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TMI Blog2015 (4) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... ute may introduce new rules of law and that in such case, it would amount to substantial change in the law and will not be necessarily retrospective. It has been held that for determining the nature of the Act regard must be had to the substance rather than the form. It has been held that if a new Act is to explain an earlier Act, it would be without object unless construed retrospectively. It has been further held that an explanatory act is generally passed to supply an omission or to clear up doubts as to meaning of previous Act. However, in the absence of clear words indicating that the meaning of the Act is declaratory, it would not be so construed when the pre-amended provision was clear and unambiguous. 2002 Notification was issued under the provisions of the Maritime Zones Act on 1.3.2002 thereby extending provisions of Chapter V of Finance Act to the designated areas in the continental shelf and exclusive economic zone of India as declared by the Notification of the Government of India in the Ministry of External Affairs dated 18.7.1986 and 19.9.1996 with immediate effect. It would thus be seen that for the first time from 1.3.2002, the areas in respect of which the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kash Shah, Mr. Asish Phillips, Mr. Jas Sanghvi Ms.Nyoti Hakani i/b. PDS Legal for the Respondent : Mr. Pradeep S. Jetly a/w Ms. Suchitra Kamble for Respondent No.1., Mr. J.H.Motwani i/b. Economic Law Practice JUDGMENT : (Per B.R.GAVAI, J.) An interesting question as to whether the Notification No. 14/2010-ST dated 27.2.2010 is clarificatory / declaratory in nature or as to whether it brings about substantive change in law arises for consideration in the present Appeal. The question to be decided in the present Appeal revolves around the interpretation of Notification No.1/2002-Service Tax dated 1.3.2002, as amended by Notification No.21/2009-ST dated 7.7.2009 and the Notification No.14/2010-ST dated 27.2.2010. 2. The facts which are not in much dispute are as under :- (a) The appellant had entered into two contracts with M/s. Oil and Natural Gas Corporation Limited (ONGC) for supply of Cantilever type jack-up rigs named, Greatdrill Chetna and Greatdrill Chitra. They were required to provide offshore drilling services to ONGC in terms of the contract dated 27.2.2009 and 8.5.2009. These rigs were hired by the appellant from M/s. Greatship Global Energy Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said show cause notice. Various contentions were raised by the appellant.However, in view of the questions of law raised on which the appeal was admitted, the only relevant contention would be that, the Notification dated 1.3.2002 as amended on 7.7.2009, made applicable the provisions of the Service Tax only to the installations, structures and vessels in the Continental Shelf of India and the Economic zone of India and that the service tax provisions were not made applicable to services consumed by Continental Shelf of India. It was contended that for the first time, the provisions of the service tax have been made applicable to the areas specified in column 2 of the Table of the Notification dated 27.2.2010 in the Contiental Shelf and Exclusive Economic Zone of India, for the purposes mentioned in column 3 of the Table. It was contended that the service provided by the appellant and which were consumed in the Continental Shelf of India and Exclusive Economic Zone of India have been brought in the tax net for the first time on 27.2.2010 and that thereafter the appellant was discharging the service tax liability in respect of the services rendered on that count. However, the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plain reading of the Notification dated 27.2.22010 would clearly show that, for the first time, the provisions of Service Tax were extended to the areas specified in column 3 of the Table of the said Notification in the Continental Shelf and Exclusive Economic Zone of India for the purposes mentioned in the column of the said Table. He submits that the services rendered were for the purpose of prospecting mineral oil in the Continental Shelf and Exclusive Economic Zone of India. The service tax liability accrued to the appellant only from 27.2.2010 and from that date, the appellant has discharged the liability towards the Service Tax. 4. As against this, Shri Jetly, the learned Counsel appearing for the Revenue submits that the Notification as amended on 27.7.2009, itself is clear. He submits that the said Notification squarely covers installations, structures and vessels. He submits that since what has been done by the appellant is providing services of rigs. He submits that rigs would be squarely covered by the term `vessel' and as such, the appellant would clearly come in the tax net on 7.7.2009. The learned counsel submits that the Notification dated 27.2.2010 is, at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Maritime Zones Act, 1976 empower the Central Government by notification to extend any enactment in force in India with such restrictions and modifications which it thinks fit to the continental shelf and the exclusive economic zone and further provides that an enactment so extended shall have effect as if the continental shelf or the exclusive economic zone to which the enactment has been extended is a part of the territory of India. Thus, sub- section (6) of Section 6 and sub-section (7) of Section 7 create a fiction by which the continental shelf and the exclusive economic zone deemed