19 RNT, J & HN, J TREVC. No. 83 of 2008 & batch requirements that require strict compliance - noncompliance of which would render the assessee ineligible to claim exemption, and the procedural or compliance provision which can be interpreted liberally. The Hon'ble Apex Court observed that the statutory conditions for grant of exemption can neither be tinkered with nor diluted. The exemption notification must be interpreted by their own wordings, and where the wordings of notification with regard the construction are clear, it has to be given effect to. If on the wordings of the notification benefit is not available, then the court would not grant benefit by stretching the words of the notification or by adding words to the notification. To interpret the exemption notification one should go by the clear, unambiguous wordings thereof. 27. In the context of exemption notification there is no new room for intendment. Regard must be to the clear meaning of the words. Claim to exemption is governed wholly by the language of the notification, which means by plain terms of the exemption clause. An assessee cannot claim benefit of exemption, on the principle that in case of ambiguity a taxing statue must be construed in his favour. 28. In Giridhar G. Yadalam v. Commissioner of Wealth TaiP, it was held that in a taxing statute it is the plain language of the provision that has to be preferred where language is plain and is capable of one definite meaning. Purposive interpretation can be given only when there is some (2015) 17 SCO 664

I 20 RNT, J & HN, J TREVC. No. 83 of 2008 & batch ambiguity in the language of the statutory provision or it leads to absurd results. 29. In Krishi Upaj Mandi Samiti, New Mandi Yard, Alwar vs. Commissioner of Centrai Excise and Service Tax, Aiwat^"*, the Hon'ble Apex Court reiterated that the exemption notification should not be liberally construed and beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication. Para 3 of the report is follows: “3. Shri Prakul Khurana and Ms. Divyasha Mathur, learned counsel appearing on behalf of the respective appellants - respective Market Committees have vehemently submitted that as the activity of allotment of shops/premises/spaces to traders and brokers by the respective Market Committees for the purpose of storage and/or marketing of agricultural produce is in the nature of a statutory activity as mandated under Section 9 of the Act, 1961 and, therefore, the Market Committees are exempted from payment of service tax on such services as per Circular No.89/7/2006 dated 18.12.2006. 3.1. Learned counsel appearing on behalf of the appellants have submitted that under Section 9(2)(xvii) of the Act, 1961, it is the duty cast upon the respective Market Committees for allotment/disposal of land or any movable or immovable property for the purpose of effectively carrying out its duties. It is submitted that as per Section 9(2XxiiiL the Market Committees are authorised to levy, recovery and receive rates, charges, fees and other sums of money to which the Market Committee is entitled. Therefore, it is the case on behalf of the respective Market Committees that the activities of the said Market Committees of allotment/leasing/renting the shop/land/platform is in the nature (2022) 5 see 62

21 RNT, J & HN, J TREVC. No. 83 of 2008 & batch of a statutory activity and therefore as per Circular No.89/7/2006 dated 18.12.2006, the respective Market Committees are exempted from payment of service tax on such activities, which are in the nature of statutory activity. 3.2 It is further submitted by Shri Khurana, learned counsel appearing on behalf of the appellants - respective Market Committees that even the fees collected/recovered by the respective Market Committees on renting/leasing the land/shop will be deposited in the Market Committee Fund and the same shall be ultimately used for the betterment of the market area. It is submitted therefore that when the respective Market Committees are the public authorities constituted under the Statute - Act, 1961 and when they perform the statutory duty / statutory function of the allotment/renting/leasing of land/shop, the respective Market Committees are entitled to the exemption provided under the 2006 circular.” 30. In Commissioner of Customs^ Koikata vs. Rupa & Co., Ltd^^, the Hon'ble Apex Court observed that the exemption notification has to be construed strictly but that does not mean that the object and purpose of the Notification is to be lost sight of and the wording used therein ignored. Where the wordings of the Notification are clear and unambiguous they have to be given effect to. Exemption cannot be denied by giving a construction not justified by the wordings of the Notification. Para 7 of Rupa & Co., Ltd (supra) reads as under: “7. Undoubtedly, the Board circular and letters relied upon support Mr. Ganguli. However, if the interpretation given by the Board and the Ministry is clearly erroneous then this Court cannot endorse that view. An exemption Notification has to be constrained strictly but that does not mean that the object and purpose of the Notification is to be lost sight of and the wording used (2004) 6 see 408

22 RNT, J & HN, J TREVC. No. 83 of 2008 & batch therein ignored. Where the wordings of the Notification are clear and unambiguous they have to be given effect to. Exemption cannot be denied by giving a construction not justified by the wordings of the Notification ” Consideration of the Judgments cited: 31. In M/s. Medha Bio Technologies (P) Ltd. v. The Commercial Tax Officer^^ G.O.Ms.No.l67, dated 26.02.1999 was involved. The main question was if the exemption granted in G.O.Ms.No.l67, dated 26.02.1999 was a general exemption issued in exercise of powers under Section 9(1) of the Andhra Pradesh General Sales Tax Act, and as such the same was also applicable for the inter-state sales, in view of Section 8 (2) of the Central Sales Tax Act, 1956 (in short 'CST Act'). The Division Bench of this Court held that G.O.Ms.No.l67, dated 26.02.1999 granting exemptions were general exemptions and were not confined to any specific circumstances or under specified conditions covered by explanation to Section 8 (2) of the Central Sales Tax Act, as it then existed; since it was concluded that the exemption granted. was general exemption within the meaning of Section 8 (2) of the Central Sales Tax Act, the Central Sales Tax was also exempted. 17 32. In S.L.S. Textiles Ltd. v. State of A.P. G.O.Ms.No.l067, dated 19.09,1985 which granted exemption with reference to sale of hank yarn in plain reels when sold to the registered dealers in the State (leaving the other category mentioned in the notification) was involved, it was held to be granting WP.No.4606 of2010 & batch Erstwhile APHC decided on 29.09.2015 (2001) 11 APCK0093

23 RNT, J & HN, J TREVC. No. 83 of 2008 & batch general exemption. It was observed that the notification was issued only under Section 9 (1) granting exemption to a specified class of persons i.e., the sales of hank yarn in plain reels effected to the registered dealers in the State. It was held that there was no other category, other than the registered dealers in the State, to whom the hank yarn in plain reels could be sold, as all the dealers to whom it could be sold were to be the registered dealers. It was also held that there was no condition or restriction as to the exemption available in respect of sales effected to the registered dealers in the State. The exemption therefore was a general exemption in the State. The exemption under the Central Sales Tax Act was also extended to inter-state sales by virtue of the provisions of Section 8 (2A) of CST Act. 33. In Anandi Roller Flour Mils Ltd. (supra) vide G.O.Ms.No.377 Rev. dated 02.05.1991 exemption was granted from the levy of the tax under the State Act on the sale and purchase of wheat or wheat products by the Roller Flour Mills within the State for a period of five years with effect from the date of publication of the notification in the Andhra Pradesh Gazette. The notification was issued under Section 9 (1) of the APGST Act. This Court held that the State Government granted exemption to all the Roller Flour Mills on the wheat and wheat products within the State. The said exemption granted to a specified class of persons should be considered as general exemption, not as a restricted or conditional. The judgment in the case of Pine Chemicals Ltd. (supra) was referred and was distinguished on the ground that in Pine Chemicals Ltd. (supra) exemption was granted subject to the fulfillment of

