‘INCLUDES’: WHAT DOES IT INCLUDE ?

[Dr. Sanjiv Agarwal]

Includes(s)

Service tax provisions include the words ‘and includes’ in various definitions such as clearing and forwarding agents, management consultants, advertising agency etc. The word ‘and includes’ are used to enlarge the scope of underlying definition. It may also refer to something which is otherwise not included. It is a word of enlargement which is generally used in the definitions and interpretation clauses to enlarge the meaning of words and phrases. The word used in an inclusive definition denotes its extension and cannot be restricted in any way. According to Black’s Law Dictionary, ‘include’ means to confine within, hold as is an enclosure, taken in, attain, brace, involve. 

When a particular definition includes certain things, it is to bring in other matter that would not properly come within the ordinary connotation of the word or expression or phrase in question. 

The word ‘includes’ gives a wider meaning to the words or phrases in the statutes. The word ‘includes’ is usually used in the interpretation clause in order to enlarge the meaning of the words in the statute. When word ‘include’ is used in the words or phrases, it must be construed as comprehending not only such things as they signify according to their nature and impact but also those things which the interpretation clause declares they shall include. Generally, an item included in the inclusive definition has to be prima facie taken to be included in the definition but it cannot be widely different from the basic concept of product or service which is being defined. The nexus has to be justifiable. 

Following judicial rulings also explain the meaning of word ‘includes’ or ‘and includes’ –

The phrase “shall include” must be construed as comprehending not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include – Dilworth v. Commissioner of Stamps (1899) ACC 99, Bansilal Agarwal and Brothers v. Commissioner of Sales Tax, AIR 1957 MP 30. 

The word “include” is often used in interpretation clauses in order to enlarge the meaning of words and phrases accruing in the body of statute when it is used, these words and phrases must be construed as comprehending not only such things as they signify according to their nature and interest, but also those things which the interpretation clause declares that they shall include – The Commissioner of Income Tax, Andhra Pradesh v. M/s Raj Mahal Hotel, Secunderabad, AIR 1972 SC 168.  

The word used in an inclusive definition denotes extension and cannot be restricted in any sense. State of Bombay v. Hospital Mazdoor Sabha, AIR 1960 SC 610.  

“The expression ‘including’ is very generally used in interpretation clause in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending not only such things as they signify according to their natural Import, but also those things which the interpretation clause declares that they shall include. The word “include” is therefore a term of extension. It imports an addition. It adds to the subject-matter already comprised in the definition – S.M. Jams v. Dr. Abdul Khair 1961 E.L.R. 308 at pp 311-12-AIR 1961 Pat. 242.” 

The term ‘includes’ widens  the scope of definition which enhances the scope of the definition as it is inclusive in nature. Therefore, the definition cannot be taken one of restrictive approach. In Regional Director, Employees' State Insurance Corpn. v. High Land Coffee Works PEX Saldana & Sons 1991 (3) SCC  617, the Hon'ble Apex Court has held as under: 

"...The word 'include' in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not wit] restriction. The word 'include' is very generally used in interpretation clauses i] order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as\ comprehending, not only such things as they signify cording to their natural import but also those things which the interpretation clause declares that they shall include. [See (z) Stroud's Judicial Dictionary, 5th edn: Vol. 3, p. 1263 and (ii) CITv. Taj Mahal Hotel 1971 (3) SCC 550, (iii) State of Bombay v. Hospital Mazdoor Sabha AIR 1960 se 610]." (p. 620) 

        It would be of benefit to extract the judgment of the Hon’ble Supreme Court of India in the case of Karnataka Power Transmission Corpn. Ltd.v. Ashok Iron Works (P) Ltd.2009 AIR SCW 1502 (Supra) at paras 12,13 and 14 which reads as follows:­ 

12.  Lord Watson in Dilworth v. Commissioner of Stamps (1899) AC 99 made the following classic statement: 

'The word "include" isvery generally used in interpretation clauses in order to enlarge the  meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as, they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word "include" is susceptible of another construction, which may become imperative, if the context of the Act is sufficient, to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to "mean and include", and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions'." 

