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2003 DIGILAW 1464 (ALL)

RAPTI COMMISSION AGENCY v. STATE OF UTTAR PRADESH

2003-07-08

MARKANDEY KATJU, R.S.TRIPATHI

body2003
M. KATJU, J. ( 1 ) IN this bunch of writ petitions the petitioners have challenged the constitutional validity of section 8-E of the U. P. Trade Tax Act, 1948 (hereinafter referred to as "the Act") which has been inserted by Section 7 of the U. P. Act No. 11 of 2001. We are treating Writ Petition No. 865 of 2001 as the leading case. The petitioner in that petition has also challenged the notices, copies of which are annexures 2 and 11 of the writ petition issued under Section 8-E. ( 2 ) THE petitioner in Writ Petition No. 865 of 2001 is a sole proprietorship concern whose business is to get purchase orders from its ex-U. P. Principals, and to purchase goods in pursuance of such orders from agriculturist/farmers. The petitioner has entered into an agreement with M/s. Tian Yuan India (P) Limited, Raigarh, Maharashtra, for purchasing goods on their behalf. The petitioner purchases mentha oil for and on behalf of ex-U. P. principals and it dispatches the same to its ex-U. P. principals, namely, M/s. Tian Yuan India Pvt. Limited in accordance with the agreement dated April 2, 2001, annexure 1 to the writ petition. Earlier also the petitioner entered into similar agreements with the said company. ( 3 ) BY notice dated July 8, 2001 the consignment of mentha oil was detained by the respondent no. 3, Trade Tax Officer, Mobile Squad, Jhansi, and the driver of the vehicle was informed about it on July 9, 2001 by the notice dated July 8, 2001, annexure 2 to the writ petition, which has been issued under Section 8-E of the Act. A perusal of the said notice shows that the detention has been made because the petitioner has not deducted the tax from the sellers/ agriculturists and has not deposited the "same. ( 4 ) THE petitioner sent a reply on July 11, 2001 stating that the purchase of mentha oil was for and on behalf of ex-U. P. principals from the agriculturists and all documents accompanying the consignment clearly established this fact. ( 4 ) THE petitioner sent a reply on July 11, 2001 stating that the purchase of mentha oil was for and on behalf of ex-U. P. principals from the agriculturists and all documents accompanying the consignment clearly established this fact. Section 8-E of the Act states as follows : "deduction by agent--Every agent referred to in Sub-clause (v) of Clause (c) of Section 2 who for the dealer residing outside the State, is responsible for making payment to a person who is not treated as a dealer under the proviso to Clause (c) of the said section, for discharge of any liability on account of the valuable consideration payable for the sale of agricultural or horticultural produce grown by that person or grown on any land in which such person has an interest, whether as owner, usufructury mortgage, tenant or otherwise, or for the sale of poultry or dairy products from fowls or animals kept by him, shall at the time of making such payment, deduct an amount equal to four per cent or at such lower rate mentioned under Section 8-D and the provisions of sub-sections (3) to (9) of Section 8-D shall mutatis mutandis apply in respect thereof. " ( 5 ) A perusal of the above provision shows that it provides for deduction of 4 per cent while making payment to a seller who is not a dealer under the U. P. Trade Tax Act for discharge of any liability on account of valuable consideration payable for the sale of agricultural or horticultural produce grown by that person or grown on any land in which such person has any interest. It is alleged in paragraph 13 of the writ petition that a seller who is not liable for payment of any tax, as he is not a dealer under the Act, will not permit a deduction of 4 per cent on the sale price which he is entitled to receive. ( 6 ) THE petitioner has relied on the decision of the Supreme Court in Commissioner of Sales Tax, u. P. v. Bakhtawar Lal Kailash Chand Arhati [1992] 87 STC 196 ; 1992 UPTC 971. ( 6 ) THE petitioner has relied on the decision of the Supreme Court in Commissioner of Sales Tax, u. P. v. Bakhtawar Lal Kailash Chand Arhati [1992] 87 STC 196 ; 1992 UPTC 971. He has also relied on the decision of this Court in Commissioner of Trade Tax, U. P. v. Tien Yuan India Pvt. Ltd, 1998 UPTC 1140 and the decision in Commissioner of Trade Tax, U. P. v. Rapti commission Agency 1999 UPTC 969. Photocopy of the reply of the petitioner to the