# CASE DETAILS COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX, PATNA v. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS

- **Citation:** 2023 INSC 910
- **Court:** Supreme Court of India
- **Decided:** 2023-10-13
- **Case number:** Civil Appeal No. 3991 of 2023
- **Bench:** S. Ravindra Bhat, Dipankar Datta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/case-details-commissioner-customs-central-excise-and-service-tax-patna-v-m-s-36859
- **Pages:** 22

## Headnote

Issue for consideration: Whether the educational institutions-Indian
Institute of Technology, Patna and the National Institute of Technology,
Rourkela are covered by the defi nition of "governmental authority" in
Mega Service Tax Exemption Notifi cation inter alia exempting various
services from the tax network rendered to government, governmental, or
local authorities.
Tax/Taxation - Service tax - Exemption from - Eligibility -
Educational institutions-IIT Patna and NIT Rourkela if covered by the
defi nition of 'Government authority' in Mega Service Tax Exemption
Notifi cation No. 25/2012, G.S.R 467(E) dated 20th June, 2012, exempting
various service from service tax:
Held: Educational institutions-IIT Patna and NIT Rourkela fall under
the amended defi nition of 'Government authority' under clause 2(s) and
are eligible for the benefi t in the Exemption Notifi cation to the educational
institutions and exempted from service tax - Amended definition of
'government authority' in clause 2(s) by way of Clarifi cation Notifi cation,
has widened the exemption base for service tax to be provided even to an
authority or a board or any other body, set up by an Act of Parliament or a
State Legislature without the condition of having been established with 90%
or more participation by way of equity or control by Government to carry
out any function entrusted to a municipality u/Art. 243W - Clarifi cation
Notifi cation introduced an amended version of clause 2(s), which re-defi ned
422
SUPREME COURT REPORTS
[2023] 15 S.C.R.
"governmental authority" with a purpose to make the clause workable in
contra-distinction to the earlier defi nition - Decisions of the Patna High
Court and the Orissa High Court rightly extending the benefi t of the
Exemption Notifi cation to the educational institutions, and a fortiori, to
SPCL, is upheld - Thus, the impugned judgments and orders are upheld -
Constitution of India - Art. 243W. [Paras 30, 34]
Circular/Government order/Notifi cation - Mega Service Tax
Exemption Notifi cation - Clause 2(s)(as amended by clarifi cation
Notifi cation), defi ning 'Government Authority' - Interpretation of word
'or' employed in clause 2(s):
Held: Word "or" employed in clause 2(s) manifests the legislative intent
of prescribing an alternative - Going by the golden rule of interpretation that
words should be read in their ordinary, natural, and grammatical meaning,
the word "or" in clause 2(s) clearly appears to have been used to refl ect the
ordinary and normal sense, that is to denote an alternative, giving a choice;
and, a diff erent meaning cannot be assigned unless it leads to vagueness or
makes clause 2(s) absolutely unworkable - Word "or" between sub-clauses
(i) and (ii) indicates the independent and disjunctive nature of sub-clause
(i), meaning thereby that "or" used after sub-clause (i) cannot be interpreted
as "and" so as to tie it with the condition enumerated in the long line of
clause 2(s) which is applicable only to sub-clause (ii) - Literally read, the
conjunction 'or' between sub-clauses (i) and (ii) clearly divides the two
clauses in two parts with the fi rst part completely independent of the second
part - First part is by itself complete and capable of operating independently
- While the Clarifi cation Notifi cation introduced an amended version of
clause 2(s), "governmental authority" was re-defi ned with a purpose to
make the clause workable in contra-distinction to the earlier defi nition -
Thus, this Court cannot overstep and interpret "or" as "and" so as to allow
the alternative outlined in clause 2(s) to vanish - There exists no ambiguity
insofar as the interpretation of clause 2(s) is concerned - Notifi cation No.
25/2012, G.S.R 467(E) dated 20th June, 2012. [Paras 23, 24, 28].
Circular/Government order/Notifi cation - Mega Service Tax
Exemption Notifi cation - Clause 2(s)(as amended by clarifi cation
Notifi cation) - Punctuation in clause 2(s) of the Clarifi cation Notifi cation
defi ning 'Governmen

## Text

_Characters 0–39,865 of 48,333. This is a partial read: ask again with offset=39865 for what follows._

[2023] 15 S.C.R. 421 : 2023 INSC 910
421
CASE DETAILS
COMMISSIONER, CUSTOMS CENTRAL EXCISE AND
SERVICE TAX, PATNA
v.
M/S SHAPOORJI PALLONJI AND COMPANY PVT.
LTD. & ORS.
(Civil Appeal No. 3991 of 2023 Etc.)
OCTOBER 13, 2023
[S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.]
HEADNOTES
Issue for consideration: Whether the educational institutions-Indian
Institute of Technology, Patna and the National Institute of Technology,
Rourkela are covered by the defi nition of "governmental authority" in
Mega Service Tax Exemption Notifi cation inter alia exempting various
services from the tax network rendered to government, governmental, or
local authorities.
