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SC ruling on tax on land used for industrial purpose

Land actually in "use" for industrial purpose in a taxing statute cannot mean land "meant to be used" for industrial purpose : SC

R.N. Sahai

THERE is no doubt whatever that it is only land which is actually in use for industrial purpose as defined in the Andhra Pradesh Non-Agricultural Lands Assessment Act, 1963 (`the Act') that can be assessed to non-agricultural assessment at the rate speci fied for land used for industrial purposes.

The wider meaning given to the word `used' in the judgment under challenge is untenable. Having regard to the fact that the Act is a taxing statute, no court is justified in imputing to the Legislature an intention that it has not clearly expressed in th e language it has employed.

So decided the Supreme Court while allowing the appeal and setting aside the judgment and order of the Andhra Pradesh High Court in The Federation of Andhra Pradesh Chambers of Commerce and Industry vs. State of Andhra Pradesh (Civil Appeal No. 1039 of 2 000 decided on August 4, 2000) by a three-Judge Beach comprising Mr Justice S.P. Bharucha, Mr Justice S.S. Mohammed Quadri and Mr Justice N. Santosh Hegde.

The present appeals before the Supreme court arose because a Bench of five judges of the Andhra Pradesh High Court interpreted the word `used' in the Andhra Pradesh Non-Agricultural Lands Assessment Act, 1963 to mean ``non-agricultural lands not only `ac tually used' but `meant to be used' or `set apart for being used'.'' This view was contested by some industries and their Federation before the Supreme Court .

The Supreme Court noted that the Act was enacted to provide for the levy of assessment on lands used for non-agricultural purposes. Section 2(d) defines `industrial purpose', so far as it is relevant to these appeals ; to mean ``any purpose connected wit h an industrial undertaking where the process of manufacturing any article is carried on with the aid of power''. `Non- agricultural land' is defined by Section 2(g) to mean ``land other than the land used exclusively for the purpose of agriculture.''

So far as the charging Section 3 is concerned, it reads: ``In the case of non-agricultural land in a local area with the population specified in Column (1) of the Schedule, there shall be levied and collected by the Government for each fasli year commenc ing on the first day of July, from the owner of such land, an assessment, at the rate specified in Column (2) where the land is used for any industrial purpose, at the rate specified against it in Column (3) where the land is used for any commercial purp ose and at the rate specified against it in column (4) where the land is used for any other non-agricultural purpose including residential purpose.''

The court also noted that the Schedule referred to in Section 3 sets out the rates of assessment per sq. m of land used (a) for industrial purposes per fasli year (b) for commercial purpose per fasli year and (c) for any other non-agricultural purpose, i ncluding residential purpose, per fasli year.

The court pointed out that Section 3 speaks of ``land is used for any industrial purpose,'' ``land is used for any commercial purpose'' and ``land is used for any other non-agricultural purpose''.

The emphasis is on the words `is used'. For the purposes of assessment of levy on non-agricultural lands at the rate specified in the Schedule for land used for industrial purposes, therefore, there has to be a finding as a fact that the land is in fact in praesenti in use for an industrial purpose. The same would apply to a commercial purpose or any other non-agricultural purpose.

The judges stated that it is trite law that a taxing statute has to be strictly construed and nothing can be read into it. In the classic passage from Cape Brandy Syndicate vs. Inland Revenue Commissioners (9) 1921-8 KB 64(71), it was said: ``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 look fairly at the language used.''

They further pointed out that the above view was reiterated by the apex court time and again. In the Sate of Bombay vs. Automobile and Agricultural Industries Corporation Bombay, 1961 12 S.T.C.122, the Supreme Court said: ``But the courts in interpreting a taxing statute will not be justified in adding words thereto so as to make out some presumed object of the Legislature. If the Legislature has failed to clarify its meaning by the use of appropriate language, the benefit thereof must go to the taxpaye r. It is settled law that in case of doubt, that interpretation of a taxing statute which is beneficial to the taxpayer must be adopted.''

They also observed that the judgment cited by the counsel for the State, namely, the Controller of Estate Duty Gujarat vs. Shri Kantilal Trikamlal 1976 4 SCC 643 is also to the same effect and does not avail the respondents. That judgment, inter alia, sa id that the sweep of the sections must be informed by the language actually used by the Legislature, and the court cannot supply new logos or invent unnatural sense to words to fulfil the unexpressed and unsatiated wishes of the Legislature.

(By arrangement with Corporate Law Adviser, New Delhi.)

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