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2011 DIGILAW 215 (GUJ)

HOTEL UTSAV PVT. LTD. v. DISTRICT COLLECTOR

2011-03-16

H.B.ANTANI, HARSHA DEVANI

body2011
JUDGMENT MS. HARSHA DEVANI :- By this petition under articles 226 and 227 of the Constitution of India, the petitioner has challenged order dated May 9, 1995 passed by the District Collector, Vadodara (annexure E) and order dated January 9, 1996 passed by the Luxury Tax Commissioner, Gujarat State, Gandhinagar (annexure G to the petition). The petitioner, a private limited company, runs a residential hotel at Vadodara in the name of "Hotel Utsav". The dispute in the present case pertains to payment of luxury tax under the provisions of the Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act, 1977 (the Act) for the period from June 27, 1991 to March 25, 1994. During this period, there was delay regarding payment of some portion of luxury tax ranging from 12 to 141 days. By a notice issued in August, 1994, the petitioner was informed that an amount of Rs. 14,328.50 was liable to be recovered from it for the period April, 1991 to February, 1994 for delayed payment of luxury tax and was called upon to deposit the same within a period of seven days. It was further stated that if the interest is not paid within the said period the same would be recovered as arrear of land revenue under section 8(2) of the Act. The interest on the amount which was not paid within time was calculated at the rate of two per cent per month under section 7A of the Act. Upon receipt of the said notice the petitioner's representative remained present on January 27, 1995 in the Office of the District Collector to represent his case. The matter was heard by the Resident Deputy Collector, before whom it was contended on behalf of the petitioner that the Act does not provide for simple interest at the rate of two per cent per month. The petitioner also put all the aforesaid facts on record by a communication dated January 28, 1995. Thereafter, by a notice dated April 5, 1995, the petitioner was directed to pay Rs. 14,328.50 as interest assessed under section 7A of the Act in response to which the petitioner by a communication dated April 8, 1995 reiterated the same contentions. Ultimately by an order dated May 9, 1995, respondent No. 1 confirmed the demand raised vide the notice issued in August, 1994 and directed the petitioner to pay Rs. 14,328.50 as interest assessed under section 7A of the Act in response to which the petitioner by a communication dated April 8, 1995 reiterated the same contentions. Ultimately by an order dated May 9, 1995, respondent No. 1 confirmed the demand raised vide the notice issued in August, 1994 and directed the petitioner to pay Rs. 13,615.50 and simultaneously, attached the petitioner's bank account under section 154 of the Bombay Land Revenue Code and recovered the amount. Being aggrieved, the petitioner filed a revision application before the Luxury Tax Commissioner who, vide the impugned order dated January 9, 1996, confirmed the order passed by respondent No. 1. Being aggrieved, the petitioner has filed the present petition. Mr. M. C. Bhatt, learned advocate appearing on behalf of the petitioner submitted that the District Collector has not decided the important legal contention raised by the petitioner as to whether under the provisions contained in section 7A of the Act, interest was payable at the rate of two per cent per month or per year. Inviting attention to the provisions of section 7A of the Act, it was submitted that the two per cent stated therein is not qualified either by month or year. It was submitted that if there is no qualification to the rate of interest, it cannot be said that the same is for per month. Inviting attention to the provisions of section 220 of the Income-tax Act, 1961 and sub-section (4A) of section 47 of the Gujarat Sales Tax Act, 1969, it was pointed out that wherever the Legislature intended the interest to be payable at the rate specified thereunder per month it has been specifically so provided in the said section. It was submitted that where it is not expressly stated that the interest is payable at the specified rate per month it has to be read as if the same is per annum. It was reiterated that in the present case, since the words "two per cent" are not qualified by the words per month, the respondents are not justified in computing interest at the rate of two per cent per month. Lastly, it was submitted that it is settled legal position that if two views are possible, the view in favour of the assessee should be adopted. On the other hand, Ms. Lastly, it was submitted that it is settled legal position that if two views are possible, the view in favour of the assessee should be adopted. On the other hand, Ms. Maithili Mehta, learned Assistant Government Pleader, placed reliance upon the affidavit-in-reply filed on behalf of respondent No. 3. It was submitted that the provisions of section 7A of the Act have rightly been interpreted by the respondents to mean that interest is leviable at the rate of two per cent per month. Attention was invited to the Statement of Objects and Reasons behind introducing section 7A of the Act to submit that the same makes it amply clear that the provision has been inserted for providing for charging of interest at the rate of two per cent per month on the amount of tax or penalty which the proprietor fails to pay within the time provided in the Act. It was, accordingly, submitted that the impugned orders are just, legal and proper and do not warrant any interference by this court. In rejoinder, Mr. M. C. Bhatt, learned advocate, submitted that the Statement of Objects and Reasons can certainly be looked into, but that would not change the intention of the Legislature when the words used in the statute are clear. It was submitted that on a plain reading of the provision, the normal interpretation would be that the interest is to be levied at the rate of two per cent per annum. It was also submitted that the Statement of Objects and Reasons produced by the learned Assistant Government Pleader pertains to the Ordinance which was issued prior to the amendment in the Act and cannot be said to be the Statement of Objects and Reasons of the amendment Act by virtue of which section 7A came to be inserted. In the backdrop of the aforesaid facts and contentions, the main issue that arises for consideration is as regards the interpretation