Sunday, November 11, 2018

STATE LEVEL COMMITTEE V. MORGARDSHAMMER INDIA LTD (1996) 1 SCC 108


Sasi K.G.

01. INTRODUCTION

The case law in State Level Committee v. Morgardshammer India Ltd. (1996) 1 SCC 108 is an example in the interpretation of the internal aid of Explanation used as a definition with an ‘or’ clause. The judgment offers not much arguments of the appellants, but the court seems to counter the manifold arguments offered by the respondent based on different theories of interpretation of Statutes. Thus this case has ample scope in understanding the role of an Explanation in the form of a definition as applicable in tax laws, as the Apex Court has upheld that the interpretation of tax legislations have a different standing than other types of Statutes.

02. PRELIMINARIES

01. Parties to the appeal

This case was decided by a two member Division Bench comprising of Justice B.P. Jeevan Reddy and Justice S.B. Majmudar of the Supreme Court of India. The case was moved as a special leave application and was numbered as Civil Appeal No. 9968 of 1995 against an order of the Allahabad High Court decided against the appellant. The Appellant in this case was State Level Committee of Uttar Pradesh and the respondent was M/s Morgardshammer India Ltd. The appellant was represented by the Government pleader whereas the respondent was represented initially by Advocate Sunil Kumar Jain and at argument stage by Adv. S.K. Dhavon. The judgment was pronounced by Justice B.P. Jeevan Reddy on behalf of both Judges.

02. Citations

This judgment was cited in various journals a few of which are given below.
1996 AIR 524
1996 SCC (1) 108
JT 1995 (8) 53
1995 SCALE (6)306

03. The law involved

The case was interpreting Explanation (i) of Sub Section (2) of Section 4A of the UP Sales Tax Act, 1948 / UP Trade Tax Act, 1948. The provision runs as follows.
Explanation.- For the purposes of this section,-
(i) `new unit’ means a factory or workshop whether set up by a dealer already having an industrial unit manufacturing the same goods at any other place in the State or an industrial unit, adjacent to, the site of an existing factory or workshop; but does not include:
(a) any factory or workshop using machinery, accessories or components already used or acquired for use in any other factory or workshop in India,
(b) any factory or workshop established on, or adjacent to the site of an existing factory or workshop manufacturing the same goods, or
(c) any addition to or extension of an existing factory or workshop
(d) any factory or workshop established on or adjacent to the site of an existing factory or workshop manufacturing same goods as are being manufactured in the existing factory or workshop cannot be called “new unit” for the purposes of the Explanation.
(e) Any addition to or extension of an existing factory or workshop cannot and does not qualify as a new unit.”

04. Cases Relied on

The following cases were relied on.
Mangalore Chemicals and Fertilizers Limited v. Deputy Commissioner of Commercial Taxes (1992 Supp. (i) S.C.C.21
CCE v. Parle Exports (P) Ltd. (1989) 1SCC 345: 1989 SCC (Tax) 84
Union of India v. Wood Papers Ltd.[(1990) 4 SCC 256 : 1990 SCC (Tax) 422
Novopan India Ltd., Hyderabad v. Collector of Central Exercise and Customs, Hyderabad (1994 Suppl. (3) S.C.C.606
Hansraj Gordhandas v. H.H. Dave [(1969) 2 SCR 253: AIR 1970 SC 755
Orient Weaving Mills (P) Ltd. v. Union of India, [1962 Supp (3) SCR 481 : AIR 1963 SC 98
Judicial Committee in Coroline M. Armytage v. Frederic Wilkinson, (1878) 3 AC at p. 370
Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh, [(1982) 1 SCR 139]: AIR 1981 SC 1649
Caroline M. Armytage v. Frederic Wilkinson (1878) 3 AC 355

05. Cases Referred to

The following cases were also referred to.
Amit Plastic Industry, Ghaziabad v. Divisional Level Committee, Meerut (1994 UPTC 121
Kailash Nath v. State of U.P. AIR 1957 SC 790
Collector of Central Excise. Bombay v. M/s.Parle Exports (P) Ltd. (1989 (1) S.C.R. 345

03. JURISDICTION OF THE COURT

This Civil Appeal before the Honourable Supreme Court of India was not filed with the certificate of the High Court under Article 134A, but as a Special Leave Petition under Article 136 which the Honourable Supreme Court granted in due course.
Article 136 is reproduced below.
136. (1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India.
(2) Nothing in clause (1) shall apply to any judgment, determination, sentence or order passed or made by any court or tribunal constituted by or under any law relating to the Armed Forces.

