the essay of 28 May 2025 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="left"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">MAY 28, 2025</font></strong></p> <p align="center"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Or means And - Supreme Court vs. Bureaucracy: The Word War</strong></font></p> <p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u>By Vijay Kumar</u></font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>joys of legal semantics! If you thought <em>"or" </em>and<em> "and"</em> were interchangeable, welcome to a legal thriller featuring the Supreme Court, bureaucracy, and a retrospective amendment that makes sure taxpayers remain perpetually perplexed. </font></p> <p align="center"><img src="https://admin.taxindiaonline.com/UploadedFiles/Customs/CaseLaws/2025/27052025.jpg" width="512" height="512"></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It all started with a seemingly simple dispute: Does <em>"plant or machinery" </em>mean the same as <em>"plant and machinery"</em>? Revenue was convinced it was a typo, much like those pesky autocorrect blunders-but this typo had serious tax implications. The case shot straight to the Supreme Court, where the judiciary declared, <em>"Or means or. And means and. Let's not confuse grammar with government flexibility." </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Despite this, bureaucracy took its <em>"Heads I win, tails you lose"</em> approach and promptly rewrote history-literally. With the Finance Act, 2025, the government retrospectively altered the language of the law back to 2017. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court held: <em>Safari Retreats -<a href="https://taxindiaonline.com/searchcaselaw/details?id=183413&type=caselaw&keyword=null" target="_blank"> <strong>2024-TIOL-101-SC-GST</strong></a> </em></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. As the expression <em>"plant or machinery"</em> appears to be intentionally incorporated, it is not possible to accept the contention that the word "or" should be read as <em>"and".</em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The legislature has made this distinction consciously. Therefore, the expression<em> "plant and machinery" </em>and<em> "plant or machinery" </em>cannot be given the same meaning. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. While interpreting taxing statutes, it is not a function of the Court to supply the deficiencies. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What will happen if the legislature makes a mistake? The Supreme Court observed in the above case, </font></p> <blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, if the legislature has made a mistake (legislature making a mistake means the law drafters in the government making a mistake), we should allow the benefit of the mistake. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <u>Read <em>"AND" </em>as <em>"OR"</em> or<em> "OR" </em>as <em>"AND"</em></u>, I had mentioned, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">The Supreme Court says, <em>"If it was a drafting mistake, as suggested by learned ASG, the legislature could have stepped in to correct it". </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">They will - now. Maybe the mistake was detected only now. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And this budget corrected that mistake in Clause 119 of the Finance Bill, 2025 - <font color="#0099FF"><strong>retrospectively</strong></font>. The Finance Bill is now the Finance Act and Section 124 of the Finance Act, 2025 reads as: </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">In section 17 of the Central Goods and Services Tax Act, in sub-section (5), in clause (d) </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">(i) for the words<em> "plant or machinery", </em>the words <em>"plant and machinery"</em> shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July 2017; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">Explanation 2. - For the purposes of clause (d), it is hereby clarified that notwithstanding anything to the contrary contained in any judgment, decree or order of any court, tribunal, or other authority, any reference to <em>"plant or machinery" </em>shall be construed and shall always be deemed to have been construed as a reference to<em> "plant and machinery". </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Supreme Court judgement has been nullified - right from the beginning of GST. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What happens to all the taxpayers who went up to the Supreme Court spending a lot of time and money? They have learnt the meaning of 'and' and 'or' and also learnt that it is not all that wise to challenge the mistakes of government - you will end up in a retrospective law against you. </font></p> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Why Litigation; Why Courts? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If retrospective legislation is so right and legal, why do we need the courts and why should anyone enter into litigation? Is it fair for the Government to change the rules after they have lost the game? The Law is actually made by the babus, often by an Under Secretary, almost always to cover up the mistakes of the bureaucrats and this cover-up is given respect in the name of <em>"legislative will"</em>. Many of us believe that in tax litigation, the Supreme Court is the highest authority in the country, but little realise that, somewhere in a quiet bureaucratic office, an Under Secretary can ensure that the Supreme Court judgement is made redundant by initiating a retrospective amendment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If they want to change the law retrospectively, why can't they do it before the Supreme Court gives its judgement? They fight the battle in the Supreme Court in all seriousness, sure of winning either way <em>"heads I win; tails you lose."</em> If they win in the Supreme Court, that's fine; if they lose, they can always amend the law retrospectively! </font></p> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Retrospective Legislation - fair or legal? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the disturbing question is whether the Government is fair and right in bringing retrospective legislation? The blatant way of the Government nullifying Supreme Court orders by unfair retrospective amendment, is astounding. