‘Card Service' - Not Taxable prior to 1-5-2006 - CESTAT LB
THE CESTAT Larger Bench headed by the President, Friday delivered a landmark judgement on Card Services.
The President quoted extensively from renowned authorities on the Principles of interpretation applicable to taxing statutes.
1. In interpreting a section in a taxing statute, the question is not at what transaction the section is according to some alleged general purpose aimed, but what transaction its language according to its natural meaning fairly and squarely hits and this is the one and only proper test. - Lord Simonds in St. Aubyn (LM) vs. A.G 1952 AC 15 (HL)
2. The proper course in construing revenue Acts is to give a fair and reasonable construction to their language without leaning to one side or the other but keeping in mind that no tax can be imposed without words clearly showing an intention to lay the burden and that equitable construction of the words is not permissible. - Lord Atkinson in Ormond Investment Co. vs. Betts (1928) AC 143 (HL)
3. If a taxing provision is, so wanting in clarity that no meaning is reasonably clear, the courts will be unable to regard it as of any effect. - IRC vs. Ross and Coulter (1948) 1 ALL ER 616 (HL)
4. If the words used in a taxing statute are ambiguous and reasonably open to be two interpretations, benefit of interpretation is given to the subject. - CIT vs. Karamchand Premchand Limited - 2002-TIOL-1228-SC-IT-LB.
5. Before taxing any person it must be shown that he falls within the ambit of the charging section, by clear words used in the section.- Commissioner of Wealth Tax, Gujarat vs. Ellis Bridge Gymkhana - ;
6. In interpreting a taxing statute, considerations of hardship, injustice or anomalies do not play any useful role, unless there be some real ambiguity.- State Bank of Travancore vs. CIT - 2002-TIOL-1099-SC-IT-LB.
7. The golden rule in statutory interpretation is that there are no golden rules.
8. There is an equally established principle of construction, that if the language of the statute is capable of bearing more than one construction, in selecting the true meaning regard must be had to the consequences resulting from adopting the alternative construction; and a construction that results in hardship, serious inconvenience, injustice, absurdity or anomaly or which leads to inconsistency, uncertainty and friction in the system which the statute purports to regulate has to be rejected and preference given to that construction which avoids such results; however this rule of construction has no application where the words are susceptible to only one meaning and no alternative construction is reasonably open.
9. if the grammatical construction leads to some absurdity or some repugnance or inconsistency, it may be departed from so as to avoid such consequences.
Can the Larger Bench of the Tribunal decide a case when the same issue is pending before the Supreme Court?. The Revenue sought adjournment of the hearing on the ground that the same issue is pending before the Supreme Court against the decision of the Tribunal in ABN Amro Bank vs. Union of India - , which is the case differed with by the referral bench.
The larger Bench observed that Mere filing or pendency of an appeal against the decision in ABN Amro Bank Limited , neither eclipses this decision nor operates as a fetter on another Division Bench, which would be free to either follow the ABN Amro Bank Limited decision or could doubt its correctness and seek interpretation, by a Larger Bench. There is also no purpose served in adjourning the reference to await the decision of the Hon'ble Supreme Court. In case the ABN Amro Bank Limited decision is confirmed by the Supreme Court, that would be the governing law and the reference would not survive. The same would be the position if ABN Amro Bank Limited decision is reversed in appeal. Till a final pronouncement by the Supreme Court emerges, there exist diametrically contrary views in the Tribunal; one the final order in ABN Amro Bank Limited and the other which is expressed in the order of reference and in respect of the same subject matter, namely identification of the scope of "credit card services" in BOFS, during the period prior to 01.05.2006.
Resolution of such a conflict at the level of the Tribunal is therefore a salutary course of action, in interests of interpretative stability which would operate until an authoritative decision is received from the judgment of Supreme Court.
Referring to precedential judgements, the larger Bench held that it can hear and decide an issue pending in the Supreme Court.
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