TMI Blog2019 (1) TMI 1714X X X X Extracts X X X X X X X X Extracts X X X X ..... Motor Vehicles Act, 1988. On a reading of both the Statement of Objects and Reasons, it is evidently clear that both the enactments have been enacted for a common purpose that is to curb evasion of sales tax on motor vehicles purchased from outside the State and brought into the State for use or sale therein, which are liable for registration under the Motor Vehicles Act, 1988. The legal principles which flow from the observations contained in the above paragraphs is that the well established principle of statutory interpretation, to help finding out as to whether particular category of assessee is to pay particular tax or not. The court makes endeavour to find out the intention of the Legislature. At the same time, the very principle is based on fairness doctrine as it lays down that if it is not very clear from the provisions of the Act as to whether the particular tax is to be levied to a particular class of persons or not, the subject should not be fastened with any liability to pay tax. Statutory interpretation cannot be done, as by process of interpretation, the provision cannot be re-written nor any word can be introduced. Further, it was held that the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N. Gopalakrishnan , K. Muruganandam , B. Raviraja , P. Rajkumar , S. P. Meenakshisundaram , J. Naresh Kumar , S. Ramesh Kumar , A. M. Packianathan Easter , P. Sesadhri , R. Ramanlal , V. S. Sri Krishnan , V. Kalyanaraman , V. P. Mohammed Moin for M/S. Aiyar And Dolia , N. Baaskaran , Hari Radhakrishnan , D. Rajendran , R. Rajaram , A. Babu and M. K. Murugantham For the Respondents - Mohammed Shaffiq , Special Government Pleader (Taxes), assisted by V. Haribabu and M. Hariharan , Additional Government Pleader and Ms. Dhanamadhuri , Government Advocate, ORDER In all these cases, the question involved is whether the respondents are entitled to impose entry tax on vehicles, which were imported by the petitioners from out side the country. 2. W. P. No. 32710 of 2005 is taken as the lead case with the consent of the learned counsels on either side and we refer to the facts of the said case. 3. Before we venture to do so, we may point out that in none of these writ petitions, the petitioners have challenged the validity of the provisions of Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 (Tamil Nadu Act No. XIII of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicles. 8. The learned counsel referred to section 3 of the Tamil Nadu Act which deals with levy of tax, section 4 of the Tamil Nadu Act which speaks about reduction in tax liability and section 12 which deals with exemptions. 9. It is submitted that section 4 speaks of two types of importers ; sub-section (1) deals with an importer, who is a dealer importing motor vehicles, becomes liable to pay tax under the General Sales tax Act and additional sales tax by virtue of the sale of such motor vehicle, then his liability under those Acts shall be reduced to the extent of tax paid under the Tamil Nadu Act. Sub-section (2) deals with the case where the importer is not a dealer and he is also given such a reduction of liability to the extent of the amount paid. 10. Therefore, it is the submission of the learned counsel that section 4 of the Tamil Nadu Act has to be read into the charging section, viz., section 3 and if it is done so, it will be evidently clear that the Tamil Nadu Act intended to prevent evasion and the Tamil Nadu Act does not intend to augment the Revenue and this is a marked difference between the Entry tax Act enacted in the State of Tamil Nadu when compar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Gift tax Act, 1958 and under the provisions of the Estate Duty Act, 1953. 15. In this regard, the learned counsel referred to the following observations made by the honourable Supreme Court in paragraphs 11, 15, 20, 21 and 22 : 11. Now to the boxing ring. The bout has been fought over the import and amplitude of 'property' as widened by section 2(15), especially Explanation 2 thereto. Sri S. T. Desai, appearing for the accountable person in the Madras case, and Shri Manchanda, arguing for the exchequer in the Gujarat case, have levelled multi-pointed attacks, but the crucial issue which is decisive of both cases is the same. What is 'property' for the purpose of this fiscal law ? 15. This 7-point programme of submission really brings out all the issues and sub-issues, legal and factual, and the last two, overlapping in some respects, deserve first attention. Before that, we must state, in precise form, the facts with reference to which the statute must speak. The life of the law is not idle abstraction or transcendental meditation but fitment to concrete facts to yield jural results- a synergetic action, not isolated operation. Our discussion wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, effectively presented by counsel, takes a legalistic course, ignoring the purpose, language and amplitude of Explanation 2. Argues Shri Desai, in a partition, equal or unequal, there is no element whatsoever of consideration, partial or full, since in a partition there is only an adjustment of rights and substtution of joint enjoyment by enjoyment in severalty. In his view it is a confusion to mix up unequal partition with inadequate consideration and it is a worse confusion to talk in terms of bonafide and malafide partition where the shares are merely unequal by choice. What is for gotten in this chain of reasoning is the office of Explanation 2 which- is deliberately designed to take into its embrace what otherwise may not be 'disposition'. Once we reconcile ourselves to the enlargement of sense imported by the Explanation, we part company with the traditional concept. We have also to stress the expression 'other right' in the Explanation which is of the widest import and cannot be constricted by reading it ejusdemgeneris with 'debt'. 