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CASE NO.: Appeal (civil)  5181 of 2006

PETITIONER: J. Srinivasa Rao                                                         

RESPONDENT: Govt. of A.P. & Anr.                                               

DATE OF JUDGMENT: 24/11/2006

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T (Arising out of SLP (C) No. 9607 of 2005) S.B. SINHA, J.

Leave granted.

       The State of Andhra Pradesh enacted the Andhra Pradesh Motor  Vehicles Taxation Act, 1963 (for short "the Act") to consolidate and amend  the law relating to levy of a tax on motor vehicles in the State of Andhra  Pradesh..  Section 3 of the Act reads as under:

"3(1) The Government may, by notification from  time to time, direct that a tax shall be levied on  every motor vehicle used or kept for use in a  public place in the State.

(2)     The notification issued under sub-section (1)  shall specify the class of motor vehicles on which,  the rates for the periods at which, and the date  from which, the tax shall be levied:

Provided that the rates of tax shall not exceed the  maximum specified in column (2) of the First  Schedule in respect of the classes of motor  vehicles fitted with pneumatic tyres specified in  the corresponding entry in column (1) thereof; and  one a half times the said maximum in respect of  such classes of motor vehicles as are fitted with  non-pneumatic tyres."

       In the Schedule appended to the Act, the rate of tax for Maxi Cab  permitted to carry more than six passengers but not more than twelve  passengers was prescribed at Rs. 1,000/-.  By reason of an amendment as  contained in the notification dated 27.04.1997, the rate of tax was modified  as under:

"(E) Contract carriages with a seating capacity  of 8 in all to 13 in all covered by intra- State or Inter-State permit for every  passenger other than the driver the vehicle  is permitted to carry.

Rs. 600/-  per seat"

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       Questioning the purported notification dated 27.04.1993, a writ  petition was filed by the appellant herein which by reason of the impugned  judgment was dismissed by the High Court opining that having regard to the  fact that in all other entries of the Schedule tax was levied on seat basis,  harmonious reading of the provisions thereof would lead to the conclusion  that rate of tax prescribed in the Schedule of Act is valid in law.

       Mr. K. Radha Krishnan, learned senior counsel appearing on behalf of  the appellant, would submit that the High Court committed a manifest error  in passing the impugned order insofar as it failed to take into consideration  that :

(i)     in case of a doubt as regards construction of a taxing statute it          should be construed in favour of the taxpayer and not the Revenue. (ii)    even assuming that there was some casus omissus, the same could not          have been supplied.

       Mr. R. Sundaravardhan, learned senior counsel appearing on behalf of  the respondents, on the other hand, would submit that in construction of a  taxing statute, addition of any word is not impermissible and rule of  strict  construction applies only to the charging section of the Act and not to the  machinery provisions.

       Drawing our attention to the fact that Maxi Cabs come within the  purview of the "contract carriage", the learned counsel would contend that  the provisions must be construed having regard to the charging provision  contained in Section 3 of the Act as also the rate of tax imposed on "contract  carriage".

       It was submitted that casus omissus can also be supplied in a case  where there is a clear necessity or where construction of a statute leads to an  absurdity or would run contrary to the plain intention of the legislature.

       The Act enacted by the State provides for a compensatory nature of  tax.  A statute involving compensatory tax in a given case must be construed  having regard to the purport and object for which it was levied.  [See Hardev  Motor Transport v. State of M.P. & Ors., JT 2006(9) SC 454]  

       Section 3 of the Act provides for a charging section stating that the tax  shall be levied on every motor vehicle used or kept for use in the State at the  rates specified in the First Schedule.  The levy of tax, therefore, is on the  motor vehicles.  Its rates may vary having regard to the use or category of  the vehicle.

       Maxi Cabs although come within the purview of the definition of  "contract carriage", but the rate of tax therefor has differently been provided  for in the statute itself.  Proviso appended to Section 3 of the Act provides  for a statutory injunction limiting the power of the State to enhance the rate  of tax.

