NOTIFICATIONS IN TAX LAWS – HOW TO READ

Notifications issued under the powers of any enactment are integral part of law itself and are considered as delegated legislation. The provisions of enactment and rules legislated there under are implemented through Notifications only. Many a times, conditions, limitations, procedure etc are notified by way of a notification. The manner of prescription for compliance and implementation of law is by Notifications. Power and authority to issue Notifications should be embedded in the law. No Notifications can be issued by any authority if not so empowered in the legislation.

Courts have been dealing with legality, authority, scope, interpretation, application, reading of interpretation and its prospective or retrospective nature etc in judicial pronouncements. It is a legally settled position that following assertions can be made with reference to Notifications:

• Notification has to be read as a whole
• Conditions in Notification ought to be fulfilled to be entitled to benefit of Notification
• Conditions in Notification should be capable of being complied with
• Exemption Notifications should not be liberally but strictly construed
• Application of Notification does not arise by implication
• Notification should be given meaning as per legislative intendment
• No one should deviate from the language of Notification
• Notifications should be given their literal meaning
• Notification, unless otherwise stated, shall come into force on the date of issue for publication in Official Gazette
• Notification, if an exception to the general rule, should be strictly construed
• Each Notification is independent unless there is a stipulation to the contrary
• No additional words or meaning can be introduced in Notification

Judicial Pronouncements

• In AMD Industries Ltd. v Commissioner of Trade Tax, Lucknow (2023) 1 TMI 385 (Supreme Court), it was held that it is settled proposition of law is that statute, more particularly exemption provisions are to be read as they are and are to be construed literally and should be given a literal meaning. The exemption provisions are to be read as they are and to be construed literally and should be given a literal meaning.

• In Krishi Upaj Mandi Samiti v CCE & ST, Alwar (2022) 2 TMI 1113; (Supreme Court), it was held that an exemption notification should not be liberally construed and beneficiary must fall within the ambit of the exemption and fulfil the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication.

It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the Court to ignore the conditions prescribed in the relevant policy and the exemption notifications issued in that regard.

The exemption notification should be strictly construed and given a meaning according to legislative intendment. The statutory provisions providing for exemption have to be interpreted in light of the words employed in them and there cannot be any addition or subtraction from the statutory provisions.

It was further held that it will be for the assessee to show that he comes within the purview of the notification. Eligibility clause, it is well settled, in relation to exemption notification must be given effect to as per the language and not to expand its scope deviating from its language. Thus, there is a vast difference and distinction between a charging provision in a fiscal statute and an exemption notification.

• In Ruchi Soya Industries Ltd. v. Union of India (2021) 5 TMI 45; (2021) it was observed that nowadays there is a marked difference in practice of dissemination of statutory information. Hosting of notification through website of Central Board of Excise and Customs had evolved by 2015. By 2015, all informations available at click of button of computer in website of Central Board of Excise and Customs which were also physically published in Official Gazette. Section 25(4) of Customs Act, 1962 also amended videFinance Act, 2016 to provide that every notification shall come into force on date of its issue by Central Government for publication in Official Gazette. In fact, Section 4 of Information Technology Act, 2000 also makes it clear that where any law requires information or other matter to be provided in writing or in typewritten or printed form, then, such requirement shall be deemed to have been satisfied if such information are matters rendered or made available in an electronic form.

Though, section 25 (4) of the Customs Act, 1962 read similarly as it stood when the dispute arose in 2001 in Union of India v Param Industries Ltd. (2015) 6 TMI 732;, there was a marked difference in the practice of dissemination of statutory information in 2015.

The use of the information technology had changed by leaps and bound since 2001. By 2015, all informations were available at the click of the button of the computer in the website of the Central Board of Excise and Customs which were also physically published in the official Gazette.

Perhaps taking note of the above provisions of the Information Technology Act, 2000 and the advancement in the use of information technology in the dissemination of information by the Central Board of Excise and Customs, the Union Parliament has also amended section 25(4) of the Customs Act, 1962 videFinance Act, 2016 to read as under:—

“(4) Every Notification issued under sub-section (1) or under sub- section (2A), unless otherwise provided, come into force on the date of its issue by the central government for publication in the Official Gazette.”