24 RNT, J & HN, J TREVC. No. 83 of 2008 & batch the conditions, but in G.O.Ms.No.377 subject matter of Anandi Roller Flour Mills Ltd. (supra) any conditions or restrictions to be fulfilled by the Roller Flour Mills in order to get the benefit of exemption could not be found. 34. It was observed that the G.O.Ms.No.377 intended to benefit a specified class of persons viz., Roller Flour Mills. There was no reference to any specified restriction or condition as in sub-section (2) of Section 9 more specifically under Clause (b) upon compliance of which the Roller Flour Mills were entitled to the exemption. The exemption was for a period of five years from the date of publication of the notification, but such exemption for a limited period could not be considered as restricted or a conditional exemption. The exemption granted to a specified class of persons should be considered as a general exemption and not as a restricted or conditional. It was held that in the absence of any restriction or condition as in sub section (2) of Section 9, being imposed in notification issued under Sub Section (1) of Section 9, the same would be a 'general' exemption. 35. In Anandi Roller Flour Mills Ltd. (supra), it was held as under in paras 11 and 12, relevant part of which is as follows: The provisions of Section 9(1) are clear a^ to the reference to class or categories of dealers from the conditions or circumstances under which exemption is available. Clause (ii) of Section 9(1) provides for class or categories of dealers, whereas the conditions or circumstances are referred to under Clause (b) of Sub-section (2) of Section 9. Therefore, the grant of exemption to a class or categories of dealers cannot be equated to that of conditional or restricted. Hence, the contention of the learned Government Pleader is devoid of any merit. 11.

25 RNT, J & HN, J TREVC. No. 83 of 2008 & batch 12. From the above discussion it is clear that the Government issued G.O. Ms. No. 377, dated May 2, 1991, granting exemption to all roller flour mills in respect of the sale or purchase of wheat and wheat products within the State for a period of five years from the date of the notification. This exemption is to a class of dealers as provided under Clause (ii) of Section 9(1) and there is no reference to any conditions or circumstances as provided under Clause (b) of Section 9(2) under which exemption is available. Therefore, in the absence of any such conditions or circumstances, under which exemption is available, the exemption shall be construed as general.” 36. Placing reliance on the said judgment, the submission advanced by the learned counsel for the respondent is that in G.O.Ms.No.l091 , any restriction or condition as in sub section (2) of Section 9, not having been imposed the G.O.Ms.No.l091 granted a general exemption. 37. In Pinakini Seeds v. State of A.P}^ G.O.Ms.No.604 Rev.(S), dated 09.04.1981 was considered as a notification granting general exemption. It was observed that the requirements in G.O.Ms.No.604 viz., the seeds certified and truthfully labeled are not cumulative requirements and that any one of these categories would qualify for exemption and that the exemption granted under G.O.Ms.No.604 was a general exemption and as such it qualified for exemption under sub-section (2A) of Section 8 of the Central Act. 38. In Sri Venkateswara Hybrid Seeds Co. (supra) G.O.Ms.No.604, Rev. dated 09.04.1981 was for consideration and following Pinakini Seeds (supra), it was held that the same granted general exemption as was also (1995)98 STC 144 (AP)

26 RNT, J & HN, J TREVC. No. 83 of 2008 & batch previously held in Pinakini Seeds (supra). Consequently, the assessee was held entitled for exemption from tax on his turnover under the Central Sales Tax as well. 39. In M/s. Vinod Solvent Extracts Private Limited (supra) G.O.Ms.No.930, dated 28.07.1977 issued under Section 9 (1) of APGST Act granting exemption on the purchase of tapioca powder was under consideration. It was held that the said exemption was a general exemption in respect of the specified class of goods falling squarely within the ambit of Section 9 (1) (i) in respect of the specified class of goods - Topioca - Exemption was granted from the purchase point and as the goods were not taxable at any other point, the exemption was at all points. Consequently, the disputed turnovers was held to be liable to be excluded from the levy under the Central Sales Tax Act. 40. In M/s. Vinod Solvent Extracts Private Limited (supra) this Court referred to its earlier judgment in the case of Hindustan Miikfood 19 Manufacturers Ltd. v. State of A.P. in which, the distinction between two kinds of exemptions in Sections 8 and 9 of the State Act was dealt with and it was observed by the Division Bench as under: Section 9 unlike section 8, is not a case of total exemption. Under section 8 there is a totality of exemption from tax on the goods specified in the Fourth Schedule, whereas section 9 enumerates, qualifies and restricts its exemptive effect in respect of sale or purchase of a specified class of goods as either at all points or at any specified point or by any specified class of persons whether it is (1982) 51 STC 1 (AP)

27 RNT, J & HN, J TREVC. No. 83 of 2008 & batch with reference to the whole or any part of the turnover, or may extend to the whole or any part of the State." 41. In the aforesaid judgments different government orders issued under Section 9 (1) of the APGST Act were for consideration and considering the same, it was held that they granted general exemption in the absence of any condition or restriction, as under sub-section (2), not being imposed and for availing the benefit of exemption, the assessee had not to make compliance of any specified restrictions or conditions. The exemption for a limited period or for specified class of persons or goods or at one or more or all points of sale or purchase, could not be construed as restricted or conditional exemption, as the same could be provided in terms of sub-section (1) of Section 9 under clauses (i) or/and (ii). 42. In the present case, the G.O.Ms.No.l091 dated 31.10.1994 is under consideration which was not under consideration in the aforesaid cited judgments. Therefore, whether the notification of G.O.Ms.No.l091 , issued under Section 9 (1) falls under the 'general' exemption for the purposes of the APGST Act is to be considered, independently, applying the principle of law, the precedents in various judgments, depending inter alia the language of the Government Order as also other relevant factors. 43. Section 5 A(l)(vi) of APGST Act uses the expression "generally, under sub-section (1) of Section 9 of the said Act". The expression 'generally' has not been defined in the Act, 1957. It has also not been explained in the APGST Act, like under Section 8(2A) of the Central Sales Tax Act. The

28 RNT, J & HN, J TREVC. No. 83 of 2008 & batch m expression 'generally', however, refers to sub section (1) of Section 9 of the Sub section (1) of Section 9, confers the power on the State Act, 1957. Government to notify exemptions and reductions of tax or interest under the said Act on the sale or purchase (i) of any specified class of goods and also (ii) by any specified class or persons in regard to the whole or any part of their turnover. The exemption notification under sub section (1), may extend to the whole or any specified areas of the State and under clause (b) of sub-section (2), it may be subject to such restriction and conditions as may be specified in the notification, including conditions as to the license and license fee. If a notification is issued under section 9(1), without imposing any such restrictions and conditions as contemplated by sub section (2), we are of the view that such notification granting exemption would be a general exemption notification. The reason is that the plain reading of Section 5(A)(1) clause (vi), refers to exemption from tax generally under sub section (1) of section 9 of the APGST Act. 44. We have to see the notification under sub section (1) of section 9, if the grant of exemption thereunder is subject to restrictions or conditions, which may be imposed under sub section (2). The notification if confined to the sale or purchase of any specified class of goods, i.e the Pulp Moulded Egg Trays manufactured by Small Scale Industrial Unit or by any specified class or persons, would not be termed as not a general exemption notification, only because it is with respect to specified class of goods or specified class or persons. The reason is that under section 9(1) the general exemption