       In Cape Brandy Syndicate v. Inland Revenue Commissioner [(1921) 1  K.B. 64], Rowlatt, J. stated:

"In a taxing Act one has to look merely at what is  clearly said. There is no room for any intendment.  There is no equity about a tax. There is no  presumption as to a tax. Nothing is to be read in,  nothing is to be implied. One can only look fairly  at the language used."

       In V.V.S. Sugars v. Govt. of A.P. and Others [(1999) 4 SCC 192], this  Court held:

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"4. The said Act is a taxing statute and a taxing  statute must be interpreted as it reads, with no  additions and no subtractions, on the ground of  legislative intendment or otherwise."           When the rate of tax is provided under a statute, construction thereof  applying the principles of noscitur a sociis and ejusdem generis would not  apply.  The rate of tax was fixed at Rs. 1,000/-.  That was a tax on the  specified motor vehicle.  The tax was not to be calculated on passenger  basis.  It may be that the provisions preceding thereto impose a tax on  passenger.  But, they were in relation to motor vehicles which are used for  different purposes.

       A Maxi Cab although would come within the purview of "contract  carriage" but it cannot carry more than twelve passengers.  It is a class  within the class of "contract carriage".

       Once the rate of tax is fixed and the same had been realized, any  notification enhancing the rate thereof cannot be permitted to transgress the  statutory limits provided for in the proviso appended to Section 3 of the Act.   Section 3 of the Act has to be read in the light of a proviso.  It must be given  its proper meaning.   

       In Gursahai Saigal v. Commissioner of Income \026 Tax, Punjab [(1963)  3 SCR 893], the question which fell for consideration before this Court was  construction of the machinery provisions vis-‘-vis the charging provisions.   Schedule appended to the Motor Vehicles Act is not machinery provision.  It  is a part of the charging provision.

       By giving a plain meaning to the Schedule appended to the Act, the  machinery provision does not become unworkable.  It did not prevent the  clear intention of the legislature from being defeated.  It can be given an  appropriate meaning.   

       In a case of doubt or dispute, it is well-settled, construction has to be  made in favour of the taxpayer and against the Revenue.  [See Sneh  Enterprises v. Commissioner of Customs, New Delhi, (2006) 7 SCC 714]

       In M/s. Ispat Industries Ltd. v. Commissioner of Customs, Mumbai  [JT 2006 (12) SC 379 : 2006 (9) SCALE 652], this Court opined:

"In our opinion if there are two possible  interpretations of a rule, one which subserves the  object of a provision in the parent statute and the  other which does not, we have to adopt the former,  because adopting the latter will make the rule ultra  vires the Act."

       It is furthermore well-known that casus omissus cannot be supplied.   

       In Ashok Lanka v. Rishi Dixit [(2005) 5 SCC 598], this Court opined:

"66. The question as to whether it can be given  effect to or not is, thus, required to be judged on its  own without reference to the circular issued by the  Commissioner of Excise. Casus omissus, it is well  known, cannot be supplied by the court. (See P.T.  Rajan v. T.P.M. Sahir)"

       Gray in ’The Nature and Sources of the Law’ (2nd ed. 1921 pp 172- 73) observed thus:  "Interpretation is generally spoken of as if its chief  function was to discover what the meaning of the

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Legislature really was. But when a Legislature has  had a real intention, one way or another, on a  point, it is not once in a hundred times that any  doubt arises as to what its intention was ... The fact  is that the difficulties of so-called interpretation  arise when the Legislature has had no meaning at  all; when the question which is raised on the  statute never occurred to it ... (In such cases) when  the judges are professing to declare what the  Legislature meant, they are in truth, themselves  legislating to fill up casus omissi."

