Full Judgment Text
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PETITIONER:
MANGALORE CHEMICALS & FERTILISERS LIMITED
Vs.
RESPONDENT:
DEPUTY COMMISSIONER OF COMMERCIAL TAXES AND ORS.
DATE OF JUDGMENT02/08/1991
BENCH:
VENKATACHALLIAH, M.N. (J)
BENCH:
VENKATACHALLIAH, M.N. (J)
AGRAWAL, S.C. (J)
CITATION:
1992 AIR 152 1991 SCR (3) 336
1992 SCC Supl. (1) 21 JT 1992 (3) 482
1991 SCALE (2)662
ACT:
Karnataka Sales Tax Act, 1957--Section 8A--Notifications
dated 30.6. 1969 and 11.8.1975 issued under granting reliefs
and incentives-Filing of monthly returns adjusting refund of
sales tax in anticipation of permission of Revenue--Initia-
tion of proceedings u/s. 13 and demand notices for sales-tax
payment, when assessee’s application for permission to
adjust sales tax not disposed of by the Revenue--Illegal.
Interpretation of Statutes--Taxing Statute--Provisions
whether substantive or procedural character
Ascertainment--Need of--When interpretative process arises,
indicated.
HEADNOTE:
On 30th June, 1969, State Government issued a notifica-
tion under Section 8A of the Karnataka Sales Tax Act, 1957,
providing a package of reliefs and incentives including one
concerning relief from payment of sales tax.
A further notification dated 11th August, 1975 was
issued, envisaging certain modified procedures for effectu-
ating the reliefs contemplated by the exemption notification
of 30th June, 1969.
For the assessment year 1976-77, the appellant made an
application to the Respondent No. 1 on 10th November, 1976
for adjustment of the refunds against sales-tax due and
permission was granted with retrospective effect from 1st
May, 1976 validating the adjustments, which the appellant
had made during the interregnum.
For the three subsequent years, viz., 1977-78, 1978-79
and 197980, similar applications, which were made on 29th
March 1977, 20th March 1978 and 8th March 1979 respectively,
remained undisposed of.
In anticipation of the permission, appellant adjusted
the refund against tax payable for these years and filed its
monthly returns setting out adjustments so effected.
337
There was no dispute that the appellant was entitled to
the benefit of the notification dated 30th June, 1969 and
that the refunds were eligible to be adjusted against
sales-tax payable for respective years.
The respondent no. 1 in his letter dated 27.3.1979
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informed the appellant that the orders on appellant’s appli-
cation for permission would be passed only on receipt of the
clarification from the Government on the matters.
On 9th January, 1980, the appellant was issued three
demand notices by the Commercial Tax Officer demanding
payment of the sales-tax, stating that as prior permission
to adjust sales-tax had not been considered by the respond-
ent no. 1, he was obliged to proceed to recover the taxes.
Steps for recovery of the penalties were also initiated.
The appellant moved the High Court for issue of writ of
mandamus to quash the demand notices and the proceedings
initiated for recovery of penalty under section 13 of the
Act.
The High Court dismissed the writ petition, against
which the present appeal was filed.
The appellant urged that indisputably the permission for
the three years had been sought well before the commencement
of the respective years but had been withheld for reasons,
which were demonstrably extraneous; that the basic eligibil-
ity was conditioned by the notification of 30th June, 1969,
which required a certificate from the Department of Indus-
tries and Commerce; that the requirement of the annual
permission for adjustment envisaged by the notification of
11th August; 1975 was merely procedural, as clause 3 of the
notification stipulated; and that if the conditions were
satisfied, it was deemed that permission was given.