In fact, section 4 of the Information Technology Act, 2000 also makes it clear that where any law provides that information or other matter shall be in writing or in the typewritten or printed form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied if such information are matters—

         “(a)   rendered or made available in an electronic form; and

           (b)   accessible so as to be usable for the subsequent reference.”

• In Gimpex Pvt. Ltd. v Commissioner of Central Tax, Tirupati (2019) 8 TMI 1187 (Cestat, Hyderabad), it was held that any notification which is an exception to general rule, must be strictly construed. Tribunal cannot change any notification to enlarge, constrict or otherwise modify it. Time limit mentioned in notification must be complied with.
• In Kultar Exports v Commissioner of Central Excise, Delhi-I (2020) 3 TMI 660 (Delhi), it was held that exemption notification has to be strictly construed. Conditions for taking benefit under notification also to be strictly interpreted. Wordings of notification when clear, plain language of notification shall be given effect to. Court cannot add or substitute any word while construing notification either to grant or deny exemption.

It is trite, that while interpreting exemption notifications, such notifications have to be interpreted, stricto sensu [Commissioner of Customs (Import), Mumbai v Dilip Kumar & Co. 2018 (7) TMI 1826 - Supreme Court (LB); Commissioner of Central Excise v Hari Chand Shri Gopal & Others 2010 (11) TMI 13 - Supreme Court; Commissioner of Central Excise v Mahaan Dairies 2004 (2) TMI 73 - Supreme Court].

The Supreme Court in Saraswati Sugar Mills [(2011 (8) TMI 4 - Supreme Court], has affirmed this principle, assailing in paragraph 7, as follows:—

“7. A party claiming exemption has to prove that he/it is eligible for exemption contained in the notification. An exemption notification has to be strictly construed. The conditions for taking benefit under the notification are also to be strictly interpreted. When the wordings of notification is clear, then the plain language of the notification must be given effect to. By way of an interpretation or construction, the Court cannot add or substitute any word while construing the notification either to grant or deny exemption. The Courts are also not expected to stretch the words of notification or add or subtract words in order to grant or deny the benefit of exemption notification. In Bombay Chemicals (P) Ltd. vCCE-(1995)Supp (2) SCC 646, a three Judge Bench of this Court held that an exemption notification should be construed strictly, but once an article is found to satisfy the test by which it falls in the notification, then it cannot be excluded from it by construing such notification narrowly”.

• In Union of India v Param Industries Ltd. (2015) 6 TMI 732 (SC), it was held that for ascertaining the effective date of a notification to bring it into force and make it effective, two conditions are mandatory, viz., (1) Notification should be duly published in the official gazette, (2) it should be offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi. The Court further observed as under:—

We are in agreement with the aforesaid view taken by the High Court which is in confirmity with the law laid down by the court in ‘Harla v The State of Rajasthan’ [1951 (9) TMI 37 - Supreme Court]wherein this court formulated the aforesaid principle in the following manner:—

“The principle underlying this question has been judicially considered in England. For example, on a somewhat lower plane, it was held in Johnson v Sargant that an Order of the Food Controller under the Beans, Peas and Pulse (Requisition) Order, 1917 does not become operative until it is made known to the public, and the difference between an Order of that kind and an Act of the British Parliament is stressed. The difference is obvious. Acts of the British Parliament are publicly enacted. The debates are open to the public and the Acts are passed by the accredited representatives of the people who in theory can be trusted to see that their constituents know what has been done. They also receive wide publicity in papers and, now, over the wireless. Not so Royal Proclamations and Orders of a Food Controller and so forth. There must therefore be promulgation and publication in their cases. The mode of publication can vary; what is a good method in our country may not necessarily be the best in another. But reasonable publication of some sort there must be.”

