2.3 Rules of Construction of Taxation Law

The five rules (the examiner's set menu): Read the charging section strictly: the subject must fall within the letter — the courts' landmark attitude in tax matters; a tax cannot be imposed by analogy. The substance-and-form tension: is the transaction what it appears (form) or what it achieves (substance)? Anti-avoidance doctrines look to substance — arrangements lacking commercial substance may be disregarded. The statutes' interpretation provisions govern: the tax Acts' own definitions and interpretation clauses, read with the general interpretation framework — the literal construction first; other aids only where the intent is unclear. No equity either way: a tax cannot be imposed by analogy, AND an exemption must be claimed within its terms — neither side gets generosity the text does not give. Circulars, notices and directives fill gaps but cannot enlarge the statute: administration's instructions bind its officers, not the statute's meaning. Nepali judicial doctrines (verified anchors — cite by principle): Benefit of doubt to the taxpayer: where the tax law is silent, ambiguous or doubtful, its use and interpretation go in the taxpayer's favour (Mahendra Raj Pandey v. Nepal Rastra Bank, writ 2677 of 2062) — the executive has no discretionary power over taxation. No retrospectivity: tax laws applied with retrospective effect are contrary to law (the Court's bulletins line, including the Nepal Tobacco and Rafroz Emporium…