High Court Of Calcutta
M.N. Dastur & Co. Ltd. & Anr. vs. Union Of India & Ors.
Section 1994FA 65(13), 1994FA 65(48)(g), 1994FA 66, 1994FA 68
D.K. Seth & Soumitra Pal, JJ.
APO No. 208 of 2002, APOT No. 112 of 2002 and T. No. 1644 of 1999 in WP No. 2917 of 1999
28th February, 2005
Counsel Appeared :
Dr. Debiprosad Pal, M. Dhar & Ms. M. Seal, for the Appellants : Kalyan Bandopadhyay & Amit Lahiri, for the Respondents
JUDGMENT
D.K. Seth, J. :
The question : The short question raised by Dr. Pal in this appeal is as to whether the expression ‘engineering firm’ used in the definition of consulting engineer in s. 65(13) of the Finance Act, 1994, Chapter V relating to service tax includes a company. Submission on behalf of the appellants :
2. Dr. Pal pointed out from the definitions defined in s. 65 that, while defining various categories of assessees liable to pay service tax under the Finance Act, 1994, Chapter V, the legislature has employed the expression ‘person’, ‘concern’ or ‘commercial concern’ except in s. 65(13) while defining ‘consulting engineer’. Whereas in the definition of ‘consulting engineer’, the legislature had employed the expression ‘firm’, which is distinct and different from the expression used in the other definitions. By reason thereof, the legislature had consistently expressed its intention to treat consulting engineer differently from the other categories of assessees liable to pay service tax. Unless the legislature had a different intention to treat consulting engineer differently, it would not have employed different expression. It could have employed the same expression used in the other definitions substituting the word ‘firm’ by the word ‘concern’ or ‘commercial concern’, as the case may be. In the absence of definition of the word ‘firm’ alike the term ‘person’ either in the service tax laws or in the Central Excise Act, the term ‘person’ can be construed to mean a person as defined in s. 2(42) of the General Clauses Act, 1897, which includes any company, association, BOI whether incorporated or not, whereas the word ‘firm’ has to be understood according to the general concept of law, which does not include a company. Company and firm being two distinct legal concepts, one cannot mean the other unless so specified under the relevant Act. This is apparent from s. 81 of the Finance Act, 1994, wherein the Explanation was appended to include a firm within the expression ‘company’. Without this Explanation the firm cannot include a company nor a company include a firm.
2.1 Relying on A.V. Fernandez vs. State of Kerala AIR 1957 SC 657 at p. 661 (para 29), Dr. Pal contended that in construing a fiscal statute determining the liability of a subject to tax, one must have regard to the strict letter of the law and not merely to the spirit of the statute or substance of law. Referring to Orissa State Warehousing Corporation vs. CIT (1999) 153 CTR (SC) 177 : (1999) 237 ITR 589 (SC) at p. 604 quoting from Cape Brandy Syndicate vs. IRC (1921) 1 KB 64 and CIT vs. Ajax Products Ltd. (1965) 55 ITR 741 (SC) at p. 747, Dr. Pal submitted that one has to look at the clear words of law and not at the intention of the legislature. In a taxing statute, one has to look merely as what is clearly said. There is no room for any intendment. There is no equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. Dr. Pal cited C.A. Abraham vs. ITO & Anr. (1961) 41 ITR 425 (SC) at p. 431 to contend that in interpreting a fiscal statute, the Court cannot proceed to make good the deficiencies, if there be any, the Court must interpret the statute as it stands. In case of doubt, the one favourable to the taxpayer is to be accepted.
