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2004 DIGILAW 134 (JK)

Durga Dal And Basin Mills v. State Of J. &K.

2004-05-01

S.N.JHA, Y.P.NARGOTRA

body2004
PER : S.N. Jha, C.J. The dispute in this batch of letters patent appeals and one writ petition relates to levy of toll (sometimes loosely called toll tax) on goods and commodities as distinct from vehicles and carriages transporting such goods and commodities. The point being common, they were heard together and are disposed of by this common judgment. The thrust of the appellants case before the Single Judge as well as in these appeals, briefly, was that having held out a promise to exempt the goods in question from the levy of toll as part of incentive to promote industrial growth of the State of Jammu & Kashmir and thus induced the appellants and others to come forward and make investments, the State Government cannot withdraw the exemption. That issue hardly survives for decision in view of the decision of the Supreme Court in the case of Hansraj and Sons v. State of Jammu & Kashmir and Ors., AIR 2002 SC 2692=(2002) 6 SCC 227, wherein the Supreme Court has categorically held that "the scheme of the Statute does not envisage levy of toll on goods or on any transaction of sale thereof". Accordingly, when the appeals were taken up, counsel for the appellants took the stand that the issue is squarely covered by the said decision of the Supreme Court. The Government having no power to levy toll on the goods in question, it could not include them in the `negative list and thereby make them amenable to the levy. Though put in a different form, the submission is well founded and therefore must be accepted. The question of exempting particular commodity or commodities from any tax or including them in the so-called negative list, making them exigible to the levy, would arise only when such levy is permissible in law. It would be tautology to say that exemption can only be allowed if there is some liability. The question of exempting particular commodity or commodities from any tax or including them in the so-called negative list, making them exigible to the levy, would arise only when such levy is permissible in law. It would be tautology to say that exemption can only be allowed if there is some liability. Learned Advocate General appearing for the respondents, however, took the stand that the Supreme Court in case of Hansraj and Sons (supra) merely quashed SRO 348 dated 20.8.1982 relating to levy of additional toll on dry fruits including almonds, walnuts and walnut kernels to be exported out of the State through certain exit points, the Court did not go into the other issues such as validity of the notification withdrawing the exemption impugned in the connected writ petitions and these appeals. He submitted that by SRO 348 dated 20.08.1982 additional toll was levied on the aforesaid goods "in addition to" the toll payable in terms of SRO 115 dated 31.3.1982. SRO 115 not having been interfered with the liability of the appellants to pay toll payable in terms of SRO 115 on the goods in question remains intact. To appreciate the stand of the Advocate General, it would be necessary to notice the relevant provisions of the Jammu and Kashmir Levy of Tolls Act, Samvat 1995 (1938 A.D) ( in short, the Tolls Act) and some of the notifications issued thereunder. The Tolls Act was enacted, as per its preamble, to consolidate in one Act the provisions for levy of tolls upon different roads and bridges in the Jammu and Kashmir State. Section 3 which is charging section of the Act, provides: "(1) The Government may from time to time prescribe, annul or alter of tolls to be levied upon any road, ferry or bridge (in the State) and may place the collection of such tolls under such management as may appear to it proper, and all persons employed in the management and collection of such tolls shall be liable to the same responsibilities as would belong to them if employed in the collection of the (Excise) Revenue under the Jammu and Kashmir (Excise) Act, 1958. (2) The rates prescribed to be levied at the commencement of this Act, shall be rates mentioned in the first schedule hereto annexed. (2) The rates prescribed to be levied at the commencement of this Act, shall be rates mentioned in the first schedule hereto annexed. The rates shall continue to be levied till they are annulled or altered in accordance with the provisions of this section. (3) The power to annul or alter the rates vested in the Government under the foregoing provisions of this section may be exercised from time to time after publication in the Government Gazette. The amendment and alteration shall have the same force and effect as if they had been contained in the first Schedule. (4) The persons under whose management the tolls are levied at the commencement of this Act shall levy the tolls prescribed and shall be held to have been appointed for collection of tolls under the provisions of this Act. (5) The Government may, from time to time, notify the commodities in respect of which tolls may be