04. FACTS OF THE CASE

The facts of the case are summarized as follows.
The Respondent Morgardshammar India Ltd had set up a production unit with machinery worth about Rs.25 lakhs, out of which machinery worth Rs.4,59,575/- was acquired from M/s. Modi Steels under Bill No.244 dated April 27, 1984. Admittedly, the said machinery was acquired by M/s Modi Steels for setting up an unit of its own but it abandoned that idea later and sold the machinery to the respondent.
The Respondent Morgardshammar India Ltd then claimed tax relaxation for first five years as envisaged in Section 4A of the UP Sales Tax Act, 1948 available to new units as defined under Explanation (i) to sub section (2) of section 4A of the Act. But the claim of Morgardshammar India Ltd was declined by the Divisional Level Committee as the Committee failed to recognize it as a new unit as a part of the machinery acquired by it for setting up its factory was purchased from M/s. Modi Steels who has purchased the said machinery earlier for their own use. A review application filed by the respondent was rejected by the State Level Committee also on the same ground. A writ petition was filed by the respondent before Allahabad High Court which allowed the writ by holding that in case M/s. Modi Steels has not put the said machinery to any use as contended by the respondent, the respondent-unit cannot be denied the eligibility certificate under Section 4-A. the Bench purported to follow an earlier decision of the High Court in Amit Plastic Industry, Ghaziabad v. Divisional Level Committee, Meerut 1994 UPTC 121. The High Court has set aside the orders impugned in the writ petition and remitted the matter to the State Level Committee with a direction to re-examine the material on record and to record a categorical finding as to whether or not the machinery purchased by the petitioner form M/s.Modi Steels was actually used in any other factory or workshop in India. If it is found that the said machinery was not actually used in any factory or workshop before its installation in the respondent-unit, the High Court opined, that the respondent-unit would be entitled to be treated as a new unit for the purpose of Section 4-A.
Being aggrieved by this judgment the appellant has filed this civil appeal to reverse the judgment of the lower court and to uphold the order of the appellant.

05 .ISSUES INVOLVED

The only issue arising in this appeal, preferred against the judgment of the Allahabad High Court, is whether the respondent-unit qualifies as a “new unit” within the meaning of Explanation (i) to sub-section (2) of Section 4-A of the U.P. Sales Tax Act.

06. QUESTIONS OF LAW

The basic question of law involved was the interpretation of the phrase “already used or acquired for use” included in clause (i) (a) of Explanation to Section 4A(2) of the U.P. Sales Tax Act, 1948.