The respondents contended that it was not as if the
right to the refund was denied or defeated by the inaction
of the Deputy Commissioner but only one mode of the refund
by adjustment--became unavailable; that the benefit envis-
aged by the notification of 11th August, 1975 was in the
nature of a concession and that the appellant in order to
avail itself of its benefit had to show strict compliance
with conditions subject to which it was available; that
where exemptions were concerned, the conditions thereof
ought to be strictly construed and strict compliance with
them exacted before a person could lay claim to the
338
benefit of the exemptions; and that if, in the meanwhile,
the period itself expired, no relief was possible as quite
obviously, the requirements of ’prior permission’ became
impossible of compliance.
Allowing the appeal, this Court,
HELD: 1. The main exemption is under the 1969 notifica-
tion. The subsequent notification which contains condition
of prior-permission clearly envisages a procedure to give
effect to the exemption. [347E-F]
2. Clause 3 of the notification leaves no discretion to
the Deputy Commissioner to refuse the permission, if the
conditions are satisfied. The words are that he "will
grant". There is no dispute that appellant had satisfied the
conditions. Yet the permission was withheld--not for any
valid and substantial reason, but owing to certain extrane-
ous things concerning some interdepartmental issues. Appel-
lant had nothing to do with those issues. [347F-H]
3. There was no other disentitling circumstance which
would justify the refusal of the permission. Appellant did
not have prior permission, because it was withheld by the
Revenue without any justification. The High Court took the
view that after the period to which the adjustment related
had expired no permission could at all be granted. A permis-
sion of this nature was a technical requirement and could be
issued making it operative from the time it was applied for.
[349C-D]
4. A distinction between the provisions of statute which
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are of substantive character and were built-in with certain
specific objectives of policy on the one hand and those
which are merely procedural and technical in their nature on
the other must be kept clearly distinguished. [347E-G]
5. The choice between a strict and a liberal construc-
tion arises only in case of doubt in regard to the intention
of the Legislature manifest on the statutory language.
Indeed, the need to resort to any interpretative process
arises only where the meaning is not manifest on the plain
words of the statute. If the words are plain and clear and
directly convey the meaning, there is no need for any inter-
pretation. [348F-G]
Assistant Commissioner of Commercial Taxes (Asstt.),
Dharwar & Ors. v. Dharmendra Trading Co. & Ors., [1988] 3
SCC 570; Wells v. Minister of Housing and Local Government,
[1967] 1 WLR 1000 at 1007
339
and Union of India & Ors. v. M/s. Wood Papers Ltd. & Ors.,
[1991] JT (1) 151 at 155, referred to.
Kedarnath Jute Manufacturing Co. v. Commercial Tax
Officer, Calcutta & Ors., [1965] 3 SCR 626 at 630 and Col-
lector of Central Excise, Bombay and Anr. v. Messrs Parle
Exports (P) Ltd., [1989] 1 SCC 345, distinguished.
Francis Bennion: "Statutory Interpretation", 1984 edi-
tion at page 683, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3235 of
1991.
From the Judgment and Order dated 14.8.1990 of the
Karnataka High Court in Writ Petition No. 3436 of 1980.
Harish Salve, K.P. Kumar, Ravinder Narain, P.K. Ram and
Ms. Amrita Mitra for the Appellant.
R.N. Narasimhamurthy, K.H. Nobin Singh and M. Veerappa
for the Respondents.
The following Order of the Court was delivered:
By this petition, Messrs Mangalore Chemicals & Fertilis-
ers Limited, a registered dealer under the Karnataka Sales
Tax Act, 1957, ("Act") seeks special leave to appeal to this
court from the judgment and order dated 14th August, 1990 of
the High Court of Karnataka in W.P. No. 3436 of 1980.
We have heard Shri Harish Salve, learned counsel for
the petitioner and Shri R.N. Narasimhamurthy, learned Senior
Counsel for the respondent-Revenue. Special leave granted.
2. On 30th June, 1969, State Government issued a noti-
fication in exercise of powers referable to sec. 8A of the
Act providing certain incentives to enterpreneurs starting
new industries in the State, pursuant to State’s policy for
"rapid industrialisation". The notification contains a
package of reliefs and incentives including one concerning
relief from payment of sales tax with which this appeal is
concerned.
