TMI Blog2023 (10) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been used to reflect the ordinary and normal sense, that is to denote an alternative, giving a choice; and, we cannot assign it a different meaning unless it leads to vagueness or makes clause 2(s) absolutely unworkable. In the present case, the word or between sub-clauses (i) and (ii) indicates the independent and disjunctive nature of sub-clause (i), meaning thereby that or used after sub-clause (i) cannot be interpreted as and so as to tie it with the condition enumerated in the long line of clause 2(s) which is applicable only to sub-clause (ii). In the present case, the use of a semicolon is not a trivial matter but a deliberate inclusion with a clear intention to differentiate it from sub-clause (ii). Further, it can be observed upon a plain and literal reading of clause 2(s) that while there is a semicolon after sub-clause (i), sub-clause (ii) closes with a comma. This essentially supports the only possible construction that the use of a comma after sub-clause (ii) relates it with the long line provided after that and, by no stretch of imagination, the application of the long line can be extended to sub-clause (i), the scope of which ends with the semicolon - the long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R 467(E) dated 20th June, 2012 ( Exemption Notification , hereafter) inter alia exempting various services from the tax network rendered to government, governmental, or local authorities. If governmental authority as defined in the Exemption Notification takes within its embrace IIT Patna and NIT Rourkela, they would be eligible for an exemption from the service tax that otherwise applies to construction services provided by service providers or subcontractors within their premises. THE APPEALS 2. In Civil Appeal No. 3991 of 2023 ( CA-I , hereafter), the appellant assails the judgment and order dated 03rd March, 2016 of the High Court of Judicature at Patna ( Patna High Court , hereafter) whereby a writ petition CWJC No. 16965 of 2015 preferred by the first respondent, i.e., M/s Shapoorji Pallonji Company Pvt Ltd ( SPCL , hereafter) was allowed and the service tax collected by the appellant was directed to be refunded. 3. Civil Appeal No. 3992 of 2023 ( CA-II hereafter) challenges the judgment and order dated 05th February, 2018 of the High Court of Orissa at Cuttack ( Orissa High Court , hereafter). The Orissa High Court while relying on the aforesaid decision of the Patna High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper to delve into the facts that formed the genesis of the writ petitions before the Patna High Court and the Orissa High Court. FACTS 9. The material facts, leading to the presentation of CA-I, are as follows: a) IIT Patna, the fourth respondent, appointed NBCC India Limited ( NBCC , hereafter), the third respondent, as a Project Management Consultant to oversee the construction of building/facilities/services for its academic complex. Vide Letter of Award dated 20th December, 2012, NBCC awarded the contract for construction works to SPCL at a total contract price of Rs.167,70,09,043.00 (Rupees One hundred Sixty-Seven Crore Seventy Lakh Nine Thousand Forty-Three only). Clause 4.2.4 of the Letter of Award specified that the aforementioned rates did not include service tax and that SPCL would be reimbursed for this tax by IIT Patna upon providing receipts. b) SPCL, in accordance with the Letter of Award, duly registered itself with the Central Excise and Service Tax ( CEST , hereafter) and discharged its service tax obligations amounting to Rs.9,73,25,398.23 (Rupees Nine Crore Seventy-Three Lakh Twenty-Five Thousand Three Hundred Ninety-Eight and Twenty-Three paisa) for the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of construction of building premises of [IIT Patna] in pursuance of the contract. f) Vide the impugned judgment, the Patna High Court allowed the writ petition of SPCL and held that IIT Patna would indeed be covered within the definition of a governmental authority under clause 2(s). In its interpretation of clause 2(s), the Court observed that provisions contained in sub-clauses (i) and (ii) of clause 2(s) are independent disjunctive provisions and the expression 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution is related to sub-clause (ii) alone because sub-clause (i) is followed by the punctuation ; and then by the conjunction or . According to the Court, any authority set up by an Act of Parliament or by an Act of the State Legislature as envisaged in sub-clause (i), therefore, cannot be made subject to the condition of 90% or more participation by way of equity or control and it is only an authority or a board or any other body established by the Government as envisaged under sub-clause (ii) of clause 2(s) that has to meet the requirement of governmental participation of 90% or m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... government-established entities as well. The Clarification Notification further clarified this expansion by encompassing government-established bodies within the definition of governmental authorities . However, it is important to note that the requirement of 90% or more government equity or control still applies to both types of governmental bodies, whether they are statutory or non-statutory. b) The High Court's error lay in its interpretation of the sub-clauses as independent and disjunctive. The deliberate separation of the condition of 90% or more participation from sub-clause (ii) serves the specific intent of making it applicable to both sub-clauses. c) It is firmly established that punctuation marks alone should not dictate the interpretation of a statute, especially when meaning of the statute is clear without them. The general principle is that punctuation marks carry less weight in the interpretation of statutes, especially when dealing with subordinate legislation. Furthermore, punctuation marks may convey different impressions, and their interpretation should not be isolated but considered in conjunction with other clauses to discern legislative intent. To support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Patna as a governmental authority has no bearing on the applicability of service tax to the transaction between SPCL and NBCC. The crux of the argument lies in the specific nature of this case: SPCL has delivered its services to NBCC, not directly to IIT Patna. IIT Patna has engaged NBCC as a Project Management Consultant, making SPCL the service provider and NBCC the service recipient in this particular transaction. Consequently, it cannot be contended that SPCL provided services directly to IIT Patna. NBCC lacks the status of a government, local authority, or governmental authority under the Exemption Notification, and it has not asserted such a claim. Therefore, the activities and transactions between SPCL and NBCC are subject to service tax and do not qualify for exemption under the Exemption Notification. 