W.P.( C ) No.6650 of 2006
With
W.P.( C ) No.2415 of 2007
With
W.P.( C ) No.2416 of 2007
With
W.P.( C ) No.2417 of 2007
With
W.P.( C ) No.2418 of 2007
With
W.P.( C ) No.2419 of 2007
With
W.P.( C ) No.2422 of 2007
With
W.P.( C ) No.2423 of 2007
------
In the matter of an application under Article 226 of the
Constitution of India.
——
The State of Jharkhand. …….Petitioner.
(In all cases)
-Versus-
Member Board of Revenue,
Jharkhand, Ranchi & Anr. ……Respondents.
(In all cases)
——
For the Petitioner : Mr. L.K. Lal, S.C. (L&C).
For the Respondents : M/s. Prabhat Kumar
Sinha and D. V. Pathy,
Advocates.
------
PRESENT
HON'BLE MR. JUSTICE NARENDRA NATH TIWARI
------
By Court : The common controversy, in this batch of the writ petitions,
lies in different perception and interpretation of Clause 5 of the
New Excise Policy issued by Excise Department, Government of
Jharkhand, published in the official gazette dated 24th February,
2004 (Annexure-1). All the writ petitions were tagged and heard
together and are being disposed of by this judgment.
2. The brief fact giving rise to the batch of the cases is that
the State of Jharkhand issued an amended excise policy by
gazette notification dated 24 th February, 2004 whereby a new
excise policy for settlement of retail liquor shops was brought into
effect from the financial year 2004-05. Prior to the said
notification, excise retail shops were used to be settled
2 W.P.(C) No.6650/2006, 2415/2007,
2416/2007, 2417/2007, 2418/2007,
2419/2007, 2422/2007 & 2423/2007
individually for one year. But in the amended policy, excise retail
shops of country spirit and country spiced sprit are to be settled
in Group-I, whereas retail Indian Foreign Made Liquor shops are
to be settled in Group-II for a block period of three years. Clause
5 of the said notification provides 10% increase in the licence fee
in second and third year of the settlement.
3. In accordance with the said policy, sale notification was
published inviting applications for settlement of retail liquor
shops. The shops were settled in the names of firms/persons, who
are the private respondents in these writ petitions, on various
dates. They deposited licence fees.
4. The controversy between the parties is regarding date of
implementation of Clause 5 i.e. the date of 10% increase in the
licence fee in second and third year of settlement, as provided
in Clause 5 of the said notification, which reads as follows:
“5. BANDOVASTI TIN VARSH KI BLOK AWADHI KE LIYE KI
JAYEGI. BANDOVASTI KE DUSRE EVAM TISRE VARSH ME
PRATYEK BAR DAS PRATISHAT KI VRIDHI PRATIVARSH NILAMI
RASHI ME KI JAYEGI.”
5. According to the State, the increased licence fee is
chargeable with effect from the commencement of the
succeeding financial year after the settlement, irrespective of
the date of settlement. The respondents-settlees claimed that
since the settlement was made after the commencement of the
financial year in the midst of the year or at the fag end of the
financial year. The increased licence fee is chargeable after
expiry of 12 calendar months i.e. after a year from the date of
settlement.
6. As per the term of agreement, any dispute arising
between the parties is to be referred to and decided by the
Member, Board of Revenue.
7. Accordingly, the said dispute was referred to the Member,
Board of Revenue, Jharkhand. He heard the parties and
answered the reference by the impugned order dated 17th July,
2006, contained in Annexure-2, in favour of the respondents-
settlees. He held that ‘year’ as used in the notification and Form
3 W.P.(C) No.6650/2006, 2415/2007,
2416/2007, 2417/2007, 2418/2007,
2419/2007, 2422/2007 & 2423/2007
127 and the similar Forms specifying 10% enhancement in fees in
the 2nd and 3rd year means year beginning after expiry of 12 and
24 British Calendar months from the date of initial settlement and
the increased licence fee is chargeable after 12 and 24 months
of the date of settlement.
8. Aggrieved by the said interpretation and the order of the
Member, Board of Revenue, the State has filed these writ
petitions.
9. It has been contended on behalf of the State-petitioner
that the Member Board of Revenue has erroneously interpreted
the word ‘year’ according to the British Calendar, though in
Clause 8 of the said notification, it has been clearly provided
that the amended provision would be made effective from the
financial year 2004-05.
10. Mr. L. K. Lal, learned S.C. (L&C), appearing on behalf of
the State-petitioner in all the cases, submitted that the
interpretation of the word ‘year’ appearing in Clause 5 of the
said gazette notification is not only inconsistent with Clause 8
thereof, rather the same is also contrary to Rule 44 of the Bihar
Excise Rules. He submitted that Rule 44 provides that licences for
the wholesale or retail vend of excisable articles may be granted
for one year from the 1st April to the 31st March. Sub Rule (2) of
Rule 44 makes it clear that if any licence be granted during the
course of the financial year, it shall be granted only up to the 31st
March, next following. According to him, the word ‘year’
appearing in the said notification has to be read in the light of
the provisions of Rule 44 and the word ‘year’ appearing therein
must be read as financial year. He further submitted that the
interpretation made by the Member, Board of Revenue is
erroneous and has caused a loss of Rs.12 crores to the State
exchequer.
