A.Balasubramanian v. The Regional Transport Officer,(The Licensing Authority,Namakkal Rajaji District.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 11.02.2009CORAM:THE HONOURABLE MRS.JUSTICE PRABHA SRIDEVANANDTHE HONOURABLE MR.JUSTICE K.K.SASIDHARANWrit Appeal No.964/2007A.Balasubramanian ..Appellant Vs.The Regional Transport Officer,(The Licensing Authority,Namakkal Rajaji District. ..RespondentAppeal filed under Clause 15 of the Letters Patent against theorder passed by this Court dated 23.10.2003 passed inW.P.No.1993/1997 filed under Article 226 of the Constitution ofIndia, calling for the records relating to the orders made inproceedings in Memorandum R.Mo.91017/14/96, dated 01.10.1996 on thefile of the Respondent herein and to quash the same.For Appellant : Mr.C.R.KrishnamoorthyFor Respondent : Mr.A.Arumugam, Spl.Additional Government PleaderJ U D G M E N TK.K.SASIDHARAN, J.Being aggrieved by the order of the learned Single Judge dated23.10.2003 in W.P.No.1993/1997 confirming the proceedings of theRegional Transport Officer taxing the motorcycles as commercialvehicles, the unsuccessful Writ Petitioner has preferred thisappeal.Background facts :-2.The appellant is the owner of a driving school at Namakkal.The appellant is also the owner of two motorcycles bearing nos. TDW8425 (Scooter) and TAL 4805 (Moped without gear). Both thesevehicles were registered in the name of the appellant for personaluse. The appellant used those two motorcycles for the purpose ofthe driving school which made the Regional Transport Officer,Namakkal to pass the order dated 01.10.1996 directing the appellantto pay vehicle tax for the two motorcycles treating the same as https://hcservices.ecourts.gov.in/hcservices/ commercial vehicles. The appellant was directed to pay tax underthe caption "others" as per clause 7 of the Tamil Nadu MotorVehicles Taxation Act, 1974. The said proceeding was challenged bythe appellant in W.P.No.1993/1997.3.Before the learned Single Judge, it was the contention ofthe appellant that the two motorcycles registered in his personalname were used for imparting training in the driving school and thesame was not used for hire or reward. The appellant also contendedthat Tamil Nadu Taxation Act does not contain any provisionrequiring payment of tax applicable to a commercial vehicle in theevent of a motorcycle being used for purposes other than personal.According to the appellant, in the absence of a separate schedulefor extra levy, it was not permissible for the transportauthorities to claim extra tax only on the basis of different user.Finding :-4.The learned Single Judge was of the opinion that thevehicles were used only for the purpose of driving school and assuch, the usage was not personal. The learned Judge observed thatthe registration of the vehicle in the name of the petitioner inhis individual name by itself cannot be taken to mean that it wouldfall under the category of "individual" under sl.no.7 of the ISchedule to the Tamil Nadu Motor Vehicles Taxation Act, so as toqualify him to pay the tax at lesser rate treating the usage aspersonal. Accordingly, the learned Single Judge negatived thecontention with regard to taxation on the basis of usage buthowever, reduced the penalty by 50%. It is the said order which isimpugned in the present writ appeal.Submissions :-5.The learned Counsel appearing for the Appellant submittedthat there is no specific entry in the Tamil Nadu Motor VehiclesTaxation Act, 1974 authorizing the transport authorities to collecttax at a different rate in the event of the motorcycle being usedfor a purpose other than "personal". According to the learnedCounsel, there should be a specific head in the Taxation Actauthorizing the authorities to collect tax and they cannot collecttax by assumption.6.The learned Additional Government Pleader appearing onbehalf of the respondent contended that the vehicle was admittedlyused for the purpose of the driving school and as such, theappellant was bound to pay the tax at the rate applicable to"others" and therefore the contention that the appellant is liableto pay tax only as an individual does not merit consideration.Analysis :-7.The proceedings impugned before the learned Single Judge wasissued by the Regional Transport Officer, Namakkal solely on the https://hcservices.ecourts.gov.in/hcservices/ ground that the two motorcycles were used for imparting trainingand as such, the appellant was not qualified to pay tax at the rateapplicable to an individual, but he is liable to pay tax under thecategory "others". The Sl.No.7 of the I Schedule to the Tamil NaduMotor Vehicles Taxation Act, 1974 provides that in the case ofmotor vehicles, other than those liable to tax under the otherprovisions of the schedule weighing more than 700 kgs, unladen