Tax/Taxation - Service tax - Exemption from - Eligibility -
Educational institutions-IIT Patna and NIT Rourkela if covered by the
defi nition of 'Government authority' in Mega Service Tax Exemption
Notifi cation No. 25/2012, G.S.R 467(E) dated 20th June, 2012, exempting
various service from service tax:
Held: Educational institutions-IIT Patna and NIT Rourkela fall under
the amended defi nition of 'Government authority' under clause 2(s) and
are eligible for the benefi t in the Exemption Notifi cation to the educational
institutions and exempted from service tax - Amended definition of
'government authority' in clause 2(s) by way of Clarifi cation Notifi cation,
has widened the exemption base for service tax to be provided even to an
authority or a board or any other body, set up by an Act of Parliament or a
State Legislature without the condition of having been established with 90%
or more participation by way of equity or control by Government to carry
out any function entrusted to a municipality u/Art. 243W - Clarifi cation
Notifi cation introduced an amended version of clause 2(s), which re-defi ned
422
SUPREME COURT REPORTS
[2023] 15 S.C.R.
"governmental authority" with a purpose to make the clause workable in
contra-distinction to the earlier defi nition - Decisions of the Patna High
Court and the Orissa High Court rightly extending the benefi t of the
Exemption Notifi cation to the educational institutions, and a fortiori, to
SPCL, is upheld - Thus, the impugned judgments and orders are upheld -
Constitution of India - Art. 243W. [Paras 30, 34]
Circular/Government order/Notifi cation - Mega Service Tax
Exemption Notifi cation - Clause 2(s)(as amended by clarifi cation
Notifi cation), defi ning 'Government Authority' - Interpretation of word
'or' employed in clause 2(s):
Held: Word "or" employed in clause 2(s) manifests the legislative intent
of prescribing an alternative - Going by the golden rule of interpretation that
words should be read in their ordinary, natural, and grammatical meaning,
the word "or" in clause 2(s) clearly appears to have been used to refl ect the
ordinary and normal sense, that is to denote an alternative, giving a choice;
and, a diff erent meaning cannot be assigned unless it leads to vagueness or
makes clause 2(s) absolutely unworkable - Word "or" between sub-clauses
(i) and (ii) indicates the independent and disjunctive nature of sub-clause
(i), meaning thereby that "or" used after sub-clause (i) cannot be interpreted
as "and" so as to tie it with the condition enumerated in the long line of
clause 2(s) which is applicable only to sub-clause (ii) - Literally read, the
conjunction 'or' between sub-clauses (i) and (ii) clearly divides the two
clauses in two parts with the fi rst part completely independent of the second
part - First part is by itself complete and capable of operating independently
- While the Clarifi cation Notifi cation introduced an amended version of
clause 2(s), "governmental authority" was re-defi ned with a purpose to
make the clause workable in contra-distinction to the earlier defi nition -
Thus, this Court cannot overstep and interpret "or" as "and" so as to allow
the alternative outlined in clause 2(s) to vanish - There exists no ambiguity
insofar as the interpretation of clause 2(s) is concerned - Notifi cation No.
25/2012, G.S.R 467(E) dated 20th June, 2012. [Paras 23, 24, 28].
Circular/Government order/Notifi cation - Mega Service Tax
Exemption Notifi cation - Clause 2(s)(as amended by clarifi cation
Notifi cation) - Punctuation in clause 2(s) of the Clarifi cation Notifi cation
defi ning 'Government Authority' - Interpretation of:
423
Held: Punctuation, though a minor element, may be resorted to for
the purpose of construction - Use of a semicolon is not a trivial matter but a
deliberate inclusion with a clear intention to diff erentiate it from sub-clause
(ii) - Upon a plain and literal reading of clause 2(s) that while there is a
semicolon after sub-clause (i), sub-clause (ii) closes with a comma, this
essentially supports the only possible construction that the use of a comma
after sub-clause (ii) relates it with the long line provided after that and, by
no stretch of imagination, the application of the long line can be extended
to sub-clause (i), the scope of which ends with the semicolon - Thus, the
long line of clause 2(s) governs only sub-clause (ii) and not sub-clause (i)
because the introduction of semicolon after sub- clause (i), followed by the
word "or", has established it as an independent category, thereby making
it distinct from sub-clause (ii) - If the author wanted both these parts to be
read together, there is no plausible reason as to why it did not use the word
"and" and without the punctuation semicolon - Clarifi cation Notifi cation
amended clause 2(s), and redefi ned "governmental authority" with a purpose
to make the clause workable in contra-distinction to the earlier defi nition
- Interpretation of statutes - Notifi cation No. 25/2012, G.S.R 467(E) dt
20.06.2012. [Paras 26, 27]
Interpretation of statutes - Interpretation of the relevant provision
- Rules of interpretation:
Held: Plain and ambiguous provision must be interpreted in the same
way as it has been stipulated and not in a way that it presumes defi ciency and
radically changes the meaning and context of the provision - Interpretation
of the relevant provision resulting in the expanded scope of its operation
cannot in itself be suffi cient to attribute ambiguity to the provision - To make
a statute workable by employing interpretative tools and to venture into a
kind of judicial legislation are two diff erent things - Merely because the
statute does not yield intended or desired results, that cannot be reason to
overstep and cross the line by employing tools of interpretation to interpret
a provision keeping in mind its outcome - Interpretative tools should
be employed to make a statute workable and not to reach to a particular
outcome. [Paras 20, 32, 33]
Maxims - Quoties in verbis nulla est ambiguitas, ibi nulla expositio
contra verba expressa fi enda est - Meaning of:
COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX,
PATNA v. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS.