29 RNT, J & HN, J TREVC. No. 83 of 2008 & batch notification can be with respect to the specified class of goods or any specified class or persons in terms of sub clause (i) & (ii). If any restriction or a specified condition is imposed in the notification under sub section (1), in view of sub section (2), then only it can be said that such notification would not be a notification granting exemption generally. Inother words if to claim benefit of exemption of specified good or by specified class, some condition or restriction is to be followed or complied, then only it would not be a general exemption. 45. We are of the view that, the exemption notification is under Section 9 (1) of the Andhra Pradesh General Sales Tax Act, 1957. Sub-section (2) of Section 9 provides, under clause (b), that any exemption from tax notified under sub-section (1) may be subject to such restrictions and conditions as may be specified in the notification, including conditions as to licences and licence fees. But, as any such restriction or condition as contemplated under sub section (2) clause (b) has not been imposed and the notification refers only to sub-section (1) of Section 9, it would be a notification of general exemption. Section 9 (1) is the provision under which a notification granting exemption from tax can be issued. The exemption, only because it refers to a specified good or specified person, i.e., pulp moulded egg trays manufactured by the Small Scale Industrial Units, cannot be considered as a restriction or condition under Section 9 (2), to avail the benefit of exemption from tax, as Clauses (i) & (ii) of sub-section (1) of Section 9 in their terms contemplate for grant of exemption in respect thereto. A notification issued under Section 9 (1) may either be referable to Clause (i) or (ii) or both but unless it is subject to the

30 RNT, J & HN, J TREVC. No. 83 of 2008 & batch condition or restriction under sub-section (2) of Section 9 it would be granting an exemption generally for the purposes of Section 5A (1) (vi) of APGST Act. 46. The question whether G.O.Ms.No.l091 is a notification granting general exemption under Section 9(1) for the purpose of the State tax is be construed from its language for the purpose of the A.P.G.S.T Act. But that would not mean that it is a notification granting general exemption also for the Under C.S.T Act the word 'generally' has been purpose of the C.S.T Act. explained in Section 8(2A) of that Act, and for the G.O.Ms.No.l091 to qualify for exemption to the assessee it will have to fulfill the requirements of Section 8(2A), which aspect would be considered shortly under Question 'C' as framed. Question 'B': 47. Learned counsel for the respondent submitted that the G.O.Ms.No.l091 is applicable and the respondent was entitled for exemption which has rightly been granted by the Appellate Tribunal. He submitted that the respondent is a small scale industry. The sale is by the small scale industry and of the Pulp Moulded Egg Trays which are manufactured by the small scale He submitted that the Pulp Moulded Egg Trays having been industry. manufactured by a small scale industry its sale by another small scale industry the G.O.Ms.No.1091 entitling the would also fulfill the requirements of respondent for exemption under Section 5A(1), (vi) to the second proviso. 48. In the present case; the sale is of Pulp Moulded Egg Trays; (i)

31 RNT, J & HN, J TREVC. No. 83 of 2008 & batch (ii) Pulp Moulded Egg Trays is manufactured by Small Scale Industrial Units; (iii) the respondent-assesse selling Pulp Moulded Egg Trays is a small scale industrial unit. But, (iv) the Pulp Moulded Egg Trays are not manufactured by the respondent unit. 49. The question is whether the notification applies to the sale of Pulp Moulded Egg Trays by respondent a small scale industry which has not manufactured the commodity in question. 50. In Delhi Transport Corporation v. Baiwan SinghF° the Hon'ble Apex Court held that it is a well settled principle of interpretation that when the words of a statute are clear and unambiguous, there cannot be a recourse to any principle of interpretation other than the rule of literal construction. 51. In Dr.(Major) Meeta Sahai v. State of Bihar^^ the Hon'ble Apex Court held that it is a settled canon of statutory interpretation that as a first step, the Courts ought to interpret the text of the provision and construct it literally. Provisions in a statute must be read in their original grammatical meaning to give its words a common textual meaning. However, this tool of interpretation can only be applied in cases where the text of the enactment is susceptible to only one meaning. Nevertheless, in a situation where there is ambiguity in the meaning of the text, the Courts must also give due regard to the consequences of the interpretation taken. Paras-20 and 21 read as under: (2019) 18 see 126 (2019)20 see 17

32 RNT, J & HN, J TREVC. No. 83 of 2008 & batch “20. It is a settled canon of statutory interpretation that as a first step, the courts ought to interpret the text of the provision and construct it literally. Provisions in a statute must be read in their original grammatical meaning to give its words a common textual meaning. However, this tool of interpretation can only be applied in cases where the text of the enactment is susceptible to only one meaning. [Nathi Devi v. Radha Devi Gupta, (2005) 2 SCC 271, para 13.] Nevertheless, in a situation where there is ambiguity in the meaning of the text, the courts must also give due regard to the consequences of the interpretation taken. 21. It is the responsibility of the courts to interpret the text in a marmer which eliminates any element of hardship, inconvenience, injustice, absurdity or anomaly. [G.P. Singh on Principles of Statutory Interpretation, 14th Edn., 2016, pp. 145-170.] This principle of statutory construction has been approved by this Court in Modern School v. Union of India [Modern School v. Union of India, (2004) 5 SCC 583, para 62 : 2 SCEC 577] , by reiterating that a legislation must further its objectives and not create any confusion or friction in the system. If the ordinary meaning of the text of such law is non-conducive for the objects sought to be achieved, it must be interpreted accordingly to remedy such deficiency.” 52. In Bajaj Auto Limited v. Union oflndia^^the Hon'ble Apex Court held that one principle is that exemption notifications, must be read in a manner that give them a liberal interpretation, provided that no violence is done to the language employed. Referring to the previous pronouncement in Novopan (India) Ltd. v. CCE & customsF^ it was observed that the rationale for the same is well enunciated in that case. In such cases, it is not as if the principle of strict interpretation of tax law has been given a complete go by, but that rule of interpretation would apply at a different stage i.e., to 22 (2019) 19 SCC 801 1994 Supp (3) SCC 606 23

33 RNT, J & HN, J TREVC. No. 83 of 2008 & batch determine whether the exemption is applicable to the assessee or not. Once such exemption is indeed .found to be applicable to the assessee, a liberal approach is to be adopted by the Court in construing the language, such as to allow the benefit to be reaped by the beneficiary in question. Para-18 is reproduced as under: “18. We may note that in terms of the impugned judgment [Bajaj Auto Ltd. V. Union ofIndia, 2017 SCC OnLine Utt 357 : (2017) 352 ELT 147] , one principle which clearly emerges, and over which there is no dispute before us, also, is that exemption notifications, like the one in question must be read in a manner that give them a liberal interpretation, provided that no violence is done to the language employed. The rationale for the same is well enunciated inNovopan (India) Ltd. v. CCE [Novopan (India) Ltd. v. CCE, 1994 Supp (3) SCC 606] apart from in other judicial pronouncements. In such cases, it is not as if the principle of strict interpretation of tax law has been given a complete go by, but that rule of interpretation would apply at a different stage i.e. to determine whether the exemption is applicable to the assessee or not. Once such exemption is indeed found to be applicable to the assessee in question, a liberal approach is to be adopted by the Court in construing the language, such as to allow the benefit to be reaped by the beneficiary in question {Union of India v. Wood Papers Ltd. [Union of India v. Wood Papers Ltd., (1990) 4 SCC 256: 1990 SCC (Tax) 422]).” 53. Recently, in AMD Industries Limited v. Commissioner of Trade Tax^‘* the Hon'ble Apex Court has reiterated the settled position of law that in case of exemption notification / exemption provision, the same is required to be construed literally and the person claiming the exemption must satisfy all the conditions of exemption provision. Paragraphs-9 and 12 are as follows: 24 (2023) 4 SCC 231