07. ARGUMENTS OF THE APPELLANT

The Appellant did not bring in many arguments, but contented on a plain and literal meaning of the phrase as follows.
Section 4-A is an elaborate one. A new unit staring production on or after first day of October, 1982 is entitled to exemption from sales tax provided the unit satisfies the requirements and conditions prescribed by Section 4A. Inter alia, it must furnish to the assessing authority an eligibility certificate granted by the prescribed officer/authority in accordance with the procedure specified. Explanation (i) to sub-section (2) of Section 4A defines the expression “new unit.” One of the grounds upon which a new factory or workshop is disqualified from being called a “new unit” is if such factory or workshop uses “machinery, accessories or components already used or acquired for use in any other factory or workshop in India.” The clause uses both the expressions “already used’ and “acquired for use” in any other factory or workshop in India. Surely both the expressions cannot mean one and the same thing. It is a disqualification if the new factory or workshop uses machinery/accessories/components already used in any other factory or workshop in India. It is a disqualification if the new factory or workshop uses machinery /accessories/components which were acquired for use in any other factory or workshop in India. When the clause uses both the said expressions simultaneously, it would not be reasonable or proper to construe the word “acquired for use” as meaning the same thing as “already used”. Such a construction would make the words “acquired for use” superfluous and a surplusage. The words “acquired for use” must be understood in their plain and ordinary meaning. It is enough that the machinery/accessories/components which are used in the factory or workshop (claiming the benefit of Section 4-A) are acquired for use in any other factory or a workshop in India. It is not necessary to go further and enquire whether that machinery/accessories/components were actually used in any other factory or workshop in India. In this case, admittedly, a part of the machinery installed in the respondent’s unit was acquired by M/s. Modi Steels for use in the factory or workshop proposed to be set up by them. According to the certificate issued by M/s.Modi Steels, their project did not materialize because it was found to be not viable. For that reason, the machinery purchased by them for the said purpose was lying in packed and un-used condition and was sold to the respondent. Thus, on their own showing, the respondents case is directly hit by clause (a) in the Explanation (i) and is not entitled to the exemption provided by Section 4-A.

08. ARGUMENTS OF THE RESPONDENT

The Respondent’s counsel Sri. S.K. Dhaon put forth many arguments of which the most important are the following.
An interpretation would not be a reasonable one unless it is not consistent with the object underlaying Section 4-A. Section 4-A is devised to encourage new industries. Disqualifying a unit from the benefit of the section on the mere ground that part of the machinery installed in the unit was acquired by another person for setting up a unit, which in fact he never did, would not be consistent with the object underlying Section 4A.
The words “acquired for use in any other factory or workshop in India” must be read and understood as “acquired for use in any other existing factory or workshop in India”. It should be so read to give effect to the idea underlying the said clause.
The respondent unit has substantially complied with the requirement of the said clause in the definition inasmuch as the value of the machinery acquired from M/s.Modi Steels is only about Rs.4.5 lakhs as against the value of the entire machinery at Rs.25 lakhs.
Section 4-A must be literally construed to further the object underlying it. In case of any ambiguity, the construction favouring the assessee should be adopted.
The decision in Collector of Central Excise. Bombay v. M/s.Parle Exports (P) Ltd. (1989 (1) S.C.R. 345 rendered by Supreme Court observes, “17. How then should the courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the Provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. It is, however, necessary to bear in mind certain principles. The notification in this case was issued under R.8 of the Central Excise Rules and should be read along with the Act.”

09. DECREE

The Supreme Court held that the phrase “already used or acquired for use” meant two different things and it is not necessary that the purchased machinery should be used and hence the respondent cannot claim the tax benefits available to ‘new units’ under Section 4A of the U.P. Sales Tax Act, 1948.
Supreme Court allowed the appeal and the judgment of the High Court was set aside. The writ petition filed by the respondent in the High Court was dismissed. No costs were ordered.