'Other right', in the context, is expressly meant considerably to widen the concept and therefore suggests a so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept along a different street, if one may use such a phrase, from the one along which that word in the Estate Duty Act is travelling. Mr. Justice Hegde rightly observed, if we may say so with respect, that 'Words in the section of a statute are not to be interpreted by having those words in one hand and the dictionary in the other. In spelling out the meaning of the words in a section, one must take into consideration the setting in which those terms are used and the purpose that they are intended to serve' (pages 605-606). The word 'transaction' in sec tion 2(xxiv) of the Gift tax Act takes its colour from the main clause, that is, it must be a 'transfer' of property in some way. Since a partition is not a 'transfer' in the ordinary sense of law, the court reached the conclusion that a mere partition with unequal allotments not being a transfer, cannot be covered by section 2(xxiv). A close reading of that provision and the judgment will dissolve the mist of mis understanding and discloses the danger of reading observations from that case for application in the instant case. The language of section 2(15), Explanation 2, is different and wider and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al has always been found to be more acceptable and this is so because it is only when both the text and context are kept in view that the statutory provisions can be best understood. On the above submissions, the learned counsel would contend that the levy of entry tax on imported motor vehicles is not sustainable in law. 20. Mr. Mohammd Shaffiq, learned Special Government Pleader, appearing for the respondents contended that the issue raised in all these writ petitions namely as to whether the State can levy and collect entry tax on imported vehicles and more particularly, the arguments advanced by the learned counsel for the petitioners was considered by the honourable Supreme Court in the case of State of Kerala v. Fr. William Fernandez reported in [2018] 57 GSTR 6 (SC) ; It is submitted that in the said decision, the honourable Supreme Court held that entry tax can be levied on goods entering the land mass of India from another Country on examining the provisions of the enactments, enacted by the State of Orissa, Bihar, Kerala and Jharkand. It is submitted that the provisions of the Kerala Act is in pari materia with the provisions of Tamil Nadu Entry tax Act and the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 (SC) ; and the preamble of the Act is also clear and prayed that the levy of entry tax on imported vehicles be sustained. 24. The submissions of Mr. T. V. Lakshmanan was adopted by Mr. P. Rajkumar and certain other counsels who had filed similar writ petitions. 25. We have elaborately heard the learned counsels for the parties and carefully perused materials placed on record. 26. As indicated by us in the opening paragraph of this order, in none of the writ petitions, there is a challenge to the Constitutional validity of the provisions of the Tamil Nadu Act. 27. The learned counsels for the petitioners in one voice submitted that none of them are challenging the Constitutional validity or in other words the vires of the Act. As indicated, there may be a variance in the prayer in the batch of writ petitions but the sum and substance of the relief sought for is to forbear the respondents from levy of entry tax on vehicles imported by the petitioners. The petitioners are either individual, companies registered under the Companies Act and partnership firms, etc. 28. The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 was an act to provide for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the limits of the city of Madras as defined in the Madras City Municipal Corporation Act, 1919 and likewise other States and towns in terms of the enactment which covers those cities and towns. Motor vehicle has been defined under section 2(i) to mean a motor vehicle as defined in clause (28) of section 2 of the Motor Vehicles Act, 1988. Section 2(l) defines State to mean the State of Tamil Nadu. Section 2(m) states that words and expressions used but not defined in the Act shall have the meaning assigned to them under the General Sales tax Act. 32. Section 3 is the charging section which falls in Chapter II of the Act which deals with Levy of tax . Sub-section (1) of section 3 states that subject to the provisions of Act there shall be levied and collected tax on entry of any motor vehicle into any local area for use or sale therein which is liable for registration, or for the assignment of a new registration mark, in the State of Tamil Nadu under the Motor Vehicles Act, 1988. The rate of tax shall be at such rate or rates not exceeding 20 per cent. as may be fixed by the Government, by notification on the purchase value of the motor vehicles. 