424
SUPREME COURT REPORTS
[2023] 15 S.C.R.
Held: When there is no ambiguity in the words, then no exposition
contrary to the words is to be made. [Para 30]
LIST OF CITATIONS AND OTHER REFERENCES
Commissioner of Customs (Import), Mumbai v. Dilip Kumar and
Company & Ors. (2018) 9 SCC 1 : [2018] 7 SCR 1191 - held inapplicable.
Barun Kumar & Ors. v. State of Jharkhand & Ors. (2022) SCC OnLine
SC 1093; Bihar State Electricity Board v. Pulak Enterprises & Ors. (2009) 5
SCC 641; ONGC Ltd v. Afcons Gunanusa JV (2022) SCC OnLine SC 1122;
Jindal Stainless Ltd. v. State of Haryana (2017) 12 SCC 1 : [2016] 10 SCR
1; Akshaibar Lal (Dr.) v. Vice-Chancellor, Banaras Hindu University (1961)
3 SCR 386; ITC Limited v. Commissioner of Central Excise, Kolkata (2019)
17 SCC 46 : [2019] 13 SCR 357; Superintendent & Legal Remembrancer,
State of West Bengal v. Corporation of Calcutta (1967) 2 SCR 170; Union
of India & Ors. v. Ind-Swift Laboratories Ltd. (2011) 4 SCC 635 : [2011] 2
SCR 1087; Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd (1961)
2 SCR 189; Utkal Contractors & Joinery (P) Ltd. v. State of Orissa (1987) 3
SCC 279 : [1987] 3 SCR 317; Green v. Premier Glynrhonwy Slate Co (1928)
1 K.B. 561, page 56; Sri Jeyaram Educational Trust v. A.G. Syed Mohideen
(2010) 2 SCC 513 : [2010] 1 SCR 1127; Kantaru Rajeevaru v. Indian Young
Lawyers Association & Ors. (2020) 9 SCC 121; Girdhari Lal & Sons v.
Balbir Nath Mathur (1986) 2 SCC 237 : [1986] 1 SCR 383 - referred to.
Green vs. Premier Glynrhonwy Slate Co (1928) 1 K.B. 561 - referred to.
Principles of Statutory Interpretation by Justice GP Singh's - referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3991 of 2023.
From the Judgment and Order dated 03.03.2016 of the High Court of
Patna in CWJC No.16965 of 2015.
With
Civil Appeal No. 3992 of 2023.
Appearances:
Balbir Singh, A.S.G., Gopal Sankar Narayanan, Sr. Adv., Mukesh
Kumar Maroria, Ms. Nisha Bagchi, Rupesh Kumar, Veer Vikrant Singh,
425
Ms. Rukmini Bobde, Vikrant Singh, Rakesh Karela, Jaiyesh Bakhshi, Ravi
Tyagi, Gaurav Mishra, Chirag Sharma, Daman Popli, Ms. Ria Chanda, Ms.
Neetu Devrani, Ms. Sakshi Tibrewal, Ms. Saksha Jha, Ms. Aditi Gupta, P.
V. Yogeswaran, Raj Bahadur Yadav, Mrs. Alka Agarwal, Prashant Singh II,
Shantnu Sharma, Ms. Vibhooti Malhotra, Bhuvnesh Satija, Udit Sharma,
Advs. for the appearing parties.
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
DIPANKAR DATTA, J.
PREFACE
1. We are tasked to decide two civil appeals that centre around a
common question: whether the educational institutions in question, viz. (i)
the Indian Institute of Technology, Patna ("IIT Patna", hereafter) and (ii)
the National Institute of Technology, Rourkela ("NIT Rourkela", hereafter),
are covered by the defi nition of "governmental authority" in Mega Service
Tax Exemption Notifi cation1 ("Exemption Notifi cation", hereafter) inter alia
exempting various services from the tax network rendered to government,
governmental, or local authorities. If "governmental authority" as defi ned
in the Exemption Notifi cation takes within its embrace IIT Patna and NIT
Rourkela, they would be eligible for an exemption from the service tax that
otherwise applies to construction services provided by service providers or
subcontractors within their premises.
THE APPEALS
2. In Civil Appeal No. 3991 of 2023 ("CA-I", hereafter), the appellant
assails the judgment and order dated 03rd March, 2016 of the High Court of
Judicature at Patna ("Patna High Court", hereafter) whereby a writ petition2
preferred by the fi rst respondent, i.e., M/s Shapoorji Pallonji & Company
Pvt Ltd ("SPCL", hereafter) was allowed and the service tax collected by
the appellant was directed to be refunded.
1
 No. 25/2012, G.S.R 467(E) dated 20th June, 2012
2
 CWJC No. 16965 of 2015
COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX,
PATNA v. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS.