2.2 According to Dr. Pal, the scheme of the definitions given in s. 65 of the Service Tax Law clearly indicates that the legislature had made a distinction between a ‘firm’ and a ‘company’, which is also a well-settled distinction in legal parlance. This definition is also apparent from r. 6(1) of the Service-tax Rules, 1994, to which our attention was drawn by Dr. Pal, where also a distinction was made between a ‘firm’ and a ‘company’. Therefore, according to Dr. Pal, the firm since not been defined in Finance Act, 1994, or in the Central Excise and Salt Act, 1944, the definition of the word ‘firm’ as defined in s. 4 of the Indian Partnership Act, 1932, is to be adopted, namely, a firm is a compendious method of describing the partners in a partnership. Whereas a company is incorporated under the Companies Act and is a separate juristic person distinct from its shareholders, which is reiterated in Mrs. Bacha F. Guzdar vs. CIT (1955) 27 ITR 1 (SC). Having placed reliance on Dulichand Laxmi Narayan vs. CIT (1956) 29 ITR 535 (SC), Dr. Pal contended that a firm name is merely an expression, a compendious mode of designating the persons agreed to carry on business in partnership. This has since been reiterated in Malabar Fisheries Co. vs. CIT (1979) 12 CTR (SC) 415 : (1979) 120 ITR 49 (SC) at p. 57 whereas a company defined under s. 3 (1)(ii) of the Companies Act is distinct from its shareholders. The shareholders who buy the share do not buy an interest in the property of the company, which is a juristic person distinct from its shareholders. It only buys an interest in the profits and gains of the company as was held in Mrs. Bacha F. Guzdar (supra) whereas a firm can only mean a partnership firm. In the absence of any definition, it is to be understood in the light of the Indian Partnership Act, as was laid down in Vazir Sultan Tobacco Co. Ltd. vs. CIT (1981) 25 CTR (SC) 186 : (1981) 132 ITR 559 (SC) at p. 568.
2.3 In these circumstances, the Circular No. 43/5/1997-TRU, dt. 2nd of July, 1997 issued by the Ministry of Finance and the Trade Circular dt. 3rd July, 1997, seeking to include company within the word ‘firm’ used in the definition of ‘consulting engineer’ is inconsistent with the scheme and context of the service tax law and are repugnant to the clear legislative provision defining ‘consulting engineer’ under s. 65(13) and as such the said circulars are ultra vires the provisions of the Finance Act, 1994, and without authority of law. The said circular having been issued by the executive, amounts to subordinate legislation. If a subordinate legislation crosses the limits of the parameters laid down by the delegating Act, such delegated legislation so much is outside the parameters and is ultra vires and void. A delegated legislation cannot go beyond nor be repugnant to the statute under which the delegation was made and it cannot extend beyond the scope or ambit of the parent Act as was held in State of MP & Anr. vs. G.S. Dall & Flour Mills (1991) 187 ITR 478 (SC) at pp. 498-9. What is not taxable under the Act, cannot be brought within the taxing–net by any by-law, rule or regulation unless the statute under which the subordinate legislation is made specifically authorizes the same, as was held in Gopal vs. State of Bihar AIR 1964 SC 370. Therefore, the impugned notification and the trade notice are ultra vires, bad in law and void. Dr. Pal criticized the judgment of the learned Single Judge, which relied on the decision in Tata Consultancy Services vs. Union of India & Anr. (2002) 176 CTR (Kar) 480 : 2001 (30) ELT 726 (Kar) : (2002) 257 ITR 710 (Kar) and Dr. V. Shanmughavel vs. CCE 2001 (131) ELT 14 (Mad) on the conspectus of the expression ‘every person’ used in s. 68, namely, the levying section which includes company. This, according to Dr. Pal, is wholly misplaced since in conflict with the specific definition of ‘consulting engineer’ defined in s. 65(13), in which the legislature had avoided or omitted to use the expression ‘any person’ or ‘concern’ or ‘commercial concern’. Submission on behalf of the respondents :
3. Mr. Kalyan Bandopadhyay, learned counsel appearing on behalf of the Department, on the other hand, contended that the learned Single Judge had adopted the ratio decided in Tata Consultancy Services (supra) rightly. Relying on the said decision, Mr. Bandopadhyay had submitted that the word ‘firm’ was significantly used in the definition ‘consulting engineer’ not to make a distinction but for properly describing an engineering firm. According to him, the word ‘firm’ cannot remain confined only to a partnership firm in the absence of any express provision. He further contends that there is no earthly reason to make a distinction that a consulting engineer if he is an individual or a firm other than company would be liable to tax, but when it is a company, it would be exempted. Such a proposition seems to be preposterous. According to him, such an interpretation would lead to absurdity. When an interpretation leads to absurdity, the Court can make the deficiency and remove the absurdity and interpret the statute according to its objects and purposes. Consulting Engineer : Whether includes a company :