33. The proviso under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle, then his liability under those Acts shall be reduced to the extent of entry tax paid by him. Sub-section (2) deals with cases where an importer is not a dealer and he has also given a benefit by reduction of the liability under the Entry tax Act to the extent of the amount paid, if any, under the law relating to the general sales tax as may be in force in that Union Territory or State. 36. Section 8 of the Act deals with the assessment procedure ; section 9 deals with the reassessment ; section 10 deals with the payment of tax and section 12 deals with the exemptions . 37. Section 12 states that subject to such conditions as it may impose, the Government may, if it is necessary so to do in the public interest, by notification, exempt any specified class of importers from the payment of whole or part of the tax payable under the Entry tax Act. Section 13 deals with the appeals , section 14 deals with power of revision , section 15 deals with imposition of penalty , section 15A gives power for impounding of motor vehicle and Chapter VII deals with miscellaneous provisions , namely, sections 16 to 20. 38. The Tamil Nadu Tax on Entry of Motor Vehicles into Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose than what was enacted by the Kerala State. Therefore, first we take up for consideration as regards the argument relating to pari materia between the two statutes and the applicability of the decision in Fr. William Fernandez [2018] 57 GSTR 6 (SC) ; 43. The Statements of Object and Reasons of the 1994 Act has been fully extracted in the decision of the High Court of Kerala in the case of Fr. William Fernandez v. State of Kerala reported in [1999] 115 STC 591 (Ker). This decision of the Kerala High Court has been reversed by the honourable Supreme Court in Fr. William Fernandez [2018] 57 GSTR 6 (SC) ; However, we have referred to this decision of the honourable Division Bench for the purposes of noting the Statement of Objects and Reasons of the Kerala Enactment which reads as follows (page 595 in 115 STC) : The State is a loser of sales tax on motor vehicles which are pur chased from outside the State and brought into the State. In order to curb the evasion of sales tax on motor vehicles purchased from out side the State and brought into the State, Government have decided to levy a tax on entry of such motor vehicles into the State, either for use or sale, which ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ; [2001] 3 SCC 359. The question would be as to what extent we have to rely upon the objects and reasons of an enactment to understand the real intent of the enactment. In other words, it has to be seen under what circumstances, the Statement of Objects and Reasons need to be looked into. 48. In this regard, it will be beneficial to refer to the decision of the honourable Supreme Court in the case of Gurudevdatta VKSSS Maryadit [2001] 4 SCC 534. The honourable Supreme Court held that the Statements of Objects and Reasons needs to be looked into, though not by itself a necessary aid, as an aid to construction only if necessary. It was further held that to assess the intent of the Legislature, in the event of there being any confusion, the Statement of Objects and Reasons may be looked into and no exception can be taken therefor-this is not an indispensable requirement but when faced with an imperative need to appreciate the proper intent of the Legislature, statement may be looked into but not otherwise. 49. In Mathuram Agrawal [1999] 8 SCC 667, the honourable Supreme Court was considering the interpretation of section 127A of the Madhya Pradesh Municipalities Act, 1961 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the Central Government or which is used exclusively for purposes relating to the defence of India. (2) The tax shall be payable by the importer in such manner and within such time as may be prescribed. 52. The charging section, viz., section 3 in the Tamil Nadu Act is as follows : 3. Levy of tax. -(1) Subject to the provisions of this Act, there shall be levied and collected a tax on the entry of any motor vehicles into any local area for use or sale therein which is liable for registration, or for the assignment of a new registration mark, in the State under the Motor Vehicles Act, 1988 (Central Act No. 59 of 1988). The rate of tax shall be at such rate or rates, not exceeding twenty per cent, as may be fixed by the Government, by notification, on the purchase value of the motor vehicles : Provided that in respect of any motor vehicle which was registered in any Union Territory or any other State under the law relating to motor vehicle : (a) before the September 10, 1996, no tax shall be levied and collected, if the owner of such vehicle applies for the assignment of a new registration mark in this State after a period of fifteen months from the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Kerala Act and Bihar Act, 1993 (before its amendment in 2003), never intended to levy any entry tax on the goods, entering into local area of the State from any place outside the territory of India. 