The State of Maharashtra vs Shri Vile Parle Kelvani Mandal & Ors.
Background
Under the earlier Maharashtra Electricity Duty Act, 1958, charitable educational institutions registered under the Bombay/Maharashtra Public Trusts Act were expressly exempted from paying electricity duty. In 2016, the State replaced this law with the Maharashtra Electricity Duty Act, 2016, and the new Section 3(2) no longer contained a clause specifically exempting such charitable trust-run schools/colleges: the surviving education exemption applied only to institutions "run by local bodies." Electricity companies began billing the respondent trust's schools for duty from September 2016 onward. The Bombay High Court held that the institutions remained exempt and quashed the demand; the State appealed.
Decision Breakdown
The Supreme Court held that an exemption provision in a taxing statute must be interpreted strictly and literally, based purely on its actual wording. Courts cannot read in an exemption that the legislature chose not to carry forward. Comparing the two statutes' wording, it found that the 2016 Act's education exemption, unlike its 1958 predecessor, only covers institutions run by local bodies, and deliberately dropped the earlier clause covering charitable-trust-run schools and colleges. The Court rejected arguments based on absurdity, discrimination, and the "doctrine of last antecedent," holding that accepting the trust's broader reading would produce its own absurdity, even profit-making private hospitals and clinics would then claim exemption. Since the wording was clear and unambiguous, there was no scope for a purposive interpretation in the exemption's favour, and the benefit of any doubt in an exemption clause (unlike a charging provision) does not automatically go to the assessee. The Court allowed the State's appeal, holding the charitable education institutions liable for electricity duty from 8 August 2016 onward.
Lesson Learnt
When a tax exemption that existed in an old law is not carried forward, in the same words, into its replacement law, courts will not "read it back in": an exemption clause must be construed strictly and literally by its actual text, not by what seems fair or was the practice under the earlier law.