34 RNT, J & HN, J TREVC. No. 83 of 2008 & batch m “9. In the case of “expansion or modernization”, the exemption shall be available, if there is an additional production as a result of such modernisation or expansion. In the present case, we are concerned with the case of “diversification”. Therefore, the goods manufactured after diversification must be different goods from the goods manufactured before such diversification. As per the settled position of law, in case of an exemption notification/exemption provision, the same is required to be construed literally and the person claiming the exemption must satisfy all the conditions of exemption provision. 12. The words used in Section 4-A are very clear and unambiguous. As per the settled proposition of law and as observed hereinabove, the statute and more particularly, the exemption provisions are to be read as they are and to be construed literally and should be given a literal meaning. Giving the literal meaning to the exemption provision, namely. Section 4-A, it cannot be said that the appellant is entitled to the exemption as claimed.” 54. Recently, in Checkmate Services Private Limited v. 25 on interpretation of a tax statute, the Commissioner of Income Tax-1 Hon'ble Apex Court held reiterating that the taxing statutes are to be construed strictly and that there is no room for equitable considerations. They are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed. It cannot imply anything which is not expressed. It cannot import provisions in the statute so as to supply any deficiency. It also referred to the 26 in which Constitution Bench in Commr. of Customs v. Diiip Kumar & Co. one of the principles was observed that if the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and 25 (2023) 6 see 451 (2018) 9 see 1 26

35 RNT, J & HN, J TREVC. No. 83 of 2008 & batch there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly. 55. Paragraphs-55 to 57 in Checkmate Services Private Limited (supra) are reproduced as under: “55, One of the rules of interpretation of a tax statute is that if a deduction exemption is available on compliance with certain conditions, the conditions are to be strictly complied with. [ See e.g., Eagle Flask Industries Ltd. v. CCE, (2004) 7 see 377] This rule is in line with the general principle that taxing statutes are to be construed strictly, and that there is no room for equitable considerations. 56. That deductions are to be granted only when the conditions which govern them are strictly complied with. This has been laid down m State of Jharkhand v. Ambay Cements [State ofJharkhand v. Ambay Cements, (2005) 1 see 368] as follows : (See p. 378, paras 23-26) “23. ... In our view, the provisions of exemption clause should be strictly construed and if the condition under which the exemption was granted stood changed on account of any subsequent event the exemption would not operate. 24. In our view, an exception or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the industrial policy and the exemption notifications. 25. In our view, the failure to comply with the requirements renders the writ petition filed by the respondent liable to be dismissed. While mandatory rule must be strictly observed, substantial compliance might suffice in the case of a directory rule. 26. Whenever the statute prescribes that a particular Act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that or

36 RNT, J & HN, J TREVC. No. 83 of 2008 & batch where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance with the same must result in cancelling the concession made in favour of the grantee, the respondent herein.” This was also reaffirmed in a number of judgments, such as CITv.Ace Multi Axes Systems Ltd. [CIT v. Ace Multi Axes Systems Ltd., (2018) 2 SCC 158] 57. The Constitution Bench, in Commr. of Customs v. Dilip Kumar & Co. [Commr. of Customs \. Dilip Kumar & Co., (2018) 9 SCC 1] endorsed as following : (SCC pp. 19 & 23-24, paras 24 & 34) “24. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocents might become victims of discretionary decision-making. Insofar as taxation statutes are concerned. Article 265 of the Constitution [ “265. Taxes not to be imposed save by authority of law.—^No tax shall be levied or collected except by authority of law.”] prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. In other words, when the competent legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the legislature. *** 34. The passages extracted above, were quoted with approval by this Court in at least two decisions being CIT v. Kasturi & Sons Ltd. [CIT v. Kasturi & Sons Ltd., (1999) 3 SCC 346] and 5/a/e of .WB. Kesoram Industries Ltd. [State ofW.B. v. Kesoram Industries Ltd., (2004) 10 SCC 201] (hereinafter referred to as Kesoram Industries case, for brevity). In the later decision, a Bench of five Judges, after citing the above passage from Justice G.P. Singh's treatise, summed up the following principles applicable to the interpretation of a taxing statute;

37 RNT, J & HN, J TREVC. No. 83 of 2008 & batch ‘(/) In interpreting a taxing statute, equitable considerations are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; (ii) Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (///) If the words are ambiguous and open to two interpretations , the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly. 999 56. The notification in clear words grants exemption on the sale of Pulp Moulded Egg Trays which are manufactured by the small scale industrial units. So the exemption is on the sale if the commodity is manufactured by small scale industrial units. From the plain language of the notification it does not follow that the sale should also be by the small scale industrial units alone, which has manufactured it. The expression 'by' refers to 'manufactured' and not the 'sale'. So, where the Pulp Moulded Egg Trays are manufactured by small scale industrial units, their sale, may be by the same small scale industrial units which has manufactured, or may be by some other Small Scale Industrial Units dealer/assessee which may not have manufactured, would be entitled for exemption. Since the respondent herein is the small scale industrial unit, we are considering the sale by SSI only and not making any observation with respect to the sale by any other dealer/assessee. So far as the respondent assessee is concerned the sale by it of the kind of the commodity exempted under G.O.Ms.No.1091, would be entitled for exemption.

38 RNT, J & HN, J TREVC. No. 83 of 2008 & batch 57. The submission advanced by the learned Government Pleader that the exemption is available, if the sale is by the SSI which manufactured the Pulp Moulded Egg Trays, is not acceptable as it does not follow from the plain language of the G.O.Ms.No.l091. It is the manufacturing which should be by the small scale industrial units. If the argument advanced by the learned Government Pleader is accepted, we would deny exemptions to the respondent assessee by giving a construction which does not follow from the wordings of the notification. The words of the notification are clear and unambiguous. The same have to be given effect to. The benefit of exemption therefore cannot be denied. 58. Even if, the submission of the learned GP be acceptable that the G.O.Ms.No.l091 is ambiguous and is open also to the interpretation as argued by him, though we are of the view it's not so, still we are of the same view. applying the law that "if the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly". Question 'C': 59. Section 8 (2A) of Central Sales Tax Act, 1956 (in short 'CST Act') reads as under: 8. Rates of tax on sales in the course of inter- state trade or commerce-( 1) Every dealer, who in the course of inter-State trade or commerce- (a) sells on the Government any goods; or