to be a part of India for the purposes of such enactments which are extended to those areas by the Central Government by issuing a notification . It has been held that sovereignty of India extends over the territorial waters and the seabed and subsoil underlying therein, the air space over such territorial waters, form part of the territory of India. It has been held that however, the position is different in the case of continental shelf and exclusive economic zone of India. The continental shelf of India comprises of the seabed beyond the territorial waters to a distance of 200 nautical miles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic zones are concerned if a notification as provided under sub-section (6) of Section 6 and sub-section (7) of Section of the Maritime Zones Act is issued in respect of any area, by a a fiction of statute such area in the continental shelf and the exclusive economic zone of India, are deemed to be a part of India for the purpose of such enactments which are extended to those areas by the Central Government by issuing a notification. It can thus be seen that for making an enactment applicable to the area in continental shelf and the exclusive economic zone of India, it is necessary that notification as required under sub-section (6) of Section 6 and sub-section (7) of Section is required to be issued by the Central Government. 8. In this background, we will have to consider the Notification No.1/2002-Service Tax dated 1.3.2002, the Notification No.21/2009-ST dated 7.7.2009 and the Notification No.14/2010-Service Tax dated 27.2.2010. The same are reproduced hereinbelow :- Notification No. 1/2002-Service Tax dated 1.3.2002 (hereinafter referred to as the 2002 Notification ). In exercise of the powers conferred by clause (a) of sub- section (6) of section 6, and clause (a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the section (6) of section 6, and clause (a) of sub-section (7) of section 7, of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976), and in supersession of the Government of India in the Ministry of Finance (Department of Revenue) notification No. 1/2002-Service Tax, dated the 1st March, 2002, published in the Gazette of India, Extraordinary, vide number G.S.R. 153 (E), dated the 1 st March, 2002, except as respects things done or omitted to be done before such supersession, the Central Government hereby extends the provisions of Chapter V of the Finance Act, 1994 (32 of 1994), to the areas specified in column (2) of the Table below, in the continental shelf and exclusive economic zone of India for the purposes as mentioned in column (3 of the said Table :- Sl. No. The areas in the Continental Shelf and the Exclusive Economic Zone of India Purpose 1 2 3 1 Whole of continental shelf and exclusive economic zone of India Any service provided for all activities per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the entire continental shelf and exclusive economic zone of India. However, vide the said notification the services which are brought into the tax net were services to the installations, structures and vessels in the continental shelf of India and Exclusive Economic Zone of India. 11. By a Notification No.14/2010-Service Tax dated 27.2.2010, in supersession of the Notification No.1/2002-Service Tax dated 1.34.2002 the Central Government extended the provisions of Chapter V of the Finance Act, 1994 to the areas specified in column (2) of the Table, in the continental shelf and exclusive economic zone of India for the purposes as mentioned in column (3) of the said Table. The Table would show that to the whole of areas in the continental shelf and exclusive economic zone of India any service provided for all activities pertaining to construction of installations, structures and vessels for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof were brought into service tax net. Similarly, in case of installations, structures and vessels within the continental shelf and exclusive economic zone of India constructed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of persons. It will be relevant to refer to the following observations of the Apex Court :- 47. May be this is one of the reasons for the Parliament to bring in the amendment referred to above to Section 27 of the Act. At any rate the admitted position when the amendment was brought in, was that there was divergence of opinion between the High Courts on the issue at hand. 48. In the Memorandum explaining provisions in Finance Bill 1987 concerning Section 27 reads as follows : SIMPLIFICATION AND RATIONALISATION OF PROVISIONS Enlarging the meaning of owner of house property'' 27. Under the existing provisions of section 22 of the Income Tax Act, any income from house property is chargeable to tax only in the hands of the legal owner. As per section 27 of the Income Tax Act, certain persons who are not otherwise legal owners are deemed to be the owners for the purposes of these provisions. Under the Transfer of Property Act, the transfer of ownership can be effected only by means of a registered instrument. However, in the recent times various other devices are sought to be employed for transferring one's ownership in property. As a result, there ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the heading declaratory statutes , the learned author has summed up as follows : Declaratory statutes The presumption against retrospective operation is not applicable to declaratory statutes. As stated in CRAIES and ap- proved by the Supreme Court : For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a preamble, and also the word 'declared' as