10. RATIO DECIDENDI

The Apex Court bought in whole the arguments of the appellant and rejected one by one those brought in by the respondents.
The reasons of the Supreme Court for the judgment can be summarized as follows.
1. The clause uses both the expressions “already used’ and “acquired for use” in any other factory or workshop in India. Surely both the expressions cannot mean one and the same thing. It is a disqualification if the new factory or workshop uses machinery/accessories/components already used in any other factory or workshop in India. It would not be reasonable or proper to construe the word “acquired for use” as meaning the same thing as “already used”. Such a construction would make the words “acquired for use” superfluous and a surplusage. The words “acquired for use” must be understood in their plain and ordinary meaning. It is enough that the machinery/accessories/components which are used in the factory or workshop (claiming the benefit of Section 4A) are acquired for use in any other factory or a workshop in India.
2. The Legislature wanted to avoid an enquiry into the factual issue of actual user where the machinery (which expressions means machinery, accessories or components) is acquired for use in any other factory or workshop in India. Once it is shown that such machinery was acquired for use in any other factory or workshop in India, the Legislature presumes use as a case of conclusive presumption. The idea was to shut out enquires of the type now ordered by the High Court. One person may say that though the machinery was acquired by him, he never installed it or used it; another may say that he only installed the machinery but did not use or operate it; a third person may say that the machinery was used only for trial run but not on a regular basis, and so on and so forth. The authorities in charge of issuing eligibility certificates would thus be caught in endless factual disputes. The idea was to lessen the room for factual controversies. It must be remembered that no unit has a right to claim exemption from tax as a master of right. His right is only insofar as it is provided by Section 4-A. While providing for exemption, the Legislature has hedged it with certain conditions. It is not open to the Court to ignore those conditions and extend the exemption.
3. Section 4-A provides for exemption from tax. It is repeatedly held by the Apex Court that a provision providing for an exemption or an exception as the case may be, has to be construed strictly. In Mangalore Chemicals and Fertilizers Limited v. Deputy Commissioner of Commercial Taxes, (1992 Supp. (i) S.C.C.21 referring to CCE v. Parle Exports (P) Ltd., [(1989) 1SCC 345: 1989 SCC (Tax) 84 Supreme Court had held exemptions from taxation have a tendency to increase the burden on the other unexempted class of tax payers and should be construed against the subject in case of ambiguity. It is an equally well known principle that a person who claims an exemption has to establish his case. In Novopan India Ltd., Hyderabad v. Collector of Central Exercise and Customs, Hyderabad (1994 Suppl. (3) S.C.C.606 Supreme Court held that the Mangalore Chemical case and Union of India v. Wood Paper case represent the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee assuming that the said principle is good and sound – does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State.
4. Referring to the respondent’s argument that inasmuch as the value of the machinery acquired from M/s.Modi Steels is only about Rs.4.5 lakhs as against the value of the entire machinery at Rs.25 lakhs tax benefit should be given, Supreme court answered that there is no room for such a contention in view of the specific language of clause (a). The clause uses all the three words – machinery, accessories or components. The use of the word “or” indicates that use of either of them, which are already used or acquired for use in any other factory or workshop in India, would disqualify the factory or workshop from being called a “new unit” within the meaning of Section 4-A. The clause does not say or indicate in any manner that only where the entire machinery installed in the unit (claiming to the new unit) has already been used or was acquired for use in any other factory or workshop in India, that the disqualification contained therein gets attracted. In the face of the clear language of the clause, it is not possible to entertain the submission of the respondent.
5. The respondent claimed that in Collector of Central Excise, Bombay v. M/s.Parle Exports (P) Ltd. (1989 (1) S.C.R. 345 Supreme Court has held that “the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the Provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them.”  Supreme Court answered the above claim as hereunder.
“See in this connection the observations of this Court in Orient Weaving Mills (P) Ltd. v. Union of India 1962 Supp (3) SCR 481 : (AIR 1963 SC 98). See also Kailash Nath v. State of U.P. (AIR 1957 SC 790). The principle is well settled that when two views of a notification are possible, it should be construed in favour of the subject as notification is part of a fiscal enactment. But in this connection, it is well to remember the observations of the Judicial Committee in Caroline M. Armytage v. Frederic Wilkinson (1878) 3 AC 355 at p. 370 that it is only, however, in the event of there being a real difficultly in ascertaining the meaning of a particular enactment that the question of strictness or of liberality of construction arises. The Judicial Committee reiterated in the said decision at pate 369 of the report that in a taxing Act Provisions establishing an exception to the general rule of taxation are to be construed strictly against those who invoke its benefit.”
Thus the Apex Court arrived at the above mentioned decree.

11. INTERPRETATION OF LAW RESORTED BY THE COURT

Some selected tools and principles of interpretation used in this judgment are discussed below under various heads

01. Intrinsic Aids / Internal Aids Used

Some examples of intrinsic aids are given below.
1. Context.
2. Title.
3. Preamble.
4. The interpretation clause.
5. Headings.
6. Marginal notes.
7. Punctuations.
8. Illustrations.
9. Schedules.
10. Proviso.
11. Exceptions and saving clause.
12. Explanations.
In this judgment the following intrinsic aids also are discussed among others.