4. The definition of ‘consulting engineer’ admittedly has not used identical expression used in defining the other assessees liable to pay service tax. Apart from the definition of ‘consulting engineer’ in s. 65(13), in all other cases, the expression ‘person’ or ‘concern’ or ‘commercial concern’ has been used. Admittedly, a different expression has been used in defining ‘consulting engineer’. It could not have been contended, and rightly, that the legislature had made a distinction consciously and by reason of such distinction, it had intended differently. A fiscal statute has to be construed strictly. If something is not subject to levy of tax clearly expressed in the statute, the same cannot be brought within the tax-net by way of interpretation as was held in A.V. Fernandez (supra). It is a settled proposition that it is the clear words of law and not the intention of the legislature, which is to be examined to find out what the taxing statute has clearly said. There is no room of intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. Only the language used is to be looked at fairly as was laid down in Orissa State Warehousing Corporation (supra) quoting from Cape Brandy Syndicate vs. IRC (supra) and also in CIT vs. Ajax Products Ltd. (supra). At the same time, as held in C.A. Abraham (supra), the Court cannot proceed to make good the deficiency, if there be any. The Court must interpret the statute as it stands. In case of doubt, the interpretation favourable to the taxpayer is to be adopted. At the same time, in case of absurdity the Court can make good the deficiency, remove the absurdity and interpret the statute according to its objects and purposes.
4.1 The word ‘firm’ cannot include a company. The name of a partnership firm is a compendious method of describing the partners in a partnership firm as was laid down in Mrs. Bacha F. Guzdar (supra), Dulichand Laxmi Narayan (supra) and Malabar Fisheries Co. (supra). It is distinct from a company, a juristic person distinct from its shareholders; whereas a partnership firm comprises of the partners and has no separate entity or existence without the partners. According to s. 4 of the Partnership Act, 1932, a ‘firm’ means persons entering into partnership with another collectively called a firm, a compendious method of describing the partners in a partnership. The partners own absolute interest in the partnership firm and its assets and properties. The partners and the partnership firm are not distinct and separate entities and are identified with each other. Whereas a company is a juristic person, a distinct and separate entity other than its shareholders. The shareholders by reason of their holding of shares do not hold any interest in the assets and properties of the company. The shareholders’ interest is confined to the profits and gains of the company; it does not extend beyond the interest to receive dividends or liability to the proportion of his shareholding. A shareholder cannot claim any interest in the property of the company. It was so held in Mrs. Bacha F. Guzdar (supra).
4.2 In Vazir Sultan Tobacco Co Ltd. (supra) the Supreme Court had made a distinction between the company and a firm, which is to be understood in the light of the definition given in s. 4 of the Indian Partnership Act. There is no doubt about the legal proposition. But each case has to be considered according to its own merit having regard to the facts and circumstances of the case. So far as the decision in Vazir Sultan Tobacco Co. Ltd. (supra) is concerned, it was dealing with the expression ‘reserve’ as defined in the Companies (Profits) Surtax Act, 1964. The provisions contained therein were distinct and different from the provisions with which we are concerned. In the context of the said 1964 Act, the Supreme Court was considering the expression with reference to the Companies Act holding that the expression not defined in 1964 Act is to be understood by reference to the expression used under the Companies Act, 1956. Therefore, this decision will not help us in order to interpret the expression ‘firm’ used in the definition of ‘consulting engineer’ in the Finance Act, 1994.
