This post covers brief compilation of judgments on deeming provisions and its impact on the Statute. The word deem has been used “82 times” in the CGST Act, 2017 and the word “as if” has been used 22 times in the CGST Act, 2017.
1.Impact of Deeming Provision and use of word “as if”– Rajasthan State I.D.I.Corpn. … vs Diamond & Gem Dev. Corpn. Ltd. & Anr (SC)
The expression “as if”, is used to make one applicable in respect of the other. The words “as if” create a legal fiction. By it, when a person is “deemed to be” something, the only meaning possible is that, while in reality he is not that something, but for the purposes of the Act of legislature he is required to be treated that something, and not otherwise. It is a well settled rule of interpretation that, in construing the scope of a legal fiction, it would be proper and even necessary, to assume all those facts on the basis of which alone, such fiction can operate. The words “as if”, in fact show the distinction between two things and, such words must be used only for a limited purpose. They further show that a legal fiction must be limited to the purpose for which it was created. (Vide: Radhakissen Chamria & Ors. v. Durga Prasad Chamria & Anr., AIR 1940 PC 167; Commr. of Income-tax, Delhi v. S. Teja Singh, AIR 1959 SC 352; Ram Kishore Sen & Ors. v. Union of India & Ors., AIR 1966 SC 644; Sher Singh v. Union of India & Ors., AIR 1984 SC 200; State of Maharashtra v. Laljit Rajshi Shah & Ors, AIR 2000 SC 937; Paramjeet Singh Patheja v. ICDS Ltd. AIR 2007 SC 168; and Commissioner of Income Tax v. Willamson Financial Services & Ors. (2008) 2 SCC 202).
2. Use of “for the purpose of this Act”-State Of Karnataka vs K. Gopalakrishna Shenoy & Anr on 15 July, 1987 Equivalent citations: 1987 AIR 1911, 1987 SCR (3) 481
This is made clear by the words “for the purposes of this Act” contained in the Explanation. The operative force of the deeming provision contained in Section 38 being restricted to Section 22 of the Motor Vehicles Act has been correctly noticed by the Karnataka High Court in Naraina Reddy’s case and the High Court has held at page 322 as follows:-
“The legal fiction created by Section 38 of the Motor Vehicles Act is only for the purpose of section 22 of that Act and cannot be extended to the Taxation Act.”
3. How Does a Deeming Fiction Work-The State Of Bombay vs Pandurang Vinayak Chaphalkar And … on 13 March, 1953 Equivalent citations: 1953 AIR 244, 1954 SCR 773
In East End Dwellings Co. Ltd. v. Finsbury Borough Council(2), Lord Asquith while dealing with the provisions of the Town and County Planning Act, 1947, made reference to the same principle and observed as follows:-
” If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it…….. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.”
4.Use of Deeming Fiction– Hira H. Advani Etc vs State Of Maharashtra on 13 August, 1969 Equivalent citations: 1971 AIR 44, 1970 SCR (1) 821
The word “deemed” is used a great deal in modern legislation. Sometimes it is used to impose for the purpose of a statute an artificial construction for a word or phrase that would not otherwise prevail. Sometimes it is used to put beyond doubt a particular construction that might otherwise be uncertain. Sometimes it is used to give a comprehensive description that includes what is obvious, what is uncertain and what is, in the ordinary sense, impossible.”