Title

The long title of the Act involved was Uttar Pradesh Sales Tax Act, 1948. Its Short Title was U.P. Sales Tax Act, 1948. The Act is also called as Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No. XV of 1948).
The title proves that the Act is a law of taxation.

Explanations

An Explanation is added to a section to elaborate upon and explain the meaning of the words appearing in the section. An Explanation to a statutory provision has to be read with the main provision to which it is added as an Explanation. An Explanation appended to a section or a sub-section becomes an integral part of it and has no independent existence apart from it.
The purpose of an Explanation is not to limit the scope of the main section. An Explanation is quite different in nature from a proviso; the latter excludes, excepts and restricts while the former explains, clarifies or subtracts or includes something by introducing a legal fiction.
The question in issue was the interpretation of clause (i) of the Explanation to Section 4A (2) of the Act.

Interpretation Clause

The Explanation (i) of the Explanation to Section 4A (2) of the Act is in the nature of a definition which is considered as an interpretation clause.

Exception Clause

The Supreme Court held that the definition of ‘new unit” in Explanation (i) comprises of two clauses (mentioned as (a) and (b) of Explanation (i)) to which three exceptions (mentioned as (c), (d) and (e)) are appended.

02. Extrinsic Aids / External Aids Used

Some examples of extrinsic aids are given below.
1. Parliamentary History.
2. Foreign Decisions.
3. Dictionaries.
4. Text books.
5. Statement of Objects and Reasons.
6. Social, Economic, Political and Scientific Inventions.
7. Reference to other statute - Codification and Consolidation Statutes.
8. Contemporaneous exposition, usage and practice.
9. Ratio decidendi and obiter dicta.
10. Terms of Trade and Commerce.
In this judgment the Supreme Court has relied on the following extrinsic aids also among others.

Foreign Decisions

The Supreme Court referred in this case to the Caroline M. Armytage v. Frederic Wilkinson, [(1878) 3 AC 355, a decision of the Privy Council to uphold the principle that in a taxing Act Provisions establishing an exception to the general rule of taxation are to be construed strictly against those who invoke its benefit. However a Privy Council decision cannot strictly be called a Foreign Judgment as it was the Apex Court of all Common Wealth Countries including India.

Reference to Other Statutes

In Central Excise. Bombay v. M/s.Parle Exports (P) Ltd. 1989 (1) S.C.R. 345 the validity of a notification issued under R.8 of the Central Excise Rules was discussed it was held that the Rules should be read along with the Act. This principle was extended to the present case also.

Ratio Decidendi and Obiter Dicta

The Supreme Court basically relied on the ratio decidendi of other cases, but not on the obiter dicta.

03. Rules of Interpretation Applied

01. Primary Rules of Interpretation

,1. Literal or Grammatical Interpretation: It depends upon the letter of enacted law. It gives plain sense and are used frequently in the courts.
2. Logical Interpretation: It is also called functional interpretation. It depends upon the spirit of enacted law. It looks beyond the 'litera legis'
3. Golden Rule of Interpretation: It is applied when meaning is plain. Some logical defect in the literal legis has been considered. The text leads to a result so unreasonable that it is self- evident that the legislature could not have meant what it has said.
4. Mischief rule of Interpretation I Rule of Hydens ' case / Smith v. Hughes Case[i]: The main aim of the rule is to determine the "mischief and defect" that the statute in question has set out to remedy, and what ruling would effectively implement this remedy. In applying the mischief rule, the court is essentially asking what part of the law did the law not cover, but was meant to be rectified by Parliament in passing the bill.
5. Statute must be read as whole: Statute must be read as whole and not as parts.
6. Harmonious Construction: When there is a conflict between two or more statues or two or more parts of a statute then the rule of harmonious construction needs to be adopted. The rule follows a very simple premise that every statute has a purpose and intent as per law and should be read as a whole. The interpretation consistent of all the provisions of the statute should be adopted. In the case in which it shall be impossible to harmonize both the provisions, the court’s decision regarding the provision shall prevail.
7. Strict and Liberal Constructions: Strict construction is a very hard-bound system which does not involve any scope of flexibility or plasticity and just averts in one single direction without paving out any ways of alternations or inter-lineation in the meaning of a provision. A liberal construction is one which expands the meaning of the statute to meet the cases which are clearly within the spirit or reason of the law or within the evil which it was designed to remedy, provided that such an interpretation is not inconsistent with the language used in the legislation.
8. Beneficial Construction: Beneficial Construction rule is a part of Harmonious construction. It is an advantageous rule of interpretation for the members of the society which preserves them from any kind of hardships being created through the law on the subject- matter they are fighting for.

