FISCAL INCENTIVES AND EXEMPTIONS: REFLECTIONS ON THE NEW INTERPRETATION STANDARD

Abstract

Interpretation of fiscal statutes, as contrasted from interpretation of other enactments, is a nuanced task as a variety of additional considerations apply. Jurisprudential survey reveals that the complexity is accentuated when subordinate fiscal legislation particularly those relating to exemptions or extending concessions, form the subject-matter of interpretation. Ruefully noting the “unsatisfactory state of the law as it stands today”, the Supreme Court a few years back reiterated the need “to resolve the doubts” and declare the legal position clearly.1 In this background, a recent decision of a five-judge bench of Supreme Court in Dilip Kumar2 has revisited the entire law governing the interpretation of such fiscal exemption provisions which confer concessional treatment to the taxpayer. The decision is, in a sense, a course-correction as it simultaneously affirms and overrules various earlier decisions. In another sense, the decision categorically and substantially alters the legal standard of interpretation in such cases. This article appraises the changes brought about by this decision in the interpretative standard and the larger ramifications in the space of fiscal jurisprudence.