Advocate Rajnish R. Singla
In order to discuss luxury tax collection in Uttarakhand- a reality, it will be imperative to go through The Preamble of Uttarakhand taxation & land Revenue Laws Act, 1975, Interpretation of Statutes, The Constitution of India.
Now the question is what the Preamble is.
Preamble has been defined in, Advanced Law of Lexicon by P. Ramanathan Aiyar edited by Justice Y.V. Chandrachud (Former Chief Justice Supreme Court of India)
Preamble, The beginning of a statute is called the preamble; which is a key to the intent of the makers of the – Act and the mischief’s which they would remedy by the same.
A recital at the beginning of some Acts to explain the mind of makers of the Acts, and the mischief’s they intend to remedy by the same; the introductory part of a statute, ordinance or regulation that states the reasons and intent of law or regulation or is used for explanatory purpose.
Preamble of a status is a clause introductory to and explanatory of the reasons for the passing of the Act.
Preamble has been defined in the Oxford English Dictionary to mean a preliminary statement in speech or writing; an introductory paragraph, section or clause; a preface, prologue, introduction. It has further been defined there as ‘an introductory paragraph’ or part in a Statute, deed, or other document setting forth the ground and intention of it. The preamble thus be-tokens that which follows. Dhananjoy Das vs. District Magistrate, AIR 1982 SC 1315.
A Preamble is said to be the key of the statute, to open the mind of makers as to the mischief which are to be remedied and the objects which are to be accomplished by the provision of the statute.
It was pointed out by the justice M. Hidayatullah in Constitutional Law of India, Vol. 1, p. 39 (published by The Bar Council of India, Trust, 1984) that the importance of preamble to statute was expressed by Plato 2000 years back (Plato: ‘the laws’ – Penguin classics, p. 185) who said that Preamble to enacted laws were essential and added in explanation:“the ‘dictatorial prescription’…..is the law pure and simple ; and the part that comes before it, which is essentially persuasive ……has an additional function analogous to that of a preamble in a speech, it seems obvious to me that the reason why the legislator gave the entire persuasive address was to make the person to whom he promulgated his law accept his order—the law—in a more cooperative frame of mind and with a corresponding greater readiness to learn. That is why, as I see it, the element ought properly to be termed not the ‘text’ of the law, but the preamble.
The preamble of the statute like the long title is a part of the Act and is an admissible aid to construction. Although not an enacting part, the preamble is expected to express the scope, object and purpose of the Act more comprehensively than the long title. It may recite the ground and cause of making the statute, the evils sought to be remedied. Secretary, regional Transport Authority vs. D.P. Sharma, AIR 1989 SC 509.
In the words of Sir Jhon Nicholl: “It is to the preamble more specially that we are to look for the reason or spirit of every statute, rehearsing this, as it ordinarily does, the evils sought to be remedied, or the doubts purported to be removed by the statute, and so evidencing, in the best and most satisfactory manner, the object or intention of the legislature in making or passing the statute itself” Brett v. Brett (1826) 162 ER 456.
In the words of my Guru ji Arun Kumar Agrawal a senior advocate every enactment has two parts, first part the Preamble- which is the soul of the enactment and the second part the Act- which is the body of the enactment. Soul masters the body, body has to obey the soul Preamble is the seed, and Act is the plant of that seed. As you sow, so shall you reap. Preamble is the legal force reservoir of the Act. Legal force flows from the Preamble to the provisions of the Act for the achievements of the objects of the Preamble.
Now coming to the Preamble of Uttarakhand taxation And land Revenue Laws Act, 1975 Act of Uttarakhand which is as follows-
“An Act to provide for the imposition of a tax on luxuries in hotels and for amendment of certain taxation and land revenue laws.”
From the perusal of the preamble of the above Act it is evident that the Uttarakhand state enacted luxury tax Act with a clear thought, clear intention, and clear vision to levy luxury tax on hotels in their state.
Now coming to the Preamble of The Uttarakhand Tax on Entry of goods into local Areas Act, 2008 which is as Follows-
“An Act provide for levy and collection of tax on entry of goods into local Area consumption, use or sale therein and for matters connected therewith or incidental thereto.
