Commissioner of Customs (Import) Vs Dilip Kumar And Company & Ors. (Supreme Court of India)
The Constitution Bench of the Supreme Court of India examined the correct interpretative approach for tax exemption notifications under fiscal statutes in Commissioner of Customs (Import) v. Dilip Kumar & Co. The reference arose due to conflicting judicial views, particularly the ruling in Sun Export Corporation, which held that ambiguity in exemption provisions should be interpreted in favour of the assessee. Doubts were raised regarding this principle, leading to reconsideration by a larger Bench.
The dispute originated from the classification of imported Vitamin E50 powder. The importers claimed concessional customs duty under a notification applicable to prawn feed, while the department denied the benefit, classifying the product differently. Lower appellate authorities ruled in favour of the assessee, relying on Sun Export Corporation, prompting the Revenue to appeal.
The Court undertook a detailed examination of statutory interpretation principles, particularly in taxation. It reiterated that taxing statutes must be strictly interpreted, with no scope for equity, intendment, or presumption. Liability to tax must arise strictly from clear statutory language, and ambiguity in charging provisions must be resolved in favour of the assessee. However, the Court distinguished exemption provisions from charging provisions, noting that exemptions reduce the tax burden on one class while increasing it on others, thereby requiring strict scrutiny.
