The General Clauses Act, 1897 (‘the Act’) is a unique
Act in the sense that its utility lies in the interpretation of other
enactments. Interpretation of statutes is a vexed issue which professionals in
general and tax practitioners in particular face time and again. The Act throws
light on some of these issues. This Article discusses the important provisions
of this unique Act.
2. Definitions :
S. 2 of the Act defines certain important terms. However,
unlike definitions in other acts, these definitions apply to all Central Acts
and Regulations made after March 1897 unless there is anything repugnant in the
subject or context. Some of the important terms defined by S. 2 are as follows :
2.1 The term Act when used with reference to an
offence or a civil wrong, shall include a series of acts, and words which refer
to acts done, extend also to illegal omissions.
2.2 The term affidavit includes an affirmation and
declaration in the case of persons by law allowed to affirm or declare instead
of swearing.
2.3 The term commencement, when used with reference to
an Act or Regulation, shall mean the day on which the Act or Regulation comes
into force.
2.4 The term Document includes any matter written,
expressed or described upon any substance by means of letters, figures or marks,
or by more than one of those means which is intended to be used or which may be
used, for the purpose of recording that matter. This definition is of particular
importance under the Stamp Acts, Registration Act, etc. Other enactments which
define the term document are the Indian Evidence Act, 1872 and the Indian Penal
Code. These two Acts also contain a similar definition of the term ‘document’.
2.5 The term financial year means the year commencing
on the first day of April;
2.6 A thing shall be deemed to be done in good faith
where it is in fact done honestly, whether it is done negligently or not.
2.7 The term immovable property has been defined to
include land, benefits to arise out of land and things attached to the earth, or
permanently fastened to anything attached to the earth. This is a very important
definition which is relevant for various Acts such as the Stamp Acts, Sale of
Goods Act, Sales Tax Acts, Registration Act, Central Excise Act, etc. The Bombay
Stamp Act has incorporated this definition in the Act itself. The two leading
decisions on this definition are those of the Supreme Court in the case of
Sirpur Paper Mills (1998) 1 SCC 400 and the recent case of Duncan’s
Industries (2000) 1 SCC 633. The Central Board of Excise and Customs
has issued an order u/s.37B of the Central Excise
Act, 1944 (Order No. 58/1/2002-CX, dated 15-1-2002) wherein after considering
seven Supreme Court decisions including the two mentioned above, the CBEC has
explained its position on when is a property immovable or movable. Moveable
property is defined to mean property of every description, except immovable
property. These two definitions apply to all Central Acts made after January,
1868.
2.8 Local authority is defined to mean a municipal
committee, district board, body of port commissioners or other authority legally
entitled to, or entrusted by the Government with, the control or management of a
municipal or local fund. Various decisions have held that the following
authorities are covered within the definition of a local authority — a Village
Panchayat, a Port Trust, a University, a State Road Transport Corporation, a
Dock Labour Board, a Metropolitan Development Authority, a Cantonment Board, a
Tahsildar, a District School Board, etc.
3. General Rules of Construction :
3.2.1 S. 6 to S. 8 deal with repealed acts and their
effects. S. 6 provides that in case any Central Act or Regulation is repealed by
any subsequent law, then, unless a different intention appears, the repeal shall
not :
Further, any such investigation, legal proceeding or remedy,
may be instituted, continued or enforced, and any such penalty, forfeiture,
liability or punishment may be imposed as if the repealing Act or Regulation had
not been passed.
Two decisions of the Constitution Benches of the Supreme Court in the cases of Rayala Corpn. (P) Ltd. and M. R. Pratap, (1969) 2 SCC 412 and Kolhapur Canesugar Works Ltd., (2000) 2 SCC 536 have observed that there is a difference between’ omission’ of a statute and its ‘repeal’ and S. 6 of the Act applies to a repealed Section and not to one which has been omitted. The Apex Court in Kolhapur’s case held that repeal of a statute or deletion of a provision, unless covered by S. 6(1) of the Act or a saving provision, totally obliterates it from the statute book and the proceedings pending thereunder stand discontinued. These judgments were recently followed in another decision of the Supreme Court in the case of General Finance Co. v. Asst. CIT, 124 Taxman 432 (SC). The Apex Court held that the principle underlying S. 6 of the Act as saving the right to initiate proceedings for liabilities incurred during the currency of an act will not apply to omission of a provision in an act but only to repeal, because an omission is different from a repeal. Hence, while dealing with a case for prosecution for non-compliance u/s.269SS of the Income-tax Act, 1961, the Court held that as S. 276DD which dealt with prosecution for offences u/ s.269SS had been omitted (and not repealed) from the statute books, and prosecution could not be launched or continued by invoking S. 6 of the General Clauses Act after its omission. Hence, the prosecution proceedings were quashed.