Now coming to the Preamble of The Central Sales Tax Act, 1956 which is as follows:
“An Act to formulate principle for determining when a sale or purchase of goods takes place in the course of inter-state trade or commerce of outside a state or in the course of import into or export from India, to provide for the levy, collection and distribution of taxes on sale of goods in the course of inter-state trade or commerce and to declare certain goods to be special importance in inter-state trade or commerce and specify the restrictions and conditions to which the state laws imposing taxes on the sale or purchase of such goods of special importance shall be subject.”
Famous Latin maxim of natural justice is-absolute sententia expositore non indigent: plain language does not need an interpreter.
Now coming to the Interpretation of Statutes.
There are some settled principles of interpretation which are given below:
(i) The court must start with the presumption that the legislature did not make a mistake.
(ii) The court must adopt a construction which will carry out the obvious intention of the legislature.
(iii) If there is a defect or an omission in the words used by the legislature, the court would not go its aid to correct or make statute or read words into it which are not there, especially when the literal reading produce on intelligible result. Dadi Jagannadham v/s Jammulu Ramulu (2001) 7 SCC 71.
A well-settled rule of interpretation in construing a taxing statute is that one must pay due regard to the strict letter of the law and not merely to the strict of the statute or the substance of the law. It is a rule firmly established that the “words of a taxing statute must never be stretched against the tax payer. If the language of the statute is clear and explicit, effect must be given to it, for in such a case the words best declare the intention of the lawgiver. It would not be right to refuse to place on the language of the statute the plain and natural meaning that it must bear on the ground that it produces a consequence, which could not have been intended by the Legislature. It is only from the language of the statute that the intention of the legislature must be gathered, for the Legislature means no more and no less than what it says. It is not permissible to the Court to speculate as to what the Legislature must have intended and then to twist or bend the language of the statute to make it accord with the presumed intention of the Legislature. Pole Star Electronics (Private) Limited v. Additional Commissioner of Sales Tax, 1979 UPTC 129 : (1987) 41 STC 409 (SC).
The elementary principle of interpreting any word while considering a statute is to gather the mens or sententia legis of the Legislature. Where the words are clear and there is no obscurity and the intention of the Legislature is clearly conveyed, there is no scope for the court to take upon itself the task of amending or altering the statutory provisions. Wherever the language is clear, the intention of the Legislature is to be gathered from the language used. While doing so what has been said in the statute and what has not been said has to be noted. A construction which requires for its support, addition or substitution of words which results in rejection of words has to be avoided.” Grasim Industries vs. Collector of Customs (2002) 128 STC 349 (SC).
Words are the skin of the language. The language opens up the bay of the maker’s mind. The legislature gives its own meaning and interpretation of the law. It does so by employing appropriate phraseology to attain the object of legislative policy which it seeks to achieve. Pannalal Bansilal Pitti v State of AP AIR 1996 SC 1023.
In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statute be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed, it can not imply anything which is not expressed, it can not import provisions in the statute so as to supply any assumed deficiency. Sales Tax Commissioner v. Modi Sugar Mills, AIR 1961 SC 1047.
In taxing statutes 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 about a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. Baidyanath Ayurved Bhawan (Pvt.) Ltd., Jhansi V/S The Excise Commissioner, U.P., AIR 1971 SC 378.
Now Coming to The Constitution of India
Article 265. Taxes not to be imposed save by authority of law – No tax shell be levied or collected except by authority of law.
Article 265 requires that-
(i) there must be a law,
(ii) the law must authorize the tax, and
(iii) the tax must be levied and collected according to law.
Article 265 provides that not only levy but also the collection of a tax must be under the authority of some law. Where an executive authority has beer empower ed to collect a tax by an invalid law or rules made thereunder , the Court is entitled to interfere.Chhotabhai Jethabhai Patel V Union of India, AIR 1952 Nag.139(144)
The word ‘Levy’ occurring in Art.265 would mean the assessment or charging or imposing tax.
Somaiyas Organics) India) Ltd. V/s State of U. P., (2001) 5 SCC 519, para29. (Constitution of India, Art. 265).
Levy cover imposition and assessment of the tax, but it does not include collection. Delta Paper Mills V/s Collector, 1995 (77) ELT 544 (AP).
It is trite that what cannot be done directly cannot be done indirectly. Sangram Singh P Gaekwad V/ S Santadevi P Gaekwad (2005) 57 SCL. 476 (SC),
A Legal maxim of natural justice is- Dura lex sed led which means “the law is hard but it is the law”.
Therefore, as a sequel to the above discussion, it is clear that the state of Uttarakhand legally cannot collect the luxury tax.