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2016 DIGILAW 442 (JK)

State of J&K v. Gurbax Rai Aggarwal

2016-08-24

N.PAUL VASANTHAKUMAR, TASHI RABSTAN

body2016
JUDGMENT : N. PAUL VASANTHA KUMAR, J. 1. The letters patent appeal is filed by the State against the order of the Writ Court dated 03.12.2005 made in OWP No. 77/2002, insofar as ordering refund of amount of Rs. 6,92,640/-, deposited by the writ petitioners within a period of two months, which was collected as a toll tax on account of exporting rice out of the State of J&K through Railways. As against the denial of interest claimed at the rate of 18% on the deposited amount, which was claimed in the writ petition, the writ petitioner has preferred Cross Appeal No. D-2/2008. The learned AAG, appearing for the appellants, namely, the State raised a preliminary objection with regard to the maintainability of the Cross Appeal in the Letters Patent Appeal and contended that Cross Appeal is not maintainable against the order passed in the writ proceedings and if the writ petitioner was aggrieved over the non-grant of interest on the deposited amount, nothing prevented it to file an appeal against the said portion of the order of the Writ Court. Learned counsel relied on the judgment of Allahabad High Court reported in AIR 1957 Allahabad 48 (Mt. Daroupadi Debi & Anr v. S.K. Dutt & Anr.). In the said judgment it was held that right to file cross objections which is conferred by Order 41 Rule 22 of the Code of Civil Procedure, cannot be invoked in Letters Patent Appeal or Special Appeals which can be filed within time prescribed for filing the appeal. Relying upon the High Court Rules, the Allahabad High Court held that in Letters Patent Appeal, cross appeal is not maintainable. In the decision reported in 1971 JKLR 605 : 2010 (7) JKJ 295 [HC] : JKJ Soft JKJ/22757, (Assessing Authority & Anr. v. Jammu Metal Rolling Mills) a similar question arose as to whether cross objections in the letters patent appeal are maintainable or not. The Full Bench of this Court in that judgment has held that right to file cross objections is not available in respect of Letters Patent Appeal and the said issue was already settled in the decision reported in AIR 1962 J&K 89 : JKJ Soft JKJ/19750 (Excise & Taxation Officer & Ors. The Full Bench of this Court in that judgment has held that right to file cross objections is not available in respect of Letters Patent Appeal and the said issue was already settled in the decision reported in AIR 1962 J&K 89 : JKJ Soft JKJ/19750 (Excise & Taxation Officer & Ors. v. Caltex India Ltd.), wherein it was held that Order 41 Rule 22 of CPC has no application to the Letters Patent Appeal more specifically so when it relates to writ jurisdiction under Article 226 of the Constitution of India corresponding to Section 103 of the J&K Constitution. The learned senior counsel appearing for the respondent was not in a position to dispute the said legal position. 2. In the light of the said judgments the preliminary objection raised by the learned counsel for appellants regarding the maintainability of the cross appeal is sustained and the same is dismissed. LPAOW No. 02/2006 3. The writ petitioner-respondent preferred the writ petition contending that Food Corporation of India through Railways transported rice and stored in its godown on railway siding. The rice consignment received by the Food Corporation of India is said to have been found of sub-standard and same was rejected and sold in open auction through tenders. The writ petitioner firm which is a firm of Punjab submitted the bid and succeeded in purchasing the said rice and carried the said rice out of State of J&K through railways which was certified by the Chief Goods Superintendent of Northern Railways Jammu, stating that the writ petitioner exported the rice out of State which was lying at Food Corporation of India, Railway Station through Railway Wagons and both import and export of rice was through railway wagons and the State road was not used for this purpose. However, the Excise and Taxation officer, Toll Post Railway Station held that writ petitioner is liable to pay toll tax amounting to Rs. 6,92,640/- vide his order dated 25.09.1991 and the writ petitioner was called upon to make the payment failing which his consignment was ordered not to be allowed to be carried outside the State. With regard to rice already exported a further demand of Rs. 2,93,886.58 was made by order dated 27.09.1991. 