426
SUPREME COURT REPORTS
[2023] 15 S.C.R.
3. Civil Appeal No. 3992 of 2023 ("CA-II" hereafter) challenges the
judgment and order dated 05th February, 2018 of the High Court of Orissa
at Cuttack ("Orissa High Court", hereafter). The Orissa High Court while
relying on the aforesaid decision of the Patna High Court in favour of SPCL,
on a similar question of law, allowed a writ petition3 preferred by SPCL for
refund of service tax.
THE RELEVANT NOTIFICATIONS
4. The Exemption Notifi cation, under consideration, was issued by the
Department of Revenue under section 93 of the Finance Act, 1994 ("the
1994 Act", hereafter) inter alia exempting various taxable services from the
levy of whole of the service tax under section 66B thereof. Clause 12(c) of
the Exemption Notifi cation, which is relevant for the purpose of the present
adjudication, reads as follows:
"12. Services provided to the Government, a local authority
or a governmental authority by way of construction, erection,
commissioning, installation, completion, fitting out, repair,
maintenance, renovation, or alteration of -
(a) ***
(b) ***
(c) a structure meant predominantly for use as (i) an educational, (ii)
a clinical, or (iii) an art or cultural establishment;
(d) ***
(e) ***
(f) ***"
5. Since we are concerned with the interpretation of "governmental
authority", clause 2(s) of the Exemption Notifi cation defi ning "governmental
authority" is reproduced hereunder:
"(s) "governmental authority" means a board, or an authority or any
other body established with 90% or more participation by way of equity
3
 W.P. (C) No. 17188 of 2015
427
or control by Government and set up by an Act of the Parliament or a
State Legislature to carry out any function entrusted to a municipality
under article 243W of the Constitution."
6. It may also be noticed that section 66D of the 1994 Act, inserted by
the Finance Act, 2012 with eff ect from 1st July, 2012, specifi es the negative
list of services, i.e., the services on which service tax is not leviable.
7. Clause 2(s) of the Exemption Notifi cation underwent an amendment
vide a Notifi cation dated 30th January, 2014 ("Clarifi cation Notifi cation",
hereafter). This amendment, re-defi ning "governmental authority", sought
to broaden the scope of the exemption. The amended defi nition is set out
hereinbelow:
"(s) "governmental authority" means an authority or a board or any
other body;
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by Government,
with 90% or more participation by way of equity or control, to
carry out any function entrusted to a municipality under article 243W
of the Constitution."
8. Having outlined the relevant legal framework under consideration,
we consider it proper to delve into the facts that formed the genesis of the
writ petitions before the Patna High Court and the Orissa High Court.
FACTS
9. The material facts, leading to the presentation of CA-I, are as
follows:
a) IIT Patna, the fourth respondent, appointed NBCC India
Limited ("NBCC", hereafter), the third respondent, as a Project
Management Consultant to oversee the construction of building/
facilities/services for its academic complex. Vide Letter of
Award dated 20th December, 2012, NBCC awarded the contract
for construction works to SPCL at a total contract price of
Rs.167,70,09,043.00 (Rupees One hundred Sixty-Seven Crore
Seventy Lakh Nine Thousand Forty-Three only). Clause 4.2.4 of
COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX,
PATNA v. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS.
[DIPANKAR DATTA, J.]
428
SUPREME COURT REPORTS
[2023] 15 S.C.R.
the Letter of Award specifi ed that the aforementioned rates did not
include service tax and that SPCL would be reimbursed for this
tax by IIT Patna upon providing receipts.
b) SPCL, in accordance with the Letter of Award, duly registered
itself with the Central Excise and Service Tax ("CEST",
hereafter) and discharged its service tax obligations amounting
to Rs.9,73,25,398.23 (Rupees Nine Crore Seventy-Three Lakh
Twenty-Five Thousand Three Hundred Ninety-Eight and TwentyThree paisa) for the period spanning from March 2013 to April
2015. It is important to note that these service tax amounts were
integrated into the monthly running bills for the aforementioned
months, which were submitted by SPCL and subsequently
approved and paid by IIT Patna. This meant that IIT Patna was
ultimately responsible for settling the service tax dues.
c) The Indian Audit and Account Department raised an audit objection
on 30th June, 2015 to the eff ect that service providers engaged
in construction activities for educational institutions meeting
the criteria of a "government, local authority, or governmental
authority" according to clause 12(c) of the Exemption Notifi cation
were not obligated to remit service tax. Consequently, because IIT
Patna was classifi ed as a governmental authority, the payment of
service tax by them was objected as such payment contravened
the exemption provision specifi ed in the Exemption Notifi cation.