39 RNT, J & HN, J TREVC. No. 83 of 2008 & batch (b) sells to a registered dealer other than the Government goods of the description referred to in sub-section (3); shall be liable to pay tax under this Act, which shall be four percent of the turnover. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1)- (a) in the case of declared goods shall be calculated at twice the rate applicable to the sale or purchase of such goods inside the appropriate State; and (b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State whichever is higher; and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law. (2A) Notwithstanding anything contained in sub- section (lA) of section 6 or sub-section (1) or clause (b) of sub-section (2) of this section, the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four percent (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate. Explanation- For the purposes of this sub-section a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods. 60. Section 8 (2A) starts with non abstante clause. It overrides the provisions of sub-Section (1-A) of Section 6 or sub-section (1) or clause (b) of

40 RNT, J & HN, J TREVC. No. 83 of 2008 & batch sub-section (2) of Section 8 with reference to the tax payable under the CST Act by a dealer on his turnover in so far as the turnover or any part thereof relates to sale or purchase of any goods. If sale or purchase of the goods under the sales tax law of the appropriate State, exempt from tax generally or subject to the taxes generally at rate which is lower than 4%, then the dealer is entitled for the relief under the CST Act as contemplated under the State Act. But here, the explanation to sub-section (2A) of section 8 becomes relevant. 61. Sub-section (2A) of Section 8 of CST Act uses the expression exempt from tax generally" under the Sales Tax Law of the appropriate State. The explanation to Sub-Section (2A) of Section 8 of CST Act which is for the purposes of sub-section (2A), provides that for the purposes of sub-section (2A) a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods. It is evident from sub-section (2A) of Section 8 of CST Act that the exemption from tax under the Central Act would be available only if under the State Tax law the exemption from tax is 'generally', as explained in the 'Explanation' and if the exemption under the State law is only in specified circumstances or under the specified conditions it shali not be deemed to be the exemption from tax generally.

41 RNT, J & HN, J TREVC. No. 83 of 2008 & batch 62. In Government of Andhra Pradesh v. Corporation Bank^^ mth respect to the interpretation of an 'Explanation', it was observed that function of explanation, in a particular statute whether is to clarify the ambiguity or to widen the scope of the main section, to determine, there is no single yardstick to decide this question, and the Court should find out the true legislative intent and give effect thereto. It referred to Bihta Co-op.Development and Cane Marketing Union Ltd. v. Bank of Bihat^^ in which the Hon'ble Apex Court had observed that the Court should not go only by the label and the explanation must be read ordinarily to clear up any ambiguity in the main section and it cannot be construed to widen the ambit of the section. However, if on a true reading of an Explanation it appears to the Court in a given case that the effect of the Explanation is to widen the scope of the main section then effect must be given to the legislative intent. In all such cases, the Court has to find out the true intention of the legislature. 63. The Hon'ble Apex Court also referred to Doypack Systems (P) Ltd. V. Union of IndiaF^ in which it was observed inter alia that the deeming provision generally is intended to enlarge the meaning of the particular word or to include matters which otherwise may not fall within the main provision. In Corporation Bank (supra) Explanation IV to Section 2 (1) (e) of the A.P.General Sales Tax Act 1957, which defined the word 'dealer' was for consideration. There was inbuilt expression "deeming provision" in the said 27 (2007) 9 see 55 AIR 1967 Se389 (1988) 2 see 299 28 29

42 RNT, J & HN, J TREVC. No. 83 of 2008 & batch Explanation. So, the Explanation IV also contained a deeming clause. The Hon'ble Apex Court held that the object of the Explanation IV containing such deeming clause was to expand the meaning of the word 'dealer'. It further observed that the same could not be read as a retrospective enactment so as to cover old transactions of the past. Thus, so far as the construction or interpretation of explanation is concerned, though generally the purpose of explanation is to clarify the doubts but an explanation can also supply something to the content of the main provision. It depends upon the statutory provision from which the legislative intention is to be discovered by first and foremost application of the rule of construction, which is literal construction. 64. In Swedish Match AB v. Securities & Exchange Board of IndisP° the Hon'ble Apex Court considered 'Explanation' and as regards functions of an 'explanation' it observed as under in paragraph-68: ’68. As regards functions of an Explanation, it was opined: (SCC p. 613, para 53) “Ji. {a) to explain the meaning and intendment of the Act itself, {b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, {d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance 30 (2004) 11 SCC 641

43 RNT, J & HN, J TREVC. No. 83 of 2008 & batch the object of the Act it can help or assist the court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same.” 65. In Swedish Match AB (supra) the Hon'ble Apex Court with respect to a legal fiction created in the Explanation, referred to the case of Dipak Chandra Ruhidas v. Chandan Kumar SarkaP^ in which it was held that the legal fiction so created must also be given its full effect. Paragraph-71 is as follows: “71. In Dipak Chandra Ruhidas v. Chandan Kumar Sarkar [(2003) 7 SCC 66] it was held that in a case where a legal fiction created in the Explanation was construed to be validly made as thereby the main provision was made absolutely clear and explicit, the legal fiction so created must also be given its full effect.” 66. In the present case, Explanation to sub-section (2A) of Section 8 of the Central Sales Tax Act also contains a deeming provision. The deeming provision is inbuilt in such explanation and that the deeming provision is that "a sale or purchase of any case shall not be deemed to be exempt from tax generally ’. Here the deeming provision is a negative unlike in the case of Corporation (supra), where a deeming provision was "shall be deemed to be". In the present case, the deeming provision in the explanation being in negative, applying the ratio as laid down in the case of Corporation Bank (supra), we hold that such deeming provision in the 'explanation', limits or 31 (2003) 7 SCC 66

44 RNT, J & HN, J TREVC. No. 83 of 2008 & batch restricts the general exemption. In other words, an exemption from tax which may be a general exemption for the purposes of the State Act may not be a general exemption for the purposes of Central Sales Tax Act if the exemption is only in specified circumstances or under specified conditions. Under Section 9 (1) of the APGST Act even the exemption can be for the specified goods and also for specified class of persons i.e., under specified circumstances or under specified conditions as under sub-section (1) and also may be without any restriction imposed as under sub-section (2) and the same may be construed as a general exemption under Section 5A, but the same would not be the general exemption notification for the purposes of the Central Act in view of explanation which explains the term 'generally' and excludes from the expression exemption granted under special circumstances or under special conditions. 67. In Pine Chemicals Ltd. (supra) The matter arose under Jammu & Kashmir General Sales Tax Act and the Central Sales Tax Act. The Hon'ble Apex Court initially granted exemption holding that the Government Order No. 159 Ind. Dated 26.03.1971 which was the subject matter of consideration therein, must be understood as an order granting exemption under and with reference to Section 5 of the Jammu & Kashmir General Sales Tax Act. The Hon'ble Apex Court held that the exemption granted under the State Sales Tax Act was a general exemption. The dealers / assessees were held entitled to claim the benefit of the provision contained in sub-section (2A) of Section 8 of the Central Sales Tax Act in view of the exemption granted to them under the Government Order No.159. The judgment dated 16.01.1992 in Pine

