Tax laws, in particular, have been subjected to much severe criticism. The number of disputes arising from taxation laws in our country is phenomenal.

The case laws, decisions and judgments on any tax law, be it excise, customs, sales tax or income tax are mind boggling. So much so that an interpretation arrived without the assistance of a tax practitioner or tax consultant runs risk of being incorrect or specious. However, having recognised the causes afflicting the tax laws, the remedy has had no easy options.

The oft-repeated advice to the Government is something like this. Drastically reform the structure. Remove all exemptions and reduce tax rates to one rate. But even their partial implementation raises eyebrows of many. Having said that, is it not true that at times disputes are raised without much serious cause? The simple truth is that it is much easier to raise doubts and create confusion than to resolve it.

The pity is that at times doubts are raised even when plain language is the essence of a legal provision. It is worrisome that at times strenuous efforts are made to distort the plain meaning of the legal provisions. On many occasions, the litigants succeed at the initial stages. True, the doubt is ultimately set at rest by a final verdict of the Supreme Court. But is it without any implications? Imagine the confusion that prevails during the interregnum and the enormous uncertainty that is caused either to the collection of revenue or the interest of the assessees.

Consider a recent case in which the controversy was set at rest by the judgment of the Supreme Court- Union of India vs Solar Pesticides Pvt Ltd-2000 (116) ELT 401 (SC).

To help understand the cause of dispute, some relevant facts. Section 27 of the Customs Act provides that the refund of duty shall the allowed only if the importer had not passed on the incidence of duty to any other person. In other words, if an importer claims refund of duty he has to establish that he himself has borne the burden of duty and not passed on its incidence to any other person. This is based on the doctrine of unjust enrichment. The idea being that if the incidence of duty has been passed on to another person, then it would be unjust to allow the refund of duty on any ground whatsoever.

A doubt was raised as to the interpretation of this provision when the imported goods are used for captive consumption by the importer and not sold as such. This doubt was entertained in a writ petition which was decided by the high court of Mumbai as Solar Pesticides Pvt Ltd vs Union of India 1992(57) ELT 201(Bom). The high court took the view that the doctrine of unjust enrichment has no application in cases where the imported goods are either consumed by the importer or used by him in the manufacture of other products.

But what happened when the matter went in appeal to the Supreme Court? The apex court rejected the high courts assertion that the incidence of duty can be passed on only directly. The court clarified that incidence of duty in relation to its being passed on to another person would take it within its ambit not only the passing of duty directly to another person but also cases where it is passed on indirectly.

The apex court emphasised that the words incidence of duty means the burden of duty. The court also explained that any difficulty in proving that the incidence of duty borne by the importer has not been passed on to the purchaser of finished product could be no ground for interpreting the section differently. The apex court gave plain meaning to the plain language used in Section 27 of the Customs Act. But how much time it has taken for the doubt to be cleared. The original petition was filed in the High Court in 1988. The High Court decided the petition in 1991. The judgment of the apex court came in 2000. Why not give plain meaning to plain words? is a serious question that deserves consideration in the larger public interest.

To be sure, it apples equally to the erring departmental officers. Unless this simple dictum is practiced no amount of simplification of tax laws will achieve the desired objective.

The author's e-mail address is rustagi@vsnl.com