levied on ad valorem basis, subject to a maximum of 15% of the value of purchase." The initial rates of toll are mentioned in the Schedule. The rates so fixed are subject to alteration by the Government as laid down in sub-section (2) read with sub-section (1). Though the rates as mentioned in the Schedule have become obsolete with prescription of new rates by the Government by passage of time, it is relevant to state that the Schedule specifies different types of vehicles, besides certain animals with respect to which toll is to be charged. Such toll is chargeable "through traffic up and down crossing the Domel toll station per trip each way" (Domel is name of a place). It would appear that while the preamble refers to " levy of tolls upon public roads and bridges", sub-section (1) of Section (3) refers to "tolls to be levied upon any road, ferry or bridge, " the Schedule refers to " traffic up and down crossing the Domel Toll Station". It is evident that any thing using the road, ferry or bridge as specified in the Schedule (subject to alteration made by notification later) is liable to pay toll at the rate(s) fixed in the Schedule and altered by the Government from time to time. The levy of toll is thus for user of roads, ferry and bridge lying within the State, as the case may be. The levy of toll is thus for user of roads, ferry and bridge lying within the State, as the case may be. It appears that upto 1966 carriages and other modes of transport of different types alone were subjected to levy of toll. On 14.9.1967, vide SRO 379, additional toll was levied on the vehicles carrying fruit produce @ Rs. 2 per 37 kgs. Copy of SRO 379 has not brought on record but similar SROs being SRO 113 dated 31.3.1981, SRO 115 dated 31.3.1982, SRO 341 dated 19.8.1982 and SRO 348 dated 20.8.1982 were produced at the time of hearing. The rates fixed with respect to the goods in question by SRO 113 were modified i.e altered by SRO 115 and again altered by SRO 341. By SRO 348 (which was under challenge in Hansraj & Sons case) additional toll "in addition to" to the toll payable in terms of SRO 115 was levied. As SRO 113 gives an idea of the preceding SROs and much reliance was placed by learned Advocate General on SRO 115 which partly modified SRO 113, it would be appropriate to notice relevant portion of the notification, SRO 113, as under: -- "In exercise of the powers conferred in sub-section (1) of Section (3) of the levy of Tolls Act, Samvat 1995 (VIII of 1995) the Government direct that notwithstanding anything contained to the contrary in the previous notifications issued on the subject, the additional toll at the different toll stations in the State shall be levied @ indicated below with effect from 1.4.1981: -- i. Goods other than fruit and timber Rs. 5.00 Per quintal on goods carried according to the laden weight as prescribed and entered in the certificate of registration issued by the registration authority under the Motor Vehicles Act, 1939. ii. Timber and Articles made thereof. Rs. 6.00 -do- iii. Fruit Rs. 4.00 -do- Provided that on goods, including fruit and timber and articles made thereof, carried in excess of the laden weight as prescribed and entered in the certificate of registration issued by the registration authority under the Motor Vehicles Act, 1939, the addl. Toll shall be levied at double in rates herein above prescribed. Rs. 6.00 -do- iii. Fruit Rs. 4.00 -do- Provided that on goods, including fruit and timber and articles made thereof, carried in excess of the laden weight as prescribed and entered in the certificate of registration issued by the registration authority under the Motor Vehicles Act, 1939, the addl. Toll shall be levied at double in rates herein above prescribed. Provided further that additional toll on fruit passing through Kandoli Nagrota/Manwal toll posts shall continue to be levied at the rates prescribed vide notification SRO 601 dated 14.11.1980." Before making comments on the import of SRO 113 it would be useful to notice the subsequent SROs issued in continuance of the previous ones on 31.3.1982 vide SRO 115 (supra) on 19.8.1982 vide SRO 341 and on 20.8.1982 vide SRO 348. It may be recalled that this SRO 348 was the subject matter of challenge in the case of Hansraj & Sons case. SRO 115 ran as under: "In exercise of the powers conferred by sub-section (1) of Section 3 of Jammu & Kashmir levy of tolls Act, Samvat 1995 (VIII of 1995) and in partial modification of Notification of SRO 113 dated 31.3.81 as amended from time to time, the Government hereby direct that the additional toll tax leviable on timber shall be Rs. 7 per quintal & Rs. 6 per quintal on all other merchandise goods including fruit." SRO 341 was as follows: " In exercise of the powers conferred by sub-section (1) of section 3 of the levy of Tolls Act Samvat 1995 (VIII of 1995) and in partial modification of Notification SRO 115 dated 31.3.1982 the Government hereby direct that additional toll shall be levied at Rs. 0.60 per kg. On dry fruit including almonds, walnuts and kernels thereof exported out of the state