External aid for interpretation cannot be employed when an ‘exemption’ entry is clear and unambiguous: SC


The Supreme Court ruled that the external aid for interpretation cannot be employed when an ‘exemption’ entry is clear and unambiguous. 


The petitioners seek special leave to appeal against the judgment and order, as passed by a Division Bench of the High Court of Judicature at Madras whereby, the Division Bench has reversed the common order as passed by the Single Judge in a batch of petitions and has disapproved the impugned clarification orders. By the said clarification orders, the petitioner, the Authority for Clarification and Advance Ruling, had held that the commodity “Hank Yarn”, as stipulated in Entry 44 of Part B of the Fourth Schedule to the Tamil Nadu Value Added Tax Act, 2006, meant only “Cotton Hank Yarn” and not “Viscose Staple Fiber (‘VSF’) Hank Yarn”.


The petitioner argued that the Single Judge has rightly taken the view in this matter with reference to the Budget speech of the Finance Minister, which made it clear that the exemption Entry 44, while describing the goods as “Hank Yarn”, was meant only for the benefit of handloom industry in the textile sector; and the Entry was required to be understood and interpreted that way alone. 

Court Observation

The Division Bench of the High Court was of the view that no external aid for interpretation was called for when the language of the Entry in question was clear in itself. The Division Bench was also of the view that even the referred Budget speech did not specifically mention that there was any intention to restrict the exemption only to “Cotton Hank Yarn”.

The division bench of Justice Dinesh Maheshwari and Justice Hrishikesh Roy noted that the Entry in question, as inserted into the Fourth Schedule to the Act, is clear and specific, that is, “Hank Yarn”; it carries neither any ambiguity nor any confusion. 

The court stated that the yarn in the hank form (which is a unit of measure), has come for exemption under the said Entry 44; and obviously, that exemption ensures to the benefit of the handloom industry too. 


The court found no reason to restrict the Entry in its operation to the handloom industry alone or to any particular class of hank yarn like “Cotton Hank Yarn” only. The exemption Entry being clear and unambiguous, no external aid for interpretation is called for, whether in the form of Budget speech or any other notification under any other enactment. 

The court while dismissing the petition said that the view as taken by the High Court commends to it and it finds no question of law worth consideration so as to entertain the petition. 

Case title: The Authority for Clarification and Advance Ruling & Anr. v/s M/S. Aakavi Spinning Mills (p) ltd.

Citation: Special Leave to Appeal (C) No. 306/2022 

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