02. Subsidiary Rules of Interpretation

1.      Noscitur a sociis : A doubtful word may be ascertained by reference to the meaning of words associated with it.
2. Lta scriptum est: Letter of enacted law
3. Ejusdem generis: It means of the same kind or nature. The rule that where particular words are followed by general words. The general words are limited to the same kind as the particular words.
4. Reddendo singula singulis: It is a Latin term that means by referring each to each; referring each phrase or expression to its corresponding object. It is a rule of construction used typically in distributing property. For example, when a will says "I devise and bequeath all my real and personal property to A", the principle of reddendo singula singulis would apply as if it read "I devise all my real property, and bequeath all my personal property, to B", since the word devise is appropriate only to real property and the term bequeath is appropriate only to personal property.
5. Rule of Bonam Partem: The maxim “Construction in Bonam Partem” connotes that words must be taken in a lawful and rightful sense. The word "lawful" connotes anything sanctioned or recognized by law. When, therefore in execution of a decree or order of the court some properties are attached, it has to be seen that the seizure is lawful and that the property belongs to the debtor. Further, the act must be rightfully done, done in a lawful manner. A statutory authority to abate nuisances would not justify an order to abate one when it could not be obeyed without committing a trespass.
6. Non obstante clause: Non-obstante clause in legal parlour is the notwithstanding clause in a Statute makes the provision independent of other provisions contained in the law, even if the other provisions provide to the contrary.
7. Same word & same meaning: Where a Legislature uses same expression in the same statute at two places or more, then the same interpretation should be given to that expression unless the context otherwise requires. But the application of the rule of "same word, same meaning" may be excluded by the context.
8. posteriores leges priores contrarias abrogant
This Latin maxim means that the later law abrogates earlier laws not consistent with it. This principle has been applied by the Supreme Court in several cases.
9. Repugnancy Rule: Repugnancy is an inconsistency or contradiction between two or more parts of a legal instrument or instruments. It is Article 254 of the Constitution of India that firmly entrenches the Doctrine of Repugnancy in India.
10. Mandatory & Directory Provisions: A mandatory statute may is one whose provisions or requirement, if not complied with, will render the proceedings to which it relates illegal and void, while a directory statute is one where non - compliance will not invalidate the proceedings to which it relates.

03. Interpretations used in this judgment

In this judgment the Supreme Court has applied the following primary rules of interpretation also among others.

LITERAL INTERPRETATION

The Supreme Court has held in this case that “When the clause uses both the said expressions simultaneously, it would not be reasonable or proper to construe the word “acquired for use” as meaning the same thing as “already used”. Such a construction would make the words “acquired for use” superfluous and a surplusage. No such interpretation ought to be adopted by a Court. The words “acquired for use” must be understood in their plain and ordinary meaning. It is enough that the machinery/accessories/components which are used in the factory or workshop (claiming the benefit of Section 4-A) are acquired for use in any other factory or a workshop in India. It is not necessary to go further and enquire whether that machinery/accessories/components were actually used in any other factory or workshop in India.” The maxim ‘Lta scriptum est’ had an application in this case.