45 RNT, J & HN, J TREVC. No. 83 of 2008 & batch Chemicals (supra), was reviewed by the Hon'ble Apex Court and the review was allowed, holding that the interpretation of Section 8 (2A) as given in the judgment dated 16.01.1992 was not correct. It was finally held in the judgment after review, that the Government Order No. 159 did not exempt from tax generally under the sales tax law of the State of Jammu & Kashmir, for Central Sales Tax and consequently, the assessee / dealer was not entitled for exemption from tax under the Central Sales Tax Act. 68. In Pine Chemicals Ltd. (supra) the government order No. 159 provided for exemption and read as under: "Sanction is accorded to the grant of the following incentives and facilities to Large and Medium Scale Industries in the State of Jammu & Kashmir. (2) Grant of exemption from the State Sales tax both on raw materials and finished products for a period of five years from the date the unit goes into production" The aforesaid clause (2) was substituted by subsequent government order dated 25.08.1971 as under: "2. Grant of exemption from the sales tax both on raw materials and finished products." 69. The Hon'ble Apex Court in Pine Chemicals Ltd. (supra) observed that for attracting the exemption provided by the government order, it had to be established that (i) the goods, the sale or purchase of which is claimed to be exempt from tax, are manufactured by a large or medium scale industry and (ii) that the said goods are manufactured and sold within five years from the date

46 RNT, J & HN, J TREVC. No. 83 of 2008 & batch the said industrial unit has gone into production. The Hon'ble Apex Court addressed the question as to whether an exemption of the nature granted under the Government Order No. 159 dated 26.03.1971 was an exemption available "only in specified circumstances or under specified conditions" within the meaning of the Explanation to Section 8 (2-A) or was it a case where the goods were exempt from the tax 'generally' within the meaning of Section 8 (2- A). 70. The Hon'ble Apex Court held that the idea behind sub-section (2-A) of Section 8 of the Central Sales Tax Act was to exempt the sale or purchase of the goods from the Central Sales Tax where the sale or purchase of such goods was exempt generally under the State sales tax law. It was held that due regard must be given and due meaning to the expression 'generally' which occur in sub-section (2-A) and which expression has been defined in the explanation. The Hon'ble Apex Court observed that if the said expression had not been there, it could probably have been possible to argue that inasmuch as the goods sold by a particular manufacturer-dealer were exempt from the State tax in his hands, they must equally be exempt under the Central Act. But, sub section (2-A) requires specifically that such exemption must be a general exemption and not an exemption operative in specified circumstances or under specified conditions. The Hon'ble Apex Court observed that the answer was only in the negative. It was observed that such goods were exempt from tax only when they were manufactured in a large or medium industrial unit within five years of its commencement of production and sold within the said period.

RNT, J & HN, J TREVC. No. 83 of 2008 & batch 47 i.e., in certain specified circumstances alone. The exemption therefore was not a general one but a conditional one. The exemption under the Government Order No. 159 was not with reference to goods or a class or category of goods but with reference to the industrial unit producing them and their manufacture and sale within a particular period. For the purposes of the government order, the nature, the class or category of goods was irrelevant. It may be any goods. It was concerned only with the industrial unit producing them and the period within which they were manufacturedand sold. It was emphasized that the exemption provided under the Government Order No. 159 was with reference to the industrial unit. So long as it was (i) a large or medium scale industry and (ii) it manufactured and sold goods within the five years of its going into production, the sale of such goods was exempt irrespective of the nature or classification of goods. It observed that similar goods might be manufactured by another unit but if it did not satisfy the twin requirements, the goods manufactured and sold by it would not be entitled to exemption from tax. The Hon'ble Apex Court held that the exemption granted under the said government order did not satisfy the requirements of Section 8 (2-A) and consequently, the exemption from tax under the Central Act was not available. 71. In Pine Chemicals Ltd. (supra) the Hon'ble Apex Court referred to its previous two pronouncements in Indian Aluminium Cables Ltd. v. State of Haryana^^ and Internationa! Cotton Corpn. (P) Ltd. v. C.T.Cf^. Referring to the 1^ case of Indian Aluminium Cables Ltd. (supra), it (1976) 4 see 27 (1975) 3 see 585

48 RNT, J & HN, J TREVC. No. 83 of 2008 & batch # observed that the question was whether the poles and cables sold to Delhi Electric Supply Undertaking were exempt from Central sales tax by virtue of the fact that Section 5 (2) (a) (iv) of the Punjab Sales Tax Act exempted sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the Indian Electricity Act, 1910 of goods for use by it in the generation or distribution of such energy from the State tax. Referring to the said judgment, the Hon'ble Apex Court observed and emphasized that general exemption means that "the goods should be totally exempt from tax before similar exemption from the levy of Central sales tax can become available. Where the exemption from taxation is conferred by conditions or in certain circumstances there is no exemption from tax generally". In applying the ratio of Indian Aluminium Cables Ltd. (supra), the Hon'ble Apex Court held in Pine Chemicals Ltd. (supra) that answer to the question would have been against the assessee inasmuch as it was not a case where goods were totally exempt from tax. That was a case where the exemption operated or was attracted only if it was established that such goods were manufactured in a large or medium industrial unit, within five years of its going into production and were sold within that period. Such exemption was not with reference to goods but with reference to the unit manufacturing the goods. 72. In Pine Chemicals Ltd. (supra) the Hon'ble Apex Court clearly observed that sub-section (2-A) speaks of sale or purchase of goods being exempt generally under the State Sales Tax enactment, it does not speak of

49 RNT, J & HN, J TREVC. No. 83 of 2008 & batch exemption qua the dealer, much less qua the unit manufacturing such goods. The exemption notification issued by the Jammu & Kashmir Government granted the exemption qua the industrial unit manufacturing the goods and the period within which they were manufactured and sold and not qua the goods. It further observed that the sub-section (2-A) of Section 8 of Central Sales Tax Act does not say that wherever a particular sale or purchase of goods is exempt from tax under the State enactment, it would equally be exempt from tax under the Central enactment. It imposes a further and a very important requirement, viz., that the sale or purchase of goods, in respect of which exemption is claimed under the Central Act, should be exempt from tax generally under the State enactment. Not stopping with that, the sub-section proceeds to explain and define what do the words "exempt from tax generally under the sales tax law of the appropriate State" mean. Relevant part of paras-10, 11, 12 & 14 of Pine Chemicals as under: “10. The idea behind sub-section (2-A) of Section 8 of the Central Sales Tax Act, which we have analysed hereinbefore, is to exempt the sale/purchase of goods from the Central sales tax where the sale or purchase of such goods is exempt generally under the State sales tax law. We must give due regard and attach due meaning to the expression ‘generally’ which occurs in the sub section and which expression has been defined in the explanation. If the said expression had not been there, it could probably have been possible to argue that inasmuch as the goods sold by a particular manufacturer-dealer are exempt from the State tax in his hands, they must equally be exempt under the Central Act. But sub-section (2-A) requires specifically that such exemption must be a general exemption and not an exemption operative in specified circumstances or under specified conditions. Can it be said that the goods sold by the dealers