12. Learned counsel representing SPCL, supported the impugned judgment and order of the Patna High Court and contended that while construction services are classified as taxable under section 65 of the 1994 Act, the Exemption Notification provides an exemption for services rendered to the Government, local authorities, or governmental authorities. IIT Patna, as an institut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... municipality under article 243W of the Constitution; 2(s) governmental authority means an authority or a board or any other body; (i) Set up by an Act of Parliament or a State Legislature; or (ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution; 15. Having read the two definitions, first and foremost, it is necessary to ascertain the objective behind the Clarification Notification which amended the Exemption Notification and re-defined governmental authority . A bare perusal of the Exemption Notification reveals that the exemption therein was only extended to those entities, viz. board or authority or body, which fulfilled the three requisite conditions, i.e. : a) having been established with 90% or more participation by way of equity or control by Government, b) set up by an Act of the Parliament or a State Legislature, and c) carrying out any function entrusted to a municipality under Article 243W of the Constitution. It is evident that the scope of the exemption was severely restricted to only a few entities. Although the reason for re-defining gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be given to a provision only when it is shrouded in ambiguity and lacks clarity, rather than when it is unequivocally clear and unambiguous. 20. What is plain and ambiguous from a bare reading of a provision under consideration must be interpreted in the same way as it has been stipulated and not in a way that it presumes deficiency and radically changes the meaning and context of the provision. This is the view expressed in the decision of a five-judge Bench of this Court in Commissioner of Sales Tax, U.P. vs. Modi Sugar Mills Ltd. (1961) 2 SCR 189 . The relevant passage therefrom reads as under: 10. [ ] In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed : it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency. 21. It is a well-established principle of statutory interpretation that any authority, entrusted with the function of legislating, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless it leads to vagueness or makes clause 2(s) absolutely unworkable. We are fortified in our view by the decision of this Court in Sri Jeyaram Educational Trust vs. A.G. Syed Mohideen (2010) 2 SCC 513 , where it was held thus: 11. It is now well settled that a provision of a statute should have to be read as it is, in a natural manner, plain and straight, without adding, substituting or omitting any words. While doing so, the words used in the provision should be assigned and ascribed their natural, ordinary or popular meaning. Only when such plain and straight reading, or ascribing the natural and normal meaning to the words on such reading, leads to ambiguity, vagueness, uncertainty, or absurdity which were not obviously intended by the legislature or the lawmaker, a court should open its interpretation toolkit containing the settled rules of construction and interpretation, to arrive at the true meaning of the provision. While using the tools of interpretation, the court should remember that it is not the author of the statute who is empowered to amend, substitute or delete, so as to change the structure and contents. A court as an interpreter cannot alter or amend the law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an independent category, thereby making it distinct from sub-clause (ii). If the author wanted both these parts to be read together, there is no plausible reason as to why it did not use the word and and without the punctuation semicolon. While the Clarification Notification introduced an amended version of clause 2(s), the whole canvas was open for the author to define governmental authority whichever way it wished; however, governmental authority was re-defined with a purpose to make the clause workable in contra-distinction to the earlier definition. Therefore, we cannot overstep and interpret or as and so as to allow the alternative outlined in clause 2(s) to vanish. 28. Let us consider the problem from a different angle. The revised definition of governmental authority and the few punctuations in the definition (two semicolons and two commas) and the conjunction or have been noticed above. Literally read, the conjunction or between sub-clauses (i) and (ii) clearly divides the two clauses in two parts with the first part completely independent of the second part. The first part is by itself complete and capable of operating independently. A construction leading to an anomalous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of a five-judge Bench of this Court in Dilip Kumar (supra) to urge that in case of any ambiguity in interpreting an exemption notification, the interpretation that favours the revenue must be adopted; also, the burden of proving applicability of the exemption notification would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. At the outset, we record that there is absolutely no quarrel with the proposition laid down therein. We, however, reject the contention of Ms. Bagchi based on Dilip Kumar (supra) because the ratio is not applicable to the facts and circumstances of this case. This, for the simple reason, that there exists no ambiguity insofar as the interpretation of clause 2(s) is concerned. We are endorsed in our opinion by the Latin maxim quoties in verbis nulla est ambiguitas, ibi nulla expositio contra verba expressa fienda est, which means that when there is no ambiguity in the words, then no exposition contrary to the words is to be made. It is, therefore, clear as a sunny day that there arises only one plausible construction of clause 2(s) which is the one the Patna High Court adopted, and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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