The clause in the said notification of 1969 relevant
for the present purpose reads:
340
"(1). Sales tax: A cash refund will-be allowed
on all sales-tax paid by a new industry on raw
materials purchased by it for the first five
(5) years from the date of the industry goes
into production, eligibility to the conces-
sions being determined on the basis of a
certificate to be issued by the Department of
Industries and Commerce."
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This was followed by a further notification dated 11th
August, 1975 envisaging certain modified procedures for
effectuating the reliefs contemplated by the earlier exemp-
tion notification of 30th June, 1969. The relevant portions
of the Preamble and the body of the notification say:
Preamble: ". .... The Commissioner of
Commercial Taxes has suggested that New Indus-
tries covered by the above scheme might be
permitted to adjust the refunds to which they
would be eligible against the sales tax pay-
able by them.
Order
In partial modification of the Gov-
ernment order cited (2) above, Government are
pleased to prescribe the following procedure
for claiming refund of sales tax by new indus-
tries.
2. The new industries intending to
take advantage of the system of adjustment
shall apply to the Deputy Commissioner of
Commercial Taxes (Administration) of the
Division concerned through the assessing
authority. The application must contain the
following particulars.
i) Name and address of the new industry;
ii) Date of commencement of the industry;
iii) Reference number of the certificate
issued by the Director of Industries & Com-
merce, Bangalore;
iv) Year for which the permission to
withhold tax amount is related;
v) The description of finished
products in which the materials are used.
341
3. The Deputy Commissioner of Com-
mercial Taxes (Administration) of the con-
cerned Division, after scrutinising the appli-
cation filed by the new industry and after
satisfying himself that the industry is cov-
ered by the scheme sanctioned in G.O. No. 0I
58 FMI 69 dated 30.6.1969 will permit the
industry to withhold the amount of tax payable
on raw materials purchased and used in the
manufacture of goods.
4. Omitted as unnecessary
5. The new industry may apply for
permission at any time during the year subject
to its renewal every subsequent year. Until
permission of renewal is granted by the Deputy
Commissioner of Commercial Taxes, the new
industry should not be allowed to adjust the
refunds. At the end of the assessment year,
particulars should be formulated in the annual
return of the total amount adjusted during the
entire year. Along with the return, details
prescribed in Government Order No. FD 428 CSL
70 dated 1.2. 1971 should be furnished.
6) *
*
7) * Omitted as unnecessary."
*
8) *
*
3. Appellant, it is not in dispute, had the necessary
eligibility under the original exemption notification of
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1969. The controversy is confined only to the question of
the manner of effectuating the refund of sales tax that
appellant, admittedly, was entitled to.
Some particulars as to the application made by the
appellant for grant of permission might, perhaps, be neces-
sary here. For the assessment year 1976-77, the appellant
made such an application to Deputy Commissioner of Sales-tax
(Administration) on 10th November, 1976 for adjustment of
the refunds against sales-tax due. This permission was
granted with retrospective effect from 1st May, 1976, vali-
dating the adjustments which the appellant had made during
the interregnum.
However, for the three subsequent years viz., 1977-78,
1978-79
342
and 1979-80, similar applications which were made on 29th
March, 1977, 20th March, 1978 and 8th March, 1979, respec-
tively, remained undisposed of. In the meanwhile, in antici-
pation of the permission appellant adjusted the refund
against tax payable for these years and filed its montly
returns setting out adjustments so effected.
4. There is, as set-out earlier, no dispute that the
appellant was entitled to the benefit of the notification
dated 30th June, 1969. There is also no dispute that the
refunds were eligible to be adjusted against sales-tax
payable for respective years. The only controversy is wheth-
er the appellant, not having actually secured the "prior
permission" would be entitled to adjustment having regard to
the words of the notification of 11th August, 1975, that
"until permission of renewal is granted by the Deputy Com-
missioner of Commercial Taxes, the new industry should not
be allowed to adjust the refunds". The contention virtually
means this: "No doubt you were eligible and entitled to make
the adjustments. There was also no impediment in law to
grant you such permission. But see language of clause 5.
