LexALL INDIA BANK OFFICERS’ CONFEDERATION versus THE REGIONAL MANAGER, CENTRAL BANK OF INDIA AND OTHERS
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* Author [2024] 5 S.C.R. 906 : 2024 INSC 389 All India Bank Officers’ Confederation v. The Regional Manager, Central Bank of India and Others (Civil Appeal No. 7780 of 2014) With (Civil Appeal No. 18459 of 2017) (Civil Appeal No. 18460 of 2017) (Civil Appeal No. 18462 of 2017) (Civil Appeal No. 18463 of 2017) (Civil Appeal No. 18461 of 2017) (Civil Appeal No. 18464 of 2017) (Civil Appeal Nos. 18465-18466 of 2017) (Civil Appeal Nos. 18457-18458 of 2017) and (Civil Appeal No. 18467 of 2017) 07 May 2024 [Sanjiv Khanna* and Dipankar Datta, JJ.] Issue for Consideration I. Does Section 17(2)(viii) of the Income Tax Act, 1961 and/ or Rule 3(7)(i) of the Income Tax Rules, 1962 lead to a delegation of the ‘essential legislative function’ to the Central Board of Direct Taxes? II. Is Rule 3(7)(i) of the Income Tax Rules, 1962 arbitrary and violative of Article 14 of the Constitution of India insofar as it treats the Prime Lending Rate of the State Bank of India as the benchmark? Headnotes Income Tax Act, 1961 – Section 17(2)(viii) – Income Tax Rules 1962 – Rule 3(7)(i) – Challenged before High Courts – High Courts dismissed the writ petitions – Several appeals were filed by staff unions and officers’ associations of various banks, impugning judgments of High Courts before Supreme Court, challenging section 17(2)(viii) and rule 3(7)(i) on the grounds of excessive and unguided delegation of essential legislative function to the Central Board of Direct Taxes, furthermore, rule 3(7)(i) was also challenged as arbitrary and [2024] 5 S.C.R. 907 All India Bank Officers’ Confederation v. The Regional Manager, Central Bank of India and Others violative of article 14 of the constitution insofar as it treats the Prime Leading Rate of SBI as the benchmark instead of the actual interest rate charged by the bank from a customer on a loan – Supreme Court uphold the impugned judgments of the High Courts – Appeals dismissed. Held: When it comes to uniform approach the laws relating to fiscal or tax measures enjoy greater latitude than other statutes. [Paras 1, 3, 34, and 35] Interpretation of Statute – Popular meaning makes the statute simpler and easier for the common people – After all, it is the common person who is concerned with the ramifications of a statute, and thus, the common man’s understanding is the definitive index of the legislative intent – This rule equally applies to construing words or expressions in a taxation statute. Section 17(2(viii) is a residuary clause, enacted to provide flexibility – Since it is enacted as an enabling catch- within-domain provision, the residuary clause is not iron-cast and exacting – The expression ‘perquisite’ is well-understood by a common person who is conversant with the subject matter of a taxing statute. Held: The legislature can and does delineate the meaning of terms through explicit definitions – Explicit definitions are useful, but it is wrong to state that all words or expressions must be explicitly defined – Popular meaning makes the statute simpler and easier for the common people – After all, it is the common person who is concerned with the ramifications of a statute, and thus, the common man’s understanding is the definitive index of the legislative intent – The legislature is assumed to be aware of the well-understood meaning attributed to the word/expression, and by necessary implication the legislature by not prescribing a fixed and exact definition, ascribes the prevalent meaning assigned to the word/expression in common parlance or commercial usage – This would include meaning assigned to technical words in a particular trade, business or profession, etc – when the legislation is concerning a particular trade, business or transaction – This rule equally applies to construing words or expressions in a taxation statute. Section 17(2(viii) is a residuary clause, enacted to provide flexibility – Since it is enacted as an enabling catch-within-domain provision, the residuary clause is not iron-cast and exacting – A more pragmatic and commonsensical approach can be adopted 908 [2024] 5 S.C.R. Digital Supreme Court Reports by locating the prevalent meaning of ‘perquisites’ in common parlance and commercial usage – The expression ‘perquisite’ is well-understood by a common person who is conversant with the subject matter of a taxing statute – New International Webster’s Comprehensive Dictionary defines ‘perquisites
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