6,92,640/- vide his order dated 25.09.1991 and the writ petitioner was called upon to make the payment failing which his consignment was ordered not to be allowed to be carried outside the State. With regard to rice already exported a further demand of Rs. 2,93,886.58 was made by order dated 27.09.1991. Both the said notices of demand were challenged by the writ petitioner in OWP No. 879/1991, contending that the writ petitioner had not used the roads or bridges of the State for exporting the rice out of the State and, therefore, it was not liable to pay the toll tax. The said writ petition was disposed of on 23.02.1999 holding that the dispute as to whether the petitioner and the Food Corporation of India have used the State road system or not shall be decided by the authorities constituted under the Toll Tax Act and such officer to be designated by the Excise Commissioner shall decide the said factual position within a period of two months. 4. The said direction having not been complied with the writ petitioner filed contempt petition bearing COA No. 10/2001, which also was disposed of on 17.09.2001 taking note of the decision dated 04.01.2001 of the appellants that the petitioner in the course of export of rice has used the soil of the State for dumping/storing the rice, therefore, toll tax was rightly levied, and the writ petitioner was granted liberty to challenge the decision taken by the respondents. Pursuant to the interim directions passed in OWP No. 879/1991, the writ petitioner deposited the amount of Rs. 6,92,640/- with the appellants. 5. Since the writ petitioner was not satisfied with the decision holding that the petitioner is liable to pay the toll tax, the notices dated 25.09.1991, 27.09.1991 and the order dated 04.01.2001 were challenged in OWP No. 77/2002 and prayer was made for refund of the amount deposited by the writ petitioner along with 18% interest per annum by contending that the writ petitioner has not used the road system of the State, hence it was not liable to pay the toll tax under the provisions of Levy of Toll Tax Act, 1995 (1938 A.D.). 6. 6. The writ petition was opposed by the appellants/State contending that even if the road system of the State has not been used while exporting the rice out of the State, yet the roads system i.e. railway track though maintained by the Railways Department of the Central Government, the soil was used by the writ petitioner which belonged to J&K State hence the State of J&K is empowered to levy toll tax on the rice exported through railways. 7. The Writ Court negatived the said contention of the State by relying on the judgment of Hon'ble the Supreme Court reported in (2002) 2 SCC 227 (Hans Raj & Ors. v. State of J&K & Ors.), holding that SRO 348, dated 20.08.1982, whereby additional toll tax was directed to be levied on dry fruit etc., exported out of the State, to be bad in law and beyond the powers vested in the State Government under Section 3 of the Act. Applying the principles mentioned in the said judgment it was held that toll tax could not be levied on the rice exported by the writ petitioner. It was also noticed by the Writ Court that the scheme of the Statute only provided for levy of toll tax upon user of public roads and bridges in the State and Railway track by no stretch of imagination can be treated to be a public road within the meaning of the Act and consequently quashed the notices as well as the decision dated 04.01.2001 and ordered refund of the deposited amount to the writ petitioner within a period of two months and denied the prayer seeking 18% interest per annum. 8. In the appeal the contention of the State is that the Writ Court was not justified in allowing the writ petition on the assumption that toll tax levied is being charged for maintenance of the road system in the State and as the writ petitioner used the soil of the State for the purposes of export of rice, the demand was justified thus the appeal deserves to be allowed by setting aside the order of the Writ Court. 9. 9. When the learned AAG appearing for the appellants was asked a specific question as to whether the rice imported to FCI godown was taken through the road to reach the FCI godown, the learned counsel for the appellant fairly submitted that, this was not the case put before the Writ Court and the argument advanced by the State was that, since the railway line is going through the soil of the State, levy of toll tax is permissible. 