Law and language

Since our laws are drafted in the English language, the grammar of the language comes into play a lot.

In a recent case, Canon, Samsung, Sony and others had imported digital still image video cameras, which were duly cleared from the customs without payment of duty under an exemption notification.

The bill of entry was verified by the Inspector; first check was carried out by the Deputy Commissioner of Customs; and then the goods were cleared.

The Directorate of Revenue Intelligence found foul with the clearance and two years later issued a Show Cause Notice (SCN), rejecting the exemption on some technical grounds. The importers contended that the DRI did not have the authority to issue a SCN under Section 28(4) of the Customs Act, which empowers “the proper officer” to issue the notice if the duty had been fraudulently not (or short) levied.

‘The’ Proper Officer

The Supreme Court in the recent decision of Canon India Pvt. Ltd. Vs Commissioner of Customs, observed that: (i) there are only two articles “a (or an)” and “the”. While “a (or an)” is an indefinite article because it does not refer to a specific person or thing, “the” is a definite article because it points out and refers to a particular person or thing; (ii) if the Parliament intended that any proper officer could have exercised the power under Section 28(4), it could have used the word “any”; (iii) the Parliament employed the article “the”, not accidentally, but with the intention to designate the proper officer who had assessed the goods at the time of clearance; (iv) “Proper officer” need not be the very same officer who had cleared the goods but can be the successor in office or any other officer authorised to exercise the powers within the same office. The power to review the earlier decision of assessment is not inherent in any authority and has been conferred specifically on “the proper officer”; (v) The Additional Director General of DRI is not the proper officer to exercise the power under Section 28(4) and hence the proceedings had to be set aside.

A number of assessees, (who must have been continuously “tensed” over the matter) would heave a big sigh of relief with this decision. This interpretation of “the” would be applied in other tax statutes too.

Prepositions, articles, punctuations

In many decisions, it would be a journey back to the school for English grammar. Under Income Tax Law, an assessee could buy or construct ‘a residential house’ and claim exemption from capital gains under certain circumstances. The assessee bought more than one house and claimed the exemption.

The Karnataka High Court in the case of CIT Vs D Ananda Basappa held that the contention of the Revenue that the phrase “a” residential house would mean one residential house is not correct.

The expression “a” residential house should be understood in a sense that building should be of residential in nature and “a” should not be understood to indicate a singular number. This view prompted the Parliament to amend Section 54 of the Income Tax Act and substitute “a residential house” with “one residential house”.

( The author is a Chennai-based advocate and tax consultant)

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