3.2.2 Any Act which repeals any other enactment by which the text of any Act or Regulation was amended by the express omission, insertion or sub-stitution of any matter, then, unless a different intention appears, the repeal shall not affect the continuance of any such amendment made by the enactment so repealed and in operation at the time of such repeal. This Section refers to textual amendments and clarifies the effect of repeal of amending statutes. It is a well-settled law that the repeal of a statute does not repeal such portion of the statute as has been incorporated into another statute. Even if the original Act is repealed, the incorporated Sections still operate in the later Act. When a sub-sequent Act amends an earlier one in such a manner as to incorporate itself in the earlier one, then the earlier Act must be read and construed as if the altered words had been written into the earlier Act and the old words are cancelled, so that there is no need for a reference to the amending Act.
3.2.3 In order to revive any enactment which has been wholly or partially repealed, the purpose to do so must be expressly stated in the Act.
3.2.4 Any act which repeals and re-enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed shall, unless a different intention appears, be construed as references to the re-enacted provision. In Mahindra & Mahindra v. UOI, AIR 1979 SC 798 it was held that if a provision of one statute is incorporated in another, any subsequent amendment in the former statute or even its total repeal, would not affect the provision as incorporated in the latter statute. In Gauri Shankar Gaur v. State of UP, AIR 1994 SC 169, it was held that if a later Act merely makes a reference to the earlier Act, it is only by way of a reference and all amendments, repeals, new law subsequently made will have effect, unless its operation is saved by this provision.
3.2.5 Where any Act or Regulation is repealed and re-enacted, then, any Notification, order, scheme, rule, form, or bye-law made or issued under the re-pealed Act or Regulation, shall, insofar as it is not inconsistent with the provisions re-enacted, continue to be in force, and be deemed to have been made or issued under the provisions so re-enacted.
3.3 S. 9 deals with the commencement and completion of time. It states that for the purpose of excluding the first in a series of days or any such period, it is sufficient if the Act uses the word ‘from’ and for including the last in a series of days or any such period of time to use the word ‘to’. Thus, if an Act uses the word ‘from’, then the first day should not be counted and if it uses the word ‘to’, then the last day should be included. Thus, in the case of Cartwright v. Mac Cormack, (1963) 1 All ER 11,where an insurance policy was issued for ‘IS days from the commencement of the policy’, it was held that the first day was excluded and the policy commenced from midnight of that day. In Union Bank Official Liquidator v. Padmanabha Menon, AIR 1955 NUC 1824, an application had to be made within three years from the date of appointment of the liquidator and in computing that period, the first day was to be excluded. It was held that the principle of S. 9 does not apply only when the words ‘from’ and ‘to’ are used in a statute. It only indicates that if the first day has been excluded, it is sufficient to use the word’ from’ and if the last day is to be included the word to be used is ‘to’.
3.4 According to S. ID, in case any Act requires something to be done in any Court or office on a particular day, and the same is closed on that day or on the last day of a period, then the action may be done on the next working day. However, this does not apply in cases where the Limitation Act applies. The object is to enable a person to do on the next working day what he could have done on a holiday. Thus, an act of the Court should not prejudice a person’s legal remedy, as the law does not compel the performance of an impossibility. There is a cleavage of judicial decisions over whether S. 10 applies to decrees and orders of the Courts. According to one school of thought, the Section applies and hence, if the time specified by the decree for doing something, say a payment, falls on a holiday, then the money can be deposited on the next working day. However, the other view is that S. 10 only applies to a case in which an act is allowed to be done by an Act, and not to an act to be done under a decree. If the payment is not done on the specified date since the day was a holiday, the decree can be executed. In this respect, the Supreme Court’s decision in the case of C. F. Angadi v. Y. S. Hirannayya (1972) 1 SCC 191 is relevant. The Apex Court held that where a party to a consent decree is given time to do an act on a day and he fails to do so on account of impossibility of performance, but he does on the next practicable day, then it must be held that the act was done in time and in terms of the consent decree. It is submitted that this is the more rational view. In an interesting decision in the case of Dharmsi Morarji Chemicals v. Occhavlal Hargovaindas Shah, AIR 1927 Bom. 480, a suit was to be filed and the due date for filing the suit (3 years from the date of payment) under the Limitation Act expired on 20th April. However, the suit was filed only in June. The Court ignored the delay, because in the interim period the High Court was closed on account of its annual summer vacation. It was held that if an act of a party is delayed on account of an act of the Court, then he is entitled to an extension over that period during which he is delayed by the Court’s action.
3.5 S. 11 states that distance, for the purposes of any Act, is to be measured in a straight line on a horizontal plain, unless a contrary intention appears from the statute. In Rex v. [okhu, AIR 1948 All 299, it was held that where the words used in an Act were ‘within the distance of two miles from the limits of a public ferry’, there was no reason why the distance contemplated should not be the shortest distance between the two points. This principle is also helpful under the Income-tax Act for determining whether a land is an urban agricultural land or a rural agricultural land. S. 2(14)(iii) of the Income-tax Act excludes an agricultural land from the definition of a capital asset if it is more than within 8 kilometers from the local limits of any municipality.
3.6 U/s.12, where any Act specifies any Customs/ Excise duty is to be based on any given quantity, e.g., weight, measure, value, etc. of the goods, then a similar duty is leviable according to the same rate on a pro rata basis on a greater or lesser quantity of goods.