Since we did not give you the permission you cannot be
permitted to adjust." Is this the effect of the law?
The sales tax already paid by the appellant on the raw
materials procured by it is the subject matter of the re-
funds. The sales-tax against which the refund is sought to
be adjusted is the sales-tax payable by appellant on the
sales of goods manufactured by it. If the contention of the
Revenue is correct, the position is that while the appellant
is entitled to the refund it cannot, however, adjust the
same against current dues of the particular year but should
pay the tax working out its refunds separately. The situa-
tion may well have been such but the snag comes here. If the
adjustments made by the appellant in its monthly statements
are disallowed, the sales-tax payable would be deemed to be
in default and would attract a penalty ranging from 1-1/2%
to 21/2% per month from the date it fell due. That penalty,
in the facts of this case, would be very much more than the
amounts of refund.
5. What emerges from the undisputed facts is that appel-
lant was entitled to the benefit of these adjustments in the
respective years. It had done and carried out all that was
necessary for it to do and carry out in that behalf. The
grant of permission remained pending on account of certain
outstanding inter-departmental issues as to which of the
departments--the Department of Sales-tax or the Department
of Industries--should. absorb the financial impact of these
concessions.
343
Correspondence indicates that on account of these questions,
internal to administration, the request for permission to
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adjust was not processed. On 27th March 1979, the Deputy
Commissioner of Commercial Taxes wrote to the appellant to
say that the orders on appellant’s application for permis-
sion would be passed only on receipt of the clarification
from the Government on these matters.
6. While the matter stood thus, on 9th January, 1980,
the Commercial Tax Officer of the concerned jurisdiction
issued three demand notices demanding payment of the sales-
tax. He said prior permission to adjust "had not been con-
sidered by the Deputy Commissioner of Managlore Division,
Mangalore, and, therefore, the Commercial Tax Officer was
obliged to proceed to recover the taxes." Steps for recovery
of the penalities were also initiated. Thereafter, in Febru-
ary, 1980, the appellant moved the High Court for issue of
writ of mandamus to quash the demand notices and the pro-
ceedings initiated for recovery of penalty under sec. 13 of
the Act.
7. The contention in the High Court were somewhat
di.fferent from those urged before us. Before the High Court
the Revenue asserted that the very conditions of eligibility
for entitlement to these concessions stood modified under a
subsequent notification of 12th January, 1977 and that
appellant did not satisfy the altered conditions of eligi-
bility. The question, therefore, was whether enterpreneurs
who had commenced their ventures prior to 12th January,
1977, could be held to be governed by the terms of the later
notification of 12th January 1977. This question, in princi-
ple, had been settled by a decision of this Court in Assist-
ant Commissioner of Commercial Taxes (Asst.), Dharwar & Ors.
v. Dharmendra Trading Co. & Ors., [ 1988] 3 SCC 570. The
question that arose there pertained to another condition
stipulated in the same notification of 12th January, 1977.
This Court held that industries established prior to that
date were not governed by those altered conditions. Though
in the present case the altered condition set-up against
appellant was a different one, on the principle decided in
Dharmendra Trading Company’s case the altered condition
would not be attracted. But the High Court took a different
view of the matter. It held, in our opinion quite erroneous-
ly, that the principle of the earlier decision of this Court
was not applicable because it was rendered in the context of
another condition in the 1977 notification. What fell for
decision was not whether a particular condition was or was
not applicable; but the very basic question whether a subse-
quent notification could undo the eligibility for the con-
cession stipulated and conferred under the 1969 notifica-
tion.