through Lakhanpur, Jammu Railway Station, Manwal and other toll posts as may be notified by the Government from time to time. This notification shall be deemed to have come into force w.e.f. 1.5.1982." SRO 348 read as under: "In exercise of the powers conferred by Sub-section (1) of Section 3 of the levy of tolls Act samvat 1995 (VIII of 1995) and in supersession of Notification SRO 341 dated 19.8.1982 the Government hereby direct that additional toll tax shall be levied at Rs. 0.60 per kg on dry fruit including almonds, walnuts and walnut kernels thereof exported out of state through Lakhanpur, Jammu, Rly. Station, Manwal and other toll posts as may be notified by the Government from time to time in addition to the toll payable in terms of SRO 115 dated 31.3.1982." It was submitted on behalf of the respondents that the goods and commodities like timber, fruit and all other merchandise goods were subjected to levy of toll by the earlier notification too. What SRO 348 did was to levy additional toll on dry fruits including almonds, walnuts and walnut kernels "in addition to" toll payable in terms of SRO 115 dated 31.3.1982. It was levy of additional toll in addition to the toll payable under SRO 115 which was held to be bad by the Supreme Court in the case of Hansraj & Sons. The Supreme Court having noticed the SRO 115, but made no adverse comments, it would follow that the power of the Government to levy additional toll on timber and all other merchandise goods including fruit cannot be questioned. We find no substance in the submission of the Advocate General. SRO 113 which was partly modified by the latter SROs as noticed hereinabove, has been in extenso quoted above. Though on first look it does appear that additional toll was being levied on the commodities at the rates notified, on a close reading of the notification it becomes clear that the toll @ Rs. 5 in the case of goods other than fruits and timber, Rs. 6 with respect to timber and articles made thereof and Rs. 4 with respect to fruit was leviable per quintal on goods carried according to laden weight as mentioned in the certificate of registration issued by the registration authority under the Motor Vehicles Act. Under Section 58(1) of the Motor vehicles Act 1988, the central government is empowered to specify, in the case of transport vehicles, the maximum gross vehicle weight, among other things. Under Section 58(2) the registering authority while registering a transport vehicle is required to enter in the certificate of registration the `unladen weight of the vehicle, among other things. Reference may in this connection be made to Form 20 and Form 23 prescribed under rules 47 and 48 of the central Rules framed under the Motor Vehicles Act containing particular of the unladen weight. Reference may in this connection be made to Form 20 and Form 23 prescribed under rules 47 and 48 of the central Rules framed under the Motor Vehicles Act containing particular of the unladen weight. Form 20 is the form of application for registration of a motor vehicle, Form 23 is the form in which certificate of registration is issued. What SRO 113 or, for that matter, the subsequent SROs did was to levy additional toll on the laden weight of the vehicle i. e additional load of the goods carried by the vehicle. What thus was done was to levy additional toll on the `increased load. Such increase was to be measured in terms of the weight of the goods which was subjected to the levy. In other words, if the unladen weight of the vehicle was `X and the increase in weight being the weight of goods was `Y and the total laden weight of the vehicle was `Z, the vehicle was liable to additional toll for the difference between "X and `Z i.e `Y -- being nothing but the weight of the goods. That is how the levy of additional toll was "per quintal" of goods. Thus, the vehicle remained the subject of levy and not the goods as such. The load of the goods adding to the unladen weight of the vehicle apparently would cause more stress, wear and tear to the roads and bridges, and therefore if the vehicles were required to pay additional toll as per the load of the goods, it simply could not be faulted. As observed above, toll is levied for the user of the roads etc., and therefore more the use, that is, heavier the impact on the road, caused by the load of the vehicle, greater would be the liability. Concept of additional toll thus was/is consistent with the scheme of the levy of toll. What SRO 348 did was to levy additional toll "in addition to" the toll payable in terms of SRO 115. As noticed above, SRO 115 already provided for additional toll on the total load of the vehicle including the load of the goods. Concept of additional toll thus was/is consistent with the scheme of the levy of toll. What SRO 348 did was to levy additional toll "in addition to" the toll payable in terms of SRO 115. As noticed above, SRO 115 already provided for additional toll on the total load of the vehicle including the load of the goods. Levy of additional toll on the goods specified in the notification