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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