Dilworth v. Commissioner of Stamps (1899) AC 99 and few other decisions came up for consideration in Peerless General Finance and Investment Co. Ltd. and the Court summarized the legal position that inclusive definition by the Legislature is used; (one) to enlarge the meaning of words or phrases so as to take in the ordinary, popular and natural sense of the words and also the sense which the statute wishes to attribute to it; (two) to include meaning about which there might be some dispute; (three) to bring under one nomen­clature all transactions possessing certain similar features but going under different names.

It goes without saying that interpretation of a word or expression must depend on the text and the context. The resort to the word 'includes' by the Legislature often shows the intention of the Legislature that it wanted to give extensive and enlarged meaning to such expression. Sometimes, however, the context may suggest that word "includes" may have been designed to mean "means", The setting, context and object of an enactment may provide sufficient guidance for interpretation of word 'includes' for the purposes of such enactment [CCE,  Bangalore v. Mahaveer Generics (2010) 24 STT 545 (Karnataka)] 

“Where the expression is merely ‘including’ it does not seem that the expression is used to have a restrictive operation and to confine the scope of the section only to things specified in the words following. Considering also taxation measures, which is intended to be quiet general in its operation, a more reasonable construction to place upon this expression would be that it enlarges the meaning of the words or phases occurring in section 7(1) of the Estate Duty Act, 1953 – Khan Bahadur C. K. Mammad Koyt. v. Asst. Controller Estate Duty-cum-Income Tax Circle, Coimbatore. (1961) 43 ITR 1 at pp 13-14 (ED).” 

In Ramala Sahkari Chini Mills Ltd v CCE, Meerut- I (2010) 29 STT 468 (SC) the apex Court held that ‘therefore, it is trite that generally the word "include" shouldbe given a wide interpretation as by employing the said word, the Legislature intends to bring in, by legal fiction, something within the accepted connotation of the substantive part. (Also See: CIT v. Taj Mahal Hotel [1971] 3 see 550, Indian Drugs & Pharmaceuticals Ltd v. Employees' State Insurance Corporation [1997] 9 see 71, Tamil Nadu Kalyana Mandapam Assn. v. Union of India [2004] 5 see 632/[20061 4 STT 308.). It is also well settled that in order to determine whether the word "includes" has that enlarging effect, regard must be had to the context in which the said word appears’. (See: South Gujarat Roofing Tiles Manufacturers Association v. State of Gujarat [1976] 4 see 601, R.D. Goyal v. Reliance Industries Ltd. [2003] 1 see 81 and Philips Medical Systems (Cleveland) Inc. v. Indian MRI Diagnostic &Research Ltd. [2008] 10 see 227). 

Thus, when ‘and includes’ is used, the legislature did not intend to import a restricted meaning. 

The word ‘includes’ is often used in interpretation clauses in order to encarge the meaning of words and phrases accusing in the body of the state when it is used, these words and phrases must be construed as comprehending not only such thought as they signify according to their nature and interest, but also those things which the interpretation clauses declares that they shall include. Commissioner of Income Tax, Andhra Pradesh v. M/s Taj Mahal Hotal Secunderabad, AIR 1972 SC 168-170. [Income Tax Act, (1972) S. 10(2) (vib)]. 

The word ‘include’ is very generally used in interpretation clause in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrase or phrases must be construed as comprehending not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include. Regl. Director ESIC v. High Land Coffee Works, AIR 1992 SC 129, 131.

The word used in an inclusive definition denotes an extension and cannot be restricted in any sense — State of Bombay v. Hospital Mazdoor Sabha, AIR 1960 SC 610, 614.

In Commercial Taxation Officer, Udaipur v. Rajasthan Taxchem Ltd. 2007 -TMI - 47969 – (SUPREME COURT OF INDIA), apex court has held that the word ‘includes’ in the definition clause, gives a wider meaning to words or phrase in statute. It is usually used to enlarge meaning of words in statute. When it is used in words or phrases, it must be construed as comprehending not only such things as they signify according to their nature and impact but also those things which interpretation clause declares they shall include.