Interpretation of Statute - Proviso ought to be given normal and natural meaning keeping in mind context, object and reasons for its enactment and incorporation: SC
WHILE interpreting the Laws, do you go by the meaning of the words or the context, object and reasons for its enactment? Our Babus who are adept in poor drafting of laws, once again got relief from the highest court.
In this very interesting case, the appellants are the mega Oil Companies of India like Indo Burma Petroleum Corporation Ltd, Hindustan Petroleum Corporation Limited, Indian Oil Corporation Limited and Bharat Petroleum Corporation Limited.
On 01.06.2006 rates of Petrol and High Speed Diesel were increased by Rs.4/- and Rs.2/- respectively from the midnight of 5/6th June, 2006. This increase in rates would have resulted in ad valorem increase in Value Added Tax (VAT) at the rate of 0.66 paise per litre of Petrol and 0.22 paise per litre of High Speed Diesel. With a view to grant some relief in the price rise to the customers, the Government of National Capital Territory of Delhi inserted a proviso to the definition "Sale Price" in Section 2(1)(zd) of the Act.
Provided that an amount equal to increase in the prices of petrol and diesel (including the duties and levies charged thereon by the Central Government) taking effect from the 6th June 2006 shall not form part of the sale price of petrol and diesel….:
By 16.02.2007, the prices were rolled back to the pre 06.06.2006 rates, but the Oil companies continued to avail the exemption. According to them, the benefit in terms of the proviso in question was to the extent of VAT chargeable and payable in respect of the amount of increase and the benefit so quantified must be made available regardless of any variation or decrease in the rates of Petrol and High Speed Diesel.
For example, if the price before the increase in rates is taken to be x and the price were to be x+4 as a result of increase w.e.f. 06.06.2006, the benefit of VAT payable in respect of the element of increase i.e. 4 must be available even if upon partial roll back the price were to be x+1 or upon full roll back the price were to be x itself. If the logic is accepted, upon full roll back, according to the Oil Companies, the VAT would be payable on x-4.
Let us substitute a number for x.
Suppose the price of petrol was Rs. 60 on 1.6.2006. On 6.6.2006, the price was enhanced to Rs.64. The Government of Delhi exempted this Rs. 4 from the price for VAT. On 30.11.2016, the price of petrol was reduced to Rs. 62 and later from 16.2.2007, it was further reduced to Rs.60, the original price with which we started.
According to the Oil Companies, they continued to get the exemption of Rs. 4 from the price even after the price was reduced to Rs. 62 and then to Rs. 60 or for that matter even if it was further reduced to Rs. 58. That is how they understood the proviso and that seems to be how it was drafted. But obviously that was not what the Delhi Government meant - it was only a drafting confusion.
The Supreme Court last week held that the the proviso ought to be given normal and natural meaning keeping in mind the context, object and reasons for its enactment and incorporation. The idea was to protect the interest of the consumers by giving exemption in respect of enhanced ad valorem VAT payable on account of increase in prices of diesel and petrol from 06.06.2006.
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