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"Reasonableness of legislative measures is unknown to our Constitution"</em>, said the Supreme Court in the <strong>Indira Gandhi</strong> election petition case and added, <em>"Giving retrospective effect to legislative amendment is accepted to be valid exercise of legislative power. The power of the Legislature to pass a law includes a power to pass it retrospectively." </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As early as in 1959, the Supreme Court observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">It cannot be disputed that the legislature has power in appropriate cases to pass even retrospective legislation. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Apex Court had consistently held that Parliament indeed had the power to bring in retrospective legislation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is not disputed that the power to make a law necessarily includes the power to make the provisions of the law retrospective. </font></p> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No windfall from legislature's mistakes: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is necessary that the legislature should be able to cure defects in statutes. No individual can acquire a vested right from a defect in a statute and seek a windfall from the legislature's mistakes. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxes are not in the nature of a penalty or a contractual obligation but rather a means of apportioning the costs of government amongst those who benefit from it. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The legislative power to make law with retrospective effect is well recognised. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is also well settled that though the legislature has no power to sit over Court's judgment or usurp judicial power, but, it has, subject to the competence to make law, power to remove the basis which led to the Court's decision. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Every sovereign legislature possesses the right to make retrospective legislation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All fine, but why go all the way up to the Supreme Court if the Government is going to bring in a retrospective legislation? </font></p> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Why retrospective legislation? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Almost every retrospective legislation is with the lofty aim of protecting the guilty. The babus who have made a bad law with their poor drafting skills cannot bear the beating from the judiciary. Most of them believe that they are the law makers endowed with great skills and if the courts are not good enough to understand their language, they, poor ones, have no other go, except to bring in retrospective legislation to protect the interests of this nation. They are capable of convincing any Finance Minister and here party affiliations do not matter. The FM's job is to protect the bureaucracy by getting these retrospective laws passed. </font></p> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Twist in the Tale: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Actually, there are two twists: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Finance Act, 2025 by Section 124 has retrospectively amended the words<em> "plant or machinery"</em>, with the words <em>"plant and machinery"</em>, this provision is yet to come into operation. As per Section 2(b) of the Finance Act, 2025, sections 121 to 124 and sections 126 to 134 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. So, this retrospective amendment will come into force only from a date to be notified by the Government, but once it is notified, it will have effect from the 1st of July 2017! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. While the government proposed the retrospective amendment in this Budget, on 07.01.2025, it filed a review petition in the Supreme Court against the Safari <em>"and or or"</em> judgement. Fighting on all fronts! </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, on one hand, the law was amended retrospectively and on the other, the very judgement of the Supreme Court which caused the retrospective amendment was again challenged in the Supreme Court - requisitioning the services of legislature, executive and judiciary - all to amend<em> "or" </em>to <em>"and". </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court last week delivered its order on the review petition.<strong> <a href="https://taxindiaonline.com/searchcaselaw/details?id=187437&type=caselaw&keyword=null" target="_blank">2025-TIOL-35-SC-GST</a></strong>. The order reads as: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#C1DFE8" span="span">In the interest of justice, the defects raised by the Registry are waived. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#C1DFE8" span="span">Delay condoned. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#C1DFE8" span="span">We have gone through the review petition and perused the Judgment and Order dated 03 October 2024 which has been sought to be reviewed. There is no error apparent on the record. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#C1DFE8" span="span">Review Petition is dismissed. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Review Petition is dismissed, which means the original order stands -<em> "or" </em>means <em>"or" </em>only and not <em>'and".</em> But there is the retrospective amendment by Finance Act, 2025 - but that is yet to be notified - but that is the law, only a notification is required, which can come at any time. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court had in the very famous <em>Ranadey Micronutrients </em>case observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">Consistency and discipline are of far greater importance than the winning or losing of court proceedings. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nani Palkhivala described <font color="#663399">retrospective amendment as a triumph of bureaucratic obstinacy over good sense</font>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fairness to the babus, it must be admitted that it is not all that easy to make faultless laws, for they are human - but if the Supreme Court thinks they made a mistake, you can always resort to retrospective amendment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the law bends to bureaucracy rather than to fairness, then <em>"or" </em>and <em>"and"</em> might just be the least of our concerns. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until next week </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Comments/feedback welcome at <u><a href="mailto:vijaywrite@tiol.in">vijaywrite@tiol.in</a></u> or 9848111243 (WhatsApp) </font></strong></p> </body> </html>