4.3 Keeping the above settled principles of law in mind, we may now proceed to find out as to whether the expression ‘firm’ used in s. 65(13) is to be understood differently. Sec. 65 : The definitions : Scheme and context :
5. In order to ascertain the situation, the principles of interpretation have to be followed. The Court in order to construe the definition comprehensively may apply the golden rule of interpretation according to the ordinary grammatical meaning having regard to the scheme of the definitions and in the context of the provisions contained in the statute and the object and purpose for which it was enacted. It is apparent that the expressions ‘person’, ‘concern’ or ‘commercial concern’ have been used to define all other assessees liable to pay service tax except s. 65(13) defining ‘consulting engineer’. The word ‘person’ as defined in s. 2(42) of the General Clauses Act includes an individual, a company or an AOP. A ‘person’ includes a juristic person. A company is a juristic person and there would be no difficulty to include a company when the definition uses the expression ‘person’. Similarly, a ‘concern’ without any qualification can include any business or professional establishment and the ‘commercial concern’ would include all concerns connected with commerce carrying on trade or profession or any kind of commercial activities and includes a company.
5.1 In the present case, s. 65(13) includes an individual professionally qualified as an engineer. This does not seem to be disputed. The definition also includes an engineering firm. According to Dr. Pal, though qualified by the word ‘engineering’, a ‘firm’ is to be understood something distinct from the company. According to him, it clearly means a partnership firm. It may be proprietorship firm but in any event it would be an association of qualified engineers without losing its entity or identity of being a qualified engineer either as an individual or as a partner in the partnership firm or as a person in an AOP without losing its identity other than a compendious mode of describing themselves without resulting into an entity different from the firm as it would be in case of a company in relation to its shareholders. Therefore, if the definition does not clearly include a company in view of the principles on which the fiscal statute is interpreted, a company cannot be brought within the taxing-net and when there is some doubt, the benefit would be available to the assessee, the taxpayer. Admittedly, the Court while interpreting the provision cannot make good the deficiency; therefore, it is to be understood as it is.
5.2 But, it appears that there is a fallacy hidden in the definition under s. 65(13). The expression ‘firm’ has not been used independent of its qualification. The engineers are definitely individuals or persons, but are not ordinary individuals or persons. They are qualified engineers. Therefore, an individual qualified engineer may be a person and means a person as well and includes a person, who is a qualified engineer. But the expression ‘person’ may include a qualified engineer but the said expression is insufficient to identify a particular class of persons, who are qualified engineers. Therefore, the expression ‘person’ could not be used to define a ‘consulting engineer’ when he is an individual or an AOP or otherwise.
5.3. The expressions ‘person’, ‘concern’ or ‘commercial concern’ appears to have been used freely in its common and ordinary meaning apposite to the particular class of assessees subject to service tax. It does not seem to give any particular or specified meaning. These expressions have been used to identify a class of assessees. It does not make any distinction, inter se, within the particular class. The definition is intended to embrace the class of assessees subject to service tax. In none of the definitions, it appears that any class within the class had ever been intended to be identified. Neither it appears that a class within the class was made liable or was intended to be excluded from the liability to pay service tax. The context in which these definitions were given was intended to identify a particular class of assessees liable to pay service tax.
5.4 Therefore, when in none of the definitions there was any attempt to identify a class within the class in order to make liable or exempt from the liability, that particular class within the class from being subjected to service tax, it cannot be conceived that the legislature had attempted to make such a distinction in the definition of ‘consulting engineer’ by creating a class within the class for the purpose of exemption from the liability to pay service tax. When in all classes of assessees as defined in s. 65, the whole of the particular class falling within the definition have been made liable, it would be wholly against the scheme, object and purpose of the legislation to exempt a particular class coming within the definition of ‘consulting engineer’. The definitions have been intended to identify a particular class liable to pay service tax. There cannot be any earthly reason to tax all coming within the particular class except one within that class. Nothing seems to appear from the scheme and the context in which the legislation was enacted to make a rational or intelligible differentia to exempt one class within the class.