well as the word 'enacted'. But the use of the words 'it is declared' is not conclusive that the Act is declaratory for these words may, at times, be used to introduce new rules of law and the Act in the latter case will only be amending the law and will not necessarily be retrospective. In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is 'to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the amendment introduced by the Finance Bill, 1988 was declaratory/clarificatory in nature so far as it relates to Section 27(iii), (iiia) and (iiib).Consequently, these provisions are retrospective in operation. If so, the view taken by the High Courts of Patna, Rajasthan, and Calcutta, as noticed above, gets added support and consequently the contrary view taken by the Delhi, Bombay and Andhra Pradesh High Courts is not good law. The Apex Court in the background of various divergent opinions taken by various High Courts with regard to the definition of owner of house property as provided in Section 22 of the Act and taking into consideration the Memorandum explaining the Finance Bill 1987 came to the conclusion that the amendment was to clear the doubts as to the meaning of the word owner in Section 22 of the Act and as such held that the amendment was declaratory / clarificatory in nature and therefore having retrospective operation. 14. The Apex Court again had an occasion to consider the amendment to Section 9(1)(ii) of the Income Tax Act in the case of Sedco Forex International Drill. Inc. Anr. vs. Commissioner of Income Tax Dehradun Anr. (2005) 12 SCC 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, it did not operate in respect of periods which were prior to 1.4.1979. It was held that since the Explanation came into force from 1.4.1979, it could not be relied on for any purpose for an anterior period. 14. In the appeal preferred from the decision by the Revenue before this Court, the Revenue did not question this reading of the Explanation by the Kerala High Court, but restricted itself to a question of fact viz., whether the Tribunal had correctly found that the salary of the assessee was paid by a foreign company. This Court dismissed the appeal holding it was a question of fact. [Commissioner of Income tax vs. S.R. Patton (1998) 8 SCC 608]. 15. Given this legislative history of Section 9(1)(ii), we can only assume that it was deliberately introduced with effect from 1.4.2000 and therefore intended to apply prospectively . It was also understood as such by the CBDT which issued Circular No. 779 dated 14th September, 1999 containing explanatory notes on the provisions of the Finance Act, 1999 in so far as it related to direct taxes. It said in paragraphs 5.2 and 5.3.5.2 The Act has expanded the existing Explanation which states that salary paid for services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich would justify reading the Explanation as operating retrospectively . Considering the law on the issue, the Apex Court held that a cardinal principle of tax law is that, the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. An explanation to a statutory provision may fulfill the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section. If it is in its nature clarificatory then the Explanation must be read into the main provision with effect from the time that the main provision came into force. It has however been held that when such a provision changes the law, it is not presumed to be retrospective, irrespective of the fact that the phrases used are it is declared or for the removal of doubts. The Apex Court held that there was no ambiguity in the main provision of Section 9(1)(ii). It only provides for taxing income of an assessee if the assessee had earned it in India. It has been held that the expression seeks to give an artificial meaning to the term earned in India thereby bringing the income earned for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses i.e. negative profit. The position has been elaborately dealt with by this Court in Commissioner of Income Tax (Central), Delhi v. Harprasad Co. P. Ltd. (1975 (99) ITR 118). This Court held with reference to the charging provisions of the statute that the expression `income' should be understood to include losses. The expression `profits and gains' refers to positive income whereas losses represent negative profit or in other words minus income. This aspect does not appear to have been noticed by the Bench in Virtual's case (supra). Reference to the order by this Court dismissing the revenue's Civil Appeal No.7961 of 1996 in Commissioner of Income Tax v. Prithipal Singh and Co. is also not very important because that was in relation to the assessment year 1970-71 when Explanation 4 to Section 271(1) ((c) was not in existence. The view of this Court in Harprasad's case (supra) leads to the irresistible conclusion that income also includes losses. Explanation 4 (a) as it stood during the period 1.4.1976 to 1.4.2003 has to be considered in the background. 