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Benefit of Ambiguity In Tax Exemption Notification Should Go In Favour Of Revenue Department

In COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI  vs M/S. DILIP KUMAR AND COMPANY & ORS., the Supreme Court Constitution bench was set up to examine correctness of Judgment in Sun Export Corporation, Bombay v. Collector of Customs case by a three-Judge bench. In the said judgment, it was held that an ambiguity in a tax exemption provision or notification must be interpreted so as to favour the assessee claiming the benefit of such exemption.

The five judge bench concluded that the Sun Export judgment created confusion and resulted in unsatisfactory state of law and decided that any ambiguity in a taxing statute should enure to the benefit of the subject/assessee, but any 66 ambiguity in the exemption clause of exemption notification must be conferred in favour of revenue – and such exemption should be allowed to be availed only to those subjects/assesses who demonstrate that a case for exemption squarely falls within the
    
parameters enumerated in the notification and that the claimants satisfy all the conditions precedent for availing exemption. Presumably, for this reason, the Bench which decided Surendra Cotton Oil Mills Case (supra) observed that there exists unsatisfactory state of law and the Bench which referred the matter initially, seriously doubted the conclusion in Sun Export Case (supra) that the ambiguity in an exemption notification should be interpreted in favour of the assessee.


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