344
Shri Narasimhamurthy with his usual fairness said that
he found it difficult to support the approach of the High
Court to the question. The main point on which the case
turned is thus settled in favour of the appellant.
8. But a subsidiary question arose whether the grant of
permission for adjustment could at all be made after the
period to which such adjustment related had itself expired.
On this, the High Court said:
" ........ But under Ext. B, the 1975 noti-
fication, a clear procedure was provided in
order to claim the benefit of refund on the
sales-tax paid on raw materials purchased by
the industrialists. The industrialists claim-
ing the benefit had to secure the prior per-
mission of the assessing authority to withhold
the tax subject to the Government’s permis-
sion. In other words, prior permission was a
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condition precedent. In the instant case, Mr.
Kumar was not able to satisfy us, permission
had indeed been granted. On the other hand, he
fairly conceded that though an application was
made, no permission was actually granted to
withhold the payment. Therefore, in view of
the 1975 notification prescribing the proce-
dure for claiming the benefit under 1969
notification as at Ex. A, there has been no
compliance and as such, the petitioner will
not be entitled to withhold the tax. With the
result, the demand at Annexure R.S and T would
be justifiable and legal."
(Emphasis supplied)
This is the only ground on which the appellant’s right to
adjustment is contested by the Revenue.
9. Shri Harish Salve urged that indisputably the permis-
sion for the three years had been sought well before the
commencement of the respective years but had been withheld
for reasons which were demonstrably extraneous. Learned
counsel emphasised that the basic eligibility was condi-
tioned by the notification of 30th June, 1969, which re-
quired a certificate from the Department of Industries and
Commerce. Both the eligibility and the fact that there was
such certification from the Department of Industries were
not disputed. Indeed, the requirement of the annual permis-
sion for adjustment envisaged by the notification of 11th
August, 1975 was, says counsel, merely procedural as clause
3 of the notification stipulated that if the conditions were
satisfied--there was no dispute they were--the Deputy Com-
missioner
345
"will permit" the adjustment. Counsel says that if, in these
circumstances, the Deputy Commissioner withheld the permis-
sion law treats that as done which ought to have been done.
10. Shri Narasimha Murthy, however, sought to contend
that the requirement of the prior permission was held--and
rightly--by the High Court to be a ’condition precedent’ and
that non-satisfaction of that condition precedent, whatever
be the reason for the non-satisfaction, automatically en-
tailed the logical consequences. Learned counsel further
submitted that it was not as if the right to the refund was
denied or defeated by the inaction of the Deputy Commission-
er but only one mode of the refund--by adjustment--became
unavailable. Learned counsel urged that the benefit envis-
aged by the notification of 11th August, 1975 was in the
nature of a concession and that the appellant in order to
avail itself of its benefit had to show strict compliance
with condition subject to which it was available. Learned
counsel placed reliance on Kedarnath Jute Munufacturing Co.
v. Commercial Tax Officer, Calcutta & Ors., [1965] 3 SCR 626
and Collector of Central Excise, Bombay and Anr. v. Messrs
Parle Exports (P) Ltd., [1989] 1 SCC 345 to support his
contention that where exemptions were concerned, the condi-
tions thereof ought to be strictly construed and strict
compliance with them exacted before a person could can lay
claim to the benefit of the exemptions.
Learned counsel submitted that the point was not whether
there was any justification for delaying the permission;
but, more importantly, whether appellant at the relevant
point of time had, such prior permission or not and that if,
in the meanwhile, the period itself expired, no relief was
possible as, quite obviously, the requirements of ’prior
permission’ became impossible of compliance.
Shri Narasimha Murthy relied on the following observa-
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tions of this court in Kedarnath Jute Manufacturing Co. ’s
case to support this contention:
" .......... But the said exemption is made
subject to a proviso. Under that proviso, in
the case of such sales a declaration form duly
filled up and signed by the registered dealer
to whom the goods are sold and containing the
prescribed particulars on a prescribed form
obtainable from the prescribed authority has
to be furnished in the prescribed manner by
the dealer who sells the goods .....