notice is annexure 4 to the writ petition. ( 7 ) IN paragraph 29 of the writ petition it is alleged that the deduction, if any, can be made if the agriculturist/selling dealer is liable for payment of tax but not otherwise. It is alleged in paragraph 30 of the writ petition that the seller is not liable to pay any tax as he is not a dealer under the Act in view of the proviso to Section 2 (c) of the Act. Hence it is alleged that there cannot be any deduction from the petitioner while paying the sale price to the agriculturist. ( 8 ) IT is further alleged in paragraph 31 of the writ petition that the goods accompanying the documents cannot be detained under Section 13-A. The petitioner has relied on the decision of this Court in Shaw Scott Distilleries Private Ltd. v. Sales Tax Officer [1983] 54 STC 344 (All.) ; 1983 UPTC 387. In that decision it was held that the provisions of Section 13-A made it clear that the power to seize goods is conferred upon an officer authorised in that behalf where either the goods cannot be traced to any bona fide dealer or where it is doubtful if the goods are properly accounted for. It is alleged that these two conditions do not exist in the present case, and hence the detention is illegal. ( 9 ) THE petitioner has alleged that a provision similar to Section 8-D was considered by the supreme Court in Steel Authority of India v. State of Orissa [2000] 118 STC 297 ; 2000 UPTC 374 and the Supreme Court has struck down Section 13-AA of the Orissa Sales Tax Act which provided for deduction of 4 per cent as TDS in respect of payment made to the contractors. The judgment of the Supreme Court is annexure 5 to the writ petition. Similarly in Nathpa Jhakri Jt. Venture v. State of Himachal Pradesh [2000] 118 STC 306 (SC) ; 2000 UPTC 459 a similar provision of the Himachal Pradesh General Sales Tax Act was declared void, vide annexure 6 to the writ petition. ( 10 ) THE petitioner has also alleged that it was an inter-State sale and hence the U. P. Trade Tax act does not apply vide Commissioner of Sales Tax v. Bakhtawar Lal Kailash Chand Arhati [1992] 87 STC 196 (SC), Commissioner of Sales Tax v. Vanaspati Trading Company, gorakhpur [1979] 44 STC 491 (All.) ; 2001 STI 169 and Commissioner of Trade Tax v. Munshiram Madan Lal 2001 UPTC 343 vide annexures 8 and 9 to the writ petition. ( 11 ) IN paragraph 38 of the writ petition it is alleged that photocopies of the documents accompanying the consignment clearly show that these documents are duly accounted for and the same had been dispatched in pursuance of the earlier agreement. ( 12 ) AFTER the petitioner filed his reply the respondent No. 2 issued notice dated July 11, 2001, annexure 11 to the writ petition, stating that the petitioner has not made deduction as required under Section 8-E while making the payment to the farmers/agriculturists. Aggrieved this, petition has been filed in this Court. ( 13 ) A counter-affidavit has been filed on behalf of the State Government. It is alleged in paragraph 3-A of the counter-affidavit that a final determination has yet to be made whether the goods were purchased by the petitioner on his own account or in the course of inter-State purchase. It is alleged in paragraph 10 that Section 8-E is a valid piece of legislation under entry 54 of List II of the Seventh Schedule to the Constitution. It is alleged in paragraph 12 that a person who is not a dealer under the Act may yet be a dealer under the Central Sales Tax Act, 1956 when he is making inter-State sales to the agent of an ex-U. P. principal. It is alleged that, section 8-E is in pari materia with Section 8-D whose validity has been upheld by this Court. It is alleged that Section 8-E provides an effective mechanism for collection of tax. It is alleged that, section 8-E is in pari materia with Section 8-D whose validity has been upheld by this Court. It is alleged that Section 8-E provides an effective mechanism for collection of tax. ( 14 ) A counter-affidavit has also been filed by the respondent No. 3 and we have perused the same. It is alleged in paragraph 8 that the goods were detained because the detaining authority could not be satisfied about the deduction made under Section 8-E. We have also perused the rejoinder-affidavit. ( 15 ) LEARNED counsel for the petitioner, Shri Bharatji Agarwal, submitted that this writ petition deserves to be allowed as it is squarely covered by the decisions of the Supreme Court in Steel authority of India Limited v. State of Orissa [2000] 118 STC 297 ; 