i.e., dry fruits including almonds, walnuts and walnut kernels in addition to the toll payable under SRO 115 not only amounted to double taxation but in effect and substance, also, levy of toll on the goods in question. The levy of additional toll as per SRO 115 read with SRO 113, as seen hereinabove, was on total load of the vehicles. A further levy on the goods carried by the vehicle clearly amounted to levy on the goods and not the vehicles carrying them. In view of the above discussions, our conclusion being that SRO 115 was not illegal, the submission of the Advocate General that the Supreme Court did not interfere with the same is neither here nor there. As a matter of fact, SRO 115 was not under challenge, and therefore there was no occasion to go into the validity or otherwise thereof, or to express any opinion on that. The decision of Supreme Court in the case of Hansraj & sons (supra) came in under reference time and again on behalf of both the appellants and the respondents. As in our opinion too, in agreement with the appellants counsel, the issue as to whether toll can be levied on goods and commodities as distinct from vehicles and carriages, is squarely covered by the decision of the Supreme Court in that case, we consider it appropriate to refer to the relevant parts of the judgment as under: "It is clear from the above that though tolls are of different types and may be levied in different situations, it ordinarily means the amount which the government, or a local authority or a person duly authorized by the government may collect for passage of carriages and vehicles over a road or bridge. This meaning is by no means exhaustive. This meaning is by no means exhaustive. Where provision for levy and collection of tolls is made under the legislative enactment or a subordinate legislation then the levy is to be governed strictly according to the provisions of the statute or rules or any other instrument, as the case may be." The Supreme Court then noticed section 3 of the Tolls Act and the Schedule and observed as under: -- "In the Schedule to the Act are enumerated vehicles of different types and the rates at which the toll is to be charged in respect of the same....From the contents of the Schedule it is clear that the statute contemplates levy of toll for crossing upon different roads and bridges in the State and the State is vested with the power to prescribe by Notification the toll rate of the levy and the manner of collection of the same. The scheme of the Statute does not envisage levy of toll on goods or on any transaction of sale thereof. It is clearly a levy upon user of public roads and bridges in the State. The scheme fits in with the concept of tolls, be it toll traverse or toll thorough, to be levied in lieu of the advantage or privilege provided by the State government for user of roads and bridges lying within the State....On a prima facie reading of the Notification No. 348 in the context of the provision in Section 3(1), it is manifest that the Notification is not in conformity with the power vested in the State Government under the Section. On a plain reading of the Notification it is clear that the intention is to levy toll on dry fruits including almonds, walnuts and walnut kernels exported out of the State through certain exit points by road or railways. The power to impose such a levy does not flow from the power vested in Section 3 of the Act in purported exercise of which the Notification has been issued." In view of the above categorical findings reached by the Apex Court there is hardly any scope to justify levy of toll on goods and commodities as distinct from vehicles and carriages carrying them. The toll is levied for users of roads and bridges and thus it is the vehicle-empty or laden with goods, which is liable to pay tolls and not the goods. The toll is levied for users of roads and bridges and thus it is the vehicle-empty or laden with goods, which is liable to pay tolls and not the goods. The Tolls Act is a taxing statute and like any other taxation statute, the provisions therefore are to be interpreted strictly by the plain words of the statute and not by inference or analogy- or "substance of the matter" (See Bank of Chettinad v. Income-Tax Commissioner, AIR 1940 Privy Council 183). In State of Maharashtra v. Mishri Lal Tarachand Lodha, AIR 1964 Supreme Court 457, the Supreme Court enunciating the principles of fiscal statutes observed that the provisions of a taxing statute "have to be construed strictly, in favour of the subject-litigant." In Diwan Bros. v. Central Bank of India, AIR 1976 Supreme Court 1503, the Apex Court observed, referring to the observations in Mishri Lal Tarachand Lodha (supra): "These observations manifestly show that the Courts have to interpret the provisions of a fiscal statute strictly so as to give benefit of doubt to the litigant. The principles deducible from the decisions referred to above are well established and admit of no doubt." Reference may be made to a recent case, Commissioner of Wealth tax v. Ellis Bridge Gymkhana, (1998) 