346
" ........... The provision pre-
scribing the exemption shall, therefore, be
strictly
construed............. ....... ......To accept
the argument of the learned counsel for the
appellant is to ignore the proviso altogether,
for if his contention be correct it will lead
to the position that if the declaration form
is furnished, well and good; but if not fur-
nished, other evidence can be produced. That
is to rewrite the clause and to omit the
proviso. That will defeat the express inten-
tion of the Legislature ..... "
11. We have given our careful consideration to these
submissions. We are afraid the stand of the Revenue suffers
from certain basic fallacies, besides being wholly techni-
cal. In Kedarnath’s case, the question for consideration was
whether the requirement of the declaration under the proviso
to Sec. 5(2)(a)(ii) of the Bengal Finance (Sales-tax) Act,
1941, could be established by evidence aliunde. The court
said that the intention of the Legislature was to grant
exemption only upon the satisfaction of the substantive
condition of the provision and the condition in the proviso
was held to be of substance embodying considerations of
policy. Shri Narasimha Murthy would say the position in the
present case was no different. He says that the notification
of 1 1th August, 1975 was statutory in character and the
condition as to ’prior-permission’ for adjustment stipulated
therein must also be held to be statutory. Such a condition
must, says counsel, be equated with the requirement of
production of the declaration form in Kedarnath’s case and
thus understood the same consequences should ensue for the
non-compliance. Shri Narasimhamurthy says that there was no
way out of this situation and no adjustment was permissible,
whatever be the other remedies of the appellant. There is a
fallacy in the emphasis of this argument. The consequence
which Shri Narasimha Murthy suggests should flow from the
non-compliance would, indeed, be the result if the condition
was a substantive one and one fundamental to the policy
underlying the exemption. Its stringency and mandatory
nature must be justified by the purpose intended to be
served. The mere fact that it is statutory does not matter
one way or the other. There are conditions and conditions.
Some may be substantive, mandatory and based on considera-
tions of policy and some others may merely belong to the
area of procedure. It will be erroneous to attach equal
importance to the non-observance of all conditions irrespec-
tive of the purposes they were intended to serve.
In Kedarnath’s case itself this Court pointed out that the
string-
347
ency of the provisions and the mandatory character imparted
to them were matters of important policy. The Court ob-
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served:
" ..... The object of s. 5(2)(a)(ii) of the
Act and the rules made thereunder is self-
evident. While they are obviously intended to
give exemption to a dealer in respect of sales
to registered dealers of specified classes of
goods, it seeks also to prevent fraud and
collusion in an attempt to evade tax. In the
nature of things, in view of innumerable
transactions that may be entered into between
dealers, it will wellnigh be impossible for
the taxing authorities to ascertain in each
case whether a dealer has sold the specified
goods to another for the purposes mentioned in
the section. Therefore, presumably to achieve
the two fold object, namely, prevention of
fraud and facilitating administrative effi-
ciency, the exemption given is made subject to
a condition that the person claiming the
exemption shall furnish a declaration form in
the manner prescribed under the section. The
liberal construction suggested will facilitate
the commision of fraud and introduce adminis-
trative inconveniences, both of which the
provisions of the said clause seek to avoid."
(Emphasis Supplied)
(See: (1965) 3 SCR 626 at 630)
Such is not the scope or intendment of the provisions
concerned here. The main exemption is under the 1969 notifi-
cation. The subsequent notification which contain condition
of prior-permission clearly envisages a procedure to give
effect to the exemption. A distinction between the provi-
sions of statute which are of substantive character and were
built-in with certain specific objectives of policy on the
one hand and those which are merely procedural and technical
in their nature on the other must be kept clearly distin-
guished. What we have here is a pure technicality. Clause 3
of the notification leaves no discretion to the Deputy
Commissioner to refuse the permission if the conditions are
satisfied. The words are that he "will grant". There is no
dispute that appellant had satisfied these conditions. Yet
the permission was withheld--not for any valid and substan-
tial reason but owing to certain extraneous things concern-
ing some inter-departmental issues. Appellant had nothing to
do with those issues. Appel- |ant is now told "we are
sorry. We should have given you the permission. But now that
the period is over, nothing can be done". The answer to this
is in the words of Lord Denning: "Now I know that a
348
public authority can not be estopped from doing its public
duty, but I do think it can be estopped from relying on a
technicality and this is a technicality" (See Wells v.
