RELEVANT INTERPRETATION PRINCIPLES (PART- II)

[Dr. Sanjiv Agarwal]

Purposive Interpretation

The courts while interpreting the provisions of a statute must look at the purpose and if the purpose of a particular provision is easily discernible from the whole scheme of the Act then bear that purpose in mind.

Taxing statutes cannot be interpreted on any presumptions or assumption. The court must look squarely at the words of the statute and interpret them.

While construing a word which occurs in a statute or a statutory instrument in the absence of any definition in that very document it must be given the same meaning which it receives in ordinary parlance or in the sense in which people conversant with the subject-matter of the statute or statutory instrument understand it. When the word to be construed in used in a taxing statute or a notification issued thereunder, it should be understood in its commercial sense. [Narang Overseas P. Ltd. v. ITAT 2007 (7) TMI 5 - HIGH COURT, BOMBAY ]

The principle of purposive interpretation stipulates that a purposive construction of an enactment is one which gives effect to the legislative purpose by following the literal meaning of the enactment where such meaning is in accordance with the legislative purpose, or by applying a strained meaning where the literal meaning is not in accordance with the legislative purpose. Apex Court applied this principle in National Insurance Co. Ltd. v. Laxmi Narain Dhut 2007 (3) TMI 663 - SUPREME COURT.  Also see Reserve Bank of India v. Peerless General Finance & Investment Co. Ltd. 1987 (1) TMI 452 - SUPREME COURT  where it was held that interpretation must depend on the text and the Context. They are the basis of interpretation. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and every thing is in its place.

A statutory provision is to be interpreted in its context and also to advance the true intention and purpose of law [CCE, Indore v. Lloyd Insulation (India) Ltd. 2007 (8) TMI 365 - CESTAT, NEW DELHI ].

Consequences of interpretation are to be kept in mind Harmonious interpretation suppressing mischief and advancing remedy has to be given. In case of conflict between purpose and material, purpose would prevail because in absence of material, substitute materials can be used. Material is subordinate to purpose. Where subordinate idea clashes with principal idea, former must adjust to latter or be disregarded altogether. Where conflict is between use and substance, use should be given greater regard. [Jaipur Golden Transport Co. Pvt. Ltd. v. CCE, Surat 2007 (8) TMI 22 - CESTAT, MUMBAI ].

In Unicorn Industries v. Union of India 2010 (11) TMI 544 - SIKKIM HIGH COURT, it was held that it was settled law fiscal statutes should be strictly construed does not rule out the application of the principles of reasonable construction to give effect to the purpose or intention of any particular provision as apparent from the scheme of the act, or with the assistance of such external aids, as were permissible under law. In order to apply the principal of reasonable construction to give effect to the purpose or intention of the provision, as apparent from the scheme of the Act, the Court must ensure to harmonize different provisions in the same Act and prefer an interpretation which would lead to harmonized construction rather than to lead to inconsistency; because, the cardinal principle is that the statute should be interpreted in such a way as to avoid absurdity and to have harmonious effect. Hence, the Court must construe the relevant provisions to make it workable, unless it was impossible to do so, rather than make it meaningless. The Division Bench of Madras High Court in the Commissioner of Customs v. M/s. L.T. Karle & Co. & Another) [2006 (8) TMI 208 - HIGH COURT OF JUDICATURE AT MADRAS], it was observed that:

"10.2 In order to apply the principles of reasonable construction to give effect to the purpose or intention of the provision, as apparent from the scheme of the Act, the Court must endeavour to harmonise different provisions in the same Act and prefer an interpretation which would lead to a harmonise construction rather than to lead to inconsistency. The cardinal principle is that the statute should be interpreted in such a way as to avoid absurdity and to have harmonious effect.

10.3 The Court must construe the relevant provisions to make it workable, unless it is impossible to do so, rather than make it meaningless."

It was also held that, It was a well-settled principle in law that the Court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the emanative factor of legislative intent. The object of interpreting a statute is to ascertain the intention of the legislature enacting it. The intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said.

It was also held that tax and equity were strangers and equity cannot be relied on even by the revenue to tax an amount which was not taxable under the statute, and therefore, tax cannot be levied on the basis of the equity. Nor tax can be evaded placing reliance on the equity.

In CCE & C, Ahmedabad-II v. Intas Pharma Ceuticals Ltd. 2013 (4) TMI 532 - GUJARAT HIGH COURT, it was held that in a taxing statute one has to looked at what was exactly or clearly stated and there was no room for ascertaining any intendment of the legislature. It was also held that nothing could be read and implied from a taxing statute and there was no equity about a tax and there was also no presumption as to tax.

In Director of Income Tax v. OHM Ltd. 2012 (12) TMI 422 - DELHI HIGH COURT,it was held that it was a well settled rule of interpretation that if a special provision was made respecting a certain matter, that matter was excluded from the general provision. It was also a well settled rule of construction that when, in an enactment of two provisions exist, which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both.

In CCE, Ahmedabad- II v. Cadila Health Care Ltd. 2013 (1) TMI 304 - GUJARAT HIGH COURT, it has been held that no provision or word in a statute is to be read in isolation. To determine legislative intention, statute has to be read as a whole. Interpretation that could render any part of the statute devoid of any meaning or application, has to be avoided. There is a presumption that legislature inserted every part of statute for a purpose and that it should be given effect. These principles are applicable to subordinate legislation also.