2000 UPTC 374 and Nathpa jhakri Jt. Venture v. State of Himachal Pradesh [2000] 118 STC 306 ; 2000 UPTC 459. In both these decisions similar provisions for deduction of 4 per cent were struck down on the ground that these provisions made no distinction between inter-State or export sale/purchase on the one hand, and intra-State sale/ purchase on the other. ( 16 ) SHRI Agarwal submitted that if Section 8-E had provided that it will not apply to inter-State, outside, or export, sales/ purchases then it is possible that it could have been held to be a valid provision. However, he submitted, a careful perusal of Section 8-E shows that it applies to all kinds of sales and purchases, whether intra-State, inter-State, outside or export, and in every case there has to be 4 per cent deduction. ( 17 ) LEARNED counsel, relying on the Supreme Court decision in Commissioner of Sales Tax v. Bakhtawar Lal Kailash Chand Arhati [1992] 87 STC 196 ; 1992 UPTC 971, submitted that the u. P. Legislature has no jurisdiction to legislate on a sale or purchase in the course of inter-State trade or commerce, or regarding outside/export sales and purchases. It can only legislate regarding intra-State sales or purchases. It can only legislate regarding intra-State sales or purchases. Since Section 8-E makes no such distinction, and it taxes all sales, whether intra-State, inter-State, outside or export, which fall within its purview, hence in view of the decisions of the Supreme Court in Steel Authority of Indias case [2000] 118 stc 297 ; 2000 UPTC 374 and Nathpa Jhakris case [2000] 118 STC 306 ; 2000 UPTC 459 it must be held that Section 8-E is ultra vires the legislative competence of the State Legislature, and consequently the impugned notices must also be held to be illegal. Section 2 (c) of the U. P. Trade Tax Act defines dealer as follows : " dealer means any person who carries on in Uttar Pradesh (whether regularly or otherwise) the business of buying, selling, supplying or distributing goods directly or indirectly, for cash or deferred payment or for commission, remuneration or other valuable consideration and includes- (i ). . . . . . . . . . . . . . . . . . . . . (ii) a factor, broker, arhti, commission agent, del credere agent, or any other mercantile agent, by whatever name called and whether of the same description as hereinbefore mentioned or not, who carries on the business of buying, selling, supplying or distributing goods belonging to any principal, whether disclosed or not ; (iii ). . . . . . . . . . . . . . . . . . (iv ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (iv ). . . . . . . . . . . . . . . . . . . (v) every person who acts within the State, as an agent of a dealer residing outside the State, and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer as- (A) a mercantile agent as defined in the Sale of Goods Act, 1930 ; or (B) an agent for handling of goods or documents of title relating to goods ; or (C) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or such payment ;" ( 18 ) A perusal of the above provision shows that a dealer includes a commission agent as well as an agent of a dealer residing outside the State who buys, sells or supplies goods in the State on behalf of such dealer outside the State. From the above definition it is evident that the petitioner is a dealer since admittedly he buys goods on behalf of ex-U. P. principals. ( 19 ) NO doubt the agriculturist/farmer who sells his produce to the petitioner is not a dealer in view of proviso to Section 2 (c) which states : "provided that a person who sells agricultural or horticultural produce grown by himself or grown on any land in which he has an interest, whether as an owner, usufructuary mortgagee, tenant, or otherwise, or who sells poultry or dairy products from fowls or animals kept by him shall not, in respect of such goods be treated as a dealer. " ( 20 ) HOWEVER, though the farmer/agriculturist, not being a dealer, may not be liable to pay sales tax under the Act, the petitioner as a dealer is certainly liable to pay purchase tax in view of section 3 (1) of the Act which states : "liability to tax under the Act.