of the provisions of section 7A of the Act. It would, therefore, be germane to refer to the provisions of section 7A of the Act which reads thus : "7A. In the backdrop of the aforesaid facts and contentions, the main issue that arises for consideration is as regards the interpretation of the provisions of section 7A of the Act. It would, therefore, be germane to refer to the provisions of section 7A of the Act which reads thus : "7A. Where any proprietor does not pay the tax within the time and in the manner provided in the Act, he shall, without prejudice to any other consequence and liabilities which he may incur, be liable to pay in addition to the amount of tax, simple interest at two per cent, of the amount of the tax due for each month or part thereof for the period which the tax remains unpaid." On a plain reading of the aforesaid provision, it is apparent that the same provides that when the proprietor does not pay tax within the time and in the manner provided in the Act, he shall be liable to pay in addition to the amount of tax simple interest at two per cent, of the amount of tax due for each month or part thereof for the period for which the tax remains unpaid. According to the learned advocate for the petitioner, the words "two per cent" are not qualified either by month or by year and as such, the same would normally be rate as per annum. However, in the opinion of the court, the said contention does not merit acceptance inasmuch as the true purport of the said provision is that in respect of the amount of tax due, for each month or part thereof simple interest has to be paid at two per cent for the period for which the tax remains unpaid. In other words, on the amount of tax due at the end of each month or part thereof, simple interest has to be calculated at the rate of two per cent per month on the amount of tax that remains unpaid. If the interpretation as canvassed on behalf of the petitioner were to be accepted it would be difficult to assign any meaning to the words "each month or part thereof". It is well-settled legal position that while interpreting the provisions of a statute care has to be taken that no part of the statute is rendered meaningless or otiose. If the interpretation as canvassed on behalf of the petitioner were to be accepted it would be difficult to assign any meaning to the words "each month or part thereof". It is well-settled legal position that while interpreting the provisions of a statute care has to be taken that no part of the statute is rendered meaningless or otiose. Besides, from the language employed in the statute there is nothing to indicate any legislative intent to levy interest at the rate of two per cent per annum. In this regard it may also be pertinent to refer to the Statement of Objects and Reasons while introducing the provisions of section 7A of the Act which reads thus : "STATEMENT At present there is no provision in the Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act, 1977 for charging interest on non-payment or delayed payment of tax. In order to ensure timely payment of tax and penalty and discourage the tendency of non-payment of tax or delayed payment of tax, it was considered necessary to provide for charging the interest at the rate of two per cent per mensem on the amount of the tax or penalty which the proprietor fails to pay within the time provided in the Act. For that purpose it was considered necessary to insert new section 7A in the Act to achieve the aforesaid object and to make consequential amendments in sections 8 and 12 of the Act. A Bill called the Gujarat Tax on Luxuries (Hotels and Lodging Houses) (Amendment) Bill, 1987 was introduced in the Assembly but could not be taken up for consideration by the Assembly for want of time. Therefore, as the Gujarat Legislative Assembly is not in session, this Ordinance is promulgated to achieve the aforesaid object." The Statement of Reasons and Objects for introducing section 7A of the Act makes the intention of the Legislature absolutely clear, namely, that provision has been made for charging interest at the rate of two per cent per month and not per year as is sought to be contended on behalf of the petitioner. It is settled legal position that for determining the purpose of the legislation, it is permissible to refer to the Statement of Objects and Reasons to look into the circumstances which were prevalent when the law was enacted and which necessitated the passing of the enactment. It is settled legal position that for determining the purpose of the legislation, it is permissible to refer to the Statement of Objects and Reasons to look into the circumstances which were prevalent when the law was enacted and which necessitated the passing of the enactment. The facts stated in the preamble and the Statement of Objects and Reasons appended to any legislation are evidence of legislative judgment. They indicate the thought process of the elected representatives of the people and their cognizance of the prevalent state of affairs, impelling them to enact the law. The contention that the Statement of Objects and Reasons pertains to the ordinance and not to the Act is required to be stated to be rejected. The reason for introducing a statutory provision by virtue of an Ordinance which has thereafter been approved by the Legislative Assembly in the same form would not change merely because earlier the provision had been introduced through an Ordinance. Thus, on a plain reading of the provisions of section 7A of the Act as well as in the light of the Statement of Objects and Reasons for introducing the said provision, it is apparent that the same provides for charging of interest at the rate of two per cent per month on the amount of tax which the proprietor fails to pay within the time provided in the Act. Examining the facts of the present case in the light of the aforesaid, in the present case, the respondent No. 1 in the impugned order dated May 9, 1995 has computed the interest at the rate of two per cent per month on the amount of tax remaining unpaid, which is in consonance with the provisions of section 7A of the Act. In the circumstances, no infirmity can be found in the impugned order passed by respondent No. 1 as well as in the impugned order passed by respondent No. 2 confirming the order passed by respondent No. 1. For the foregoing reasons, the petition fails and is accordingly dismissed. Rule is discharged with no order as to costs.