8. It appears that what the Finance Act intended was to make the position explicit which otherwise was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that the Government was satisfied and accordingly amended Notification No.46/94 vide Notification No.95/94 dated 25.4.1994 correcting the mistake and clarifying the position that parts of power-driven pumps which were to be utilized for manufacturing power-driven pumps within the factory would also be exempted. However, for the period 1.3.1994 to 25.4.1994, proceedings were initialed against the manufacturers for clearing parts without payment of duty. The Assessing Authority confirmed the demand. The learned CEGAT dismissed the appeal In this background, while allowing the appeal, the Apex Court observed in para 16 :- 16. In view of the consistent policy of the Government of exempting parts of power driven pumps utilized by the factory within the factory premises, it could not be said that while issuing notification No.46/94 of March 1, 1994, the exemption in respect of said item which was operative was either withdrawn or revoked. The action was taken only with a view to rescinding several notifications and by issuing a composite notification. The policy remained as it was and in view of demand being made by the Department, a representation was made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein not concerned as to whether it was constitutionally permissible for the Parliament to do so as we are not called upon to determine the said question but for our purpose, it would be suffice to hold that the explanation is not clarificatory or declaratory in nature. 18. Recently, the Constitution Bench of the Apex Court in the case of Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Pvt.Ltd. (2015) 1 SCC 1, had an occasion to consider whether the proviso to Section 113 of the Income Tax Act, 1961 was clarificatory in nature and and as such could be made retrospectively applicable or was applicable prospectively. The Constitution Bench observed thus :- 33 A Constitution Bench of this Court in Keshavlal Jethalal Shah v. Mohanlal Bhagwandas Anr.8, while considering the nature of amendment to Section 29(2) of the Bombay Rents, Hotel and Lodging House Rates Control Act as amended by Gujarat Act 18 of 1965, observed as follows: The amending clause does not seek to explain any pre- existing legislation which was ambiguous or defective. The power of the High Court to entertain a petition for exercising revisional juristdiction was before the amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made retrospective, does not apply to the assessment for that year. Anwer to the Reference 37. When we examine the insertion of proviso in Section 113 of the Act, keeping in view the aforesaid principles, our irresistible conclusion is that the intention of the legislature was to make it prospective in nature. This proviso cannot be treated as declaratory/statutory or curative in nature. It can thus be seen that taking into consideration that the law brought about a substantive change, the Constitution Bench refused to consider it clarificatory or declaratory in nature. 19. From the analysis of the aforesaid Judgments of the Apex Court, it would be clear that if the statute uses the words it is declared or it is clarified for removal of doubts , then it will be presumed that the amending law is declaratory or clarificatory. However, merely using the said words would not be sufficient to conclusively hold that the Act is declaratory. Even by use of such words, a statute may introduce new rules of law and that in such case, it would amount to substantial change in the law and will not be necessarily retrospective. It has been held that for determining the nature of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptions were consolidated and fresh notification was issued on 1.3.1994, though the power-driven pumps were included in exempted items, the parts of power- driven pumps were omitted. A representation was made to the Government pointing out this error. Accordingly, by subsequent notification dated 25.4.1992, the said mistake was corrected. In this background, it was found that the notification dated 25.4.1992 was clarificatory in nature. 23. However, as against this, in the case of Sedco Forex International Drill. Inc., it was found that the earlier provision of Section 9(1)(ii) was clear and it provided taxing only the income earned in India. It was held that the explanation, as brought on statute book by amendment of 1999 which gives an artificial meaning to the term earned in India and also brings under the tax net salary for the rest period when the assessee was not working in India, makes a substantive change in the existing law and as such could not be said to be clarificatory in nature. It is to be noted that even though in the amendment words removal of doubt it is clarified were used, the aforesaid view has been taken by the Apex Court. 24. Similarly, in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services provided outside the limits of Indian territorial waters not liable to Service Tax - At present the levy of service tax extends to the whole of India except the State of Jammu and Kashmir. The expression India includes the territorial waters of India. Indian territorial waters extend up to twelve nautical miles from the Indian land mass. Chapter V of the Finance Act which governs the levy of Service Tax has not extended to the levy to designated areas in the Continental Shelf and the Exclusive Economic Zone of India ( as has been done in case of Central Excise vide Notification No. 166/87- C.E., dated 11-6-87 and in case of Customs by Notification Nos. 11/87-Cus., dated 14-1-87 64/97-Cus., dated 1.12.97). It is, therefore, clarified that the services provided beyond the territorial waters of India are not liable to Service Tax as provisions of Service tax have not been extended to such areas so far. (Source : Service Tax Circular No. 36/4/2001, dated 18- 10-2001) It would thus be clear that the Department itself was aware that unless a notification was issued under the provisions of Maritime Zones Act, then the provisions of Chapter V of Finance Act which gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact, as to whether they