Additionally, IIT Patna was directed to immediately undertake
actions for the recovery or adjustment of the service tax previously
paid to SPCL.
d) Following receipt of the audit objection, IIT Patna notifi ed NBCC
vide a letter dated 27th August, 2015 and conveyed that the Joint
Secretary (Tax Research Unit) at the Government of India's
Ministry of Finance, Department of Revenue, had clarifi ed the
defi nition of auxiliary educational services. This clarifi cation
included an enumeration of various services eligible educational
institutions could receive and which would be exempted from
service tax. Notably, this clarifi cation did not specifi cally mention
construction activity. Additionally, IIT Patna expressed its
429
intention to establish a methodology for the recovery of service
tax reimbursement.
e) Apprehensive of the initiation of recovery proceedings for the
service tax already paid, SPCL approached the Patna High Court
seeking the following relief:
"(i) the instructions of the respondent no.2 dated 30.06.2015
(as contained in Annexure-6) directing immediate recovery
adjustment of service tax reimbursed by the respondent no.4 be
quashed.
(ii) for a declaration that [IIT Patna] is obliged to reimburse
service tax paid by the [SPCL] on the service of construction of
its building premises.
(iii) alternatively for a direction to the [Commissioner, Customs
Central Excise and Service Tax] to refund the amount of service
tax paid by [SPCL] on the service of construction of building
premises of [IIT Patna] in pursuance of the contract."
f) Vide the impugned judgment, the Patna High Court allowed the
writ petition of SPCL and held that IIT Patna would indeed be
covered within the defi nition of a "governmental authority" under
clause 2(s). In its interpretation of clause 2(s), the Court observed
that provisions contained in sub-clauses (i) and (ii) of clause 2(s)
are independent disjunctive provisions and the expression "90%
or more participation by way of equity or control to carry out any
function entrusted to a municipality under Article 243W of the
Constitution" is related to sub-clause (ii) alone because sub-clause
(i) is followed by the punctuation ";" and then by the conjunction
"or". According to the Court, any authority set up by an Act of
Parliament or by an Act of the State Legislature as envisaged in
sub-clause (i), therefore, cannot be made subject to the condition
of "90% or more participation by way of equity or control" and it
is only an authority or a board or any other body established by the
Government as envisaged under sub-clause (ii) of clause 2(s) that
has to meet the requirement of governmental participation of 90%
or more by way of equity or control. It was, accordingly, ruled that
COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX,
PATNA v. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS.
[DIPANKAR DATTA, J.]
430
SUPREME COURT REPORTS
[2023] 15 S.C.R.
the construction activity undertaken by SPCL is exempt from
payment of service tax in terms of the Exemption Notifi cation
read with the Clarifi cation Notifi cation, followed by a direction
that the service tax collected by the Revenue shall be refunded
to SPCL or IIT Patna, as the case may be.
10. The relevant facts, leading to the presentation of CA-II, are as
follows:
a) SPCL was awarded a works contract vide Work Order dated
22nd February, 2013 by NIT Rourkela to carry out construction
projects at its campus. The total value of the contract was
Rs.302,82,39,866.00 (Rupees Three Hundred Two Crore
Eighty-Two Lakh Thirty-Nine Thousand Eight Hundred SixtySix only). Clause 12 of the Work Order stated that the aforesaid
price shall be inclusive of all taxes except service tax which
may be reimbursed as applicable.
b) SPCL sought clarifi cations from the Service Tax Commissionerate
regarding the applicability of service tax on services rendered
to NIT, Rourkela.
c) SPCL, however, discharged its service tax liability amounting
to Rs 5,79,17,168.00 (Rupees Five Crore Seventy-Nine Lakh
Seventeen Thousand One Hundred Sixty-Eight only) to the
Service Tax Department and raised all the bills to NIT, Rourkela
charging service tax. However, no service tax was paid by NIT,
Rourkela claiming that the work executed is exempt from the
payment of service tax.
d) Aggrieved, SPCL approached the Orissa High Court for
reimbursement of such service tax payment.
e) The Orissa High Court, vide the impugned judgment, allowed
the writ petition of SPCL by relying upon the judgment and
order of the Patna High Court, as aforesaid. The Deputy
Commissioner of Service Tax was directed to dispose of
SPCL's pending application for refund of service tax within
two months.
431
SUBMISSIONS
11. Ms. Bagchi, learned counsel representing the appellants in both
the appeals, contended that IIT Patna and NIT Rourkela were not eligible
for the benefi ts outlined in the Exemption Notifi cation due to its exclusion
from the defi nition of "governmental authority". In contesting the impugned
judgment and order of the Patna High Court, she advanced the following
submissions:
a) The Amendment to the Exemption Notifi cation carried out vide the
Clarifi cation Notifi cation aimed to broaden its applicability beyond
statutory bodies, extending its benefi ts to government-established
entities as well. The Clarifi cation Notifi cation further clarifi ed
this expansion by encompassing government-established bodies
within the defi nition of "governmental authorities". However, it is
important to note that the requirement of 90% or more government
equity or control still applies to both types of governmental bodies,
whether they are statutory or non-statutory.
b) The High Court's error lay in its interpretation of the sub-clauses
as independent and disjunctive. The deliberate separation of the
condition of "90% or more participation" from sub-clause (ii)
serves the specifi c intent of making it applicable to both subclauses.
c) It is fi rmly established that punctuation marks alone should not
dictate the interpretation of a statute, especially when meaning
of the statute is clear without them. The general principle is that
punctuation marks carry less weight in the interpretation of statutes,
especially when dealing with subordinate legislation. Furthermore,
punctuation marks may convey diff erent impressions, and their
interpretation should not be isolated but considered in conjunction
with other clauses to discern legislative intent. To support this
argument, reference was made to the decisions of this Court in
Barun Kumar & Ors. vs. State of Jharkhand & Ors.4, Bihar State
4
 (2022) SCC OnLine SC 1093
COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX,
PATNA v. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS.