Minister of Housing and Local Government, [1967] 1 WLR 1000
at 1007).
Francis Bennion in his "Statutory Interpretation", 1984
edition, says at page 683:
"Unnecessary technicality: Modern courts seek
to cut down technicalities attendant upon a
statutory procedure where these cannot be
shown to be necessary to the fulfilment of the
purposes of the legislation."
12. Shri Narasimhamurthy again relied on certain obser-
vations in Collector of Central Excise, Bombay-1 & Anr. v.
M/s. Parle Exports (P) Ltd., [1989] 1 SCC 345 in support of
strict construction of a provision concerning exemptions.
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There is support of judicial opinion to the view that exemp-
tions from taxation have a tendency to increase the burden
on the other unexempted class of tax-payers and should be
construed against the subject in case of ambiguity. It is an
equally well-known principle that a person who claims an
exemption has to establish his case. Indeed, in the very
case of M/s. Parle Exports (P) Ltd. relied upon by Sri
Narasimhamurthy, it was observed:
"While interpreting an exemption clause,
liberal interpretation should be imparted to
the language thereof, provided no violence is
done to the language employed. It must, howev-
er, be borne in mind that absurd results of
construction should be avoided."
The choice between a strict and a liberal construction
arises only in case of doubt in regard to the intention of
the Legislature manifest on the statutory language. Indeed,
the need to resort to any interpretative process arises only
where the meaning is not manifest on the plain words of the
statute. If the words are plain and clear and directly
convey the meaning, there is no need for any interpretation.
It appears to us the true rule of construction of a provi-
sion as to exemption is the one stated by this Court in
Union of India & Ors. v. M/s. Wood Papers Ltd. & Ors.,
[1991]JT(1) 151at 155.
" ...... Truly, speaking liberal and strict
construction of an exemption provision are to
be invoked at different stages of interpreting
it. When the question is whether a
349
subject jails in the notification or in the
exemption clause then it being in nature of
exception is to be construed strictly and
against the subject but once ambiguity or
doubt about applicability is lifted and the
subject falls in the notification then full
play should be given to it and it calls for a
wider and liberal construction .... "
(Emphasis supplied)
13. It appears to us that the view taken of the matter
by the High Court does not acknowledge the essential dis-
tinction between what was a matter of form and w/hat was one
of substance. There was no other disentitling circumstance
which would justify the refusal of the permission. Appellant
did not have prior permission because it was withheld by the
Revenue without any justification. The High Court took the
view that after the period to which the adjustment related
had expired no permission could at all be granted. A permis-
sion of this nature was a technical requirement and could be
issued making it operative from the time it was applied for.
14. We, therefore, allow the appeal, set aside the
judgment of the High Court under appeal and direct the
Deputy Commissioner of Sales Tax (Admn.) to grant the per-
mission for the said three years operative from the dates of
the application. The permission shall entitle the appellant
to the adjustment of the refunds against the taxes due for
the respective years. We issue these directions in view of
the admitted position that, apart from the technical objec-
tion that periods to which the applications related had
since expired, there was no other, impediment for the grant
of permission. It also follows that the demand notices which
proceed on the premise that adjustment of refunds against
taxes due was unavailable can not also stand. They are
quashed.
There will be no order as to costs.
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V.P.R. Appeal allowed.
350