-- (1) Subject to the provisions of this Act, every dealer shall, for each assessment year, pay a tax at the rates provided by or under Section 3-A, or Section 3-D on his turnover of sales or purchases or both, as the case may be which shall be determined in such manner as may be prescribed. " ( 21 ) IT may be noticed that Section 3 of the Act imposes tax on not only sales but also on purchases. Since the petitioner is purchasing the goods from the farmers/agriculturists, and he is a dealer within the meaning of definition in Section 2 (c), the petitioner is certainly liable to pay purchase tax under the U. P. Trade Tax Act in respect of his purchases within the State. Hence there can be no doubt that intra-State purchases made by the petitioner can be subjected to tax under the Act. ( 22 ) SECTION 8-E is only a convenient method of collecting tax which the Legislature thought may otherwise would have been evaded. ( 23 ) IN West U. P. Sugar Mills Association v. State of U. P. 2001 UPTC 1110 a division Bench of this Court held that a provision which was convenient device for facilitating the collection of tax which the Legislature thought would otherwise be evaded is valid. In that decision this Court relied on the Supreme Court decisions in Orient Paper Mills Ltd. v. State of Orissa [1961] 12 stc 357 and Chhotabhai Jethabhai Patel and Co. v. State of Madhya Pradesh [1972] 30 STC 1 in which it was held that power to collect a tax means the power to collect it properly and effectively. The same view was taken by the Supreme Court in Venkateshwara Theatre v. State of Andhra Pradesh [1995] 96 STC 130 ; (1993) 3 SCC 677 , Buxa Dooars Tea Co. Ltd. v. State of west Bengal [1989]. 74 STC 447 ; AIR 1989 SC 2015 , Govind Saran Ganga Saran v. Commissioner of Sales Tax [1985] 60 STC 1 (SC) ; AIR 1986 SC 1041, Khyerbari Tea Co. Ltd. v. State of Assam AIR 1964 SC 925 and Madurai District Central Co-operative Bank Ltd. v. Third Income-tax Officer, Madurai AIR 1975 SC 2016 , etc. ( 24 ) IN V. K. Singhal v. State of U. P [1995] 97 STC 355 ; 1995 UPTC 337, this Court upheld the validity of Section 8-D and observed that the power to impose tax also includes the power of its collection by means of advance payment of tax or deduction of tax at source to be finally adjusted at time of filing of the return. ( 25 ) IN our opinion the Legislature in its wisdom can always provide for a convenient device for collection of tax. It is not for this Court to go into the question whether there could be a better method than that devised by the Legislature for collection of the tax. The court may feel that the mischief sought to be remedied by the law may better have been achieved by adopting some other course of action or by some other law, but on this ground it cannot strike down the law. The Legislature in its wisdom is free to choose different methods of remedying an evil, and the court cannot say that this or that method should have been adopted. As Mr. Justice Cardozo observed in Anderson v. Wilson 289 US 20 : "we do not pause to consider whether a statute differently conceived and framed would yield results more consonant with fairness and reason. We take this statute as we find it. " ( 26 ) THERE are various provisions in various taxing statutes which provide for deduction at source, e. g. , under the Income-tax Act, Sales Tax Act, etc. , and the validity of all these provisions have been upheld. Hence Section 8-E is not a new concept in tax law. It was made by the Legislature in its wisdom for more efficient mechanism for collection of tax. This court cannot sit as a court of appeal over the wisdom of the Legislature as long as the Legislature is acting within its legislative competence. ( 27 ) SALES and purchase tax are mentioned in entry 54 of List II of the Seventh Schedule to the constitution which states : "taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92a of List I. " ( 28 ) IT is well-settled that the entries in the Lists in the Constitution should be given the widest scope of their meaning vide Sri Ram Ram Narain Medhi v. State of Bombay AIR 1959 SC 459 (vide para 12) ; Banarasi Dass v. Wealth Tax Officer, Special Circle Meerut AIR 1965 SC 1387 (vide para 6), etc. It has also been held by the Supreme Court that the general words in an entry would be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it, vide R. S. Joshi, Sales Tax Officer, Gujarat v. Ajit Mills Limited [1977] 40 stc 497 ; (1977) 4 SCC 98 , Hans Muller of Nuremburg V; Superintendent, Presidency Jail, calcutta AIR 1955 SC 367 , Navinchandra Mafatlal v. Commissioner of Income-tax AIR 1955 sc 58 , Chaturbhai M. Patel v. Union of India AIR 1960 SC 424 ; Rai Ramkrishna v. State of bihar AIR 1963 SC 1667 , etc. The various entries in the three Lists are not powers of legislation but fields of legislation, vide Union of India v. Dhillon (1971) 2 SCC 779 (vide