3.7 S. 13 states that words in masculine gender would be deemed to include females and words in singular shall include the plural and vice versa. However, both these provisions apply provided they are not repugnant to the subject or the context. In E. Alfred v. First Addl. ITO, Salem, AIR 1958 Mad, it was held that the liability under the Income-tax imposed on the legal representative of a deceased attaches itself to all the legal representatives of the deceased. As per S. 13(2) of the General Clauses Act, the word ‘singular’ includes the plural and hence, when there are many representatives within the knowledge of the ITO, all of them must be served with notices. In the case of Vijaya Manohar Arbat v. Kashirao Sawai (1987) 2 SCC 278, the Court held that the expression ‘his father or mother’ in the Code of Criminal Procedure is not confined only to the father or mother of a son, but also applies to the parents of a daughter. Accordingly, the daughter has an obligation even after marriage to maintain her parents if they are unable to do so. A daughter after her marriage does not cease to be a daughter of her parents. However, the Supreme Court in the case of Dhandhania Kedia v. CIT, AIR 1959 SC 219, held that this Section can be applied only when there is nothing to the contrary Where the words of the Income-tax Act are Clear, then there is no room for application of this Section.
4. Orders, Rules:
4.1 Whenever a power to issue any Notification, order, scheme, rule, form, or bye-law is conferred, then the power includes the power to add to, amend, vary or rescind the same.
4.2 In case any Act or Regulation which is not to come into force immediately on its passing, confers a power to make rules or bye-laws, or to issue orders with respect to various matters, then that power may be exercised at any time after the passing of the Act or Regulation. However, the rules, bye-laws or orders so made or issued shall not take effect till the commencement of the Act or Regulation.
4.3 In case a power to make rules or bye-laws is conditional upon the same being made after their previous publication, then the following provisions would apply:
a) first a draft of the proposed rules or bye-laws would be published in the prescribed manner for the information of persons likely to be affected.
b) the draft should include a notice specifying a date on or after which the draft will be taken into consideration;
c) the rule-making and sanctioning authority shall consider any objection or suggestion with respect to the draft;
d) once the rule or bye-laws purported to have been made in exercise of a power to make rules or bye-laws are published in the Gazette, then it shall be conclusive proof that the same have been duly made.
5. Others:
5.1 S. 63 to S. 70 of the Indian Penal Code and the provisions of the Code of Criminal Procedure in relation to the issue and the execution of warrants for the levy of fines shall apply to all fines imposed under any Act, Regulation, rule or bye-law, unless provided otherwise. This provision is based on the Rule of Convenience, i.e., there is a uniform procedure for all enactments to be followed for recovery of fines, unless the statute itself provides another mode.
5.2 In case an act or omission is an offence under two or more Acts, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but he shall not be liable to be punished twice for the same offence. Thus, where an act is an offence under two or more enactments, the offender cannot be punished twice for the same offence.
5.3 Where any Act or Regulation authorises or requires any document to be served by post, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. Thus, a uniform procedure has been laid down in all cases requiring service of notice by post. However, this proposition may be rebutted by providing evidence to show that actually there was no service of notice. In a case where a notice was served for specific performance of an Agreement by a Registered AD and returned un-served due to alleged refusal, it was held that the Notice must be deemed to have been served – Bhabhia Devi v. P. Yadav, (1997) 3 SCC 631. In the following cases it was held that the notice is deemed to have been duly served: Shimla Development Authority v. Santosh Sharma, (1997) 2 SCC 637 (Notice sent by Registered AD, but neither the unserved notice nor the AD card was received); State of Kerala v. VTK Udaya, 1995 Suppl. (3) SCC 518 (Notice returned with endorsement ‘not known’); Harcharan Sing v. Shiv Rani, AIR 1981 SC 1284 (Addressee refused to accept letter).
5.4 Any enactment may be cited by reference to the title or short title by reference to the number and year thereof, and any provision in an enactment may be cited by reference to the Section or sub-section of the enactment in which the provision is contained. Any Act or Regulation in which a description or citation of a portion of another enactment is made shall be construed as including the word, Section or other part mentioned or referred to as forming the beginning and as forming the end of the portion comprised in the description or citation.
6. Conclusion:
The Courts have, in innumerable pronouncements, held that if a term is not defined in a particular Act, Rule, etc., then the definition given in the General Clauses Act will prevail. For instance, in the case of Karam Chand Thapar, AIR 1961 SC 838, the Supreme Court held that the purpose of the Act is to place in a single Act provisions as regards definitions of words and legal principles of interpretation which would otherwise have to be incorporated in many Acts and Regulations. The definition and the rules of interpretation contained in the Act have to be read in every other statute governed by it. Similarly, in Dulichand Laxminarayan, 29 ITR 535 (SC), it was held that the definitions given in S. 3 of the Act apply when there is nothing repugnant in the subject or the context.
Hence, knowledge of the basic provisions/principles of the General Clauses Act will assist the Auditor not only in interpreting the provisions of the Corporate and Tax Laws, but also in adding value to his advisory services.
