Latest News

  • Home
  • National
  • Assessee has to prove tax exemption: Supreme Court
Assessee has to prove tax exemption: Supreme Court
Thursday, August 2, 2018 IST
Assessee has to prove tax exemption: Supreme Court

NEW DELHI: The onus of proving a tax exemption where the guidelines aren’t clear would be on the assessee, and he cannot claim the benefit of any such ambiguity in provisions, a constitution bench of the Supreme Court said.
 

 
 

Experts said the ruling would completely alter precedents as also the principle of law where the assessee was given the benefit of doubt. This will have significant ramifications for taxpayers and influence decision on past as well as future litigation over tax disputes, they said.
 
The five-member bench, comprising Justices Ranjan Gogoi, NV Ramana, R Banumathi, Mohan M Shantanagoudar and S Abdul Nazeer, was constituted to look into what is the rule to be applied while interpreting a tax exemption provision or notification when there is an ambiguity.
 
“Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification,” it said in an 83-pages judgement delivered on Monday.
 
“When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject or assessee and it must be interpreted in favour of the revenue,” the bench ruled.
 
PRAWN FEED OR CHEMICAL INGREDIENTS?
 
The case pertains to assessee Dilip Kumar, and overturns decision in case of Sun Export Corporation, who imported a consignment of feed grade Vitamin-E50 powder in 1999. The assessee claimed the benefit of a concessional 5% duty instead of the standard 30%, classifying the product as prawn feed that attracted the lower rate.
 
Exemption was denied by customs on the ground that the imports contained chemical ingredients for animal feed and were not animal feed or prawn feed as such, and so were not eligible for the concessional rate.
 
The revenue department approached the apex court following adverse ruling in the appellate fora. A two-judge bench referred the matter to a three-judge bench, which opined it required reconsideration, bringing it before the constitution bench.
 
 

 
 

HIGHER RISK FOR INDUSTRY
 
Tax experts said this decision would have wide ramifications for tax payers. “Till now, the general understanding was that to determine the eligibility, an exemption notification has to be interpreted strictly but once having determined so, it ought to be interpreted liberally to ensure that benefit can be provided to the assessee,” pointed out Pratik Jain, indirect taxes leader at PwC.
 
With this decision, in all cases an exemption notification has to be interpreted strictly and in case of ambiguity or alternate views, the benefit of doubt should go to the government, Jain said, calling it a landmark decision that would have a widespread impact on past as well as future litigation.
 
“From industry standpoint, it would mean that rigours of interpreting an exemption notification have to be much more as the risk goes up substantially in case of disputes,” he said.
 
Other tax experts concurred with the view.
 
“The ruling is likely to have far-reaching ramifications, as going forward tax authorities are going to interpret exemption notifications in a constrict way and would thus insist on strict adherence to conditions attached to claiming benefit under the notifications,” said Harpreet Singh, partner-indirect taxes at KPMG. “Any deviation from conditions or ambiguity is likely to deny the benefit of exemption/concession.”

 
 
 
 
 

Related Topics

 
 
 

Trending News & Articles

 Article
Here is the full list of 827 porn websites banned by the DoT

While the Uttarakhand High Court has asked to block 857 websites, the Ministry of Electronics and IT (Meity) found 30 portals without any pornographic content. ...

Recently posted . 61K views . 1 min read
 

 Article
Class XII Boys Raped 16-Year-old in Dehradun School After Watching Porn on Phone: Police

The four boys as well as five school officials, including the director and principal, were arrested after the incident. The minors were presented before the Juvenil...

Recently posted . 8K views . 1 min read
 

 Article
Sept 27,2001 Rahul Gandhi and his girl friend Veronique,was arrested in Logan airport in Boston

Rahul was having an Italian passport and was carrying suitcase full of dollars. Some say it was about was it $2 million. Rahul and his girl friend was th...

Recently posted . 7K views . 7 min read
 

 Article
TOP 10 GYM EQUIPMENT BRANDS IN INDIA 2017

True – Tr...

Recently posted . 6K views . 83 min read
 

 
 

More in National

 Article
Paytm Payments Bank: Here's What It Means for Paytm Customers

Paytm on Tuesday launched the Paytm Payments Bank in India, declaring the new unit by means of an open notice in daily papers and a blog entry. After Vijay Shekhar ...

Recently posted. 749 views . 32 min read
 

 Article
Why women’s safety in Delhi NCR is still a joke!

It was a just another evening as I headed home to Lajpat Nagar from my office in Noida. Being a journalist, I was accustomed to working late hours and was prepare...

Recently posted. 547 views . 2 min read
 

 Article
IRCTC next-gen e-ticketing website revamped! 10 new features every Indian Railways passenger will cheer

Financial Express Online takes a look at 10 new features on the revamped IRCTC next-generation e-ticketing website that will cheer every Indian Railways passenger...

Recently posted. 761 views . 1 min read
 

 Video
Types Of Girlfriends - MostlySane



Recently posted . 1K views
 

 Reviews
Top 10 Real Estate Websites for Property Search



Recently posted . 1K views . 48 min read
 

 Reviews
Top Schools in Delhi-NCR



Recently posted . 1K views . 126 min read
 

 Article
Court Admits Suit Against Manoj Tiwari On Arvind Kejriwal's Slap Attack

In his complaint, Sushil Kumar also sought the prosecution of the BJP leaders for an alleged criminal conspiracy to defame the ruling Aam Aadmi Party in Delhi by te...

Recently posted. 467 views . 1 min read
 

 Article
4 lakh shell companies face deregistration over non-filing of I-T returns: Report

New Delhi: Over 4 lakh shell companies face deregistration over non-filing of I-T returns, as per a newspaper report. A report in the Times of I...

Recently posted. 659 views . 16 min read
 

 
 
 

   Prashnavali

  Thought of the Day

Every Test in Our Life Makes Us Bitter Or Better .....
Anonymous

Be the first one to comment on this story

Close
Post Comment
Shibu Chandran
2 hours ago

Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

November 28, 2016 05:00 IST
Shibu Chandran
2 hours ago

Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

November 28, 2016 05:00 IST
Shibu Chandran
2 hours ago

Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

November 28, 2016 05:00 IST
Shibu Chandran
2 hours ago

Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

November 28, 2016 05:00 IST


ads
Back To Top