Construction and Interpretation:
No tax can be imposed on the subject without words in the Act clearly showing an intention to lay a burden upon him. In other words, the subject cannot be taxed unless he comes within the letter of the law. The argument that he falls within the spirit of the law cannot be availed by the department. Tax and equity are strangers. In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.
(a) Natural Justice: However, this does not mean that there is no scope for natural justice. Tax laws have to be interpreted reasonably and in consonance with justice. Where a literal construction would defeat the obvious intention of the legislation and produce a wholly unseasonable result, the court must do some violence to the words and so achieve that obvious intention and produce a rational construction. If the interpretation of a fiscal enactment is open to doubts the construction most beneficial to the subject should be adopted, even if it results in his obtaining “a double advantage”. A provision for exemption of relief should be construed liberally and in favour of the assessee. Likewise, a provision for appeal should be liberally construed. The law is to be ascertained by interpreting the language used in the Act in its natural meaning, uninfluenced by considerations derived from the previous state of the law. But in cases of doubt regarding the construction, assistance may be sought from previous judicial interpretation or from previous legislation or by adverting to the mischief intended to be suppressed. A subsequent enactment affords no useful guide to the interpretation of earlier law, unless it is on the same subject and the earlier law is ambiguous. An amendment may be made by the legislature only to clarify the position and not to change the law. When legislation follows a continuous practice and repeats the words on which the practice is founded, it may be inferred that the legislature in reenacting the statute intended those words to be understood in their perceived meaning.
Generally speaking, the sections in the Act do not overlap one another and each section completely covers the matter with which it deals. As far as possible the Act should be construed in such a way as to reconcile the various provisions and unravel apparent conflict into harmony bearing in mind that a general provision cannot derogate from a special provision regarding a certain class of cases. If a case appears to be governed by either of two provisions, it is clearly the right of the assessee to claim that he should be assessed under that one which leaves him with a lighter burden.
Those sections which impose the change of levy should be strictly construed but those which deal merely with the machinery of assessment and collection should not be subjected to a rigorous construction but should be construed in a way that makes the machinery workable.
The draft of a Bill which is afterwards enacted in the form of a statute and the report of a commission or select committee appointed to deal with the subject are not admissible as aids in construing the provisions of the Act but they or the statement of objects and reasons may be referred to for the limited purpose of ascertaining the conditions prevailing at the time and the extent and urgency of the evil sought to be remedied.
(b) Definition clause and undefined words: A definition or interpretation clause which extends the meaning of a word should not be construed as taking away its ordinary meaning. Further, such a clause should be so interpreted as not to destroy the basic concept or essential meaning of the expression defined, unless there are competing words to the contrary. Words used in the sections of the Act are presumed to have been used correctly and exactly as defined in the Act and it is for those who assert the contrary to show that there is something repugnant in the subject or context. Words which are not specifically defined must be taken in their legal sense or their dictionary meaning or their popular or commercial sense as distinct from their scientific or technical meaning unless a contrary intention appears.
(c) Legal fiction: The word “deemed” may include the obvious, the uncertain and the impossible. A legal fiction has to be carried to its logical conclusion but only within the field of definite purpose for which the fiction is created. As far as possible, a legal fiction should not be so interpreted as to work injustice.
(d) Marginal Notes: Marginal notes to the sections cannot control the construction of the statute but they may throw light on the intention of the legislature.
(e) Provisos: A proviso cannot be held to control the substantial enactment or to withdraw by mere implication any part of what the main provision has given. A proviso is not applicable unless the substantive clause is applicable to the facts of the case. The proper function of a proviso is to except and deal with a case which would otherwise fall within the general language of the main enactment and its effect as confined to that case.
However, a proviso may be read as an independent substantive enactment where the context warrants such construction. Whether a proviso is construed as restricting the main provision or as a substantive clause it cannot be divorced from the provision to which it stands as a proviso. It must be construed harmoniously with the main enactment.