The constitution bench of the Supreme Court said that the burden of proving a tax exemption is on assessee in case of a lacuna or if there is no settled law. The bench said that the assessee can’t derive the benefit of any ambiguity in provisions. The five-member bench was composed of Justices Ranjan Gogoi, NV Ramana, R Banumathi, Mohan M shantanagoudar and S Abdul Nazeer. The bench found the solution for interpretation of tax exemption provision where there is a lacuna or ambiguity.
The bench overruled the judgment of Sun Export case and pronounced that “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.” Further, the bench also ruled that “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 favor of the revenue.”
The court said that ratio in Sun Export case “is not correct and all the decisions which took similar view stand overruled as earlier view created confusion and resulted in an unsatisfactory state of law”.
After the pronouncement of judgment, it is expected that it will affect the precedents. Earlier the assessee was given was favored and given the benefit of doubt. However, This ruling will significantly affect the taxpayers and further settle the tax disputes.
Tags : #India#Tax Exemption#Strict Interpretation