were in the areas which were covered by the notifications of 1986 and 1996 or not. 30. Vide 2010 Notification, the Govt. of India in supersession of the 2002 Notification, extended the provisions of Chapter V of the Finance Act, 1994 to the areas specified in column 2 of the Table in the continental shelf and exclusive economic zone of India, for the purposes as mentioned in column 3 of the said Table. Sr. No.1 of the Table would show that in respect of whole of continental shelf and exclusive economic zone of India, any services provided for activities pertaining to construction of installations, structures and vessels for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof have been brought under the tax net. It would further be seen from Sr. No.2 of the table, that insofar as the installations, structures and vessels within the continental shelf and exclusive economic zone of India constructed for the purpose of prospecting and extraction or production of mineral oil and natural gas are concerned, any service provided or to be provided by or to such installations, structures and vessels and for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LORD CAIRNS stated the principle thus: If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hands, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable, construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute. VISCOUNT SIMON quoted with approval a passage from Rowlatt, J. expressing the principle in the following words : 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 tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. Relying upon this passage Lord Upjohn said: Fiscal measures are not built upon any theory of taxation . 10. It is obvious that the Legislature has deliberately used the word ` ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 and observed as follows: the principle in favour of a strict literal approach ... simply means that 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. 25. In Commissioner of Stamp Duties (NSW) v. Simpson, (1917) 24 CLR 209 Barton J., citing Viscount Haldane in Lumsden v Inland Revenue Commissioners, [1914] AC 877, stated the following: The duty of Judges in construing Statutes is to adhere to the literal Construction unless the context renders it plain that such a construction cannot be put on the words. This rule is especially important in cases of Statutes which impose taxation. The Court in Simpson case (supra) sought to determine whether a deed poll constituted a settlement for the purposes of Section 49 of the Stamp Duties Act, 1898 (NSW). Section 3 which defined the word 'settlement' as meaning 'any contract or agreement' was examined. The Court by adopting a strict literal approach held that only a contract or an agreement cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x avoidance scheme and should therefore be disallowed under Section 260 of the Income Tax Assessment Act, 1936(Cth). The Court held that under a literal interpretation Section 36A could apply to allow the taxpayer to claim a loss. Barwick CJ, speaking for the majority relied on the decision in Inland Revenue Commissioners v Westminster (Duke), [1936] AC 1 which advocated the literal approach be applied when interpreting taxation legislation and stated the following: It is for the Parliament to specify, and to do so, in my opinion, as far as language will permit, with unambiguous clarity, the circumstances which will attract an obligation on the part of the citizen to pay tax. The function of the court is to interpret and apply the language in which the Parliament has specified those circumstances. The court is to do so by determining the meaning of the words employed by the Parliament according to the intention of the Parliament which is discoverable from the language used by the Parliament. It is not for the court to mould or to attempt to mould the language of the statute so as to produce some result which it might be thought the Parliament may have intended to achieve, thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). 33. In B. Premanand and Ors.v. Mohan Koikal and Ors., (2011)4 SCC 266 this Court has observed as follows: 32. The literal rule of interpretation really means that there should be no interpretation. In other words, we should read the statute as it is,without distorting or twisting its language. 33. We may mention here that the literal rule of interpretation is not only followed by Judges and lawyers, but it is also followed by the lay man in his ordinary life. To give an illustration, if a person says this is a pencil , then he means that it is a pencil; and it is not that when he says that the object is a pencil, he means that it is a horse, donkey or an elephant. In other words, the literal rule of interpretation simply means that we mean what we say and we say what we mean. If we do not follow the literal rule of interpretation, social life will become impossible, and we will not understand each other. If we say that a certain object is a book, then we mean it is a book. If we say it is a book, but we mean it is a horse, table or an elephant, then we will not be able to communicate with each other. Life will become impossible. Hence, the meaning of the literal rule of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the liability to pay taxes in clear terms. If the concerned provision of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the interpretation which favours the subjects, as against there the revenue, has to be preferred. This is a well established principle of statutory interpretation, to help finding out as to whether particular