STRICT CONSTRUCTION OF PENAL STATUTES AND FISCAL STATUTES

This article covers the following key doctrines:

• Strict Construction of Penal Statutes
• Strict Construction of Fiscal Statutes

STRICT CONSTRUCTION OF PENAL STATUTES

One of the foundational principles of statutory interpretation is that penal statutes must be strictly construed. This means every word in such a statute should be interpreted as it is written—without expanding its meaning based on intent or broader objectives.

The reason is simple: since penal statutes impose punishments, it is essential that they be interpreted with precision. If there is any ambiguity, the interpretation that favors the accused must be adopted.

However, this does not mean the language of the statute should be artificially narrowed to exclude cases clearly covered by it. The law should apply fairly and clearly.

Landmark Case:

Kishan Chand vs State of Haryana (AIR 2014 SC 2561): The Supreme Court held that penal provisions imposing harsh punishments and requiring strict compliance must be strictly interpreted. Courts must ensure that no one is penalized under vague or loosely worded laws.

STRICT CONSTRUCTION OF FISCAL STATUTES

Taxing statutes refers to the statutes which deals with tax. It is also known as fiscal statutes. These statutes imposing taxes or monetary burdens should be strictly construed. It means that each word in the statute should be interpreted by the words of the statute and not with spirit behind the statute. This principle states that a statute imposing offence or monetary burdens must be strictly construed.

The rule here is: if there are two reasonable interpretations of a fiscal statute, the interpretation that favors the assessee (taxpayer) should be adopted.
Fiscal statutes should not be extended by inference or implication to cover situations not clearly specified in the language of the law.

Landmark Cases:

District Registrar and Collector vs Canara Bank (AIR 2005 SC 186): The court clarified that fiscal statutes are not remedial in nature and hence do not warrant liberal interpretation. They are to be strictly construed since they impose burdens on the public.

Union of India vs Onkar S. Kanwar (AIR 2002 SC 3653): The Supreme Court emphasized that when two views are possible in interpreting a fiscal statute, the court must choose the one that benefits the assessee.