       Reliance placed by Mr. Sundarvardhan on Champa Kumari Singhi  and others v. The Member Board of Revenue, West Bengal and Others [AIR  1970 SC 1108 : (1970) 1 SCC 404] is misplaced.  In that case, this Court  was considering a voluntary disclosure scheme vis-‘-vis the time limit  specified therefor.  The applicant made certain defaults in payment of  instalments.  Having regard to the purport of the scheme, it was stated:

"\005The language of clause (iv) of the proviso  was unfortunate in expressing this intent and has  now been corrected in the new Act but the  intention was always obvious. Even in the second  agreement which replaced the first agreement the  same condition obtained. There was a concession  shown in the matter of penalty and smaller  instalments were fixed. But the Central Board of  Revenue had stipulated even then that the  concession mentioned above would only be  available if the revised scheme of payment was  strictly followed. In other words, payment was to  be made by instalments and this concession  therefore attracted the provisions of clause (iv).  The Government could always accept any  instalment even if paid late without having to  worry about the period of limitation of one year  from the date of demand, since clause (iv) of the  first proviso gave them an option to wait till the  last instalment was payable. The scheme of the  instalments took the matter out of the main part  of sub-section (7) and brought it within the  proviso to clause (iv)\005"

       Clause (iv) of the proviso appended to Sub-section (7) of Section 46  of the Income Tax Act, 1922 came up for consideration therein which reads  as under:

"Save in accordance with the provisions of sub- section (1) of Section 42 or to the proviso to  Section 45, no proceedings for the recovery of any  sum payable under this Act shall be commenced  after the expiration of one year from the last day of  the financial year in which any demand is made  under this Act: Provided that the period of one year herein referred  to shall  *                               *                       * (iv) where the sum payable is allowed to be paid  by intalments, from the date on which the last of  such instalments was due."

       Whereas the contention of the appellants therein was that they could  have been treated as defaulters in terms of Sub-section (1) of Section 46  only, the Revenue contended that the matter was covered by Clause (iv) of

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the proviso to Sub-section (7) of Section 46 which allows limitation of one  year to be calculated from the date on which the last instalment was due in  that case.   

       Herein we are not concerned with such a provision as the Schedule  can be given effect to in the light of the charging provisions contained in  Section 3 of the Act.

       Reliance has also been placed upon a decision of this Court in  Commissioner of Income Tax, Central Calcutta v. National Taj Traders  [(1980) 1 SCC 370] wherein this Court opined that the rule of literal  construction can be departed from when it would lead to manifestly absurd  result not intended by legislature.

       There cannot be any dispute with regard to the aforementioned  proposition of law.

       However, we may notice that therein only Tulzapurkar, J. stated the  law thus:          "\005In other words, under the first principle a casus  omissus cannot be supplied by the Court except in  the case of clear necessity and when reason for it is  found in the four corners of the statute itself but at  the same time a casus omissus should not be  readily inferred and for that purpose all the parts of  a statute or section must be construed together and  every clause of a section should be construed with  reference to the context and other clauses thereof  so that the construction to be put on a particular  provision makes a consistent enactment of the  whole statute. This would be more so if literal  construction of a particular clause leads to  manifestly absurd or anomalous results which  could not have been intended by the  Legislature\005"

       Given this plain meaning to the provisions referred to hereinbefore, in  our opinion, the rate of tax could not be increased in derogation to the  proviso appended to Section 3 of the Act.  The notification in our opinion  as  it seeks to change the basis of the mode of taxation is illegal and, thus,  cannot be sustained.

       It is not a case where language is obscure which would give rise to  two different meanings; one leading to the workability of the Act and  another to absurdity.  In such a case, a presumption as regard  constitutionality of statute may be raised.  It is well settled that construing a  taxing statute, the court shall make an endeavour to give effect to the golden  rule of interpretation, i.e., principle of literal interpretation and would not  supply casus omissus.

       In Hardev Motor Transport (supra), Clause (g) of Entry IV of the First  Schedule of the M.P. Motor Vehicles Taxation Act was struck down inter  alia on the ground that the same was contrary to the charging provisions.

       For the reasons aforementioned, the impugned judgment cannot be  sustained which is set aside accordingly.  The appeal is allowed.  No costs.