category of assessee are to pay a particular tax or not. No doubt, with the application of this principle, Courts make endeavour to find out the intention of the legislature. At the same time,this very principle is based on fairness doctrine as it lays down that if it is not very clear from the provisions of the Act as to whether the particular tax is to be levied to a particular class of persons or not, the subject should not be fastened with any liability to pay tax. This principle also acts as a balancing factor between the two jurisprudential theories of justice - Libertarian theory on the one hand and Kantian theory along with Egalitarian theory propounded by John Rawls on the other hand. 41.3 Tax laws are clearly in derogation of personal rights and property interests and are, therefore, subject to strict con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not proceed to add the words which are not found in the statute. It is equally settled that if the person sought to be taxed comes within the letter of the law he must be taxed, however, great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. It is further settled that an equitable, construction, is not admissible in a taxing statute, where the courts can simply adhere to the words of the statute. It is equally settled that a taxing statute is required to be strictly construed. Common sense approach, equity, logic, ethics and morality have no role to play while interpreting the taxing statute. It is equally settled that nothing is to be read in, nothing is to be implied and one is required to look fairly at the language used and nothing more and nothing less. No doubt, there are certain judgments of the Apex Court which also holds that resort to purposive construction would be permissible in certain situation. However, it has been held that the same can be done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. The 2010 Notification uses the words in supersession of the Government of India, in the Ministry of Finance (Department of Revenue) Notification No.1/2002 service tax dated 1.3.2002 . It could thus be clear that the legislative intent is to supersede the 2002 Notification as amended in 2009 and substitute with 2010 notification. The legislative intent could further be gathered from the following words : except as things done or omitted to be done before such super session. It would thus be seen that what has been saved by the notification upon supersession is only in respect of things done or omitted to be done before supersession i.e before 27.2.2010. The words used are Central Government hereby extends . It is thus clear upon plain reading of 2010 notification, that the legislative intent of 2010 notification is (i) that it supersedes the 2002 notification, it consequently also supersedes 2009 amendment which was brought in 2009 to the 2002 Notification, (ii) it only saves the things done or omitted to be done before such supersession and (iii) from the date of issuance it extends the provisions of Chapter V of the Finance Act, 1994 to the areas specified in colu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is illegal and, thus, cannot be sustained. 39. It would thus be seen that the Apex Court held that the casus omissus could be provided only in case of clear necessity and when reasons for the same could be found in four corners of the statute. It further held that casus omissus could not be readily inferred. 40. Again in the case of Southern Petrochemical Industries Co. Ltd. vs. Electricity Inspector Etio and Ors. (2007) 5 SCC 447, the Apex Court was considering the provisions of Tamil Nadu Tax on Consumption or Sale of Electricity Act, 2003. An argument was advanced that the words unless different intention appears should be read in Section 20(1) of the said Act. Rejecting the contention, the Apex Court observed as follows :- 92. Submission of Mr. Andhyarujina that this Court must read the words unless a different intention appears in sub- section (1) of Section 20 of the 2003 Act, in our opinion, is impermissible in law. We have rejected a similar contention of Mr. Nariman urging us to read down and apply the purported rule of purposive construction while construing Section 14 of the 2003 Act. We do not intend to apply different tests in the matter of const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the services rendered to installations, structures and vessels, the 2010 Notification widens the tax scope and amongst various other services also brings into the service tax net the services rendered to or by the installations, structures and vessels. It can thus be seen that the present transaction, which is in the nature of providing services by the vessels of the appellant for the purpose of prospecting mineral oil and as such is a service consumed by the seabed of Continental Shelf of India would come in the tax net only after 2010 Notification came into effect. We are of the considered view that the said service cannot be said to be a service rendered to the installations, structures and vessels. Not only this, but the Respondent also in the order- in-original has noted that the appellant is discharging applicable service tax on the services received by installations, structures and vessels in the Continental Shelf and Exclusive Economic Zone of India but was not discharging the service tax on services consumed by the seabed of Continental Shelf of India. 43. Since we have held that the transactions involved in the present case is not taxable under the Notification o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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