Purposive interpretation of exemption notification :
Wordings in exemption notification have to be construed keeping in view the object and purpose of the exemption – Oblum Electrical Industries P Ltd. v. CC 94 ELT 449 (SC) = AIR 1997 SC 3467 = 1997 AIR SCW 3557 = 1997(7) SCC 581 – followed in KR Steel Union v. CC 2001 AIR SCW 1541 = 2001(4) SCC 736 = 129 ELT 273 (SC 3 member bench), where it was held that an exemption notification cannot be read in a narrow manner so as to defeat the object of the notification – same view in Commissioner, Trade Tax v. DSM Group of Industries AIR 2005 SC 271 = 139 STC 269 = 2004 AIR SCW 6771 = (2005) 1 SCC 657.
In CCE v. Acer India Ltd. (2004) 172 ELT 289 = (2004) 8 SCC 179 = AIR 2004 SC 4805 = 137 STC 596 = 2004 AIR SCW 5496(SC 3 member bench), following principles were summarised for interpretation of taxing/fiscal statute – (a) No one can be taxed by implication (b) While construing a taxing statute, existing market practice may also be taken into consideration (c) Provision enacted for benefit of assessee should be so construed which enables the assessee to get its benefit (d) Even in taxation statute, principle of purposive construction will be adhered to when a literal meaning may lead to absurdity.
In Shriram Vinyl v. CC 2001 (129) ELT 278 (SC 3 member bench), it was held that an exemption notification is to be construed reasonably and rationally and not in a manner which deprives the benefit thereof – same view in CC v. Malwa Industries (2009) 12 SCC 735 = 9 321 = 235 ELT 214 (SC).
In CC v. Rupa and Co. Ltd. 2004 AIR SCW 4241 = 170 ELT 129 (SC), it was observed, ‘An exemption notification has to be construed strictly but that does not mean that the object and purpose of the notification is to be lost sight of and wording used therein ignored’ [In this case, exemption was available for ‘goods required for manufacture of textile garments’. It was held that this will cover capital goods required directly or indirectly for manufacture of textile garments].
In CCE v. Himalayan Coop Milk Product Union Ltd. 2000 AIR SCW 4155 = 123 STC 403 = 122 ELT 327 (SC), it was held that exemption notifications have a purpose and policy decision behind it. Such purpose should not be defeated – same view in CC v. Reliance Petroleum (2008) 7 SCC 220 = 227 ELT 3 (SC) – quoted with approval in Coastal Paper v. CCE (2015) 10 SCC 664 = 52 GST 65 = 60 147 = 322 ELT 153 (SC) * Green Brilliance Energy v. CCE (2015) 325 ELT 351 (CESTAT 3 member LB).
Section 32 confers benefit to assessee. The provision should be so interpreted and the word used therein should be assigned such meaning as would enable the assessee to secure the benefits intended to be given by the legislature to the assessee. It is also settled that where there are two possible interpretations of taxing provisions, one which is favourable to assessee should be preferred – Mysore Minerals v. CIT 1999 AIR SCW 3146 = AIR 1999 SC 3185 = 239 ITR 775 = 106 Taxman 166 (SC).
Exemption notification has to be so interpreted as to give it true import and meaning, not to make it purposeless and nugatory. – CC v. United Electrical 1999 AIR SCW 3862 = AIR 1999 SC 3796 = 108 ELT 609 (SC).
In CIT v. Gwalior Rayon Silk Mfg Co. – (1992) 62 Taxman 471 = 196 ITR 149 (SC), it was observed that tax laws have to be interpreted reasonably and in consonance with justice adopting a purposive approach. Provision for deduction, exemption or relief should be construed reasonably and in favour of assessee. Notification should not be construed in a manner which defeats the very purpose of notification – Hercules Tyre and Rubber Industries v. CCE 1983 (13) ELT 1017 (CEGAT) * Asea Brown Boveri Ltd. v. CCE 2000(121) ELT 666 (CEGAT) * Baxter (I) P Ltd. v. CC 2001(130) ELT 652 (CEGAT) * Pitamber Coated Paper v. CCE 2003 (157) ELT 297 (CESTAT).
The object and purpose of exemption notification should be kept in mind. Notification should be construed literally but should be given their fullest amplitude (to ensure that purpose and object of notification is not frustrated) – Tata Oil Mills Co. Ltd. v. CCE (1989) 4 SCC 541 = 43 ELT 183 = 82 STC 225 = AIR 1990 SC 27 (SC).