5.5 It is inconceivable that a consulting engineer as an individual or constituting a partnership firm or a proprietorship firm would be liable to pay tax under the service tax laws, but the same persons forming a company, a different juristic person, a distinct legal entity apart from the shareholders, would be outside the tax- net. We do not find any reason as to why a company providing ‘taxable service’ as defined under s. 65(48)(g) would not be a taxable service, when it would be so when provided by an individual qualified engineer or a proprietorship or partnership firm of engineers. This seems to be little absurd. Secs. 66 and 68 : The chargeability : The taxable event :
6. Sec. 66 is the charging section. Under sub-s. (3), service tax is levied at the rate of 5 per cent of the value of the taxable service referred to in sub-cl. (g) among others enumerated in s. 65(48) and collected in such manner as prescribed. Sec. 68 provides that every person providing taxable service to any person shall pay service tax at the rate specified in s. 66 in such manner and within such period as may be prescribed. That apart, by reason of sub-s. (2) of s. 68, any other taxable service on being notified by the Central Government may also be liable to service tax in the same manner as may be prescribed and the rate specified in s. 66 subject to the provisions of Chapter V may apply to such person as if he is the person liable to pay the service tax in relation to such taxable service.
6.1 Therefore, s. 65 cannot be read out of the context and the scheme of the Act. It has to be read in consonance with ss. 66 and 68 namely, the charging section and the liability to pay. Rule 6 in sub-r. (1) provides that service tax on the value of the taxable service received during the calendar month shall be paid to the credit of the Central Government by 25th day of the month immediately following. The proviso, however, carves out an exception in respect of the assessee, who is an individual or a proprietary firm or a partnership firm, who are supposed to pay on the 25th day of the month immediately following the quarter in which service tax in the value of taxable service is received.
6.2 Admittedly, the word ‘firm’ has not been defined in the Act. We are to give the ordinary grammatical meaning of the word ‘firm’ in order to interpret the provisions of s. 65(13). While ascertaining the meaning of the word ‘firm’ intended to be given by the legislature, we may first look into the word if used elsewhere in the statute in consonance with the taxing event apparent from the scheme and gather the meaning therefrom. In Nagpur Electric Light & Power Co. Ltd. & Ors. vs. K. Shreepathirao AIR 1958 SC 658, the apex Court declared that a definition clause in an enactment must derive its meaning from the context or subject. We find that the word ‘firm’ has been used in s. 81 where it was explained in relation to imposition of penalty. It has been used in r. 6 to make a distinction with regard to the manner of payment. This use of the word ‘firm’ in the statute and the rules indicates how it is to be interpreted. It is the responsibility of the Court to interpret the word in a manner in consonance with the scheme and the object and its purpose as well as the different expressions used in the statute unless a different intention of the legislature is apparent to impute a different meaning. While fixing liability on account of breach of the provisions of the statute, a company has been explained to include a partnership firm. According to the scheme of the Act, the tax is leviable on the provider of taxable service. The providing of the taxable service is taxable event. Under s. 68, every person providing taxable service is made liable to pay the tax. Thus, it appears that the legislature had never intended to make any distinction between a firm and a company for the purpose of defining ‘consulting engineer’. If for the purpose of penalty, it can be so, then it would also be so in relation to chargeability.
6.3 Any other interpretation would lead to absurdity, a deficiency supposed to be made good by the Court while interpreting. If two views are possible, and one leads to absurdity, the other possible view is to be accepted. The principle of beneficial interpretation in favour of assessee cannot come into play on the face of absurdity. The use of the word ‘firm’ qualified by the word ‘engineering’ was intended to denote a conglomeration of engineers providing taxable service in its ordinary, common and natural sense. The word ‘engineering firm’ denotes an establishment of engineers providing taxable service defined under s. 65(48)(g). The legislature had never used nor intended to use the word ‘firm’ in its legal or technical sense.
