If there are two exemptions, which are applicable to a particular commodity, the taxpayer can choose the one more beneficial to himself. There cannot be any bar or prohibition or estoppel from claiming such an exemption even if he has not claimed it at an initial stage. This judicial pronouncement has come recently from the Supreme Court in the case of Share Medical Care vs. Union of India – 2007(209) ELT321 (SC).
The issue in this case was that there were two types of exemption under two different categories for some medical equipment imported. The importer originally claimed under one category but later claimed under another category, which was more beneficial. Revenue held that once the taxpayer claimed under one category he couldn’t change over to another category of exemption as an ‘afterthought’.
The Supreme Court held that the fact that the taxpayer applied for one type of exemption originally does not mean that he cannot claim exemption, which is more beneficial to him at a later stage. The Supreme Court categorically held that “even if an applicant does not claim benefit under a particular notification at the initial stage he is not barred, prohibited or estopped from claiming such exemption at a later stage”.
There have been several previous judgements of the Supreme Court to the same effect. In the case of CCE vs. Indian Petro Chemicals – 1997 (92) ELT13 (SC), the Supreme Court held that if two exemption notifications are applicable in a given case, the taxpayer can claim the more beneficial one. In the case of HCL vs. CC – 2001 (30) ELT 405 (SC), the Court held that where there are two exemptions that cover the goods, the assessee is entitled to the benefit of the exemption which gives him greater relief. In the case of Unichem Laboratories Ltd vs. CCE – 2002 (145) ELT502 (SC), the Supreme Court held that the benefit of a more beneficial exemption is available to the assessee and denying it to him is unfair.
The Court gave a stricture to Revenue using quite strong language, namely the following, “There can be no doubt that the authorities functioning under the Act must, as are in duty bound, protect the interest of the Revenue by levying and collecting the duty in accordance with law – no less and also no more. It is no part of their duty to deprive an assessee of the benefit available to him in law with a view to augment the quantum of duty for the benefit of the Revenue. They must act reasonably and fairly”.
In yet another income tax case of Kerala State Cooperative Marketing Federation Ltd. vs. CIT – (1998) 5 SCC 48, the Supreme Court held that if income fell within any of the several heads of exemption, the taxpayer can avail of the more beneficial one.
In conclusion I must say that it is extremely unfortunate that Revenue had ignored several judgements to the same effect even before this judgement. It is equally unfortunate that the Additional Solicitor General appeared in this case on behalf of Revenue without even caring to see that there are so many judgements of the Supreme Court, which clearly held that it was permissible to claim a more beneficial exemption at a later stage even when another exemption was claimed or none was claimed originally.
It has been a practice in the Customs Department for long years to allow such claim of exemption at a later stage right up to appeal and revision stage. I know it for certain from my experience over decades. But now the tendency has come to somehow deny what is due to the taxpayers. That is what leads to so many Supreme Court judgements reiteratering such a simple proposition as this in the present judgement.
The writer is former member, Central Board of Excise & Customs
Taxpayer`s choice
INDIRECT TAXES: LAW OF THE LAND
Sukumar Mukhopadhyay / New Delhi Jun 15, 2007, 20:52 IST
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