para 22), harakchand Ratanchand Banthia v. Union of India [1970] 1 SCR 479, Calcutta Gas Company (Proprietary) Ltd. v. State of West Bengal AIR 1962 SC 1044 , etc. ( 29 ) THE submission of the learned counsel for the petitioner that the deduction in question can only be made if the selling dealer is liable for payment of tax has no merit. As already mentioned above, even if a seller who is not a dealer is not liable for payment of tax, the purchaser, if a dealer, is liable for payment of tax as is evident from a bare perusal of Section 3 (1) of the Act. ( 30 ) AS regards the submission of the petitioner that the goods in question cannot be detained in view of the decision in Shaw Scott Distilleries Private Ltd: v. Sales Tax Officer [1983] 54 STG 344 (All.); 1983 UPTC 387, a perusal of Section 13-A of the Act makes it clear that goods can be seized by the authorised officer where either the goods cannot be traced to any bona fide dealer or when it is doubtful if such goods are properly accounted for by the dealer vide Section 13-A (1-A ). Hence we make it clear that the detention in respect of Section 8-E shall only be made if the conditions of Sub-section (1-A) of Section 13-A are fulfilled, and the other provisions in Section 13-A must also be complied with. Hence we make it clear that the detention in respect of Section 8-E shall only be made if the conditions of Sub-section (1-A) of Section 13-A are fulfilled, and the other provisions in Section 13-A must also be complied with. At this stage we cannot say whether the provisions of Sub-section (1-A) of Section 13-A are fulfilled or not and this should be decided by the detaining authority at the earliest. ( 31 ) WE come now to the main submission of the learned counsel for the petitioner on which he has heavily relied, namely, that Section 8-E has to be struck down in view of the Supreme Court decisions in Steel Authority of India Limited v. State of Orissa [2000] 118 STC 297 ; 2000 uptc 374 and Nathpa Jhakris case [2000] 118 STC 306 ; 2000 UPTC 459. Under entry 92a of list I of the Seventh Schedule, inter-State sales can only be taxed by Parliament, but, it is submitted, Section 8-E makes no distinction between intra-State sales and inter-State sales. ( 32 ) WE have carefully considered the aforesaid decisions of the Supreme Court. In Steel authority of India Limited case [2000] 118 STC 297 ; 2000, UPTC 374, it has been observed by the Supreme Court (vide paragraph 15) that : "section 13aa of the Orissa Sales Tax Act should have been precisely drafted to make it clear that no tax was levied on that part of the amount credited or paid that related to inter-State sales, outside sales and sales in the course of import. . . . . . . . . " ( 33 ) A careful perusal of the above two decisions, namely, Steel Authority of India Limited case [2000] 118 STC 297 (SC) ; 2000 UPTC 374 and Nathpa Jhakris case [2000] 118 STC 306 ; 2000 UPTC 459 shows that the Supreme Court was not invited to consider, nor did it actually consider, the principle of statutory interpretation of reading down the language of a statutory provision if that is necessary to make the provision constitutionally valid, rather than to adopt the plain or wide meaning which would make it unconstitutional. This principle has been laid down in a series of Supreme Court decisions, (referred to below) many of which are Constitution bench decisions, whereas the decision in Steel Authority of India Limited case [2000] 118 STC 297 (SCJ ; 2000 UPTC 374 is a three-Judge Bench decision and the decision in Nathpa Jhakris case [2000] 118 STC 306 ; 2000 UPTC 459 is a two-Judge Bench decision of the Supreme court. ( 34 ) IT is well-settled that there is presumption in favour of the constitutional validity of a Statute vide Chiranjitlal Chowdhuri v. Union of India [1950] SCR 869, Madhu Limaye v. Sub-divisional magistrate, Monghyr AIR 1971 SC 2486 , P. J. Krishna Lal v. Government of Kerala 1995 AIR scw 1325, Jilubhai Nanbhai Khachar v. State of Gujarat AIR 1995 SC 142 , etc. ( 35 ) IT two interpretations are reasonably possible the court should take an interpretation which would uphold the constitutional validity of the statute even if that involves narrowing down the scope of the statutory provision. No doubt a plain reading of Section 8-E indicates that even inter-State sales are covered by it, but such an interpretation would make the provision unconstitutional. Hence a narrower interpretation should be adopted. ( 36 ) IN our opinion the decisions of the