Strict construction of exemption notification :
An exemption notification should be construed strictly. There is no scope for any intendment – HemrajGordhandas v. H H Dave, CCE AIR 1970 SC 755 = 1978 (2) ELT (J350) (SC) = 1969 2 SCR 253 (SC 5 member Constitution Bench) – confirmed in Rajasthan Spg. and Wvg. Mills Ltd. v. CCE 1995 (77) ELT 474 (SC) = 1995 (58) ECR 569 (SC) = AIR 1995 SC 1985 = (1995) 4 SCC 473 =102 STC 476 (SC). In this case, it was reaffirmed that exemption notification has to be strictly construed and that no extended meaning can be given to exempted item to enlarge the scope of exemption granted by the notification. It was also held that onus is on assessee to prove his eligibility for exemption – same view in Grasim Industries Ltd. v. State of Madhya Pradesh 1999 AIR SCW 4189 = AIR 2000 SC 66 = 1999(8) SCC 547 * Sanghvi Reconditioners v. UOI (2010) 2 SCC 733 * BPL Ltd. v. CCE (2015) 52 GST 102 = 58 34 = 319 ELT 556 (SC).
Exemption notification has to be strictly construed. The conditions for taking benefit have to be strictly interpreted – Sarabhai M Chemicals v. CCE AIR 2005 SC 1126 = (2005) 2 SCC 168 = 179 ELT 3 (SC 3 member bench) * Mittal Polypack v. State of Jharkhand (2005) 141 STC 270 (SC) *CC v. M Ambalal & Co. (2011) 2 SCC 74 = 260 ELT 487 (SC) * Bhai Jaspal Singh v. ACCT (2011) 1 SCC 39 = 35 VST 456 (SC) * Uttam Industries v. CCE (2011) 265 ELT 14 (SC) * State of UP v. Mahindra and Mahindra Ltd. (2011) 6 GST 210 = 42 VST 365 (SC) * Gammon India v. CC (2011) 269 ELT 289 (SC) * CC v. Konkan Synthetic Fibres (2012) 6 SCC 339 = 278 ELT 37 (SC) * Indian Oil Corporation v. CCE (2012) 5 SCC 574 * State of Jharkhand v. L A Opala R G Ltd. (2014) 45 GST 266 = 45 25 = 70 VST 342 (SC) * CC v. GE BE Ltd. (2015) 322 ELT 785 (SC) * CCE v. Honda Siel Power Products Ltd. (2015) 323 ELT 644 (SC).
Eligibility clause in relation to exemption notification must be given a strict meaning – Tata Iron and Steel Co. v. State of Jharkhand (2005) 4 SCC 272 = AIR 2005 SC 2871 = 140 STC 284 (SC) * CCE v. Hira Cement (2006) 145 STC 264 = 194 ELT 257 = 8 STR 96 (SC) * Orient Traders v. CTO (2008) 13 VST 530 = 237 ELT 447 (SC).
Notification should be read in its entity. Further, exemption notification has to be read strictly so far as the eligibility is concerned. Conditions stipulated therein cannot be ignored – CCE v. Ginni Filaments 2005 (181) ELT 145 (SC 3 member bench).
When wording of a notification are clear, then the plain language of the notification must be given effect to. An interpretation which is not borne out by the plain wording of notification cannot be given effect to – Excon Bldg. Material Mfg. Co. P Ltd. v. CCE 2005 (186) ELT 263 (SC 3 member bench). Exemption notification has to be interpreted on its wording. No words, not used in the Notification, can be added – CCE v. Sunder Steels AIR 2005 SC 1307 = 181 ELT 154 (SC 3 member bench).
Exemption notification has to be construed strictly. If there is any doubt, benefit thereof would be given to revenue and not to assessee (taxable person under GST)- Star Industries v. CC (2015) 52 GST 922 = 63 131 = 324 ELT 656 (SC) * Larsen and Toubro Ltd. v. CCE (2015) 52 GST 937 = 62 102 (SC) * CCE v.HondaSiel Power Products Ltd. (2015) 52 GST 672 = 62 202 (SC).
It is settled law that to avail the benefits of a notification, the party must strictly comply with the conditions of the notification. It is also settled law that the notification has to be interpreted in terms of its wording. Where the language is very clear and unambiguous, benefit cannot be granted merely on ground of sympathy – State of Punjab v. Punjab Fibres (2005) 139 STC 200 (SC 3 member bench).
If an assessee avails benefit of a notification, he has to necessarily comply with conditions of notification. Assessee cannot approbate and reprobate – CC v. Indian Rayon (2008) 229 ELT 3 (SC).