1 SCC 384, wherein the same view was expressed in these words: "The rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section. No one can be taxed by implication. A charging section has to be construed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all." We need not notice other decisions on the point which are available in plenty. It is relevant to mention here that after the Supreme Court gave the aforesaid verdict, an ordinance titled `The levy of Tolls (Amendment) Ordinance, 2002 was promulgated on 14.8.2002, amending the Preamble and Section 3 of the Tolls Act extending the scope of the levy to "in respect of men, animals, vehicles, machinery, commodities and goods in any form whatsoever". The said Ordinance was replaced by Levy of Tolls (Amendment) Act, 2002 (Act XL of 2002). The said Ordinance was replaced by Levy of Tolls (Amendment) Act, 2002 (Act XL of 2002). The amendment has been given retrospective effect from 17-7-2002 which coincides with the date of judgment in Hansraj & Sons case. In terms of the amended provisions, now it is open to the Government to levy tolls not only with respect to goods in whatever form but also with respect to men and animals from 17.7.2002. The appellants do not dispute that in view of the amended provisions the goods too can be subjected to the levy of toll. The existing dispute, if any, thus has to be decided for the prior period alone. It may be mentioned here that judgment in Hansraj & Sons case has been made prospective and it has further been made clear that any amount collected as toll or additional toll under the impugned notification need not be refunded. In other words, if any toll/additional toll has already been collected from the appellants the same is not to be refunded; at the same time, uncollected toll/additional toll for the period prior to 17.7.2002 cannot be collected with respect to the goods -- the levy being ultra virus the Tolls Act-as it then stood. Coming to the other aspect of the case about the validity of SRO 139 dated 20.4.1999 by which the earlier SRO 252 dated 20.08.1998 allowing exemption in respect of the goods in question by including them in the negative list was withdrawn, the issue rising from such withdrawal notification has become academic in view of the decision in Hansraj & Sons case. As observed at the outset, the question of exemption arises only when the statute creates any liability. Section 5 of the Levy of Tolls Act provides that Government may from time to time grant exemption from payment of tolls levied under the Act. Thus, if toll can be levied in respect of any transaction or thing such transaction or thing may be exempted from the mischief of the levy. But where the transaction or the thing itself cannot be subjected to levy, no question of exemption would arise. The State Government in its wisdom issued exemption notification as part of incentive programme to accelerate industrial growth of the State. First policy resolution of the kind was issued vide G.O no. 159/Ind. of 1971 dated 25.3.1971. But where the transaction or the thing itself cannot be subjected to levy, no question of exemption would arise. The State Government in its wisdom issued exemption notification as part of incentive programme to accelerate industrial growth of the State. First policy resolution of the kind was issued vide G.O no. 159/Ind. of 1971 dated 25.3.1971. This was replaced by subsequent resolutions, the last one was issued on 27.5.1998 vide G.O no. 202/Ind. of 1998 valid for 1998-2003. The said resolution was followed by statutory notification SRO 252 dated 20.8.1998 exempting the goods in question from certain taxes including toll under the Tolls Act. Such exemption apparently was on the premise that the goods in question could be subjected to levy of toll, and therefore to encourage private entrepreneurship, exemption notification was issued as a part of the incentive package. The position that now stands after decision of the Apex Court in Hansraj & Sons case is that the Tolls Act (as it stood) did not permit such levy on goods. If that is the correct legal position, there was no occasion for the government to issue any exemption notification with respect to the goods in question or include them in the negative list in purported exercise of power under Section 5 of the Tolls Act. The issue which is now academic pales into insignificance and is not required to be gone into. Suffice it to say that if any benefit has been availed of by the appellants by virtue of the exemption, the same shall not be recovered from them; similarly they will not be held liable by virtue of the impugned notification, that is, SRO 139 dated 20.4.1999. The rights of the parties will be so construed and determined for the period prior to coming into force of the amended provisions on 17.7.2002. The rights and liabilities for the period subsequent thereto will be governed by the amended provisions. The appeals and the writ petition are accordingly disposed of, and the order of learned Single Judge stands modified. There will no order as to costs.