Supreme Court in Steel Authority of India case [2000] 118 STC 297 ; 2000 UPTC 374 and Nathpa Jhakris case [2000] 118 STC 306 ; 2000 UPTC 459 are distinguishable because they have not noted the decisions of the Supreme Court in a plethora of cases (including several Constitution Bench decisions) where it was clearly laid down that the language of a statutory provision can be narrowed down if that is necessary to sustain its cpnstitutional validity. In our opinion, the language of Section 8-E can be narrowed down so as to make it applicable only to intra-State sales/purchases, as this would make the provision valid. ( 37 ) IN Rt. Rev. Magr Mark Netto v. Government of Kerala (1979) 1 SCC 23 (vide para 6) a constitution Bench decision of the Supreme Court read down a statutory provision so as to make it constitutional. In that case the constitutional question was whether Rule 12 (iii) of the Kerala education Rules, 1959 was violative of article 30 of the Constitution. Rev. Magr Mark Netto v. Government of Kerala (1979) 1 SCC 23 (vide para 6) a constitution Bench decision of the Supreme Court read down a statutory provision so as to make it constitutional. In that case the constitutional question was whether Rule 12 (iii) of the Kerala education Rules, 1959 was violative of article 30 of the Constitution. A plain and literal interpretation of the provision would make it violative of article 30 of the Constitution, and hence the Supreme Court narrowed down the scope of the said rule so as to sustain its validity. ( 38 ) SIMILARLY in Sunil Batra v. Delhi Administration AIR 1978 SC 1675 (vide para 38) another constitution Bench decision, the Supreme Court observed : "constitutional deference to the Legislature and the democratic assumption that peoples representatives express the wisdom of the community lead courts into interpretation of statutes which preserves and sustains the validity of the provision. " ( 39 ) THERE is always a presumption that the Legislature does not exceed its jurisdiction vide union of India v. Elphinstone Spinning and Weaving Co. Ltd. AIR 2001 SC 724 (page 733), state of Bihar v. Bihar Distillery Ltd. AIR 1997 SC 1511 (1519), etc. ( 40 ) IT follows from the above principle that if one construction of the statute will make it ultra vires whereas another construction will sustain its constitutional validity the court should prefer the latter, on the ground that the Legislature is presumed not to have intended to exceed its jurisdiction vide Union of India v Tulsiram Patel AIR 1985 SC 1416 , State of Kerala v. U. K. Krishnan Nair AIR 1978 SC 747 , (759), Rayala Corporation (P.) Ltd. v. Director of enforcement, New Delhi AIR 1970 SC 494 (499), Jothi Timber Mart v. Corporation of Calicut air 1970 SC 264 (266), K. S. Venkataraman and Co. (P.) Ltd, v. State of Madras [1966] 17 STC 418 (SC) ; AIR 1966 SC 1089 (1104), Corporation of Calcutta v. Liberty Cinema AIR 1965 SC 1107 (1113), Tilkayat Shri Govindlalji Maharaj v. State of Rajasthan AIR 1963 SC 1638 (1655), kedar Nath Singh v. State of Bihar AIR 1962 SC 955 (969), State of Bihar v. Sm. Charusila Dasi air 1959 SC 1002 (1010) and Express Newspapers (Private) Ltd, v. Union of India AIR 1958 sc 578 (623 ). Charusila Dasi air 1959 SC 1002 (1010) and Express Newspapers (Private) Ltd, v. Union of India AIR 1958 sc 578 (623 ). ( 41 ) IT is a well-settled principle of interpretation that the general words in a statute may be construed narrowly in order to sustain its validity vide New Delhi Municipal Committee v. State of Punjab AIR 1997 SC 2847 (2901 ). Hence if it is possible to read a statutory language as subject to an implied term to sustain its validity the court should be very ready to make such an implication vide A. G. Gambia v. Momodon Jobe (1984) AC 689 (702) [pc, Hector v. Attorney general of Antique and Barbuda (1990) 2 All ER 103, p. 107 (PC)]. In re, Hindu Womens Right to Property Act AIR 1941 FC 72, the Federal Court upheld the validity of the Hindu Womens Rights to Property Act, 1947 by construing the word "property" as meaning "property other than agricultural land". In that decision Gwyer, C. J. , observed : "if that word property necessarily and inevitably comprises all forms of property, including agricultural land, then clearly the Act went beyond the powers of the Legislature ; but when a legislature with limited and restricted powers makes use of a word of such wide and general import, the presumption must surely be that it is using it with reference to that kind of property