Bombay High Court
The Commr. Of Income Tax-(Tds), ... vs The Commr., Akola Municipal ... on 1 July, 2017
Bench: M.S. Sanklecha
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR
INCOME TAX APPEAL NO.91 OF 2008
The Commissioner of Income Tax-(TDS),
Aaykar Bhavan, Civil Lines,
Nagpur. ... APPELLANT
.. Versus ..
The Commissioner,
Akola Municipal Corporation,
Civil Lines, Akola. ... RESPONDENT
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Mr.A. Parchure & B. Mohta, Advocate for the Appellant.
Mr.N.S. Bhattad, Advocate for the Respondent.
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INCOME TAX APPEAL NO.92 OF 2008
The Commissioner of Income Tax-(TDS),
Aaykar Bhavan, Civil Lines,
Nagpur. ... APPELLANT
.. Versus ..
The Commissioner,
Akola Municipal Corporation,
Civil Lines, Akola. ... RESPONDENT
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Mr.A. Parchure & B. Mohta, Advocate for the Appellant.
Mr.N.S. Bhattad, Advocate for the Respondent.
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2 Itl91.08.odt
INCOME TAX APPEAL NO.97 OF 2008
The Commissioner of Income Tax-(TDS),
Aaykar Bhavan, Civil Lines,
Nagpur. ... APPELLANT
.. Versus ..
The Commissioner,
Akola Municipal Corporation,
Civil Lines, Akola. ... RESPONDENT
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Mr.A. Parchure & B. Mohta, Advocate for the Appellant.
Mr.N.S. Bhattad, Advocate for the Respondent.
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CORAM : M.S.SANKLECHA &
MANISH PITALE, JJ.
DATED : July 1, 2017.
ORAL JUDGMENT (Per M.S. SANKLECHA, J.)
These three appeals under Section 260-A of the
Income Tax Act, 1961 (the Act) challenges the common order
dated 21st May, 2008 passed by the Income Tax Appellate
Tribunal, Nagpur (Tribunal). The impugned common order
relates to the assessment years 2005-2006, 2006-2007 & 2007-
2008.
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2. All the three appeals were admitted on 20th March,
2009 on the following identical substantial questions of law :
'i) Whether the Tribunal is correct in law in holding
that there is no liability to collect tax at source under
Section 206C(1C) of the Income Tax Act, 1961 in
respect of octroi collected by the agent appointed by the
assessee?
ii) Whether on the facts and in the circumstances of the
case, the Tribunal is justified in holding that "octroi"
collectible by the assessee is different than "toll" leviable
by the assessee and thus is not within the ambit of
206C(1C) of the Income Tax Act, 1961?'
3. The respondent/assessee is the Municipal
Corporation for the town Akola. For the subject assessment
years the respondent/assessee had entered into a contract called
Agency Agreement, by virtue of which respondent/assessee
appointed agent to provide services of collecting octroi on its
behalf. This octroi was collected at the rates fixed by the
respondent/assessee, for which the necessary receipts are also
issued in the name of respondent/assessee. The entire amount
collected by the agent is remitted to the respondent/assessee
and the agent is entitled to a commission depending upon the
quantum of octroi collected during the year.
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4. The appellant/Revenue issued notices to the
respondent/assessee for the subject assessment years asking it to
show cause why it should not be held liable to pay the tax
collected at source (TCS) under Section 206C(1C) of the Act.
The basis of the notices was that the amount collected by the
agent as 'octroi' and handed over to the respondent/assessee
were subject to tax collection at source (TCS) in terms of Section
206C(1C) of the Act. This collection of tax is to be from its
agent/licensee collecting the octroi on its behalf.
5. Thereafter, the Income Tax Officer by an order dated
20th April, 2007 held that for the subject assessment years 2005-
2006, 2006-2007 and 2007-2008 the respondent/assessee was
under obligation to collect tax from its agent/licensee during
three years at the rate prescribed in Section 206C(1C) of the Act
on the amount received from its agent/licensee along with
interests thereon. Thus, the order dated 20th April, 2007
demanded an amount in the aggregate of Rs.1.09 Crores being
the tax collectible at source by the respondent/assessee along
with interest thereon of Rs.15.96 Lakhs for the subject three
assessing years.
6. Being aggrieved, the respondent/assessee carried the
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issue in appeal in respect of the all three assessment years to the
Commissioner of Income Tax (Appeals). By a common order
dated 31st October, 2007, the Commissioner of Income Tax
(Appeals) confirmed the view of the Assessing Officer and held
that the amount collected by the agent/licensee of the
respondent as octroi would be covered by Section 206C(1C) of
the Act. This on the ground that the octroi collected is
similar/identical to a toll. Thus, the appeals of the
respondent/assessee were dismissed.