andowned by an individual, a sum of Rs.600 has to be paid as annualtax. But on the other hand, if it was owned by "others", a sum ofRs.1,200/- has to be paid. There is no provision in the Tamil NaduMotor Vehicles Taxation Act, requiring payment of extra tax in theevent of the motorcycle being used for a different purpose like theone in the present matter. Admittedly, unladen weight of the motorvehicle is less than 700 kgs. and it is also registered in the nameof the appellant in his individual capacity. The usage of thevehicle for a different purpose would be considered as violation ofthe policy condition in case the insurer prescribes a conditionthat there would be no coverage in the event of the vehicle beingused for a purpose other than personal. However, unless there is aparticular provision in Tamil Nadu Motor Vehicles Taxation Act,1974 enabling the transport authorities to claim tax at a differentrate, it is not possible for them to collect extra tax. Theschedule clearly shows that that are two distinct owners - onebeing 'individual' and the other being 'others'. There is noexpress provision anywhere in the Taxation Act which permits theauthorities to collect tax at a different rate in the event thevehicle registered in the name of an individual was used for apurpose other than personal.8.Taxation statute has to be given a literal interpretation.In case the words of a taxation statute is plain and unambiguous,it has to be interpreted to give full effect to the wording of thestatute. It is not permissible for including something in thetaxing statute so as to give a different meaning to a particularprovision. If there is a provision for recovery of tax, TaxCollector is entitled to collect tax at the rate prescribed underthe statute. In the absence of a provision, it would beimpermissible to levy tax even if equity is in favour of the State.This is on account of the settled position that equity has no ruleto play in a taxation statute. Therefore, there should be anexpress provision authorizing the authorities to collect tax and inthe absence of such a provision, no tax could be collected in anycircumstances.Legal Position :-9.The Hon'ble Supreme Court in Commissioner of Sales Tax v.Modi Sugar Mills Ltd., AIR 1961 SC 1047, considered the necessityto interpret the taxation statute in the light of what is clearlyexpressed and observed thus :- https://hcservices.ecourts.gov.in/hcservices/ "In interpreting a taxing statute, equitableconsiderations are entirely out of place. Norcan taxing statutes be interpreted on anypresumptions or assumptions. The court mustlook squarely at the words of the statute andinterpret them. It must interpret a taxingstatute in the light of what is clearlyexpressed: it cannot imply anything which isnot expressed; it cannot import provisions inthe statutes so as to supply any assumeddeficiency.10.In Mathuram Agrawal v. State of M.P., (1999) 8 SCC 667, theissue before the Supreme Court was regarding levy and collection ofproperty tax in respect of buildings and while considering the saidissue in the light of the decided cases, the Hon'ble Supreme Courtheld that the statute should clearly and unambiguously convey thethree components of the tax law i.e. the subject of the tax, theperson who is liable to pay the tax and the rate at which the taxis to be paid and indicated the legal position thus :- "The intention of the legislature in ataxation statute is to be gathered from thelanguage of the provisions particularly wherethe language is plain and unambiguous. In ataxing Act it is not possible to assume anyintention or governing purpose of the statutemore than what is stated in the plain language.It is not the economic results sought to beobtained by making the provision which isrelevant in interpreting a fiscal statute.Equally impermissible is an interpretationwhich does not follow from the plain,unambiguous language of the statute. Wordscannot be added to or substituted so as to givea meaning to the statute which will serve thespirit and intention of the legislature. Thestatute should clearly and unambiguously conveythe three components of the tax law i.e. thesubject of the tax, the person who is liable topay the tax and the rate at which the tax is tobe paid. If there is any ambiguity regardingany of these ingredients in a taxation statutethen there is no tax in law. Then it is for thelegislature to do the needful in the matter."11.In Mathuram Agrawal v. State of M.P., (1999) 8 SCC 667, theHon'ble Supreme Court referred to an earlier Judgment in Bank ofChettinad Ltd. v. CIT, 1940 (8) ITR 522 (PC) and the opinion ofLord Russell as well as Lord Simonds thus :- "13.In the case of Bank of Chettinad Ltd.v. CIT the Privy Council quoted with approval https://hcservices.ecourts.gov.in/hcservices/ the