50 RNT, J & HN, J TREVC. No. 83 of 2008 & batch in this case are exempt from tax generally under the State sales tax enactment? The answer can only be in the negative. Such goods are exempt from tax only when they are manufactured in a large or medium industrial unit within five years of its eommencement of production and sold within the said period, i.e., in certain specified circumstances alone. The exemption is not a general one but a conditional one. The exemption under the Government Order No. 159 is not with reference to goods or a class or category of goods but with reference to the industrial unit producing them and their manufacture and sale within a particular period. For the purposes of the government order, the nature, class or category of goods is irrelevant; it may be any goods. It is concerned only with the industrial unit producing them and the period within which they are manufactured and sold. Can it be said in such a case that it is an instance where the sale is of goods, the sale or purchase of which is under sales tax law of the appropriate State, exempt from tax generally? Certainly not. Exemption provided by Government Order No. 159, to repeat, is not with reference to goods but with reference to the industrial unit. So long as it is (/) a large or medium scale industry and (//) it manufaetures and sells goods within the five years of its going into production, the sale of such goods is exempt irrespective of the nature or classification of goods. Similar goods may be manufactured by another unit but if it does not satisfy the above two requirements, the goods manufactured and sold by it would not be entitled to exemption from tax. Indeed, the goods manufactured by that very unit would not be eligible for exemption if they are manufactured after the expiry of five years from the date it goes into production and/or sells them beyond the said period. The period of exemption may also vary from unit to unit depending on the date of commencement of production in each unit. For the above reasons, we are of the opinion that the exemption granted under the aforesaid government order does not satisfy the requirements of Section 8(2-A). 11. We may point out that this was also the view taken by this Court in two earlier cases. \n Indian Aluminium Cables Ltd. \. State of Haryana [{\916) 4 see 27 : 1976 SCC (Tax) 437] the question was whether the poles and cables sold by the appellant therein to Delhi Electric Supply Undertaking were exempt

51 RNT, J & HN, J TREVC. No, 83 of 2008 & batch from Central sales tax by virtue of the fact that Section 5(2)(a)(/v) of the Punjab Sales Tax Act exempted “sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the Indian Electricity Act, 1910, of goods for use by it in the generation or distribution of such energy” from the State tax. The claim of the appellant was negatived by Ray, C.J., speaking for himself and Beg and Jaswant Singh, JJ., holding that the exemption granted under Section 5(2)(a)(/v) of the State Act was not a general exemption but an exemption operative only in specified circumstances and under specified conditions. It was pointed out that the specified circumstance in that case was that the sale must be to an undertaking engaged in supplying electrical energy to the public under a licence and the specified condition was that the goods purchased by the undertaking must be used for generation or distribution of electrical energy. If any of these circumstances are not satisfied, it was pointed out, the sale of such goods not exempt from tax. It was emphasised that (SCC p. 31, para 15): was ""General exemption means that the goods should be totally exempt from tax before similar exemption from the levy of Central sales tax can become available. Mdiere the exemption from taxation is conferred by conditions or in certain circumstances there is no exemption from to.y generally". (emphasis added) In our respectful opinion, the ratio of this decision clearly concluded the question arising in Pine Chemicals [(1992) 2 SCC 683] against the inasmuch as it was not a case where goods were “totally exempt from tax”. It case where the exemption operated or was attracted only if it was established that such goods were manufactured in a large or medium industrial unit within five years of its going into production and were sold within that period. As pointed out hereinbefore, the exemption was not with reference to goods but with reference to the unit manufacturing the goods. 12. \n International Cotton Corpn. (P) Ltd. v. C.T.O. [(1975) 3 SCC 585 : 1975 SCC (Tax) 78] , a Bench of this Court comprising four learned Judges observed that “the object of sub-section (2-A) of Section 8 is to exempt transaction of sale of any goods if they are wholly exempt from tax under the assessees was a

52 RNT, J & HN, J TREVC. No. 83 of 2008 & batch sales tax law of the appropriate State and make the said sales chargeable at lower rates where under the Sales Tax Act of the State the sale transactions are chargeable to tax at a lower rate though it is true, the point raised and determined in that case was a different one. In our respectful opinion, the decision m Indian Aluminium [(1976) 4 SCC 27 ; 1976 SCC (Tax) 437] which was a decision rendered by a Bench of three learned Judges was binding upon the Bench which decided the Pine Chemicals [(1992) 2 SCC 683] . (This Bench too comprised three learned Judges.) It is, however, interesting to notice that when the above two decisions were brought to the notice of the Bench, it referred to the ratio of the said decisions but neither followed it nor made any attempt to distinguish it but proceeded to make it a basis for their decision notwithstanding the fact that the said ratio ran exactly counter to the one adopted by the Bench. The two decisions did not certainly support the interpretation adopted in the judgment under review. On the contrary, they, and in particular the decision m. Indian Aluminium [(1976) 4 SCC 27 : 1976 SCC (Tax) 437] , militated against the said interpretation. It is for this reason, coupled with the fact that the interpretation placed in the judgment under review on Section 8(2-A) may affect a large number of cases all over the country, that we agreed to re-examine the issue, which we would not have agreed to ordinarily. 14. Shri Raja Ram Agarwal, learned counsel for one of the respondent- assessees submitted that the object behind Section 8(2-A) was to bring about uniformity in the matter of incidence and rate of tax between the State sales tax enactment and Central sales tax enactment. He submitted that where a particular sale or purchase is exempt from tax under the State sales tax enactment, it should equally be exempt under the Central enactment. While the broad objective underlying Section 8(2-A) is certainly the one pointed out by the learned counsel, it is not possible or permissible to ignore the clear and unambiguous language employed in Section 8(2-A). The sub-section does not say that wherever a particular sale or purchase of goods is exempt from tax under the State enactment, it would equally be exempt from tax under the Central enactment. It imposes a further and a very important

53 RNT, J & HN, J TREVC. No. 83 of 2008 & batch requirement, viz., that the sale or purchase of goods, in respect of which exemption is claimed under the Central Act, should be exempt from tax generally under the State enactment. Not stopping with that, the sub section proceeds to explain and define what do the words “exempt from tax generally under the sales tax law of the appropriate State” mean? In this view of the matter, acceptance of the contention urged by Shri Aggarwal would be a case of over-simplification and violative of the express language employed in the sub-section.” 73. Applying the principle of law laid down in Pine Chemicals Ltd. (supra) we proceed to consider the G.O.Ms.No.l091, dated 31.10.1994 to find out if the said government order is granting general exemption within the meaning of Section 8 (2A) of the Central Sales Tax Act read with its explanation. If it is so, the assessee would be entitled for exemption under the Central Sales Tax Act as well, but if the said government order cannot be deemed to have granted general exemption vyithin the meaning of this expression, under Section 8 (2A) and the exemption was available only in specified circumstances or under specified conditions, the assessee would not be entitled for exemption under the Central Sales Tax Act. 74. G.O.Ms.No.l091, dated 31.10.1994, as reproduced supra, grants exemption from the tax payable under Andhra Pradesh General Sales Tax Act on the sale of pulp moulded egg trays manufactured by the Small Scale Industrial Units. When we compare G.O.Ms.No.l091, dated 31.10.1994 with G.O.Ms.No.l59, dated 26.03.1971 of Jammu & Kashmir as was involved in Pine Chemicals Ltd. (supra) what we find is that the pulp moulded egg trays is mentioned in G.O.Ms.No.l091, whereas in G.O.No.l59 of Jammu & Kashmir the