[DIPANKAR DATTA, J.]
432
SUPREME COURT REPORTS
[2023] 15 S.C.R.
Electricity Board vs. Pulak Enterprises & Ors.5, and ONGC Ltd
vs. Afcons Gunanusa JV6.
d) The terms 'or' and 'and' can be interchangeably interpreted to
fulfi l the legislative intent. In this context, reference was made
to the rulings of this Court in Jindal Stainless Ltd. v. State of
Haryana7, Barun Kumar (supra) and Akshaibar Lal (Dr.) v.
Vice-Chancellor, Banaras Hindu University8.
e) The impugned judgment of the Patna High Court carries the risk
of unconditionally broadening the coverage and scope of the
exemption to include various public bodies, such as Telecom
Regulatory Authority of India, Airports Authority of India,
and public sector banks. These entities could potentially claim
exemptions under diff erent clauses of the Exemption Notifi cation,
covering various services provided by a "governmental authority".
A lenient interpretation of the term "governmental authority"
could unfairly burden the exchequer. Reliance was placed on the
decision of a Constitution Bench of this Court in Commissioner
of Customs (Import), Mumbai vs. Dilip Kumar and Company &
Ors.9 wherein it was held that any notifi cation or a clause granting
an exemption must be interpreted strictly and literally, with any
ambiguity resolved in favour of the revenue.
f)
IIT Patna and NIT Rourkela are institutions incorporated under
central statutes, i.e., the Indian Institute of Technology Act,
1961 ("the 1961 Act", hereafter) and the National Institutes of
Technology Act, 2007 ("the 2007 Act", hereafter), respectively,
and they do not carry out any duties or responsibilities akin to
Schedule XII of the Constitution; the two educational institutions,
therefore, do not fall under the classifi cation of "governmental
authority" nor are exempted under the negative list.
5
 (2009) 5 SCC 641
6
 (2022) SCC OnLine SC 1122
7
 (2017) 12 SCC 1
8
 (1961) 3 SCR 386
9
 (2018) 9 SCC 1
433
g) SPCL has paid service tax through self-assessment. Reliance was
placed on ITC Limited vs. Commissioner of Central Excise,
Kolkata10 in support of the contention that the order of selfassessment being an assessment order under the Customs Act,
1962 is appealable and a refund claim is not sustainable unless
the assessment itself is set aside.
h) Classifi cation of IIT Patna as a "governmental authority" has
no bearing on the applicability of service tax to the transaction
between SPCL and NBCC. The crux of the argument lies in the
specifi c nature of this case: SPCL has delivered its services to
NBCC, not directly to IIT Patna. IIT Patna has engaged NBCC
as a Project Management Consultant, making SPCL the service
provider and NBCC the service recipient in this particular
transaction. Consequently, it cannot be contended that SPCL
provided services directly to IIT Patna. NBCC lacks the status of
a "government, local authority, or governmental authority" under
the Exemption Notifi cation, and it has not asserted such a claim.
Therefore, the activities and transactions between SPCL and
NBCC are subject to service tax and do not qualify for exemption
under the Exemption Notifi cation.
12. Learned counsel representing SPCL, supported the impugned
judgment and order of the Patna High Court and contended that while
construction services are classifi ed as taxable under section 65 of the
1994 Act, the Exemption Notifi cation provides an exemption for services
rendered to the Government, local authorities, or governmental authorities.
IIT Patna, as an institution of national importance, was established by the
Parliament under Article 248 of the Constitution, through the 1961 Act.
Similarly, NIT Rourkela was established under the 2007 Act. Consequently,
IIT Patna and NIT Rourkela should be considered governmental authorities
in accordance with clause 2(s)(i) of the Exemption Notifi cation, read in
conjunction with the Clarifi cation Notifi cation. In reply to the submission
of the appellants that the classifi cation of IIT Patna as a "governmental
authority" would not have any bearing on the applicability of service tax to
10 (2019) 17 SCC 46
COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX,
PATNA v. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS.
[DIPANKAR DATTA, J.]
434
SUPREME COURT REPORTS
[2023] 15 S.C.R.
the transaction between SPCL and NBCC as service provider and service
recipient respectively, learned counsel drew support from clause 29(h) of the
Exemption Notifi cation which exempts services provided by sub-contractors
by way of works contract to another contractor providing works contract
services which are already exempted under the Exemption Notifi cation.
Accordingly, it was submitted that there was no merit in the appeals and
the same deserved outright dismissal.
13. Learned counsel appearing for IIT Patna supported the impugned
judgment and order of the Patna High Court. According to him, IIT Patna
qualifi es as a "governmental authority" under the Exemption Notifi cation
as amended by the Clarifi cation Notifi cation. It was further submitted that
the provisions contained in sub-clause (i) and sub-clause (ii) of clause 2(s)
are independent disjunctive provisions and the expression "90% or more
participation by way of equity or control" is related to sub-clause (ii) alone,
meaning thereby that an authority established by Government should have
90% or more participation in order to be exempted from service tax. The
authority set up by an Act of Parliament or State Legislature is not subject
to this condition. No case for interference having been set up, the counsel
prayed for dismissal of CA-I.
