Assessee has to prove tax exemption - Supreme Court
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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 a company, Sun Export Corporation, which imported a consignment of feed grade Vitamin-E50 powder in 1999. The company 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 twojudge bench referred the matter to a three-judge bench, which opined it required reconsideration, bringing it before the constitution bench.
“Any deviation from conditions or ambiguity is likely to deny the benefit of exemption/concession.” #casansaar (Source - Economic Times)
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