10. The learned senior counsel appearing for the respondent on the other hand, relied on the judgment of the Full Bench of this Court reported in AIR 1969 J&K 113 : 2010 (8) JKJ 646 [HC] : JKJ Soft JKJ/19936 (Girdharilal Anand Saraf v. State of J&K), wherein it is held that the State is the owner of the road called the National Highway and persons travelling on the roads are bound to pay tax as levied by the State Government which will go to the coffers of the State. The Full Bench relied on a judgment of Hon'ble the Supreme Court reported in AIR 1961 SC 1480 and held that toll is charged for use of road in the State as the road will get damaged due to stress and strain caused to the road due to movement of vehicles, therefore, depending upon the nature of the vehicle carrying load, less or higher toll can be collected. 11. The question arises for consideration is as to whether the Food Corporation of India had imported the rice in the State to its godown by using the State road and whether the writ petitioner, who purchased the rice from FCI through auction, while moving the said rice out of the State used any road laid by the State. 12. Admittedly the FCI or the writ petitioner never used the road laid in the State of Jammu and Kashmir. The rice was imported through Railway wagons and was stored in the FCI godown which is in the Railway track and the writ petitioner, after purchasing the said rice, transported the said rice out of the State only through Railway wagons. The said position is not disputed. 13. The rice was imported through Railway wagons and was stored in the FCI godown which is in the Railway track and the writ petitioner, after purchasing the said rice, transported the said rice out of the State only through Railway wagons. The said position is not disputed. 13. The preamble of Levy of Tolls Act, 1995 (1938 A.D.) states that, "where it is expedient to consolidate in one Act the provisions for levy of tolls upon public roads and bridges in (The State in respect of men, animals, vehicles, machinery, commodities and goods in any form whatsoever)". The word used, namely, for use of public roads and bridges has got significance. As per Section 3 the rate of tolls to be levied is mentioned as per first schedule. When we go through the first schedule, different rates are prescribed for levy, namely, camel, bullcart, vehicle driven by one pony or one mule, vehicle driven by two ponies or two mules, motor cycle, motor cycle with side car, motor car carrying not more than three passengers, trailer attached to motor vehicle, motor or stem tractor, lorry with laden weight of 33 maunds or 51 maunds, 70 maunds, station wagon etc. 14. The contention of the learned AAG that even the goods brought in or taken out through Railways can also be levied tolls tax, has no substance in the light of specific toll rates fixed for each item where the Railway wagon is not included. The idea behind collection of Toll is as compensation for use of roads and bridges and to maintain the same. Neither the writ petitioner not the Food Corporation of India used the roads or bridges while bringing the rice to FCI godown or taking the rice to Punjab after getting the rice on auction. The Levy of Tolls Tax (Amendment) Act, 2002 empowers the State to levy the tolls in respect of men and animals apart from goods in any form whatsoever. The said amendment was given effect to from 17.07.2002 based on the judgment in Hans Raj's case (supra). Thus prior to the said amendment the tolls tax cannot be levied for the transportation of goods and it could be levied only for using vehicles. The tolls tax levied against the writ petitioner is against the goods, namely, rice. The said amendment was given effect to from 17.07.2002 based on the judgment in Hans Raj's case (supra). Thus prior to the said amendment the tolls tax cannot be levied for the transportation of goods and it could be levied only for using vehicles. The tolls tax levied against the writ petitioner is against the goods, namely, rice. Thus by no stretch of imagination the Levy of Tolls Act, 1995 (1938-A.D.) authorizes the State to levy toll tax for the goods transported through Railways alone. Admittedly the Levy of Tolls Tax Act is a fiscal statute/taxing statute. It is well accepted principle of law that taxing statute have to be construed strictly in favour of the litigant. The said proposition is made clear in the judgment of Hon'ble the Supreme Court reported in AIR 1976 SC 1503 (Diwan Bros v. Central Bank of India), and it is held thus:- "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." Again in the decision reported in (1998) 1 SCC 384 (Commissioner of Wealth Tax v. Ellis Bridge Gymkhana), the same principle is reiterated and it is held thus:- "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." In the decision reported in (2015) 1 SCC 1 , (Commissioner of Income Tax v. Vatika Township Private Ltd.), Hon'ble the Supreme Court in paragraph 41.2 to 41.5 has held thus:- "41.2.........