with respect to which it is competent to legislate and to no other. " The learned Chief Justice further observed :"there is a general presumption that a Legislature does not intend to exceed its jurisdiction. . . . . . . . . . . . and there is ample authority for the proposition that general words in a statute are to be construed with reference to the powers of the Legislature which enacts it. " ( 42 ) THE above rule was applied by the Supreme Court in Kedar Nath Singh v. State of Bihar air 1962 SC 955 and the Supreme Court took a narrow construction of Section 124a of the indian Penal Code so as to avoid making it unconstitutional in view of articles 19 (l) (a) and 19 (2)of the Constitution. " ( 42 ) THE above rule was applied by the Supreme Court in Kedar Nath Singh v. State of Bihar air 1962 SC 955 and the Supreme Court took a narrow construction of Section 124a of the indian Penal Code so as to avoid making it unconstitutional in view of articles 19 (l) (a) and 19 (2)of the Constitution. ( 43 ) SECTION 124a of the Indian Penal Code which relates to sedition makes a person punishable who "by words, either spoken or written or by signs or visible representation or otherwise, brings or attempts to bring into hatred or contempt, or excites or attempts to excite disaffection towards the Government established by law". ( 44 ) A perusal of the above provision shows that if it is construed in a plain or wide manner it will violate article 19 (l) (a) and 19 (2) of the Constitution. Hence, the Supreme Court, in order to make the provision constitutionally valid, limited the scope "to acts involving intention or tendency to create disorder or disturbance of law and order or incitement to violence. " ( 45 ) SINHA, C. J. speaking for the court in that decision observed: "it is well-settled that if certain provisions of law, construed in one way would make them consistent with the Constitution, and another interpretation would render them unconstitutional, the court would lean in favour of the former construction. " ( 46 ) IN Sunil Batra v. Delhi Administration AIR 1978 SC 1675 the Supreme Court upheld the validity of Section 30 (2) of the Prisons Act, 1894, which provides for solitary confinement of a prisoner under sentences of death in a cell and Section 56 of the same Act, which provides for the confinement of a prisoner in irons for his safe custody, by construing these provisions narrowly so as to avoid their being declared invalid on the ground that they were violative of the rights guaranteed under articles 14, 19 and 21 of the Constitution. ( 47 ) SIMILARLY, in New India Sugar Mills Ltd. v. Commissioner of Sales Tax [1963] 14 STC 316 (SC) ; AIR 1963 SC 1207 , a wide definition of the word "sale" in the Bihar Sales Tax Act, 1947 was restricted by construction to exclude transactions, in which property was transferred from one person to another without any previous contract of sale, since a wider construction would have resulted in attributing to the Bihar Legislature an intention to legislate beyond its competence. ( 48 ) IN New Delhi Municipal Committee v: State of Punjab AIR 1997 SC 2847 provisions in the municipal laws levying property tax on lands and buildings did not contain any exception in respect of the property of the State. These provisions were upheld by taking a narrow construction by excluding the property of the State since such property is exempted from taxation under article 289 of the Constitution. Although the aforesaid provisions did not expressly exclude property of the State from taxation, yet by adopting a narrow construction the validity of the provisions was sustained. ( 49 ) IN Tilkayat Shri Govindlalji Maharaj v. State of Rajasthan AIR 1963 SC 1638 the words "affairs of the temple" occurring in Section 16 of the Rajasthan Nathdwara Temple Act were construed as restricted to secular affairs, as on a wider construction the section would have violated articles 25 and 26 of the Constitution. ( 50 ) IN R. L. Arora v. State of U. P. AIR 1964 SC 1230 (at page 1234) the Supreme Court while construing Section 40 (1) (aa) of the Land Acquisition Act, as amended by Act 31 of 1962 construed the words "building or work" to such building or work which would subserve the public purpose of the industry or work in which the company, for which acquisition is made, is engaged. A wider and literal construction of the clause would have brought it in conflict with article 31 (2) of the Constitution, and hence the narrower construction was adopted. . .