6.4 Words used in a statute dealing with matters relating to the general public are presumed to have been used in their popular rather than narrow, legal or technical sense. The doctrine of Loquitur ut vulgus, i.e., according to the common understanding and acceptance of the terms, is to be applied in construing the words used in statute dealing with matters relating to the public in general. If an Act is directed to dealings with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language. It was so observed by Lord Esher M.R. at p. 119 in Unwin vs. Hanson (1891) 2 QB 115 (CA). That the IT Act and for that matter the Finance Act is of general application is beyond dispute. It is all the more so because the Finance Tax Act is one consolidating and amending the law relating to income-tax, super tax, service tax, etc. To support this proposition, we may derive inspiration from Rao Bahadur Ravulu Subba Rao & Ors. vs. CIT (1956) 30 ITR 163 (SC) at p. 169. Therefore, the natural not the legal or technical meaning of the word ‘firm’ is to be given. Sec. 65(13) : Firm : Natural meaning :
7. Having read the provisions in the context it is used and the scheme in which it is intended to be used and the object and purpose of enacting the statute and the absence of any intelligible differentia or a rational classification, it has to be interpreted to include all kinds of firm, i.e., a business establishment. This again we must note that the legislature had used the expression ‘engineering firm’. The firm has been qualified by the word ‘engineering’. Therefore, the word ‘firm’ has been used in this particular class of assessees to include all classes of firms dealing with engineering. The word ‘firm’ was not used for the purpose of indicating the constitution of the firm, namely, a proprietorship or partnership, but in order to identify a class of firm providing taxable service within the meaning of s. 65(48)(g).
7.1 In these circumstances, we do not think that there is any deficiency in the definition of ‘consulting engineer’, which could be presumed to have excluded a company providing taxable service defined under s. 65(48)(g) when its counterparts comprising of an individual or a proprietorship or partnership firm or an AOP are included. From the scheme of the Act, we have not been able to find out any intelligible differentia or rational classification for excluding a company providing taxable service under s. 65(48)(g) when its counterparts being individuals or proprietorship or partnership or AOP are coming within the taxing-net providing the same service. This is further supported from the scheme of the 1994 Act. The Act aims at levying tax on service. It is the taxable service, which makes the provider liable. Thus, the taxable event is the providing of service and the levy falls on the provider. It would be inconceivable that the legislature had intended that the levy would fall on a provider when an individual or a proprietorship or partnership firm but not when a company. The distinction seems to be unintelligible and without any rationale, thus absurd. Under s. 68 the liability is of every person. In support of this proposition, we may gainfully refer to the decision in Motipur Zamindari Co. Ltd. vs. State of Bihar & Anr. AIR 1953 SC 320, where the Court held that there was no justification to differentiate between a company and an individual and that there was nothing in the statute being interpreted by the Court in that case, which would prevent the inclusion of the company. The Court was in that case interpreting the term “proprietor” as defined by s. 2(O) of Bihar Land Reforms Act. It held that in view of the object of the Bihar Land Reforms Act, there was no reason to differentiate between an individual proprietor and a company, which owns estates or tenures.
7.2 The object of the Act is of general application, and not intended to confer any special benefit to a company. The definition of all other assessees includes company, then it is not known why the legislature would intend to exclude a company providing a particular class of taxable service falling within s. 65(48)(g). Though eloquently argued by Dr. Pal, the rationale between the differentiation having regard to the expression “firm” imposing liability to the whole class to exempt a class within the class is not intelligible and does not at all make out a case of rational classification to interpret the said definition otherwise than in consonance with the definition given to all other class read together with ss. 66 and 68 having regard to the object and purpose of the enactment. When the statute is not a statute aimed at conferring certain special treatment for protecting the interest of a company, such an interpretation is not possible. Therefore, though for different reason, we are in agreement with the decision of the learned Single Judge since appealed against.
