Meaning of "such as" in construction of rules, VAT + CST

[Manoj Narayanwal]

In several provisions phrase "such as" is used. It's normal meaning is fir example. Is there any legal or supreme court citation.

Posts / Replies

[MARIAPPAN GOVINDARAJAN]

The words 'such as' are used for giving examples for a particular case. This words have been used in the erstwhile definition of 'input service' in Rule 2(l) of CENVAT Credit Rules, 2004 which led to many a litigation for the interpretation to term a service as input service.

[Pradeep Khatri]

Dear Manoj,

In addition to above reply please go through the appended judgment as required by you.

In Royal Hatcheries (P) Ltd. V. State of A.P., 1994 Supp (1) SSC 429 = 1993 (10) TMI 85 - SUPREME Court , the Supreme Court held that the words "such as" indicate that what are mentioned thereafter are only illustrative and not exhaustive. Thus, the activities that follow the words "such as" are illustrative of the activities relating to business which are included in the definition of input service and are not exhaustive. Therefore, activities relating to business could also be other than the activities mentioned in the sub-rule. However, that does not mean that every activity related to the business of the assessee would fall within the inclusive part of the definition. For an activity related to the business, it has to be an activity which is analogous to the activities mentioned after the words "such as". What follows the word "such as" is "accounting, auditing, financing, recruitment, and quality control, coaching and training, computer networking, credit rating, share registry, and security". Thus, what is required to be examined is as to whether the service rendered by commission agents can be said to be an activity which is analogous to any of the said activities. The activity of commission agent, therefore, should bear some similarity to the illustrative activities. In the opinion of this court, none of the illustrative activities, viz., "accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security" is in any manner similar to the services rendered by Commission agents nor are the same in any manner related to such services. Under the circumstances, though the business activities mentioned in the definition are not exhaustive, the service rendered by the commission agents not being analogous to the activities mentioned in the definition, would not fall within the ambit of the expression "activities relating to business". Consequently, CENVAT credit would not be admissible in respect of the Commission paid to foreign agents.

We hope now the meaning of Such as would be clear to you.

Regards,

Sameer Malhotra - Consultant

YAGAY and SUN (Management, Business and Indirect Tax Consultants)