11. He further submitted that according to the definition in the
General Clauses Act, Clause 8 of the said notification and Rule
44 of the Excise Rules are wholly erroneous and misconceived. In
view of the clear provision for enhancing licence fee from the
4 W.P.(C) No.6650/2006, 2415/2007,
2416/2007, 2417/2007, 2418/2007,
2419/2007, 2422/2007 & 2423/2007
second and third year, the settlees are liable to pay the
enhanced fee after the commencement of the financial year,
next following to the year of the settlement, irrespective of the
date of settlement in their favour in the preceding financial year.
12. The respondents-settlees, on the other hand, strongly
supported the interpretation of the word ‘year’ and the order
passed by the learned Member, Board of Revenue. It has been
urged that the word ‘year’ has not been defined in the Excise
Act or Rules made therein and as such, learned Member Board
of Revenue has rightly relied on the definition of ‘year’ as
provided in the General Clauses Act. Clause 5 of the said
notification mentions the word ‘year’. The word ‘financial year’
is used only in Clause 8. Clause 8 provides that the notification
shall come into force with effect from the financial year 2004-05.
It has no relevance for interpreting the meaning of the word
‘year’ mentioned in Clause 5 of the said notification. It has been
further submitted that if a word is not defined in the statute,
recourse is to be taken to the definition provided in the General
Clauses Act. The meaning of the word ‘year’, as provided in the
General Clauses Act, is the British Calendar year of 12 months.
13. Learned counsel appearing on behalf of the respondents-
settlees emphasized that nothing can be read and implied other
than the language used in taxing statute. Clause 5 mentions the
word ‘year’. It cannot be read as ‘financial year’. Learned
counsel submitted that wherever the use of word ‘financial year’
is intended, it has been clearly mentioned in the Rule and the
notification. In the earlier notification, Clause 6 clearly provided
that the settlement has to be made from the 1st April for a
maximum period of one year and ending 31st March. In the said
clause, there was provision of deposit of licence fee of one year,
subject to enhancement of 10% and 5% licence fee.
14. From the plain reading of the said clause, it is clear that
the enhancement in the licence fee was intended on the
commencement of the financial year i.e. 1st April of the following
year. The said provision has been amended, providing
5 W.P.(C) No.6650/2006, 2415/2007,
2416/2007, 2417/2007, 2418/2007,
2419/2007, 2422/2007 & 2423/2007
enhancement of licence fee by 10% in the second and third
year of settlement.
15. The State Government now has come with a fresh sale
notification for the settlement of liquor shops in the year 2008. In
this notification, Clause 5 has been again amended and the
words ‘1st April and financial year’ have been again specifically
used in place of the word ‘year’ in Clause 4. That amendment
conspicuously goes to show that the said notification is
applicable prospectively.
16. It has been submitted that the learned Member Board of
Revenue has taken pains to elaborately deal with the relevant
provisions of law and has come to a right conclusion that the
word ‘year’ used in Clause 5 clearly means the year according
to the British Calendar.
17. Having heard learned counsel and on consideration of the
relevant legal positions and the language used in the different
notifications as also the interpretation and conclusion of the
learned Member, Board of Revenue, I find substance in the
submissions made by learned counsel for the respondents-
settlees.
18. It is well settled that a taxing statute is to be strictly
construed. In 7th Edition of G.P. Singh’s, Principles of Statutory
Interpretation, Chapter-10, Page-576, the well established rule
interpreting taxing statute in the words of Lord Wensleydale
reaffirmed by Lord Halsbury and Lord Simonds has been quoted
thus:
“The subject is not to be taxed without clear words for that
purpose; and also that every Act of Parliament must be
read according to the natural construction of its words.”
19. Learned author has also quoted Lord Cairns saying …….”If
there be admissible in any statute, what is called an equitable,
construction, certainly, such a construction is not admissible in a
taxing statue where you can simply adhere to the words of the
statute.” At the same place, learned author refers Viscount
Simon, who quoted with approval, a passage from Rowlatt, J.
