SCOPE OF 'INCLUDES' IN SERVICE TAX

[Dr. Sanjiv Agarwal]

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 justiceable.

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 accuring 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."

"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 pp13-14 (ED)."

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. (2008) 12 STR 660(SC), 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.