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TMI Blog2023 (10) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Punit Vinay, AOR JUDGMENT DIPANKAR DATTA, J. PREFACE 1. We are tasked to decide two civil appeals that centre around a common question: whether the educational institutions in question, viz. (i) the Indian Institute of Technology, Patna ("IIT Patna", hereafter) and (ii) the National Institute of Technology, Rourkela ("NIT Rourkela", hereafter), are covered by the definition of "governmental authority" in Mega Service Tax Exemption Notification No. 25/2012, G.S.R 467(E) dated 20th June, 2012 ("Exemption Notification", hereafter) inter alia exempting various services from the tax network rendered to government, governmental, or local authorities. If "governmental authority" as defined in the Exemption Notification takes within its embrace IIT Patna and NIT Rourkela, they would be eligible for an exemption from the service tax that otherwise applies to construction services provided by service providers or subcontractors within their premises. THE APPEALS 2. In Civil Appeal No. 3991 of 2023 ("CA-I", hereafter), the appellant assails the judgment and order dated 03rd March, 2016 of the High Court of Judicature at Patna ("Patna High Court", hereafter) whereby a writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority", sought to broaden the scope of the exemption. The amended definition is set out hereinbelow: "(s) "governmental authority" means an authority or a board or any other body; (i) set up by an Act of Parliament or a State Legislature; or (ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution." 8. Having outlined the relevant legal framework under consideration, we consider it proper to delve into the facts that formed the genesis of the writ petitions before the Patna High Court and the Orissa High Court. FACTS 9. The material facts, leading to the presentation of CA-I, are as follows: a) IIT Patna, the fourth respondent, appointed NBCC India Limited ("NBCC", hereafter), the third respondent, as a Project Management Consultant to oversee the construction of building/facilities/services for its academic complex. Vide Letter of Award dated 20th December, 2012, NBCC awarded the contract for construction works to SPCL at a total contract price of Rs.167,70,09,043.00 (Rupees One hundred Sixty-Seven Crore Seventy Lakh Nine Thousand Forty- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt seeking the following relief: "(i) the instructions of the respondent no.2 dated 30.06.2015 (as contained in Annexure-6) directing immediate recovery adjustment of service tax reimbursed by the respondent no.4 be quashed. (ii) for a declaration that [IIT Patna] is obliged to reimburse service tax paid by the [SPCL] on the service of construction of its building premises. (iii) alternatively for a direction to the [Commissioner, Customs Central Excise and Service Tax] to refund the amount of service tax paid by [SPCL] on the service of construction of building premises of [IIT Patna] in pursuance of the contract." f) Vide the impugned judgment, the Patna High Court allowed the writ petition of SPCL and held that IIT Patna would indeed be covered within the definition of a "governmental authority" under clause 2(s). In its interpretation of clause 2(s), the Court observed that provisions contained in sub-clauses (i) and (ii) of clause 2(s) are independent disjunctive provisions and the expression "90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution" is related to sub-clause (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . SUBMISSIONS 11. Ms. Bagchi, learned counsel representing the appellants in both the appeals, contended that IIT Patna and NIT Rourkela were not eligible for the benefits outlined in the Exemption Notification due to its exclusion from the definition of "governmental authority". In contesting the impugned judgment and order of the Patna High Court, she advanced the following submissions: a) The Amendment to the Exemption Notification carried out vide the Clarification Notification aimed to broaden its applicability beyond statutory bodies, extending its benefits to government-established entities as well. The Clarification Notification further clarified this expansion by encompassing government-established bodies within the definition of "governmental authorities". However, it is important to note that the requirement of 90% or more government equity or control still applies to both types of governmental bodies, whether they are statutory or non-statutory. b) The High Court's error lay in its interpretation of the sub-clauses as independent and disjunctive. The deliberate separation of the condition of "90% or more participation" from sub-clause (ii) serves the specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r responsibilities akin to Schedule XII of the Constitution; the two educational institutions, therefore, do not fall under the classification of "governmental authority" nor are exempted under the negative list. g) SPCL has paid service tax through self-assessment. Reliance was placed on ITC Limited vs. Commissioner of Central Excise, Kolkata (2019) 17 SCC 46 in support of the contention that the order of self-assessment being an assessment order under the Customs Act, 1962 is appealable and a refund claim is not sustainable unless the assessment itself is set aside. h) Classification of IIT Patna as a "governmental authority" has no bearing on the applicability of service tax to the transaction between SPCL and NBCC. The crux of the argument lies in the specific nature of this case: SPCL has delivered its services to NBCC, not directly to IIT Patna. IIT Patna has engaged NBCC as a Project Management Consultant, making SPCL the service provider and NBCC the service recipient in this particular transaction. Consequently, it cannot be contended that SPCL provided services directly to IIT Patna. NBCC lacks the status of a "government, local authority, or governmental authority" u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndition. No case for interference having been set up, the counsel prayed for dismissal of CA-I. ANALYSIS 14. Before we commence our analysis, it would be apt to juxtapose the relevant clauses from the Exemption Notification and the Clarification Notification for facility of appreciation: EXEMPTION NOTIFICATION CLARIFICATION NOTIFICATION 2(s) "governmental authority'' means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution; 2(s) "governmental authority" means an authority or a board or any other body; (i) Set up by an Act of Parliament or a State Legislature; or (ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution; 15. Having read the two definitions, first and foremost, it is necessary to ascertain the objective behind the Clarification Notification which amended the Exemption Notification and re- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to be placed by the appellants, for the reasons that follow. 