In Brief
A Constitution Bench reconsidered the principle established in Sun Export Corporation v. Collector of Customs regarding interpretation of tax exemption notifications. The respondents imported Vitamin E50 powder and claimed concessional customs duty (5% instead of 30%) under a Customs Notification, relying on the Sun Export doctrine that ambiguities in exemption notifications should favour the assessee. The Court held that this doctrine was incorrect. Exemption notifications must be strictly interpreted in favour of the revenue; the assessee must prove eligibility. While ambiguities in charging/taxing provisions favour the taxpayer, ambiguities in exemption provisions favour the state. The Court overruled Sun Export and related cases, clarifying that strict interpretation applies at the eligibility stage, though liberal construction may follow once eligibility is established. The matter was remanded for reconsideration on merits."
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