JUDGMENTS OF COURTS ARE NOT TO BE CONSTRUED AS STATUTES

[Mr. M. GOVINDARAJAN]

     Interpretation of statues plays a crucial role in all litigation process.   A tax matter is no exception to this.  When there is difference of opinion in the interpretation of statutes the courts render their helping hands in resolving the problem.    Interpretation is done by various methods.  The judgments pronounced by High Courts, Supreme Court are treated as Rule of law which is binding on lower courts.  It is used to rely on the judgments of courts in litigation by the both parties for their favor.  The Supreme Court in one case gives a direction in which way the judgments of the higher court are to be analyzed while deciding a case.

     In 'Commissioner of Central Excise, Bangalore V. SriKumar Agencies' - 2008 -TMI - 31635 - SUPREME COURT appeals were placed before a three Judge Bench because of reference made by a Division Bench (2007 (216) ELT A24 (SC)) with the following order:

"The point involved in this batch of appeals is whether the printing on the package is merely incidental or primary.   On this point we find that there are two streams of judgments of this Court.   Therefore, keeping in view the conflict of opinion, on the point involved in 'Rollatainers Ltd., and another V. Union of India and others (1994 Suppl.(3) SCC 293), Collector of Central Excise, Bombay V. Paper Print & Products &Co., (1997 (10) SCC 564) and Metagraphs Private Limited V. Collector of Central Excise, Bombay (1997 (1) SCC 262) we deem it appropriate that these cases be placed  for hearing before a larger bench"

     The Revenue contended the following:

§         The CEGAT disposed of several appeals without detailed analysis of the factual position involved;

§         It merely referred to some judgments and submissions of the assessees;

§         The conclusions are practically non reasoned and abrupt conclusions were arrived at to hold that printing on media was not merely incidental to its primary use but in fact clearly show the nature of goods contained therein;

§         In this case five categories were involved which were contextually different;;

§         The view expressed by CEGAT even on facts was contrary to the radio laid down by the SC in ITC Ltd., V. Collector of Central Excise, Madras - JT 1998 (8) SC 327;

The respondent assessees submitted the following:

§       The CEGAT is the last finding authority;

§       From its vast experience having dealt with large number of cases, even by visual inspection of the materials, it was in a position to record a conclusion;

§       The factual scenario is not difference in these cases vis-à-vis those assessees whose cases were the object matter of the decisions which have been referred to by CEGAT.

The court held as follows:

·        Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed;

·        Observations of Courts are neither to be read as Euclid's theorem nor as provisions of the statute and that took taken out of their context;

·        These observations must be read in the context in which they appear to have been stated;

·        Judgments of Courts are not to be construed as statutes;

·        To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define;

·        Judges interpret statutes, they do not interpret judgments;

·        They interpret words of statutes; their words are not to be interpreted as statutes;

The Supreme Court relied on some observations as follows:

Ø      In 'London Craving Dock Co. Ltd., V.Horton' - (1951 AC 737) Lord Mac. Dermot observed in Page No. 761 as - "The matter cannot, of course, be settled merely by treating the ipsissima vetra of Willes, J as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto.   This is not to detract from the great weight to be given to the language actually used by that most distinguished judge";

Ø      In 'Home Office V. Dorset Yacht Co.' - 1970 (2) All ER 294 - Lord Reid said - "Lord Atkin's speech ….. is not to be treated as if it was a statute definition.   It will require qualification in new circumstances;

Ø      Megarry J. in (1971) 1 WLR 1062 observed - "One must not of course, construe even a reserved judgment of Russel L.J., as if it were an Act of Parliament;

Ø      In 'Herrington V. British Railways Board' -1972 (2) WLR 537 - Lord Morris said -"There is always peril in treating the words of a speech or judgment as though they were words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case".

The Supreme Court held that circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases.  Disposal of cases blindly placing reliance on a decision is not proper.  The Court further relied on the following words of Lord Denning in the matter of applying precedents have become locus classicus - "Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the color of one case against the color of another.   To decide, therefore, on which side of the line a close falls, the broad resemblance to another case is not at all decisive".   "Precedent should be followed only so far as it marks the path of justice but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches.   My plea is to keep the path to justice clear of obstructions which could impede it".

     The Supreme Court held that since the factual position has not been analyzed in detail, disposal of appeals by mere reference to decisions was not the proper way to deal with the appeals.   The CEGAT also does not appear to have dealt with the relevant and applicability of ITC's case.  The CEGAT ought to have examined the cases individually and the articles involved.  By clubbing all the cases together and without analyzing the special features of each case disposing of the appeals in the manner done was not proper.   The Supreme Court, therefore, set aside the impugned judgment in each case and remits the matter to CESTAT to be dealt with by the appropriate bench.