External Aid For Interpretation Cannot Be Employed When An 'Exemption' Entry Is Clear And Unambiguous: Supreme Court

The Supreme Court observed that external aid for interpretation cannot be employed when an 'exemption' entry is clear and unambiguous.

In this case, the Authority for Clarification and Advance Ruling, had held that the commodity "Hank Yarn", as stipulated in Entry 44 of Part B of the Fourth Schedule to the Tamil Nadu Value Added Tax Act, 2006 ('the Act'), meant only "Cotton Hank Yarn" and not "Viscose Staple Fiber ('VSF') Hank Yarn". This was upheld by the Single bench of the High Court with reference to the Budget speech delivered by the Minister of Finance, Government of Tamil Nadu. Later, the Division Bench held that no external aid for interpretation was called for when the language of the Entry in question was clear in itself.

Agreeing with the view taken by the Division Bench, the Apex Court bench comprising Justices Dinesh Maheshwari and Hrishikesh Roy observed that the yarn in the hank form (which is a unit of measure), has come for exemption under the said Entry 44; and obviously, that exemption enures to the benefit of the handloom industry too.

"However, for that matter, if the benefit of this broad and unambiguous entry 6 also goes to any other industry, there is absolutely no reason to deny such benefit. In other words, we find no reason to restrict the Entry in its operation to the handloom industry alone or to any particular class of hank yarn like "Cotton Hank Yarn" only. The exemption Entry being clear and unambiguous, no external aid for interpretation is called for, whether in the form of Budget speech or any other notification under any other enactment...When the Entry in question specifically provides for exemption to the goods described as "Hank Yarn" without any ambiguity or qualification, its import cannot be restricted by describing it as being available only for the hank form of one raw material like cotton nor could it be restricted with reference to its user industry", the court said.

The court noted that in K.P. Varghese v. Income Tax Officer: (1981) 4 SCC 173 it was held that when literal interpretation leads to a result which was never intended by the Legislature, the Court may, rather should, depart from the plain language and modify the same so as to achieve the obvious intention of the Legislature.

The observations in the said decision, based on the rules of interpretation to cull out meaning of a sentence (vide paragraph 5 thereof), do not apply to the question at hand because the Entry in question is clear, direct and unambiguous; and simply reads: "Hank Yarn". the court said while dismissing the SLP filed by the Authority.

Headnotes

Case details

Case name: Authority For Clarification And Advance Ruling Vs Aakavi Spinning Mills (P) Ltd.

Citation: 2022 LiveLaw (SC) 191

Case no.|date: SLP(C) 306/2022 | 12 Jan 2022

Coram: Justices Dinesh Maheshwari and Hrishikesh Roy

Counsel: Sr. Adv K. Radhakrishnan for petitioner, Sr. Adv V. Giri for respondents