STRICT INTERPRETATION

The Supreme Court has held in this case that “It is repeatedly held by this Court that a provision providing for an exemption or an exception as the case may be, has to be construed strictly.” It is also declared that “in support of strict construction of a provision concerning exemptions there is support of judicial opinion to the view that exemptions from taxation have a tendency to increase the burden on the other unexempted class of tax payers and should be construed against the subject in case of ambiguity. It is an equally well known principle that a person who claims an exemption has to establish his case.”
Again the Supreme Court held that “A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State.”
The Supreme Court also observed, “The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the legislature manifest on the statutory language. Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the words are plain and clear and directly convey the meaning, there is no need for any interpretation.” However it has on the contrary invented the legislative intent as, “Indeed, there appears to be good reason behind the use of both the said expression in the clauses. The Legislature, it is obvious, wanted to avoid an enquiry into the factual issue of actual user where the machinery (which expressions means machinery, accessories or components) is acquired for use in any other factory or workshop in India. Once it is shown that such machinery was acquired for use in any other factory or workshop in India, the Legislature presumes use – a case of conclusive presumption. The idea was to shut out enquires of the type now ordered by the High Court.”

LOGICAL INTERPRETATION

The last said observation is also an example of logical interpretation as the intention of legislature is logically deducted by the Court and as there is no such wordings in the Act, its objects or reasons or elsewhere, and yet the Court has held that, “The Legislature, it is obvious, wanted to avoid an enquiry into the factual issue of actual user where the machinery (which expressions means machinery, accessories or components) is acquired for use in any other factory or workshop in India. Once it is shown that such machinery was acquired for use in any other factory or workshop in India, the Legislature presumes use – a case of conclusive presumption.”

OTHER FEATURES OF INTERPRETATION

The Supreme Court also observed the following.
1. “All the words used in the clause have to be give their due meaning. None of them can be treated as a surplusage. It is not also possible to ignore the words expressly employed in the said clause or to explain them away on notions of one’s own reasonableness.”
2. “Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the words are plain and clear and directly convey the meaning, there is no need for any interpretation.”
3. “The very definition contained in Explanation (i) uses both the expression “factory or workshop” and “existing factory or workshop” at more than one place which fact would be evident from a bare perusal of the said definition. Wherever the Legislature wanted to refer to an existing factory or workshop, it is not possible to read the words “acquired for use in any other factory or workshop in India” to mean “acquired for use in any other existing factory or workshop in India”. We see no reason to add any words to those employed in the clause. It cannot also be said that such addition of word(s) is necessary to avoid an absurdity.”
4. “The clause uses all the three words – machinery, accessories or components. The use of the word “or” indicates that use of either of them, which are already used or acquired for use in any other factory or workshop in India, would disqualify the factory or workshop from being called a “new unit” within the meaning of Section 4-A. The clause does not say or indicate in any manner that only where the entire machinery installed in the unit (claiming to the new unit) has already been used or was acquired for use in any other factory or workshop in India that the disqualification contained therein gets attracted.”

12. CONCLUSION

The interpretation used in this judgment is primarily a literal but strict interpretation with a logical construction to determine the true intent of the legislature. This case is basically a simple case wherein the judges have not gone deep into the complexities of interpretation by resorting to the ground of conclusive presumption available in exemption to tax legislations in favour of the State. However, unlike judgments based on adversarial arguments, the Court seems to counter the arguments of the respondent with a presupposition that there is not much legal matter to dispute in the subject-matter, in spite of the lower court having adjudged in favour of the respondent.
Though this is a simple case of literal interpretation, the core of the ratio decidendi of this judgment however, is the logical interpretation that the legislative intent of the construction of the phrase in the Explanation is to prevent the authorities in charge of issuing eligibility certificates from being caught in endless factual disputes and to lessen the room for factual controversies. By inventing such an interpretation, the Supreme Court successfully curtailed the very scope of the litigation and adjudged in favour of the State Committee, the appellant.


[i] (1871) LR 6 QB 597

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