The Literal Rule Of Interpretation In UK Taxation Law
A "Statute" is the will of democratic parliament that governs the
functioning of states. The government should work, and the court must enforce
the rules as set down by the legislature will in the enforcement of the law. The
courts will be brought upon to interpret the phrases, words, and statements
employed in the law on a regular basis. Over the years, the courts have
established specific principles called as "Rules of Interpretation of Statutes"
in the process of such interpretation.
Most regulations include a "Statement of Objects and Reasons" as well as a
"Preamble," which together serve as guides for interpreting the actual meaning
of terms and idioms used throughout the law.
The procedure through which the true sense or meaning of a word is understood is
known as interpretation. It is not a legal question to determine the meaning of
a common English word. It is a legal question to determine how a statute should
be construed. The process by which a judge (or indeed any person, lawyer or
layman, who has occasion to search for the meaning of a statute) constructs a
meaning from the words of a statute book that he either believes is that of the
legislature, or that he proposes to attribute to it, is known as
'interpretation.' Statutory operation is not and never will be automatic.
It, like all legal norms, must be implemented through application-in other
words, through court interpretation. The 'art of propagating a purpose' is the
'art of interpretation.' Statute interpretation is a discipline in and of
itself. A statute is a legislative decree, and the best approach to understand
or construe it is to look for the author's meaning. A legislative provision must
be interpreted in accordance with the author's intent.
There is a distinction between the expressions Construction and Interpretation,
according to some. In general usage, however, the terms "interpretation" and
"construction" are often used interchangeably.
There are two types of interpretation: grammatical and logical. Grammatical
interpretation is determined by applying the laws of speech to the words
employed in the statute; in other words, it simply considers the legislature's
verbal expression. Logical interpretation gives effect to the legislature's aim
by taking into account additional situations that are acceptable within the
norms established in this regard.
Literal Rule Of Interpretation
The Literal Rule, also known as the Plain-Meaning Rule, is a method of statutory
construction that states that unless a statute expressly defines any of its
terms otherwise, legislation are to be read using the ordinary meaning of the
language of the statute. To put it another way, the law should be read word for
word and should not be interpreted in any way other than its intended meaning.
Legislators frequently add "definitions" sections within statutes to avoid
ambiguity. These parts explicitly clarify the most essential terms used in the
act. However, some legislation do not have a definitions section at all, or
(more typically) fail to define a term. The plain meaning rule is intended to
help courts when they are faced with a dispute over the meaning of a term not
defined by the statute or a word contained within a definition. Absent a
contrary definition in the act, terms must be given their plain, usual, and
literal meaning, according to the plain meaning rule.
The first and most basic rule of construction is that words and phrases in
technical law are assumed to be employed in their technical meaning if they have
one, and in their ordinary meaning otherwise, and the second is that phrases and
sentences are to be construed according to grammar rules.
A statute's words must be accorded their ordinary meaning prima facie. Unless
there is a compelling and evident cause to the contrary, the grammatical
construction that is clear and manifest and without doubt should prevail. There
is no room for construction when there is no ambiguity in the language. The
plain meaning of a term carries greater weight in statutory interpretation than
any other argument.
Intention Of Legislature
"To intend the legislators to have intended what they have actually said:
"Says the rule of construction. The goal of every interpretation is to determine
the Parliament's objective, but the Parliament's intention must be deduced from
the language used. If the statute's text is clear and unambiguous, the court
must give it effect, and it has no authority to extend its application in order
to carry out the legislature's actual or ostensible aim.
It is a well-established principle of interpretation that the court must proceed
as though the legislature did not make a mistake and did exactly what it meant.
If the result of applying this rule to a statute is not what the legislature
intended, it is up to the legislature to amend the statute rather than the
courts to attempt the necessary amendment by imbuing plain meaning with
something other than its natural meaning in order to produce a result that the
legislature is presumed to have intended.
It is self-evident that a court's principal responsibility is to give effect to
the legislature's objective as expressed in the words employed by it, and that
no extraneous consideration can be used to help find that intention. When the
language of the law is unambiguous and devoid of ambiguity, it is not up to the
courts to add their own gloss to squeeze out a meaning that is not supported by
the language of the law.