7. On further appeals for the three subject assessment
years, the Tribunal by the impugned order allowed
respondent/assessee's appeal. The impugned order hold that
Section 206C (1C) of the Act obliges a person who grants an
agency/license, or in any other manner transfers his right in
respect of parking lot, toll plaza or a mine and quarry to another
person, then while receiving the amount so collected from such
other person i.e. agent/licensee (the transferee of its right), the
respondent/assessee should also collect tax at source. However,
the above obligation is only restricted to parking lots, toll plazas
and mine or quarry. This obligation does not extend to octroi.
The impugned order further draws a distinction between 'toll
plaza' and 'octroi' as popularly understood. Therefore, it
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concludes that a collection of toll to which Section 201C(1C)
applies can not be extended to a transfer of right to collect octroi
through an agency/licensee. Therefore, the impugned order
allowed the respondent/assesse's appeal.
8. Being aggrieved, the Revenue is in appeal before us.
9. Before we consider the rival submissions, it would be
useful to reproduce Section 206C(1C) of the Act which arises for
consideration in the present appeals and reads as under :
"206C(1);(1A);(1B);.......................
(1C) Every person, who grants a lease or a licence or
enters into a contract or otherwise transfers any right
or interest either in whole or in part in any parking lot
or toll plaza or mine or quarry, to another person,
other than a public sector company (hereafter in this
section referred to as "licensee or lesse") for the use of
such parking lot or toll plaza or mine or quarry for the
purpose of business shall, at the time of debiting of the
amount payable by the licensee or lessee to the account
of the licensee or lessee or by the issue of a cheque or
draft or by any other mode, whichever is earlier, collect
from the licenseee or lessee of any such licence, contract
or lease of the nature specified in column (2) of the
Table blow, a sum equal to the percentage, specified in
the corresponding entry in column (3) of the said
Table, of such amount as income tax:
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TABLE
Sl.No. Nature of contract or licence or lease etc. Percentage
(i) Parking lot Two per cent
(ii) Toll Plaza Two per cent
(iii) Mining and quarrying Two per cent
10. Mr. Parchure, learned counsel appearing for the
appellant/Revenue in support of appeal submits that there is no
difference between "octroi" and "toll". In fact, 'toll' is a generic
term, while 'octroi' is a species thereof. Consequently, the fact
that Section 206C(1C) of the Act obliges a person to collect tax
in respect of toll collected by an agent/licensee is to be equally
applied to collection of octroi by an agent. This is so, as in
substance, both "toll" and "octroi" are the same.
11. As against the above, Mr. Bhattad, the learned
counsel appearing for assessee placed reliance upon the
impugned order and submits that legally and commercially toll
is considered to be distinct and differ from an octroi. Thus, it is
submitted that there is no occasion to interfere with the
impugned order of the Tribunal.
12. We find that the impugned order of the Tribunal is a
detailed order and it has examined in depth the difference
between the meaning of the word 'toll' and 'octroi' and pointed
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out how differently the two words are legally and popularly
understood. The Seventh Schedule of the Constitution of India
empowers the State to levy octroi as found in Entry 52 of List II
thereof. While Entry 59 of List II of the Seventh Schedule of the
Constitution of India empowers the State to collect tolls. Thus,
the basic constitutional difference between that two levies.
Further, Section 127 of the Maharashtra Municipal Corporation
Act, 1949 lists out the power of the Corporation to impose tax as
listed therein and it separately enumerates 'octroi' and 'toll'.
This again is indicative of the fact that legally 'octroi' as a tax is
distinct from a 'toll' as a tax. Further, we note the impugned
order also placed reliance upon various dictionary meanings
which again show that a 'toll' is normally collected on account of
use of the roads by animals and humans. As against which,
'octroi' is normally collected on account of goods entering the
corporation limits (area) for use, consumption or sale. Keeping
in view the aforesaid distinction between the two, the impugned
order of the Tribunal holds that Section 206C(1C) of the Act
obliges every person who grants a contract/lease transferring his
right to collect toll to also collect tax at source as specified at
serial No.2 of the Table to Section 206C(1C) of the Act.
However, Section 206C(1C) of the Act cannot be extended to
oblige the Corporation to collect tax at source from its agent in
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respect of octroi collected.
13. It is a settled position of law that fiscal statues are
strictly construed. Long years ago, in the case of Cape Brandy
Syndicate vs. IRC 1921 1 Kings Bench 64, Justice Rowlatt
explained the principles of strict construction of a taxing statues,
as follows :
"In a taxing Act one has to look merely at what is
clearly said. There is no room for any intendment.