In State of Jharkhand v. Ambay Cements 2004(178) ELT 55 = 139 STC 74 = 2004 AIR SCW 6703 (SC 3 member bench), it was held as follows, (a) Provision of exemption should be strictly construed. It is not open to Court to ignore the conditions prescribed in the exemption notification (b) Mandatory rule must be strictly followed, while substantial compliance might suffice in a directory rule (c) Whenever the statute prescribed that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement is mandatory (d) It is the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way (e) Where a statute is penal in character, it must be strictly construed and followed – quoted with approval in CCE v. Emkay Investments AIR 2005 SC 261 = 2004 (174) ELT 298 (SC 3 member bench).
In CCE v. Mahaan Dairies (2004) 11 SCC 798 = 166 ELT 23 (SC), it was observed, ‘In order to claim benefit of an exemption notification, a party must strictly comply with terms of the notification. If on wordings of the notification, the benefit is not available, then by stretching the words of notification or by adding words to notification, benefit cannot be conferred’.
Exemption provision has to be strictly construed. If there is any hardship, it is for legislature to take appropriate action to make suitable provisions – India Agencies v. ACCT AIR 2005 SC 1594 = 139 STC 329 = 2004 AIR SCW 7135 (SC 3 member bench).
In Tata Motors v. State of Maharashtra (2004) 136 STC 1 (SC), it was held that conditions for exemption are to be strictly complied with. If the condition is not capable of performance, exemption is not available. [In this case, sales tax set off was available if goods are despatched to branch office which should be registered under CST Act. The assessee had branch offices at some places where CST Act was not applicable. It was held that set off will not be available for despatches to these branches].
In Eagle Flask Industries Ltd. v. CCE (2004) 7 SCC 377 = 171 ELT 296 = 64 RLT 363 (SC), it was held that conditions of exemption notification have to be strictly complied with. In this case, demand was confirmed only because necessary declaration/undertaking was not filed [The assessee seems to be unlucky, otherwise, there are many decisions that substantial benefit cannot be lost on account of procedural lapses].
In India Sugars and Refineries Ltd. v. UOI – 1983 (12) ELT 209 (Kar HC), it was observed that if an expression in notification is used in plain and meaningful language, there is no scope for assuming an ambiguity and trying to interpret it on a supposed intention of the makers of the notification – similar views in Inter Continental v. UOI 2003 (154) ELT 37 (Guj HC DB) * Abhishek Steels v. CCE 2001(131) ELT 457 (CEGAT). Exemption benefit cannot be denied by calling in aid supposed intentions of exempting authority, if the taxpayer is within the plain terms of the exemption. – VandanaIspat v. CCE 2002(144) ELT 166 (CEGAT).
In Wipro Ltd. v. UOI 1997(94) ELT 470 (SC), concession was refused when essential condition for availing concession was not complied with.
Exemption notification cannot be unduly stretched to produce unintended results in derogation of the plain language employed therein. – CCE v. Modi Rubber 2001 (133) ELT 515 (SC 3 member bench).
In Steel Authority of India Ltd. v. CCE (1997) 10 SCC 335 = 1996 AIR SCW 3162 = 1996 (88) ELT 314 (SC), it was observed that due emphasis has to be given to the clear language of the conditions mentioned in the exemption notification. – quoted with approval in Gujarat State Fertilizers Co. v. CCE AIR 1997 SC 3620 = 91 ELT 3 (SC) = (1997) 4 SCC 140 = 1997 AIR SCW 1578, where it was held that for deciding whether an exemption notification gets attracted, express language of the exemption notification has to be given its due effect. – . – . – Express and wide terminology used in exemption notification cannot be curtailed by any process of reasoning about the supposed intention of the Government underlying the issuance of the said notification.
Wording in some other notification cannot be considered for interpretation – In CCE v. Rukmani Pakkwell Traders 2004 AIR SCW 4099 = (2004) 11 SCC 801 = AIR 2004 SC 4906 = 165 ELT 481 (SC) it was observed, ‘It is settled law that exemption notifications have to be strictly construed. They must be interpreted on their own wording. Wordings of some other notification are of no benefit in construing a particular notification – quoted with approval in Compack P Ltd. v. CCE (2006) 3 STT 1 = 189 ELT 3 = (2005) 8 SCC 300(SC).
Wrong mention of section would not be ground to refuse relief – In Shri Hari Chemicals Export Ltd. v. UOI (2006) 3 STT 54 = 193 ELT 257 (SC), it is observed, ‘It is a well settled principle of law that wrong mentioning of a section would not be a ground to refuse relief to an assessee if he is otherwise entitled thereto [In this case, asses see had taken credit under rule 57A, but he was entitled to take credit under rule 56A].