Other Sub Rules Of Literal Interpretaion
Noscitur A Sociis
According to Lord Macmillan, the rule of construction noscitur a sociis means
"the meaning of the word is to be assessed by the company it keeps." "It is a
reasonable rule of construction to construe words in an act of Parliament with
reference to the terms found in direct connection with them," according to the
Privy Council. It is a more general rule than ejusdem generis, which is merely
an application of the former.
In the following words, Justice Gajendragadkar explains the ruling in detail:
"This rule according to Maxwell means that when two or more words which are
susceptible of analogous meaning are coupled together, they are understood to be
used in their cognate sense. They take as it were their colour form each other
i.e., the more general is restricted to a sense analogous to a less general."
The rule was recently used to interpret the term "luxuries" in Entry 62 of List
II of the Constitution, which is a broad term with a lot of ambiguity.
Furthermore, the rule cannot be applied to completely eliminate one of the
It is an application of the same premise that a thing that should have been, but
was not included in a statute, cannot be addressed by the courts since doing so
would be legislation rather than construction. However, there is no presumption
that a casus omissus exists, and language allowing the court to create one where
none exists should be avoided.
In this regard, it is important to recall that, while a court cannot provide a
true casus omissus, it is also obvious that it should not construe a legislation
in such a way that it creates casus omissus where none exists.
How Are Taxation Statutes Generally Interpreted?
Taxation is the collection of money from the assessee (taxpayer) by an absolute
authority with no assurance of payment. As a result, taxes place a monetary
burden on the taxpayer and are thus regarded as a legal penalty to some extent.
As a result, no tax can be imposed unless it is specifically authorised by law.
Tax legislation is a sort of fiscal law that is enacted through a process of
trial and error or experimentation
Legislators are unable to foresee all the events or conditions that may
emerge after the law is passed. It's conceivable that the assessed will find a
loophole in the law and take advantage of it. In the event of any
irregularities, the assessee is given the benefit of the doubt because tax
causes a financial hardship.
The courts must assign the words a clear, plain, and straightforward
interpretation without presuming or considering any other potential
ramifications since tax acts are subject to strict mandate requirements. There
is no assumption of taxation or legislative intent to impose tax unless it is
As a result, adjustments and clarifications will have to be made by the
legislature or a subordinate body to fill up the gaps. There are two possible
outcomes if the court delivers a clear, straightforward, and straight definition
of a word. The consequence that is beneficial to the taxpayer should be taken
into account. There can be no tax burden until and until the statute expressly
imposes the duty on the taxpayer.
Interpretation Rule Applicable To The Taxation Statute
A taxation statute is a fiscal statute that imposes a financial burden on the
taxpayer. As a result, such statutes are carefully construed. The correct
meaning is communicated in a clear, direct, and uncomplicated manner. If two
viable options exist, the one that benefits the assessee is chosen. There are
three stages to any taxation statute. The first topic is which tax is collected
or imposed, followed by the assessment of the assessee's liability, and finally,
the recovery when the assessment is done.
The act's charging terms are included in the first stage. The statute must
expressly state that these costs will be charged. The scope and range of
subjects to whom the tax is imposed are defined by these charging requirements.
It also contains a synopsis in the form of themes that the legislature thinks
the bill will address. Because they cause financial hardship, the norms
controlling charging must be severely interpreted. There is no room for
ambiguity, and the information is provided in a straightforward, clear, and
Nothing can be deduced to support the intent of the lawmakers or the law's
intended purpose. When the IRS determines that a topic is covered by
legislation, it imposes a tax on all of those topics. By broadening the
definition, no tax can be applied unless it can be proven. When it comes to
taxation, the concept of equity has no bearing. It's because tax legislation
contains a lot of declared legal fiction. As a result, regardless of whether or
not something is legal, everything that is written must be strictly observed.
If the words are unambiguous, the court must read them that way regardless of
the consequences, or, to put it another way, the court is compelled by legal
fiction to do so even if the construction is unjust. The inadequacy cannot be
remedied by lengthening the statute's duration. It is the legislature's
responsibility to correct this by amendments.
The court must accept and obey the translated word if it has a clear, simple,
and plain meaning under any taxation statute, even if the interpretation of the
phrase leads to absurdity. It is also the responsibility of the legislature to
investigate and correct the problem. The courts are not compelled to expand the
meaning of imprecise and unclear language. If the legislature had foreseen a
situation like this, it would have addressed it in the main act by using proper
descriptions and phrasing, or the taxing authority would have issued a statement
clarifying the position.