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 concerned provision of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the interpretation which favours the subjects, as against there the revenue, has to be preferred. Such a law has to be unambiguous and should prescribe the liability to pay taxes in clear terms. If the concerned provision of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the interpretation which favours the subjects, as against there the revenue, has to be preferred. This is a well established principle of statutory interpretation, to help finding out as to whether particular category of assessee are to pay a particular tax or not. No doubt, with the application of this principle, 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 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. This principle also acts as a balancing factor between the two jurisprudential theories of justice - Libertarian theory on the one hand and Kantian theory along with Egalitarian theory propounded by John Rawls on the other hand. 41.3. Tax laws are clearly in derogation of personal rights and property interests and are, therefore, subject to strict construction, and any ambiguity must be resolved against imposition of the tax. In Billings v. U.S. [232 U.S. 261, at p. 265, 34 S.Ct. 421 (1914)], the Supreme Court clearly acknowledged this basic and long-standing rule of statutory construction: "Tax Statutes... should be strictly construed, and, if any ambiguity be found to exist, it must be resolved in favor of the citizen. Eidman v. Martinez, 184 U.S. 578, 583; United States v. Wigglesworth, 2 Story, 369, 374; Mutual Benefit Life Ins. Co. v. Herold, 198 F. 199, 201, affd 201 F. 918; Parkview Bldg. Assn. v. Herold, 203 F. 876, 880; Mutual Trust Co. v. Miller, 177 N.Y. p. 57." 41.4. Again, in United States v. Merriam [263 U.S. 179, 44 S.Ct. 69 (1923)], the Supreme Court clearly stated at pp. 187-88: "On behalf of the Government it is urged that taxation is a practical matter and concerns itself with the substance of the thing upon which the tax is imposed rather than with legal forms or expressions. Again, in United States v. Merriam [263 U.S. 179, 44 S.Ct. 69 (1923)], the Supreme Court clearly stated at pp. 187-88: "On behalf of the Government it is urged that taxation is a practical matter and concerns itself with the substance of the thing upon which the tax is imposed rather than with legal forms or expressions. But in statutes levying taxes the literal meaning of the words employed is most important, for such statutes are not to be extended by implication beyond the clear import of the language used. If the words are doubtful, the doubt must be resolved against the Government and in favour of the taxpayer. Gould v. Gould, 245 U.S. 151, 153." 41.5. As Lord Cairns said many years ago in Partington v. Attorney-General [(1869) LR 4 HL 100]: "As I understand the principle of all fiscal legislation it is this: If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be." 15. Such being the position of law, the contention of the learned counsel appearing for the appellant, that soil of the State is used to lay the Railway line, cannot be reason to levy toll tax, and the learned Single Judge has rightly accepted the contention of the writ petitioner and ordered refund of the amount deposited. 16. The decision cited by the learned counsel for the appellants, namely, (2002) 2 SCC 227 was in respect of usage of road by dry fruit vendors who collected the same from the growers and transported the same to factories. In this case there was no such transportation of the rice through any road in the State either by the importer, namely, Food Corporation of India or by the exporter, namely, the writ petitioner. Hence the said judgment has no application to the facts of this case which was rightly distinguished by the Writ Court. 17. In this case there was no such transportation of the rice through any road in the State either by the importer, namely, Food Corporation of India or by the exporter, namely, the writ petitioner. Hence the said judgment has no application to the facts of this case which was rightly distinguished by the Writ Court. 17. In fine, the appeal is dismissed with a direction to refund the amount deposited by the writ petitioner within a period of four weeks from the date of receipt of copy of this order. No costs.