following passage from the opinion of LordRussell of Killowen in IRC v. Duke ofWestminster 1936 AC 1:“I confess that I view with disfavour thedoctrine that in taxation cases the subject isto be taxed if in accordance with a court’sview of what it considers the substance of thetransaction, the court thinks that the casefalls within the contemplation or spirit of thestatute. The subject is not taxable byinference or by analogy, but only by the plainwords of a statute applicable to the facts andcircumstances of his case. As Lord Cairns saidmany years ago in Partington v. AttorneyGeneral (1869) 4 HL 100 at p.122: ‘As Iunderstand the principle of all fiscallegislation, it is this; if the person soughtto be taxed comes within the letter of the lawhe must be taxed, however great the hardshipmay appear to the judicial mind to be. On theother hand, if the Crown seeking to recover thetax cannot bring the subject within the letterof the law, the subject is free, however,apparently within the spirit of the law thecase might otherwise appear to be.”14.In the case of Russell (Inspector ofTaxes) v. Scott (1948) 2 All Enquiry Report 1,Lord Simonds in his opinion at p.5 observed:“My Lords, there is a maxim of income taxlaw which, though it may sometimes beoverstressed, yet ought not to be forgotten. Itis that the subject is not to be taxed unlessthe words of the taxing statute unambiguouslyimpose the tax on him. It is necessary thatthis maxim should on occasion be reasserted andthis is such an occasion.”12.The Hon'ble Supreme Court in Federation of A.P. Chambers ofCommerce & Industry v. State of A.P., 2000 (5) Supreme 389 ::(2000) 6 SCC 550 held that the taxation statute has to be strictlyconstrued and nothing can be read into it and made the legalposition thus :-"7.It is trite law that a taxing statutehas to be strictly construed and nothing can beread into it. In the classic passage from CapeBrandy Syndicate which was noticed in thejudgment under appeal, it was said: https://hcservices.ecourts.gov.in/hcservices/ “In a taxing Act one has to look merely atwhat is clearly said. There is no room for anyintendment. There is no equity about a tax.There is no presumption as to a tax. Nothing isto be read in, nothing is to be implied. Onecan look fairly at the language used.”This view has been reiterated by thisCourt time and again. Thus, in State of Bombayv. Automobile and Agricultural IndustriesCorpn., 1976 (4) SCC 643 this Court said:“But the courts in interpreting a taxingstatute will not be justified in adding wordsthereto so as to make out some presumed objectof the legislature. ... If the legislature hasfailed to clarify its meaning by the use ofappropriate language, the benefit thereof mustgo to the taxpayer. It is settled law that incase of doubt, that interpretation of a taxingstatute which is beneficial to the taxpayermust be adopted.”Conclusion :-13.The learned Single Judge was carried away by the fact thatthough the vehicle was registered in the individual name of theappellant, it was used only for the purpose of the driving school.It was in the said circumstances, the learned Single Judge pointedout that when the appellant used the vehicle for imparting trainingin his driving institute, it goes without saying that the vehicleswere put to use exclusively for commercial purposes and therebymaking him liable to pay tax under the category "others". However,the fact remains that there is no entry in the taxation Act fortaxing such unauthorized usage of the vehicle. In the event ofinserting a provision in the taxation Act making the unauthorizedor different usage of the motorcycle liable for extra levy therewould be no difficulty for such recovery. However, the positioninsofar as the Tamil Nadu Motor Vehicle Taxation Act is entirelydifferent. There is no specific head for collection of such extratax. In fact, the only distinction is between an individual andothers on the basis of ownership. Therefore, we are of the opinionthat the Transport Authorities were not justified in directing theappellant to pay tax in respect of his motorcycles treating thesame as commercial vehicles solely on account of the usage of thevehicles for imparting training though registered in his individualcapacity. https://hcservices.ecourts.gov.in/hcservices/

14.In the result, the writ appeal is allowed and the orderdated 23.10.2003 in W.P.No.1993/1997 is set aside and consequently,the impugned Order dated 01.10.1996 on the file of the respondentis quashed. No costs.sd/-Asst.Registrar/true copy/Sub Asst.RegistrartarTo The Regional Transport Officer, (The Licensing Authority, Namakkal Rajaji District.+ 1 c.c. to M/s. C.R. Krishnamoorthy, Advocate. S.R.No.5747.+ 1 c.c. to The Government Pleader. S.R.No.5816. Judgment inWrit Appeal No.964/2007BVN (CO)GSK 17.02.2009.