RELEVANT INTERPRETATION PRINCIPLES FOR SERVICE TAX (PART- III)

[Dr. Sanjiv Agarwal]

Delegated Legislation

In Malaysian Airlines v. Union of India 2010 (8) TMI 786 - BOMBAY HIGH COURT, it was held that delegated legislation has to be read in the context of primary statute under which it is made. In case of any conflict, primary legislation would prevail. The Hon'ble Supreme Court in the

case of ITW Signode India Ltd. v. Collector of Central Excise 2003 (11) TMI 114 - SUPREME COURT OF INDIA, held as under:

"it is well settled principle of law that in case of a conflict between a substantive act and delegated legislation, the former shall prevail in as much as delegated legislation must be read in the context of the primary legislative act and not the vice-versa."

Apart from the above judgment, the aforesaid principle is also recognized by the Hon'ble Supreme Court in Union of India v. Somasundram Viswanath - 1988 (9) TMI 315 - SUPREME COURT OF INDIA wherein the Court ruled that the Act will prevail over the Rules. The rule which travels beyond the scope of Act cannot be given effect to [also see Bimal Chandra Banerjee v. State of Madhya Pradesh, 1970 (8) TMI 30 - SUPREME Court; Lohia Machines Ltd. v. Union of India, 1985 (1) TMI 1 - SUPREME Court; Chowgule & Co. v. C.I.T., 1992 (3) TMI 61 - BOMBAY High Court]

In SKP Securities Ltd v. Deputy Director (RA-IDT) 2013 (1) TMI 549 - CALCUTTA HIGH COURT, it was held that statutory rules cannot introduce something which not contemplated in statute. It was well settled principle of interpretation that statutory rules must be constructed in a harmony with the rule making power, in exercise of which, the statutory rule had been made. If it were possible to interpret the statutory rule in more than one ways, the court would prefer that interpretation which would make the statutory rule workable and intra vires, to that interpretation which would render the rule ultra vires and invalid.

In Delhi Chartered Accountants Society (Regd.) v. Union of India 2013 (2) TMI 55 - DELHI HIGH COURT, it was held that CBEC circulars have to be in conformity with the Act and Rules, and if not, they cannot be enforced.

Legislative Intention

In Balwant Singh v. Jagdish Singh 2010 (7) TMI 556 - SUPREME COURT OF INDIA, it was held that provisions of statute including every word should be given full effect keeping legislative intent in mind to ensure to achieve projected object. No provision is treatable as enacted purposelessly. Courts can not give interpretation to provisions to render them ineffective or odious.

In CCE, Chandigarh-I v. Punjab Steels 2010 (7) TMI 252 - PUNJAB AND HARYANA HIGH COURT, it was held that it is not possible to assume any intention or governing purpose of statute more than what is stated in plain language. The words cannot be added or substituted so as to give a particular meaning. The terms are specifically defined in and used in different provisions consciously. The argument that reading of terms in statute by analogy, ie, if in one provision a term is used, the same should be read in other provision as well where not specifically mentioned is not sustainable. Once the rule making authority has defined the terms specifically, the argument of analogy that same should be read in the other provision as well, where it has not been specifically mentioned, has no leg to stand. Reference can be made to the observations of a Constitution Bench of Hon'ble the Supreme Court in Mathuram Agarwal v. State of Madhya Pradesh, 1999 (10) TMI 125 - Supreme Court of India:

"The intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature. The statute should clearly and unambiguously convey the three components of the tax law i.e. The subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute then there is no tax in law. Then it is for the legislature to do the needful in the matter."

In Mathuram Agarwal v. State of Madhya Pradesh, 1999 (10) TMI 125 - Supreme Court of India, it was observed that the intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act, it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words, cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the Legislature.

In SKS Ispat & Power Ltd. v. CC & E 2012 (11) TMI 962 - CHATTISGARH HIGH COURT, it was held that when intention of legislature is clear, no process can be adopted which goes against it. Apex court in Rajkumar Shivhare v. Asstt. Director Directorate of Enforcement 2010 (4) TMI 432 - SUPREME COURT, observed as follows :

"34. When a statutory forum is created by law for redressal of grievance and that too in a fiscal Statute, a writ petition should not be entertained ignoring the statutory dispensation. In this case High Court is a statutory forum of appeal on a question of law. That should not be abdicated and given a go bye by a litigant for invoking the forum of judicial review of the High Court under writ jurisdiction. The High Court, with great respect, fell into a manifest error by not appreciating the aspect of the matter. It has however dismissed the writ petition on the ground of lack of territorial jurisdiction."

In Disha Foods Pvt. Ltd. v. CCE, Hyderabad -2013 (7) TMI 241 - CESTAT BANGALORE , it was held that it is trite law that the legislative intent should be deciphered from a conjoint reading of all the relevant provision of the statute and it should be constructed in a manner which would advance justice in a given set of facts and not in a manner which leaves the aggrieved party remediless.

 (To be continued……)