Strict Construction

Strict Construction/Restrictive Construction
Strict Construction means each of the words in statute should be interpreted by letter and no
regard should be give to the spirit beyond the statute. A judge has to apply the text only as it is
written in the statute, when there is clear meaning of the text and there will be no scope for any
further investigation regarding the same. Here in strict interpretation courts will use literal rule of
interpretation. This method is important because judges will not make any wrong inferences
from statutes and will not go out from the letter of the law and the judgment will be purely based
on the text of the statute. This upholds the rule of law by giving importance to the legislature that
passes the laws.
In State of Jharkand v Ambay Cements (2005) 1 SCC 368 , it was observed that the provisons
of law should be srictly constructed, it should not be left open for court to interpret, the court
cannot ignore the conditions prescribed in the proviison. Wherever there is a mandatory rule it
must be strictly followed. When a statute explicitly mentions the performance of a particular
statute in a specified way and lays down the consequences to it,that should be mandatorly
followed. Cardinal rule of interpretation is that when a particular act should be done in a
prescribed manner the courts cannot interpret that in any way of performance.
Tax laws and strict construction
Taxation is a statutory payment to the government.No tax can be levied and collected except
according to the authority of law. There is a fiscal legisaltion passed every year which prescribes
rate of taxes. Statute imposing taxes or monetary burdens are strictly construed. The logic behind
this principle is that imposition of taxes is also a kind of imposition of penalty which can only be
imposed if the language of the statue unequivocally (saying without any doubt) says so.
The two well settled principles of the interpretation, as applicable in taxing statutes are:
1. There is no equity in tax and the principle of strict or literal construction applies in
interpreting tax statutes. Hence, on the plain language of the statute, if the assessee is
entitled to two benefits , he has to be granted both these benefits and
2. If there are two reasonble interpretations of taxing statutes, the one that favours the
assessee has to be accepted.
Penal statutes and strict interpretation
In CCE v. Orient Fabrics 2003 (158) ELT 545 ,it was observed, ‘Expropriatory legislation
must be strictly construed.
It was further observed that a penal statute must receive strict construction’. Strict construction
is the general rule of penal statutes. - Bijay Kumar Agarwala v. State of Orissa - 1996 (5)
SCALE 530 .
If two possible constructions can be put upon a penal provision, the court must lean towards that
construction which exempts the subject from the penalty rather than the one which imposes
penalty - Tolaram Relumal v. State of Bombay AIR 1954 SC 496
In Sanjay Dutt v. State 1994 (5) SCC 402, it was observed that those not covered by express
language of the penal statute should not be roped in by stretching the language of the law.
Liberal vs Strict Construction
Liberal or beneficial construction means the interpretation should be made liberally with
intention to advance the purpose or object of the statute. Thus, in case of strict interpretation
courts may prefer the literal rule while for liberal construction courts may prefer golden rule or
mischief rule. Generally, taxing and penal statutes are to be strictly construed while beneficial or
benevolent legislation like ESI, Contract Labour Act or P.F. should be liberally construed. Even
in case of taxing statutes, beneficial provisions should be liberally construed.
The modern view is that the distinction between strict view for taxation statutes and liberal view
for welfare statutes is not much relevant. In Babua Ram v. State of UP (1995) 2 SCC 689 it
was observed : ‘Strict and liberal construction is a means by which statute is expanded or
restricted in order to convey legislative intent. It would make no difference whether Statute
involved is penal, criminal, remedial or in derogation of any rights. Strict or liberal construction
should be used as a tool in the process of ascertaining legislative intent when in doubt.
Otherwise, they have little or no value’.
Illustrations of liberal and strict constuction
In Royal Hatcheries v. State of Andhra Pradesh- (1994) 92 STC 239 (SC),it has been held
that ‘one day old chicks’ are not ‘domestic animals’ for Sales Tax purposes as the illustrations
given in the relevant provision for ‘domestic animals’ were oxen, bulls, cows, buffaloes, goats,
sheep etc. However, in another case, Bridge v. Parsons - (1863) 32 LJMC 95, a British Court
had held that cock can be considered as ‘domestic animal’ for purposes of ‘Protection to Animals
from Cruelty’. It is clear that for sales tax purposes, strict interpretation is preferred, while for
prevention of cruelty to animals, liberal interpretation is preferred. Hospital was not treated as
‘industry’ by Supreme Court for purpose of Customs Act in MS Company (P.) Ltd. v. UOI
1985 (19) ELT 15 (SC). However, in Bangalore Water Supply and Sewage Board v. R Rajjappa
AIR 1978 SC 548, hospital was considered as ‘industry’ for purposes of Industrial Disputes Act.
ID Act is a benevolent legislation for benefit of workmen and liberal definition was preferred
(apart from the fact that definition of ‘Industry’ in Industrial Disputes Act is very broad and
wide).

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Strict Construction/Restrictive Construction

Tax laws and strict construction

Liberal vs Strict Construction

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