• In Anand Tissues Ltd v Commissioner of Central Excise, Meerut-I (2017) 352 ELT 225 (Cestat, Allahabad), the court while contemplating the validity of contrary conditions in different notifications held that condition of another notification cannot be read while determining eligibility to exemption under a notification. Each notification is independent unless there is a stipulation to the contrary.

• In Kony Labs IT Services Pvt. Ltd. v CC, CE & ST Hyderabad-IV (2017) 3 TMI 378 (Cestat, Hyderabad), where SSI exemption was subject to non-availment of cenvat credit and where credit availed was subsequently reversed, it was held that rejection of refund was not justified. The bench relied upon supreme court judgment in Commissioner v Precoat Meridian Ltd. 2015 (11) TMI 323 - Supreme Court, and Franco Italian Co Pvt. Ltd. v Commissioner 2000 (8) TMI 109 - CEGAT, NEW DELHIwhere issue relating to fulfillment of substantive condition in notification to claim benefit of exemption when cenvat credit taken and subsequently reversed was considered and decided in assessees favour.

• In Sify Technologies Ltd. v CCE & ST, LTU Chennai (2015) 3 TMI 964 (Cestat, Chennai), where an explanation was amended in section 67(4) of the Finance Act, 1994, and such amendment gave rise to determination of liability bringing change to concept of gross value of taxable service, it was held that it is well settled that amendment to law can be made retrospectively even by bringing an amendment to explanation appearing in statute. Nature and character of amendment decides whether such amendment is declaratory or clarification and accordingly whether retrospective or not. Declaratory law is always prospective while clarificatory law is retrospective in nature. It is well settled law that statute making amendment to effect of declaration of liability is not normally retrospective unless otherwise intention is expressed by legislature or by necessary implication [Relied upon: Union of India & Ors. Versus M/s Martin Lottery Agencies Ltd. - 2009 (5) TMI 1 - Supreme Court.

• In CARGILL INDIA PVT. LTD. Versus UNION OF INDIA - 2013 (6) TMI 40 - GUJARAT HIGH COURT, it was held that for the purpose of construing an exemption notification, what was indicated in the notification should be strictly followed. [Also see: THE COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI Versus M/s. SUJAG FINE CHEMICALS INDIA LTD. - 2012 (11) TMI 488 - BOMBAY HIGH COURT]

• In WIPRO LIMITED Versus UNION OF INDIA - 2013 (2) TMI 385 - DELHI HIGH COURT, in relation to export rebate, it was held that conditions imposed by notification must be capable of being complied with. If it is impossible of compliance, then there is no purpose behind it.

• In GARDEN SILK MILLS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, SURAT - 2008 (11) TMI 604 - CESTAT AHMEDABAD, it was held that while interpreting the notification of the statutes, where there was absence of any ambiguity, same had to be interpreted on basis of plain words used by it. Further, exemption Notification had to be interpreted strictly on its own terms.

• In KRISHNA SINGH GARBYAL Versus COMMISSIONER OF CUSTOMS, LUCKNOW - 2014 (2) TMI 1015 - CESTAT NEW DELHI, it was held that no additional words or meaning can be introduced in notification. They have to be interpreted in their grammatical and ordinary sense without addition or subtraction or substantiation. The Tribunal relied on the judgment in the case of Commissioner of Central Excise, Jaipur Versus M/s. Mewar Bartan Nirman Udyog - 2008 (9) TMI 33 - Supreme Court, wherein it was held that it is well settled position in law that exemption notification has to be interpreted in terms of its language. Where the language is plain and clear, effect must be given to it.

• In DIEBOLD SYSTEMS (P) LTD. Versus COMMISSIONER OF SERVICE TAX - 2007 (11) TMI 93 - CESTAT, CHENNAI, it was held that charging section has to be found in statute itself and where there is none in the statute, they cannot be supplemented by way of notifications.

• In GUJARAT AMBUJA EXPORTS LTD. Versus COMMISSIONER OF C. EX - 2007 (10) TMI 92 - CESTAT, AHMEDABAD, it was held that a notification has to be seen and interpreted on the basis of clear plain language used and no extra materials can be read into the same.