It has been matter of litigation for long as to whether for an exemption, the interpretation of a term has to be done in restrictive and conservative manner or it will include all goods covered under it as well.
This has been an issue before various Courts of law and intersting logics have evolved in the following precedents :
It is well settled in law that a term and /or word has to be understood in its context and not in isolation so that the meaning of such word or expression becomes redundant .
In the case of GUJARAT STATE FERTILIZERS PVT. LTD. Versus UNION OF INDIA, 2009 (241) E.L.T. 190 (Del.),upheld by Honourable Apex Court in Gujarat State Fertilizers Company v. Collector — 1997 (91)L.T. 3 (S.C.) , Honourable Delhi High Court held that
“23. Having regard to the terms of the notification and on an application of the principles enunciated by the Supreme Court in Hansraj Gordhandas case (supra), The Steel Authority of India’s case (supra), the Hindustan Platinum case (supra) and the Gujarat State Fertilizers case (supra), it is held that the sulphuric acid referred to in the two notifications is not confined only to sulphuric acid per se but includes the entire range of sulphuric acids that fall within tariff item, because of the specific reference to the tariff item itself, on account of the words “falling under this item”. If the revenue’s contention is accepted, two anomalies would emerge i.e. the Court would be left without guidance as to which class of sulphuric acid really qualifies for exemption thus enabling the authorities to pick and choose as between one and the other kind of sulphuric acid; and two, the specific reference to tariff item 14G, which includes all kinds of description of acids falling within the broad generic term “sulphuric acid”, would be rendered meaningless. The Court’s finding is also supported by the fact that not all products described in TI 14G qualify for exemption and Nitric, Hydrochloric Acids do not enjoy the same benefit.
3.That under Paras 30 and 32, the following was observed ,
“30. The crucial terms here are sulphuric acid “intended for use in the manufacture of fertilizers”. There are no restrictive terms cutting down the width of the phrase “intended for use”. Applying the canon of construction mentioned earlier, i.e. that such exemption notifications are to be considered in their own terms, the Court holds that the express terms here do not make a distinction between “primary” and “secondary” product or “main product” and “by-product”. As far back as in Hansraj’s case, it was ruled that:
“It is well-established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax-payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority.” (emphasis supplied)
“32…..held that Oleum is classifiable under TI 14G; the petitioner’s use of that product leading to manufacture of ammonium sulphate entitles it to the benefit of the two exemption notifications.”
4.In COMMISSIONER OF SALES TAX COMMISSIONER OF SALES TAX Versus AGARWAL & CO.- 1983 (12) E.L.T. 116 (Bom.), the Honourable Bombay High Court held that
The Supreme Court decisions show that while interpreting a general term used for describing any commodity in any fiscal legislation, the general term so used covers that commodity or item or article in all its forms and varieties. Thus in the case of Tungabhadra Industries Ltd. v. Commercial Tax Officer, Kurnool reported in 11 S.T.C. 827 the Supreme Court construed ‘groundnut oil’ to include hydrogenated groundnut oil (commonly called Vanaspati), and this was done inspite of the fact that chemical properties of Vanaspati are somewhat different from those of groundnut oil. Similarly in the case of Commissioner of Sales Tax, Madhya Pradesh, Indore v. Jaswant Singh Charan Singh reported in 19 S.T.C. 469 coal was held to include charcoal. In the case of Alladi Venkatesarlu v. Government of Andhra Pradesh reported in 41 S.T.C. 394 the Supreme Court held that parched rice (Atukulu) as well as puffed rice (muramaralu) were included in the entry “rice”. It is not necessary to go into a number of similar cases. In the case of Porritts & Spencer (Asia) Ltd. v. State of Haryana reported in 42 S.T.C. 433 the Supreme Court was required to consider the interpretation of the term ‘textiles’. The Supreme Court observed that in interpreting any word in an entry, one should bear in mind that it does not embody a static concept. It is the skin of a living thought, and may change its hue with new developments in technology and emergence of new items and processes. A term in a fiscal legislation should be interpreted having regard to newly developing materials, methods, techniques and processes. It held that the concept of “textiles” was not a static concept. It had, having regard to newly developing materials, methods, techniques and processes a continually expanding content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language, be regarded as “textiles”. In the same manner, milk in powder form can be looked upon as a result of this continually evolving technology. There is no reason why it should be excluded from the generic term ‘milk’.
5.In Hindustan Platinum Pvt. Ltd. v. Collector — 1995 (77) E.L.T. 276 (S.C.), the Honourable Apex Court had to deal as to what shall be the true meaning of term “Silver “.
The Apex court while analysing the term “Silver” had observed as below;
“…….The short question which the authorities below were required to consider was whether the term ‘silver’ used in the said entry should be confined to ingots which would result in the appellants not getting the benefit of the exemption notification in respect of the various items of silver manufactured by them. The Tribunal took the view that the entry contemplates only the metal and not any other article made out of silver. It rejected the appellant’s contention that the term ‘silver’ includes silver in all forms and not merely silver as a metal pure and simple.”
xxxxxxx xxxxxxx xxxxxxx xxxxxxx”
“………We do not see any reason why the expression ‘silver’ in Tariff Item 24 should be given a narrow meaning as has been done by the Tribunal. We are, therefore, inclined to think that the expression ‘silver’ in Tariff Item 24 should be given a wider meaning so as to include all articles of silver in the sense in which those who are dealing with commodities in question generally understand them. In other words, if the articles in question are generally understood in the commercial world by those who deal in them as silver they would attract duty under Tariff Item 24 but if they are not so known by those dealing with the articles in question they would fall outside the broad spectrum of the expression ‘silver’ in Tariff Item 24 and would then perhaps fall within the residuary clause unless attracted by any other specific tariff item.”
On perusal of the above ratios, the following has emerged :
‘groundnut oil’ to include hydrogenated groundnut oil (commonly called Vanaspati), and this was done inspite of the fact that chemical properties of Vanaspati are somewhat different from those of groundnut .
parched rice (Atukulu) as well as puffed rice (muramaralu) were included in the entry “rice.