ANALYSIS
14. Before we commence our analysis, it would be apt to juxtapose
the relevant clauses from the Exemption Notifi cation and the Clarifi cation
Notifi cation for facility of appreciation:
EXEMPTION NOTIFICATION
CLARIFICATION NOTIFICATION
2(s) "governmental authority'' means
a board, or an authority or any other
body established with 90% or more
participation by way of equity or
control by Government and set up by
an Act of the Parliament or a State
Legislature to carry out any function
entrusted to a municipality under article
243W of the Constitution;
2(s) "governmental authority" means an
authority or a board or any other body;
(i) Set up by an Act of Parliament
or a State Legislature; or
(ii) established by Government,
with 90% or more participation by way
of equity or control, to carry out any
function entrusted to a municipality
under article 243W of the Constitution;
435
15. Having read the two defi nitions, fi rst and foremost, it is necessary
to ascertain the objective behind the Clarifi cation Notifi cation which
amended the Exemption Notification and re-defined "governmental
authority". A bare perusal of the Exemption Notifi cation reveals that
the exemption therein was only extended to those entities, viz. board or
authority or body, which fulfi lled the three requisite conditions, i.e. : a)
having been established with 90% or more participation by way of equity
or control by Government, b) set up by an Act of the Parliament or a State
Legislature, and c) carrying out any function entrusted to a municipality
under Article 243W of the Constitution. It is evident that the scope of
the exemption was severely restricted to only a few entities. Although
the reason for re-defi ning "governmental authority" has not been made
available by the appellants, we presume that unworkability of the scheme
for grant of exemption because of the restricted defi nition of "governmental
authority" was the trigger therefor and hence, the scope of the exemption
was expanded to cover a larger section of entities answering the defi nition
of "governmental authority". An amendment by way of the Clarifi cation
Notifi cation was, therefore, introduced which expanded the defi nition of
"governmental authority" and widened the exemption base for service
tax to be provided even to an authority or a board or any other body, set
up by an Act of Parliament or a State Legislature without the condition
of having been established with 90% or more participation by way of
equity or control by Government to carry out any function entrusted to a
municipality under Article 243W of the Constitution.
16. While the aforesaid interpretation of amended clause 2(s) has been
upheld by the Patna High Court, the appellants have countered the same by
submitting that the amended defi nition of "governmental authority" as in
clause 2(s) should be interpreted in a manner so as to make the long line
under clause 2(s) applicable to both sub-clause (i) and sub-clause (ii). In
other words, as per the appellants, to qualify as a "governmental authority"
under clause 2(s)(i), such authority, board or body must not only be a
statutory authority set up by an Act of Parliament or a State Legislature
but must also have 90% or more participation of the Government by way
of equity or control to carry out any like function that a municipality under
Article 243W of the Constitution is entrusted to discharge.
COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX,
PATNA v. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS.
[DIPANKAR DATTA, J.]
436
SUPREME COURT REPORTS
[2023] 15 S.C.R.
17. We have no hesitation to disagree with the latter interpretation
sought to be placed by the appellants, for the reasons that follow.
18. In Superintendent & Legal Remembrancer, State of West Bengal
vs. Corporation of Calcutta11, a nine-judge Bench of this Court, relying
upon Craies' On Statute Law (6th edn), stated that where the language of
a statute is clear, the words are in themselves precise and unambiguous,
and a literal reading does not lead to absurd construction, the necessity
for employing rules of interpretation disappears and reaches its vanishing
point.
19. This Court in Union of India & Ors. vs. Ind-Swift Laboratories
Ltd.12, held that harmonious construction is required to be given to a
provision only when it is shrouded in ambiguity and lacks clarity, rather
than when it is unequivocally clear and unambiguous.
20. What is plain and ambiguous from a bare reading of a provision
under consideration must be interpreted in the same way as it has been
stipulated and not in a way that it presumes defi ciency and radically changes
the meaning and context of the provision. This is the view expressed in
the decision of a fi ve-judge Bench of this Court in Commissioner of Sales
Tax, U.P. vs. Modi Sugar Mills Ltd.13. The relevant passage therefrom
reads as under:
"10. [...] In interpreting a taxing statute, equitable considerations
are entirely out of place. Nor can taxing statutes be interpreted on
any presumptions or assumptions. The court must look squarely at
the words of the statute and interpret them. It must interpret a taxing
statute in the light of what is clearly expressed : it cannot imply
anything which is not expressed; it cannot import provisions in the
statutes so as to supply any assumed defi ciency."