54 RNT, J & HN, J TREVC. No. 83 of 2008 & batch 0^ goods were not mentioned. What was mentioned was with reference to the industrial unit, so long as it was (i) a large or medium scale industry, and (ii) it manufactured and sold goods within the five years of its going into production. The sale of such goods was exempt irrespective of the nature or classification of goods. In the present case, we are not concerned with the condition of period of five years as in the present G.O.Ms.No.l091 there is no such condition. But, the condition is "manufactured by the Small Scale Industrial Units", which expression is of much relevance. The nature of the goods has been specified i.e.. pulp moulded egg trays" in G.O.Ms.No.l091. In G.O.No.159 of Jammu & Kashmir the goods were not mentioned, so it applied to all kinds of goods which were "manufactured by large and medium scale industry units" "within the specified period". We are of the view that such a distinction i.e., the goods being specified here, and the time not specified. would not come in the way of the application of law as laid down in Pine Chemicals Ltd. (supra) to the present case, for considering whether the Government Order No. 1091, granting exemption under the State law would be a 'general' exemption within the meaning of sub-section (2A) of Section 8 of the Central Sales Tax Act. In Pine Chemicals Ltd. (supra) the condition manufactured in large or medium scale industrial unit" and also the "period of within five years of the commencement of the production and sole within the said period", were considered as the specified circumstances or under specified conditions in which or under which the exemption was available. It was held that it being so, the exemption granted by the government order under the

55 RNT, J & HN, J TREVC. No. 83 of 2008 & batch State law was not a general exemption, but a conditional one and consequently, the exemption from tax under the State Act was not for Section 8 (2A) of the Central Sales Tax Act. Applying the same principle, we hold that the G.O.Ms.No.l091, dated 31.10.1994 does not grant exemption from tax, to the goods i.e., pulp moulded egg trays manufactured by the small scale industrial units, in general for the purposes of Section 8 (2A) of CST Act. In other words, the pulp moulded egg trays manufactured by all kinds of industries are not exempted. The exemption is only under the specified circumstances or under specified conditions on only those pulp moulded egg trays which are manufactured by small scale industrial units. The exemption under Section 8 (2A) of the Central Act does not speak of an exemption for the dealer much less for the unit manufactured under Section 8 (2A) of the Central Sales Tax Act. It speaks sale or purchase of goods being exempted generally under the State Sales Tax enactment. In the present case, the State did not grant exemption to the goods generally but exemption was granted if the goods in question was manufactured by a small scale industrial unit. Consequently, we are of the considered view that the exemption vide G.O.Ms.l\lo.l091, dated 31.10.1994 is not a general exemption within the meaning of Section 8 (2A) of the Central Sales Tax Act. It cannot be covered under the expression 'generally' under Section 8 (2A) read with its explanation. G.O.Ms.No.1091 may be available under the State Act, Section 5-A (i) (vi), but the same would not be available under the Central Sales Tax Act, Section 8 (2A), only because exemption is available under the State Act. Exemption under

56 RNT, J & HN, J TREVC. No. 83 of 2008 & batch 75. The judgments cited by the learned counsel for the respondent are of no help so as to grant exemption in view of G.O.Ms.No.l091 dated 31.10.1994 considering it as 'general exemption' for the purpose of Section 8 (2A) of the Central Sales Tax Act. The G.O.Ms.No.l091 granting exemption under Section 9 (1) of the APGST Act does not qualify as of'general exemption' within the meaning of Section 8 (2A) of the Central Sales Tax Act. At the cost of repetition, the judgment of Pine Chemicals Ltd. (supra) clearly held that if that was the intention of the legislature that wherever the exemption is granted under the State Act, the assessee would also be entitled of the same exemption under the Central Act, the legislature would not have used the expression 'generally' in sub-section (2A) of Section 8 and also should not have explained the meaning of 'generally' in the said expression under the Explanation. The said expression 'generally' under sub-section (2A) of Section 8, keeping in view the meaning as explained in the Explanation, if the explanation would not have been there it could have been possible that the goods sold by a particular manufacturer, dealer which are exempt from the State Sales Tax must equally be exempt under the Central Act. Conclusions: 76. Our conclusions are that: (i) G.O.Ms.No.1091 dated 31.10.1994 issued under Section 9(1) of the A.P.G.S T Act is a notification granting exemption from tax on the commodity of Pulp Moulded Egg Trays manufactured by Small

RNT, J & HN, J TREVC. No. 83 of 2008 & batch 57 Scale Industrial Units, 'generally', for the purpose of Section 5- A(l)(vi) of the A.P.G.S.T Act 1957. (ii)The plain language of the G.O.Ms.No.1091, dated 31.10.1994 shows that the respondent/assessee/dealers are entitled for exemption from tax on the commodity in question. (iii)The G.O.Ms.No.l091, dated 31.10.1994 notification, cannot be construed as a notification granting exemption from tax 'generally' under the Central Sales Tax Act, under Section 8(2A) of the Central Sales Tax Act in view of its 'Explanation' and the law as laid down by the Hon'ble Apex Court in Pine Chemicals Limited (supra). (iv)The Sales Tax Appellate Tribunal has rightly held that the respondent-assessee is entitled for exemption from tax under the provisions of the Andhra Pradesh General Sales Tax Act, 1957. (v)We however, clarify that based on the G.O.Ms.No.l091, dated 31.10.1994 the respondent/assessee would not be entitled to claim Exemption from Central Tax under Section 8(2A) of the Central Sales Tax Act, 1956. 77. The Questions of law 'A', 'B', & 'C' as framed in para-13 (supra) are answered as in para-76 (supra) Result: 78. In the result, all the Tax Revision Cases are dismissed with the aforesaid clarifications.

58 RNT, J & HN, J TREVC. No. 83 of 2008 & batch Pending miscellaneous petitions, if any, shall stand closed i n consequence. SD/- P. VENKATA RAMANA JOINT REGISTRAR i J //TRUE COPY// SECTION OFFICER to Sri Justice RAVI NATH TILHARI (for his Lordships kind perusal) One fair copy Sri Justice HARINATH NUNEPALLY (for his Lordships kind perusal) One fair copy to To Appellate Tribunal, Andhra Pradesh, Hyderabad, (with 1. The Sales Tax records if any) 2. The Deputy 3. The 4. One 5. Two CCs to GP for Amaravathi [OUT] 6. 9 L.R. Copies. 7. The Under Secretary Company Affairs, New Delhi. 8. The Secretary, Andhra Pradesh High Court Advocates' Association Library, High Court Buildings, Amaravathi. VR Section, High Court of Andhra Pradesh at Amaravathi. (to dispatch the lower court records) lO.Three CD Copies Commissioner (CT), Eluru, West Godavari District. Commercial Tax Officer, Nidadavole, East Godavari District. CC to Sri S R R Viswanath, Advocate [OPUC] Commercial Tax, High Court of Andhra Pradesh at Union of India, Ministry of Law, Justice and 9. The Section Officer TK ssb

HIGH COURT TK DATED:08/05/2024 COMMON JUDGMENT TREVC.Nos.83, 135, 149 & 191 of 2008 DISMISSING THE TAX REVISION CASES