58. The other questions which were framed for consideration may not be relevant to the cases on hand. In none of these cases, the petitioners have challenged the constitutional validity or legislative competence of the State to enact the law. 59. The submission made on behalf of the respondents before the Supreme Court was that section 2(d) of the Kerala Act on its own term does not cover entry of goods into local area from any place outside the country. It was further submitted that the expression any place outside the local area by itself would have been enough to cover the goods imported from anywhere outside the local area ; outside the local area would have been outside the State or outside the country but Legislature never intended to levy entry tax on goods imported from outside the country that is why entry of goods from local area, from outside the State is provided for. This argument was considered by the honourable Supreme Court and the contentions advanced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability of the subject to tax regard must be had to plain and strict letter of law. Reliance has been placed on the judgment Commissioner of Income-tax v. Vatika Town ship P. Ltd. [2014] 367 ITR 466 (SC) ; [2015] 1 SCC 1. In paragraph 41.2 and paragraph 41.3, following has been held (para 39, page 494 in 367 ITR) : '41.2. At the same time, it is also mandated that there cannot be imposition of any tax without the authority of law. Such a law has to be unambiguous and should prescribe the liability to pay taxes in clear terms. If the provision concerned of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the inter pretation which favours the subjects, as against the Revenue, has to be preferred. This is a well established principle of statutory inter pretation, to help finding out as to whether particular category of assessee are to pay a particular tax or not. No doubt, with the appli cation of this principle, the courts make endeavour to find out the intention of the Legislature. At the same time, this very principle is based on fairness doctrine as it lays down that if it is not very clear from the provisions of the Act as to whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular tax or not. The court makes endeavour to find out the intention of the Legislature. At the same time, the very principle is based on fairness doctrine as it lays down that if it is not very clear from the provisions of the Act as to whether the particular tax is to be levied to a particular class of persons or not, the subject should not be fastened with any liability to pay tax. Further, tax statutes should be strictly construed ; and if any ambiguity be found to exist, it must be resolved in favour of the citizen. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the Legislature. The statute should clearly and unambiguously convey the three components of the tax law. 62. The learned counsel for the petitioners also referred to the observations made by the Supreme Court in paragraph 63 of the judgment and to buttress their submission contended that section 4 of the Act has be read into charging section 3 and if that is done, then, the intention of the Legislature is clear that there was no intention to levy entry tax on imported vehicles from outside the State. 63. However, the honourable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for all goods entering into local area. In no uncertain terms, the honourable Supreme Court held that charging section is clear, unambiguous and the provisions cannot be read to mean that the imported goods coming from outside the country are excluded from charge of entry tax and no such indication is discernible from any provisions of the Act. It was further held that the charging event is complete as and when goods enter into the local area for use, sale or consumption irrespective of its origin. 67. Thus, in our considered view, the judgment in the case of Fr. William Fernandez [2018] 57 GSTR 6 (SC) applies with full force to the cases on hand which arise under the provisions of the Tamil Nadu Act which is pari materia to the Kerala enactment, which was considered by the honourable Supreme Court and levy of entry tax on imported vehicles was upheld. Thus, we are of the clear view that the prayer sought for by the writ petitioners in these cases are not tenable and the writ petitions are liable to be dismissed. 68. Mr. R. L. Ramani, learned senior counsel assisted by Mr. B. Raveendran counsel for the petitioner in W. P. No. 33525 of 2007 argued on a slightly different plain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Tamil Nadu General Sales tax Act, 1959 were put to challenge, wherein as per entry 150 in the Schedule to the Act, articles of food and drink sold to customer in 3 star, 4star and 5 star hotels were taxable at 10 per cent. this was challenged as being discriminatory. 72. A Division Bench of this court in Sangu Chakra Hotels Private Limited v. State of Tamil Nadu [1985] 60 STC 125 (Mad) allowed the writ petitions on the ground that the demand of higher rate of tax for star category hotels were discriminatory. The State Government filed appeal before the honourable Supreme Court, which was tagged along with other connected matters and the Supreme Court in Kerala Hotel Restaurant Association v. State of Kerala [1990] 77 STC 253 (SC), allowed the appeals filed by the State holding that there is a rational nexus exists for such classification and the classification is founded on intelligible differentia. Subsequently, one of the petitioners had filed separate appeals before the Supreme Court in Civil Appeal Nos. 101 and 102 of 1995, wherein, it was pointed out that after the Division Bench judgment in Sangu Chakra Hotels Private Limited [1985] 60 STC 125 (Mad), entry wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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