It is true that exemption notification should be strictly construed, but it is equally well settled that the exemption notifications, like any other statutory provision, has to be construed reasonably having due regard to the language employed. – HMM Ltd. v. CCE – 1996 (11) SCC 332 = 1996 2 = 87 ELT 593 (SC). In this case, an interpretation which effectuates the object of notification was accepted against interpretation which would defeat the object – quoted with approval in Coastal Paper v. CCE (2015) 10 SCC 664 = 52 GST 65 = 60147 = 322 ELT 153 (SC).
Exemption notification should not be confined to its grammatical meaning or ordinary parlance, but it should also be construed in the light of context. – – There is a need to derive the intent from a contextual scheme. -Hindustan AluminiumCorpn Ltd. v. State of UP – (1981) 48 STC 411 (SC) = AIR 1981 SC 1649 = 13 ELT 1656 = (1981) 3 SCC 578 = (1982) 1 SCR 129. – quoted with approval in CCE v. North-Eastern Tobacco (2003) 1 SCC 161 = 2002 AIR SCW 5270 = 146 ELT 490 (SC), where the word ‘new industrial unit’ was interpreted keeping in view the object of exemption notification.
Exemption notification should be interpreted in a manner to give full effect to the intention of Government. – Precast Engineering v. CCE 2000(118) ELT 288 (CEGAT 5 member bench). An interpretation which goes against stated legislative policy (as stated in explanatory notes to budget in this case) should be avoided – Minwool Rock Fibres v. CCE 2003(153) ELT 135 (CEGAT).
Exemption notification should be given their due effect, keeping in view the purpose underlying therein – CCE v. Neoli Sugar Factory – 1993 (65) ELT 145 (SC) = 1993 Supp 3 SCC 69 * CCE v. Himalaya Coop Milk Products (2000) 8 SCC 42 = 123 STC 403 = 122 ELT 327 (SC) * CCE v. S K Engg and Trading Co. – 1993 (68) ELT 240 (CEGAT).
In Belapur Sugar v. CCE 1999 AIR SCW 1316 = 108 ELT 9 = (1999) 4 SCC 103 = AIR 1999 SC 1692, it was held that unless there is anything contrary in the Act, Rules or Notification, if there be two possible interpretations, it is that interpretation which subserve the object and purpose should be accepted.
A purposive interpretation of provisions of the Act should be given while considering a claim from tax – Sanjeev Lal v. CIT (2015) 5 SCC 775.
If there are two interpretations possible, one which subserves the object of the Act and other which does not, we have to adopt the former – New Holland Tractors v. CCE (2010) 253 ELT 249 (CESTAT).
Notification should be read as a whole – Notification should be read as a whole and not in piecemeal manner. Paragraphs must not be read in isolated manner – Punjab Anand Meters Ltd. v. CCE – 1992 (57) ELT 460 (CEGAT). Exemption notification has to be read in its entirety and not in parts – Grasim Industries Ltd. v. State of Madhya Pradesh 1999 AIR SCW 4189 = AIR 2000 SC 66 = 1999(8) SCC 547.
Impossible condition is deemed to have been waived – A condition which is impossible to be fulfilled can be deemed to have been waived, unless the condition is precedent to the exercise of a jurisdiction – Mallya Fine Chem (P.) Ltd. v. CCE – 1992 (57) ELT 659 (CEGAT)
Conditions not specified in notification not to be added – Condition not specified in exemption notification cannot be added – Cochin Cements v. State of Kerala (2008) 18 VST 224 (Ker HC DB).
Exemption notification should be workable – Principles of purposive construction may be employed for making an exemption notification a workable one – UOI v. Ranbaxy Laboratories (2008) 7 SCC 502 = AIR 2008 SC 2286 – quoted with approval in N Kannadasan v. AjoyKhose (2009) 7 SCC 1.
Exemption cannot be denied on basis of supposed intention of exempting authority – If the taxpayer is within plain terms of the exemption, he cannot be denied its benefit by calling in aid any supposed intention of exempting authority. Operation of an enactment or a notification has to be judged not by the object which the legislature or the notifying authority, as the case may be, has in mind, but by the words which have been employed to effectuate the legislative intent – Innamuri Gopalan v. State of AP 1963(2) SCR 898 = 14 STC 742 (SC). This was quoted with approval in ITC Ltd. v. CCE 2004 AIR SCW 7208 = 64 RLT 341 = 171 ELT 433 (SC), but it was held that in case of ambiguity, legislative object can be seen.