State of Uttar Pradesh v. Kores India Ltd. is a major case (AIR 1977 SC
132) The issue was whether carbon paper should be included in the definition of
paper in this context. According to the Hon'ble Supreme Court, word paper is
used for writing, packaging, and printing in everyday life, but carbon paper is
employed for wholly different purposes.
Furthermore, the manufacturing method for carbon paper is significantly
different and more difficult than that for normal paper. As a result, because
carbon paper is not included in normal paper, the Court determined that it will
not be taxed. It was determined that the definition of paper should be
self-evident, therefore there was no need to interpret it to include carbon.
As a result, courts aren't obligated to broaden the scope of the definition to
include scenarios that aren't well-known. It is only taxed when it is expressly
authorised by law. The broad terminology used in taxes legislation should have a
simple, plain, and clear meaning that the general people can understand and
apply in everyday life. Words that are often used by persons who are subject to
the law should be interpreted in this way.
The assessment of culpability and the recovery of dues, respectively, are the
second and third stages of any tax system. These are procedural provisions that
spell out the technicalities and procedures that must be followed in order for
the act to be valid. These provisions must be understood fairly and liberally in
order to fulfil the legislature's goal.
When a contradiction has two meanings, the reasonable one is chosen because it
will assist the legislator in achieving his or her aim and addressing the
problem for which the legislation was created. They must be read in a way that
allows charging provisions to be implemented and administered efficiently. If an
assessee asks an exemption, the rigorous rule will be disregarded in favour of
The exemption should be granted if the assessee meets all of the rules and
standards for exemptions, and if the assessee falls into the exemption group.
depending on the authority enacting the law's presumed or likely objective. The
equity concept underpins the substantial compliance idea, which also applies to
If the prerequisites for claiming exemptions are met sufficiently or only a few
minor procedural requirements are not met, considerable compliance can allow one
to claim exemptions if the goal for which the law was created is not affected.
Because the consequences vary depending on the facts of each case, the level of
compliance, and whether partial compliance fits the law's essence, goal, and
purpose, the applicability of such theory is determined on a case-by-case basis.
How Are Taxation Statues Interpreted In U.K.?
A "statute" that sustains the government's operation replicates the will of the
sovereign legislature. The executive and judiciary, two pillars of the
government, must implement the rules in accordance with the legislative will
while administering justice. Frequently, the courts are called upon to interpret
the terms and expressions used in the law. For purposes of such interpretation,
the courts have established specific rules known as "Rules of Interpretation of
Statutes" over the years.
The court determines what the law means, rather than what it could imply, under
the "literal rule" premise. In doing so, the judge will give the terms in the
legislation a literal reading, that is, their ordinary meaning, even if the
outcome is an otherwise unfair or objectionable effect. The literal rule
explains that the aim of Parliament is better expressed when the phrases are
used in their natural and usual context.
The Parliament, as the state's representative democratic component, is expected
to endeavour to enact exactly what it declares in its rules. If judges have the
authority to provide an apparent or non-literal reading of the text of a
parliamentary act, Parliament's will, and consequently the will of the people,
The advantages and disadvantages of constructing statutes literally are
numerous. It cannot be denied that anyone with the necessary language skills may
effectively read and interpret a statute. It not only ensures consistency, but
it also limits the scope of unneeded lawsuits. It is also thought to be
beneficial in promoting drafting precision. Countries such as the United Kingdom
rely significantly on the legislation and are less reliant on the court.
The essential rationale for applying the Literal construction rule is the
legislature's supposed authoritative standing. However, there are several flaws
that must be addressed in order to maintain a stable legal and political
environment in the country.
The most prevalent source of disagreement is a misinterpretation of a
legislative instrument. A law provision's clarity and efficacy go a long way
toward eliminating judicial fights. Under a literal construction regime, the
extent of ambiguity and uncertainty allows unjustified litigants to take
advantage of a loophole in the system. It also wastes the time and money of a
litigant who is guided to court with his best interests in mind only to be
frustrated later by the legal difficulties connected with reading a statute
under this statutory construction scheme.
Effective in decreasing judicial adventurism, but at what cost? This system's
central question. It significantly decreases the role of judges, leading to
serious doubts about the very existence of courts. The existence of courts would
be a farce if every piece of legislation were to be drafted and its
interpretation regulated by the law-making body.
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