TaxTMI 
TaxTMI 
2023 (10) TMI 748
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....dv. Mr. Shantnu Sharma, Adv. Ms. Vibhooti Malhotra, AOR Mr. Punit Vinay, AOR JUDGMENT DIPANKAR DATTA, J. PREFACE 1. We are tasked to decide two civil appeals that centre around a common question: whether the educational institutions in question, viz. (i) the Indian Institute of Technology, Patna ("IIT Patna", hereafter) and (ii) the National Institute of Technology, Rourkela ("NIT Rourkela", hereafter), are covered by the definition of "governmental authority" in Mega Service Tax Exemption Notification No. 25/2012, G.S.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 Judicatur....
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....dment vide a Notification dated 30th January, 2014 ("Clarification Notification", hereafter). This amendment, re-defining "governmental authority", sought to broaden the scope of the exemption. The amended definition is set out hereinbelow: "(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." 8. Having outlined the relevant legal framework under consideration, we consider it 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, N....
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....establish a methodology for the recovery of service tax reimbursement. e) Apprehensive of the initiation of recovery proceedings for the service tax already paid, SPCL approached the Patna High Court seeking the following relief: "(i) the instructions of the respondent no.2 dated 30.06.2015 (as contained in Annexure-6) directing immediate recovery adjustment of service tax reimbursed by the respondent no.4 be quashed. (ii) for a declaration that [IIT Patna] is obliged to reimburse service tax paid by the [SPCL] on the service of construction of its building premises. (iii) alternatively for a direction to the [Commissioner, Customs Central Excise and Service Tax] to refund the amount of service tax paid by [SPCL] on the service 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....
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....e impugned judgment, allowed the writ petition of SPCL by relying upon the judgment and order of the Patna High Court, as aforesaid. The Deputy Commissioner of Service Tax was directed to dispose of SPCL's pending application for refund of service tax within two months. SUBMISSIONS 11. Ms. Bagchi, learned counsel representing the appellants in both the appeals, contended that IIT Patna and NIT Rourkela were not eligible for the benefits outlined in the Exemption Notification due to its exclusion from the definition of "governmental authority". In contesting the impugned judgment and order of the Patna High Court, she advanced the following submissions: a) The Amendment to the Exemption Notification carried out vide the Clarification Notification aimed to broaden its applicability beyond statutory bodies, extending its benefits to 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 government....
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.... revenue. f) IIT Patna and NIT Rourkela are institutions incorporated under central statutes, i.e., the Indian Institute of Technology Act, 1961 ("the 1961 Act", hereafter) and the National Institutes of Technology Act, 2007 ("the 2007 Act", hereafter), respectively, and they do not carry out any duties or responsibilities akin to Schedule XII of the Constitution; the two educational institutions, therefore, do not fall under the classification of "governmental authority" nor are exempted under the negative list. g) SPCL has paid service tax through self-assessment. Reliance was placed on ITC Limited vs. Commissioner of Central Excise, Kolkata (2019) 17 SCC 46 in support of the contention that the order of self-assessment being an assessment order under the Customs Act, 1962 is appealable and a refund claim is not sustainable unless the assessment itself is set aside. h) Classification of IIT 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....
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....pression "90% or more participation by way of equity or control" is related to sub-clause (ii) alone, meaning thereby that an authority established by Government should have 90% or more participation in order to be exempted from service tax. The authority set up by an Act of Parliament or State Legislature is not subject to this condition. No case for interference having been set up, the counsel prayed for dismissal of CA-I. ANALYSIS 14. Before we commence our analysis, it would be apt to juxtapose the relevant clauses from the Exemption Notification and the Clarification Notification for facility of appreciation: EXEMPTION NOTIFICATION CLARIFICATION NOTIFICATION 2(s) "governmental authority'' means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a 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, ....
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....statutory authority set up by an Act of Parliament or a State Legislature but must also have 90% or more participation of the Government by way of equity or control to carry out any like function that a municipality under Article 243W of the Constitution is entrusted to discharge. 17. We have no hesitation to disagree with the latter interpretation sought to be placed by the appellants, for the reasons that follow. 18. In Superintendent & Legal Remembrancer, State of West Bengal vs. Corporation of Calcutta (1967) 2 SCR 170, a nine-judge Bench of this Court, relying upon Craies' On Statute Law (6th edn), stated that where the language of a statute is clear, the words are in themselves precise and unambiguous, and a literal reading does not lead to absurd construction, the necessity for employing rules of interpretation disappears and reaches its vanishing point. 19. This Court in Union of India & Ors. vs. Ind-Swift Laboratories Ltd. (2011) 4 SCC 635, held that harmonious construction is required 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 fr....
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....rinciples of Statutory Interpretation, the word "or" is normally disjunctive while the word "and" is normally conjunctive. In English law, the position is clear as crystal, as explained by Lord Scrutton in Green vs. Premier Glynrhonwy Slate Co. (1928) 1 K.B. 561, page 569, that one does not read "or" as "and" in a statute unless one is obliged, because "or" does not generally mean "and" and "and" does not generally mean "or". 23. When the meaning of the provision in question is clear and unambiguous by the usage of "or" in clause 2(s), there remains no force in the submission of Ms. Bagchi that "or" should be interpreted as "and". In our opinion, the word "or" employed in clause 2(s) manifests the legislative intent of prescribing an alternative. Going by the golden rule of interpretation that words should be read in their ordinary, natural, and grammatical meaning, the word "or" in clause 2(s) clearly appears to us to 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. We are fortified in our view by the de....
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....ed several decisions as well as the punctuation comma in the relevant provision of the Supreme Court Rules, 2013. 26. What follows is that punctuation, though a minor element, may be resorted to for the purpose of construction. 27. 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. We are, therefore, of the opinion that the long line of clause 2(s) governs only sub-clause (ii) and not sub-clause (i) because of the simple reason that the introduction of semicolon after sub-clause (i), followed by the word "or", has established it as an independent category, thereby making it distinct from sub-clause (ii). If the....
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....to is no valid argument unless equity or control by the Government, to the extent of 90%, is shown to exist qua the relevant authority/board/body. Incidentally, neither is there any indication in the petition nor has Ms. Bagchi been able to disclose the identity of any such authority/board/other body which is covered by her argument. No such identified authority/board/body covered by the aforesaid construction of the definition of "governmental authority" in clause 2(s) of the Clarification Notification, which the appellants appeal to us to accept, having been brought to our notice, we are unable to find any fault in the decisions of the Patna High Court and the Orissa High Court extending the benefit of the Exemption Notification to the educational institutions, and a fortiori, to SPCL. 29. We need not draw guidance from any of the decisions cited by Ms. Bagchi, except one, on the question of construction of the relevant clause because none of those decisions had the occasion to deal with the issue emanating from the Exemption Notification and the Clarification Notification that we are tasked to consider. 30. Ms. Bagchi heavily relied on the decision of a five-judge Bench of....