There is no equity about a tax. There is no
presumption as to tax. Nothing is to be read in,
nothing is to be implied. One can only look fairly at
the language used."
Further, Apex Court in the case of Sales Tax Commissioner .vs.
Modi Sugar Mills AIR 1961 Supreme Court 1047 has observed
that-
"In interpreting a taxing statue, equitable consideration
are entirely out of place. Nor can taxing statues be
interpreted on any presumptions or assumptions. The
court must look squarely at the words of the statue and
interpret them. It must interpret a taxing statue in the
light of what is clearly expressed; it cannot imply
anything which is not expressed; it cannot import
provisions in the statues so as to supply any assumed
deficiency."
14. Recently the Supreme Court in CIT vs. Calcutta
Knitwears [2014] 362 ITL 673 (SC) has held that while
interpreting fiscal statues, the Court must not add or substitute
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the word in the provision. Court observed as under :
"31. This Court in Tata Consultancy Services v. State
of Andhra Pradesh has ascribed plain meaning to the
terms computer and computer programme in a fiscal
statute and reiterating the proposition laid down in
Inland Revenue Commissioner case (supra), observed
that a court should not be over zealous in searching
ambiguities or obscurities in words which are plain.
32. In Prakash Nath Khanna v. C.I.T., 2004 (9) SCC
686, this Court has explained that the language
employed in a statute is the determinative factor of the
legislative intent. The legislature is presumed to have
made no mistake. The presumption is that it intended
to say what it has said. Assuming there is a defect or
an omission in the words used by the legislature, the
Court cannot correct or make up the deficiency. Where
the legislative intent is clear from the language, the
Court should give effect to it (Delhi Financial
Corporation v. Rajiv Anand, 2004 (11) SCC 625;
Government of Andhra Pradesh v. Road Rollers Owners
Welfare Association, 2004(6) SCC 210).
33. In B. Premanand and Ors. v. Mohan Koikal and
Ors., (2011)4 SCC 266 this Court has observed as
follows:
"The literal rule of interpretation really means that
there should be no interpretation. In other words, we
should read the statute as it is, without distorting or
twisting its language. We may mention here that the
literal rule of interpretation is not only followed by
Judges and lawyers, but it is also followed by the lay
man in his ordinary life. To give an illustration, if a
person says "this is a pencil", then he means that it is a
pencil; and it is not that when he says that the object is
a pencil, he means that it is a horse, donkey or an
elephant. In other words, the literal rule of
interpretation simply means that we mean what we say
and we say what we mean. If we do not follow the
literal rule of interpretation, social life will become
impossible, and we will not understand each other. If
we say that a certain object is a book, then we mean it
is a book. If we say it is a book, but we mean it is a
11 Itl91.08.odt
horse, table or an elephant, then we will not be able to
communicate with each other. Life will become
impossible. Hence, the meaning of the literal rule of
interpretation is simply that we mean what we say and
we say what we mean."
34. Thus, the language of a taxing statute should
ordinarily be read understood in the sense in which it is
harmonious with the object of the statute to effectuate
the legislative animation. A taxing statute should be
strictly construed; common sense approach, equity,
logic, ethics and morality have no role to play. Nothing
is to be read in, nothing is to be implied; one can only
look fairly at the language used and nothing more and
nothing less. (J. Srinivasa Rao v. Govt. of A.P. and Anr.
2006(13) SCALE 27, Raja Jagadambika Pratap Narain
Singh v. C.B.D.T., [1975] 100 ITR 698(SC))."
(emphasis supplied).
15. Further, the Supreme Court in CIT vs. Vatika
Township (P) Ltd. 367 ITR 466 has quoted with approval Lord
Cairns in Partington V. Attorney General,
"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."
16. Applying aforesaid test to the case at hand the
inescapable conclusion is that Section 206C(1C) of the Act only
obliges a person to collect tax from its agents/licensee who
collects a toll on its behalf. The obligation to collect tax under
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Section 206C(1C) of the Act cannot be extended to collection of
octroi. The legislature when it brought in section 206C(1C) of
the Act has not authorised the collection of tax at source in
respect of octroi. It specifically restricted its obligation to only
three categories namely parking, toll plaza, mining and
quarrying. It is not open to the Revenue to extend the ambit
and scope of section to also include contracts, license or lease for
collection of items other then toll, parking fees and for mining
and quarrying. Therefore, there is no legislative mandate to
collect tax at source or the octroi collected under Section
206C(1C) of the Act.
17. In the above view, no fault can be found with the
impugned order of the Tribunal. Accordingly, the substantial
questions of law are answered in the affirmative i.e. in favour of
the respondent-assessee and against appellant-Revenue.
18. Appeal dismissed. No order as to costs.
JUDGE JUDGE
waghmare
