What Is Substantive Law ? What Is Procedural Law ? And Which Of The Two Is Superior Law ?

Substantive law refers to how facts of each case are handled and how to penalize or ascertain damages in each case. Whereas, Procedural law refers to the different processes through which a case proceeds. Substantive laws define the legal relationship between different individuals, or between individuals and the State. Procedural laws define the rules with which substantive laws may be enforced. Substantive law is considered to be main law and Procedure law as subordinate to Substantive Law.

Illustrations :

1. The question of whether an individual is competent to enter into a contract is dealt under Substantive Law, whereas the question of the time within which one party may sue another is dealt under Procedural Law.

2. A person has to declare his true income in income tax return, this is substantive law and return has to be filed in a particular form, within due date as prescribed is procedural law.

3. Right to appeal against an order passed by Assessing Officer before CIT(A) is a substantive law. The appeal has to be filed online in Form 35 within 30 days of receipt of order is a procedural law.

4. Payment of due taxes is substantive law, filing of income tax or GST return is a procedural law.

Separate penal actions are provided in various statutes for violation of law whether it is substantial or procedural. If a person does  not pay his due taxes,  severe penal actions are provided and in case a person pays taxes but does not file returns, soft penal actions are provided.

Substantive part of law establishes the rights, duties and liabilities of individuals. Procedural law establishes the methods, practices and ways in which a court proceeding takes place. Substantive law consists of written statutory law passed by legislature that govern how people behave,  They also define our rights and responsibilities as citizens, on the other hand, Procedural law governs the mechanics of how a legal case flows, including steps and processes of a case, it adheres to due process.

In Commissioner of Wealth Tax, Meerut vs. Sharvan Kumar Swarup & Sons 210 ITR 886 (SC) it was observed as under : “The distinction between substantive law and procedural provisions has been indicated in Black’s Law Dictionary, (Sixth Edn. P. 1203) as follows:

As a General Rule, laws which fix duties, established rights and responsibilities among and for persons, natural or otherwise, are ‘Substantive Laws’ in character, while those which merely prescribe the manner in which such rights and responsibilities may be exercised and enforce in a court are ‘Procedural Laws In Salmond’s Jurisprudence, (Twelfth Edn. P. 462), the distinction between substantive law and law of procedure is indicated in the following words:

What, then, is the true nature of the distinction? The law of procedure may be defined as that branch of the law which governs the process of litigation. It is the law of actions — jus quod ad actions pertinent — using the term action in a wide sense to include all legal proceedings, civil or criminal. All the residue is substantive law, and relates, not to the process of litigation, but to its purposes and subject-matters. Substantive law is concerned with the ends which the administration of justice seeks’ procedural law deals with the means and instruments by which those ends are to be attained. The latter regulates the conduct and relations of courts and litigants in respect of the litigation itself; the former determines their conduct and relations in respect of the matters litigated. What facts constitute a wrong is determined by the substantive law; what facts constitute proof of a wrong is a question of procedure. So far as the administration of justice is concerned with the application of remedies to violated rights, we may say that the substantive law defines the remedy and the right, while the law of procedure defines the modes and conditions of the application of the one to the others.

The division of law into two broad categories of substantive law and procedural law is well known. Broadly stated, whereas substantive law defines and provides for rights, duties, liabilities, it is the function of the procedural law to deal with the application of substantive law to particular cases and it goes without saying that the law of Evidence is a part of the law of procedure.

The law of procedure may be defined as that branch of the law which governs the process of litigation. It includes all legal proceedings whether civil, criminal or taxation. All the residue is substantive law, it relates not to the process of litigation but to its purpose and subject matter.

Substantive law deals with the ends which the administration of justice seeks while Procedural laws primarily deal with the means and instruments by which those ends can be achieved.

In the case of Thirumalai Chemicals Ltd. vs. Union of India and others IN CIVIL APPEAL Nos.3191-3194 OF 2011 the Supreme Court has held that all those laws which affect the substantive and vested rights of the parties have to be taken as substantive law, whereas any provision of law dealing with the form of the trial, mechanism of the trial or procedure thereof, has to be treated as procedural in nature.

Substantive law refers to body of rules that creates, defines and regulates rights and liabilities. Right conferred on a party to prefer an appeal against an order is a substantive right conferred by a statute which remains unaffected by subsequent changes in law, unless modified expressly or by necessary implication. Procedural law establishes a mechanism for determining those rights and liabilities and a machinery for enforcing them… Right of appeal may be a substantive right but the procedure for filing the appeal including the period of limitation cannot be called a substantive right; and aggrieved person cannot claim any vested right claiming that he should be governed by the old provision pertaining to period of limitation.

Substantive law is generally understood as superior law and procedural law subordinate to substantive law. Procedural laws are enshrined in law to determine how substantial laws are to be complied with.. One such case comes in my mind is Supreme Courts case Goetze (India) Ltd. vs CIT on 24 March, 2006 reported at  284 ITR 323 SC

Some part of above case law is reproduced below :

The question raised in this appeal relates to whether the appellant assessee could make a claim for deduction other than by filing a revised return. The assessment year in question was 1995-96. The return was filed on 30-11-1995, by the appellant for the assessment year in question. On 12-1-1998, the appellant sought to claim a deduction by way of a letter before the assessing officer. The deduction was disallowed by the assessing officer on the ground that there was no provision under the Income Tax Act to make amendment in the return of income by modifying an application at the assessment stage without revising the return.

This appellant’s appeal before the Commissioner (Appeals) was allowed. However, the order of the further appeal of the department before the Income Tax Appellate Tribunal was allowed. The appellant has approached this court and has submitted that the Tribunal was wrong in upholding the assessing officer’s order. He has relied upon the decision of this court in National Thermal Power Company Ltd. v. CIT (1998) 229 ITR 383, to contend that it was open to the assessee to raise the points of law even before the Appellate Tribunal.

The decision in question is that the power of the Tribunal under section 254 of the Income Tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appellate Tribunal under section 254 of the Income Tax Act, 1961. There shall be no order as to costs.

In above case the assessee was denied the benefit of some deduction which  was not claimed in Income Tax Return but was claimed later on by filing separate letter. The claim was denied even by Supreme Court of India. A particular deduction is allowable or not is a  substantive law and claiming the same in Income Tax Return is a procedural law. In this case Procedural law was considered main law and substantial law was put aside.

I hope the article shall be beneficial to readers.

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