21. It is a well-established principle of statutory interpretation
that any authority, entrusted with the function of legislating, legislates
for a purpose; it can, thus, safely be assumed that it will not indulge in
11 (1967) 2 SCR 170
12 (2011) 4 SCC 635
13 (1961) 2 SCR 189
437
unnecessary or pointless legislation. This Court, in Utkal Contractors &
Joinery (P) Ltd. vs State of Orissa14, lucidly explained thus:
"9. [...] It is again important to remember that Parliament does not
waste its breath unnecessarily. Just as Parliament is not expected to use
unnecessary expressions, Parliament is also not expected to express
itself unnecessarily. Even as Parliament does not use any word without
meaning something, Parliament does not legislate where no legislation
is called for. Parliament cannot be assumed to legislate for the sake
of legislation; nor can it be assumed to make pointless legislation.
Parliament does not indulge in legislation merely to state what it is
unnecessary to state or to do what is already validly done. Parliament
may not be assumed to legislate unnecessarily."
22. Having noticed some of the precedents in the fi eld of interpretation
of statutes, we now move on to a little bit of English grammar. The word
"or" as well as the word "and" is a conjunction; and it is well known
that a conjunction is used to join words, phrases, or clauses. On how the
conjunctions "or" and "and" are to be read, guidance could be drawn
from authoritative texts and judicial decisions. As per Justice GP Singh's
Principles of Statutory Interpretation, the word "or" is normally disjunctive
while the word "and" is normally conjunctive. In English law, the position
is clear as crystal, as explained by Lord Scrutton in Green vs. Premier
Glynrhonwy Slate Co.15, that one does not read "or" as "and" in a statute
unless one is obliged, because "or" does not generally mean "and" and "and"
does not generally mean "or".
23. When the meaning of the provision in question is clear and
unambiguous by the usage of "or" in clause 2(s), there remains no force in
the submission of Ms. Bagchi that "or" should be interpreted as "and". In
our opinion, the word "or" employed in clause 2(s) manifests the legislative
intent of prescribing an alternative. Going by the golden rule of interpretation
that words should be read in their ordinary, natural, and grammatical
meaning, the word "or" in clause 2(s) clearly appears to us to have been
used to refl ect the ordinary and normal sense, that is to denote an alternative,
14 (1987) 3 SCC 279
15 (1928) 1 K.B. 561, page 569
COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX,
PATNA v. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS.
[DIPANKAR DATTA, J.]
438
SUPREME COURT REPORTS
[2023] 15 S.C.R.
giving a choice; and, we cannot assign it a diff erent meaning unless it leads
to vagueness or makes clause 2(s) absolutely unworkable. We are fortifi ed
in our view by the decision of this Court in Sri Jeyaram Educational Trust
vs. A.G. Syed Mohideen16, where it was held thus:
"11. It is now well settled that a provision of a statute should have to
be read as it is, in a natural manner, plain and straight, without adding,
substituting or omitting any words. While doing so, the words used in
the provision should be assigned and ascribed their natural, ordinary
or popular meaning. Only when such plain and straight reading, or
ascribing the natural and normal meaning to the words on such reading,
leads to ambiguity, vagueness, uncertainty, or absurdity which were
not obviously intended by the legislature or the lawmaker, a court
should open its interpretation toolkit containing the settled rules of
construction and interpretation, to arrive at the true meaning of the
provision. While using the tools of interpretation, the court should
remember that it is not the author of the statute who is empowered to
amend, substitute or delete, so as to change the structure and contents.
A court as an interpreter cannot alter or amend the law. It can only
interpret the provision, to make it meaningful and workable so as to
achieve the legislative object, when there is vagueness, ambiguity or
absurdity. The purpose of interpretation is not to make a provision
what the Judge thinks it should be, but to make it what the legislature
intended it to be."
24. In the present case, the word "or" between sub-clauses (i) and (ii)
indicates the independent and disjunctive nature of sub-clause (i), meaning
thereby that "or" used after sub-clause (i) cannot be interpreted as "and"
so as to tie it with the condition enumerated in the long line of clause 2(s)
which is applicable only to sub-clause (ii).
25. Applying a diff erent lens, let us test the worth of Ms. Bagchi's
submission in the light of the punctuations in clause 2(s). It has been held
by a bench of nine Hon'ble Judges of this Court in Kantaru Rajeevaru
vs. Indian Young Lawyers Association & Ors.17 that when a provision is
16 (2010) 2 SCC 513
17 (2020) 9 SCC 121, para 18.
439
carefully punctuated and there is doubt about its meaning, weight should
undoubtedly be given to the punctuation; however, though a punctuation
may have its uses in some cases, but it cannot certainly be regarded as a
controlling element and cannot be allowed to control the plain meaning.
While so observing, this Court considered several decisions as well as the
punctuation comma in the relevant provision of the Supreme Court Rules,
2013.
26. What follows is that punctuation, though a minor element, may be
resorted to for the purpose of construction.
27. In the present case, the use of a semicolon is not a trivial matter
but a deliberate inclusion with a clear intention to diff erentiate it from subclause (ii). Further, it can be observed upon a plain and literal reading of
clause 2(s) that while there is a semicolon after sub-clause (i), sub-clause (ii)
closes with a comma. This essentially supports the only possible construction
that the use of a comma after sub-clause (ii) relates it with the long line
provided after that and, by no stretch of imagination, the application of the
long line can be extended to sub-clause (i), the scope of which ends with
the semicolon.