18. In Superintendent & Legal Remembrancer, State of West Bengal vs. Corporation of Calcutta (1967) 2 SCR 170, a nine-judge Bench of this Court, relying upon Craies' On Statute Law (6th edn), stated that where the language of a statute is clear, the words are in themselves precise and unambiguous, and a literal reading does not lead to absurd construction, the necessity for employing rules of interpretation disappears and reaches its vanishing point. 19. This Court in Union of India & Ors. vs. Ind-Swift Laboratories Ltd. (2011) 4 SCC 635, held that harmonious construction is required to be given to a provision only when it is shrouded in ambiguity and lacks clarity, rather than when it is unequivocally clear and unambiguous. 20. What is plain and ambiguous from a bare reading of a provision under consideration must be interpreted in the same way as it has been stipulated and not in a way that it presumes deficiency and radically changes the meaning and context of the provision. This is the view expressed in the decision of a five-judge Bench of this Court in Commissioner of Sales Tax, U.P. vs. Modi Sugar Mills Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "and" and "and" does not generally mean "or". 23. When the meaning of the provision in question is clear and unambiguous by the usage of "or" in clause 2(s), there remains no force in the submission of Ms. Bagchi that "or" should be interpreted as "and". In our opinion, the word "or" employed in clause 2(s) manifests the legislative intent of prescribing an alternative. Going by the golden rule of interpretation that words should be read in their ordinary, natural, and grammatical meaning, the word "or" in clause 2(s) clearly appears to us to have been used to reflect the ordinary and normal sense, that is to denote an alternative, giving a choice; and, we cannot assign it a different meaning unless it leads to vagueness or makes clause 2(s) absolutely unworkable. We are fortified in our view by the decision of this Court in Sri Jeyaram Educational Trust vs. A.G. Syed Mohideen (2010) 2 SCC 513, where it was held thus: "11. It is now well settled that a provision of a statute should have to be read as it is, in a natural manner, plain and straight, without adding, substituting or omitting any words. While doing so, the words used in the provision should be assigned and ascribed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, it can be observed upon a plain and literal reading of clause 2(s) that while there is a semicolon after sub-clause (i), sub-clause (ii) closes with a comma. This essentially supports the only possible construction that the use of a comma after sub-clause (ii) relates it with the long line provided after that and, by no stretch of imagination, the application of the long line can be extended to sub-clause (i), the scope of which ends with the semicolon. We are, therefore, of the opinion that the long line of clause 2(s) governs only sub-clause (ii) and not sub-clause (i) because of the simple reason that the introduction of semicolon after sub-clause (i), followed by the word "or", has established it as an independent category, thereby making it distinct from sub-clause (ii). If the author wanted both these parts to be read together, there is no plausible reason as to why it did not use the word "and" and without the punctuation semicolon. While the Clarification Notification introduced an amended version of clause 2(s), the whole canvas was open for the author to define "governmental authority" whichever way it wished; however, "governmental authority" was re-defined with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of the definition of "governmental authority" in clause 2(s) of the Clarification Notification, which the appellants appeal to us to accept, having been brought to our notice, we are unable to find any fault in the decisions of the Patna High Court and the Orissa High Court extending the benefit of the Exemption Notification to the educational institutions, and a fortiori, to SPCL. 29. We need not draw guidance from any of the decisions cited by Ms. Bagchi, except one, on the question of construction of the relevant clause because none of those decisions had the occasion to deal with the issue emanating from the Exemption Notification and the Clarification Notification that we are tasked to consider. 30. Ms. Bagchi heavily relied on the decision of a five-judge Bench of this Court in Dilip Kumar (supra) to urge that in case of any ambiguity in interpreting an exemption notification, the interpretation that favours the revenue must be adopted; also, the burden of proving applicability of the exemption notification would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. At the outset, we record that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... say. This is the real basis of the so-called golden rule of construction that where the words of statutes are plain and unambiguous effect must be given to them. A court should give effect to plain words, not because there is any charm or magic in the plainness of such words but because plain words may be expected to convey plainly the intention of the legislature to others as well as judges." 32. Keeping the above-said ratio in mind, an interpretation of the relevant provision resulting in the expanded scope of its operation cannot in itself be sufficient to attribute ambiguity to the provision. 33. To make a statute workable by employing interpretative tools and to venture into a kind of judicial legislation are two different things. Merely because the statute does not yield intended or desired results, that cannot be reason for us to overstep and cross the Lakshman Rekha by employing tools of interpretation to interpret a provision keeping in mind its outcome. Interpretative tools should be employed to make a statute workable and not to reach to a particular outcome. CONCLUSION 34. For the reasons aforesaid, we find no merit in these appeals. The impugned judgments and order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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