6 W.P.(C) No.6650/2006, 2415/2007,
2416/2007, 2417/2007, 2418/2007,
2419/2007, 2422/2007 & 2423/2007
expressing the principle in the following words: “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 tax. Nothing is to be read in, nothing is to be
implied. One can only look fairly at the language used.” He has
also quoted the saying of Bhagwati, J.: “In construing fiscal
statutes and in determining the liability of a subject to tax one
must have regard to the strict letter of the law. If the revenue
satisfies the court that the case false strictly within the provisions
of the law, the subject can be taxed. If, on the other hand, the
case is not covered within the four corners of the provisions of
the taxing statute, no tax can be imposed by inference or by
analogy or by trying to probe into the intentions of the
Legislature and by considering what was the substance of the
matter.” [Quoted from A. V. Fernandez Vs. State of Kerala, AIR
1957 SC 657, p.661]
20. Article 265 of the Constitution provides that no tax shall be
levied or collected except by the authority of law. Article 366 of
the Constitution defines Taxation and Tax reads as follows:
“Taxation includes the imposition of any tax or impost
whether general or local or special and ‘tax’ shall be
construed accordingly.
21. In view of the above, any compulsory exaction of money
by Government amounts to imposition of tax which is not
permissible except by or under the authority of a statutory
provision. Reference can be made to the decision of the
Supreme Court in the case of CCE Vs. Kisan Sahkari Chinni Mills
[AIR 2001 SC 3379].
22. Though there is distinction between tax and fee, which are
both imposition made by the State for raising revenue. A tax is
imposed for public purpose for raising general revenue of the
State. A fee in contrast is imposed for rendering services and
bears a broad co-relationship with the services rendered, but a
compulsory imposition of fee also comes within the fold of tax.
7 W.P.(C) No.6650/2006, 2415/2007,
2416/2007, 2417/2007, 2418/2007,
2419/2007, 2422/2007 & 2423/2007
23. Again the position is different where a duty or fee is
charged by the State for parting with its privilege of dealing in
deleterious commodities such as liquor.
24. Though every fee must not satisfy the test of quid pro quo
for a licence fee may be regulatory in nature where no quid pro
need be established [State of Tripura Vs. Sudhir Ranjan Nath, AIR
1997 SC 1168, p.1173]. But such regulatory fee also cannot be
excessive. Reference may be made to the decisions of the
Supreme Court in A.P. Paper Mills Ltd. Vs. Government of A.P., AIR
2000 SC 3290; and State of U.P. Vs. Vam Organis Chemical Ltd.,
(2004)1 SCC 295.
25. In Calcutta Municipal Corporation Vs. M/s. Shrey
Merchantile Pvt. Ltd., A.I.R. 2005 SC 1879, the Supreme Court has
clearly held that so-called regulatory fee, which has no
connection with the case of regulation, is really a tax in the garb
of a fee.
26. Learned Member Board of Revenue has broadly taken
note of the fact that some of the licences which were granted in
the month of December, 2004 and has occasion to deal with the
liquor sale only for about four months and other licensees who
enjoyed that privilege for 8-9 months in the first year of
settlement, exacting the increased licence fee, in both cases
with effect from 1st April, 2005 is certainly discriminatory and
arbitrary and against the principle of law.
27. In my view, a compulsory enhancement in the licence fee
without taking into consideration the delay in granting licence to
the respondents in the previous year is against the principle of
imposition of regulatory fee even in the case of liquor and is
arbitrary and unreasonable. The same violates the mandate of
Article 14 of the Constitution of India.
28. Learned Member Board of Revenue has also rightly held
that the word ‘year’ as used in the notification and Form 127 and
other similar forms specifying 10% enhancement in fees in the
second and third year means a ‘year’ reckoned according to
8 W.P.(C) No.6650/2006, 2415/2007,
2416/2007, 2417/2007, 2418/2007,
2419/2007, 2422/2007 & 2423/2007
the British Calendar and 10% increase in licence fee in the
second and third year should be made after expiry of 12 and 24
calendar months from the date of its settlement. The finding of
the learned Member Board of Revenue fits with the established
interpretative process of statutory provision. It is well established
that when the language of the statutory provision is plain and
clear, full effect must be given to them and there is no need of
any interpretation to give a different meaning. Reference may
be made to the decisions of the Supreme Court in Mangalore
Chemicals & Fertilizers Vs. Dy. Commissioner of Commercial
Taxes [AIR 1992 SC 152], Punjab Land Development and
Reclamation Corporation Ltd. Vs. Presiding Officer [(1990)3 SCC
682], Maharastra State Financial Corporation Vs. Jaycee Drug &
Pharmaceuticals (P) Ltd. [(1991)2 SCC 637 (651)] and HH Sri
Rama Verma Vs. CIT [1991 Supp (1) SCC 209], which have been
also referred to and relied upon by learned Member Board of
Revenue.
29. In view of the aforesaid discussion, I find no infirmity,
illegality or arbitrariness in the impugned order of learned
Member, Board of Revenue. The said order is upheld.
30. It is further held that the respondents are entitled to
proportionate remission of licence fee paid in excess. The State-
petitioner is liable to comply with the term of the order passed by
learned Member, Board of Revenue.
31. Accordingly, these writ petitions are dismissed.
32. However, there is no order as to costs.
(Narendra Nath Tiwari, J.)
JHARKHAND HIGH COURT
Dated, Ranchi, 9th July, 2009
Sanjay/AFR