7.3 To support our view, we may borrow the reasoning from the decision of the Karnataka High Court in Tata Consultancy Services (supra), relying on the decisions in Tirath Singh vs. Bachittar Singh & Ors. AIR 1955 SC 830 and CIT vs. J.H. Gotla (1985) 48 CTR (SC) 363 : AIR 1985 SC 1698 to support its view, as quoted hereafter : “There is no distinction under the Act between the provider of a service, who is an individual, a partnership concern or an incorporated company. The liability to pay tax on the service provided falls uniformly on all the three, provided the service is of a kind that has been declared taxable under s. 65(48) of the Act. Viewed thus, what is taxed by the Act in the case of service provided by consultant engineers is the service provided directly or indirectly in the nature of advice, consultancy or technical assistance in any manner and relating to any disciplines of engineering. The fact that the service is provided by an individual or a partnership or by a company is wholly inconsequential. It is true that inclusion in the definition of the expression “consulting engineer” could include a company to set the entire controversy at rest, but the very fact that a company providing a technical assistance in any engineering discipline is not specifically included in the definition of the expression “consulting engineer” would not, ipso facto, mean that service rendered by any such company cannot be considered to be taxable. It is fairly well-settled that where the language of a statute in its ordinary meaning leads to a manifest anomaly or contradiction, the Court is entitled to put upon it a construction which modifies the meaning of the words used in the same.”
7.4 The decision in Dr. V. Shanmughavel (supra) may not help us much since in that case the distinction was sought to be made as to whether the services rendered by a valuer or by an engineer would come within the definition of ‘consulting engineer’ or not. Though some other decisions have since been cited by Dr. Pal, but we do not find any reason to discuss the same, since, in our view, any further discussion would be superfluous. Conclusion :
8. Thus, the Circular dt. 2nd July, 1997, issued by the Ministry of Finance and the Trade Circular dt. 3rd July, 1997, cannot be held to be contrary to the provisions of the statute or inconsistent with the scheme and context of the service tax law or repugnant to the clear legislative provisions defining ‘consulting engineer’ under s. 65(13). Having regard to the discussion made above, it cannot be said that the said circular was issued in excess of the parameters limited by the legislation delegating the power. It is well within the parameters and, therefore, can never be ultra vires to the parent Act or void. Therefore, the ratio decided in G.S. Dall & Flour Mills (supra) cannot be attracted. Since it is well within the enactment, it is not a case that a tax is being imposed by reason of the said two circulars on the company though not liable through subordinate legislation without being authorised by the parent Act as was held in Gopal (supra).
8.1 From the discussion above, we are of the view that the word “firm” used in the definition of ‘consulting engineer’ interpreted in the context and the scheme of s. 65 in consonance with s. 66 and s. 68 and the meaning conferred to the word “firm” elsewhere in the statute includes a company as explained in s. 81 since there is nothing to support an intelligible differentia or a rational classification between a company and a firm providing taxable service defined under s. 65 (48)(g) to exclude a company from the tax-net when both providing the same taxable service being the taxable event in a statute, which is not meant for providing special provisions for or benefit to a company. Order :
9. In the result, the appeal fails and is hereby dismissed. The judgment and order of the learned Single Judge, though for a little different and added reasons as discussed above, is hereby affirmed. The two circulars being the Circular No. 43/5/97-TRU, dt. 2nd July, 1997, issued by the Ministry of Finance and the Trade Circular dt. 3rd July, 1997, are declared to have been issued within the parameters of delegated legislation flowing from the parent Act and are valid pieces of delegated legislation in consonance with the provisions of the parent Act.
9.1 There will, however, be no order as to costs.
Soumitra Pal, J. :
I agree.
[Citation : 279 ITR 147]
