Advocate Rajnish R. Singla
In order to discuss Tax Collection in Uttarakhand, it will be imperative to go through the Preamble of The Uttarakhand VAT Act, 2005, The Uttarakhand (U.P. Taxation and Land Revenue Laws Act, 1975) Adaption and Modification Order, 2002, The Uttarakhand Tax on Entry of Goods into Local Areas Act, 2008, 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 it self” 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, 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 The VAT Act of Uttarakhand which is as follows-
An act to provide for and consolidate the law relating to levy of value added tax on sale or purchase of goods in the state of Uttarakhand.
From the perusal of the preamble of the above Act it is evident that the Uttarakhand state enacted his Vat Act with a clear thought, clear intention, and clear vision to levy VAT on sale or purchase of goods in his state.
Now coming to The Preamble of The Preamble of The Uttarakhand (U.P. Taxation and Land Revenue Laws Act, 1975) Adaption and Modification Order, 2002 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 his Act with a clear thought, clear intention, and clear vision to impose tax on luxuries in hotels in his state.
Now coming to The Preamble of The Uttarakhand Tax on Entry of Goods into Local Areas Act, 2008 is as follows-
An Act to provide for levy and collection of tax on entry of goods into local areas for consumption, use or sale therein and for matters connected therewith or incidental thereto.
From the perusal of the preamble of the above Act it is evident that the Uttarakhand state enacted his Act with a clear thought, clear intention, and clear vision to levy and collect tax on entry of goods into local areas in his state.
Whereas Preambles of various other states of VAT Acts are as follows-
ARUNACHAL PRADESH:-An act to levy consumption tax on goods consumed in the state of Arunachal Pradesh through a combination of tax on entry of goods in local area of Arunachal Pradesh and value added sales tax on the business in the state.
ANDHRA PRADESH:-An act to provide for and consolidate the law relating to levy of value added tax on sale or purchase of goods in the state of Andhra Pradesh and for matters connected therewith and incidental thereto.
ASSAM:-An act to provide for the imposition and collection of tax on sales or purchases of goods in the state of Assam and for matters connected therewith and incidental there to.
BIHAR:-An act to consolidate and amend the law relating to levy of tax on sales or purchase of goods in the state of Bihar and to provide for matters connected therewith or incidental thereto.
CHHATTISGARH:- An act to levy tax on sales and purchase of goods in the state of Chhattisgarh.
DADRA AND NAGAR HAVELI:- A regulation to consolidate and amend the law relating to levy of tax on sales or purchases of goods I the Union Territory of Dadra and Nagar haveli and to provide for matters connected therewith or incidental thereto.
DELHI:- An act to consolidate and amend the law relating to levy of tax on sale of goods, tax on transfer of property involved in execution of works contracts, tax on transfer of right to use goods and tax on entry of motor vehicles by way of introducing a value added tax regime in the local areas of the national capital territory of Delhi.
GOA:- An act to provide for and consolidate the law relating to levy and collection of value added tax on sales of goods in the state of Goa.
GUJARAT:- An act to consolidate and amend the law relating to levy and collection of value added basis in respect of sales and purchases of goods in the state of Gujarat.
HARYANA:- An act to provide for levy and collection of tax on sales and purchases of goods in the state of Haryana and matters incidental thereto and connected therewith.
HIMANCHAL PRADESH:- An act to re-enact the law to provide for the levy of a value added tax on the sales or purchases of goods in the state of Himanchal Pradesh and for certain other matters connected therewith.
JAMMU & KASHMIR:- An Act to provide the levy and collection of value added tax on the sale and purchase of goods in the state of Jammu and Kashmir.
JHARKHAND:- An Act to provide for consolidate the law relating to levy of value Added tax on sales and purchases of goods and on entry of goods into local area in the state of Jharkhand.
KARNATAKA:- An Act to provide for further levy of tax on the purchases or sales of goods in the state of Karnataka.
KERALA:- An act to consolidate and amend the law relating to levy of tax on the purchases or sales of goods based on the concept of value Added tax in the state of Kerala.
MAHARASHTRA:- An act to consolidate and amend the law relating to levy and collection of tax on sale and purchase of certain goods in the state of Maharashtra.
MADHYA PRADESH:- An act to levy tax on sales and purchase of goods in the state of Madhya Pradesh.
NAGALAND:- An Act of levy tax on sale of goods in Nagaland on the basis of value added to such goods at each stage of sale of such goods and on purchase of certain goods in Nagaland in specified circumstances and to provide for matters connected therewith or incidental thereto.
ORISSA:- To provide for the imposition and collection of tax on the sales or purchase of goods in the state of Orissa.
PUDUCHERRY:- An act to provide for the levy and collection of value added tax on the sale or purchase of goods in the Union Territory of Puducherry and for matters connected therewith or incidental thereto.
PUNJAB:- An act to provide for levy and collection of value added tax and turnover tax on the sale or purchase of goods and for the matters connected therewith and incidental thereto, and for the repeal of the Punjab General Sales Tax Act, 1948.
RAJASTHAN:- An act to consolidate and amend the law relating to levy of tax on sale and purchase of goods and to introduce Value Added system of taxation in the State of Rajasthan.
SIKKIM:- An act to consolidate the law relating to levy of tax on sale and purchase of goods in the state of Sikkim and for matters connected therewith or incidental thereto.
TRIPURA:- An act to provide for levy and collection of value added tax at different point of sale in the state of Tripura.
TAMIL NADU:- An act to consolidate and amend the law relating to levy of tax on sale and purchase of goods in the state of Tamil Nadu.
UTTAR PRADESH:- A act to provide for the levy and collection of tax on sale or purchase of goods and to introduce value added system of taxation in the state of Uttar Pradesh.
WEST BENGAL:- An Act of levy tax on sale of goods West Bengal on the basis of value added to such goods at each stage of sale of such goods and on purchase of certain goods in West Bengal in specified circumstances and to provide for matters connected therewith or incidental thereto.
Preamble of The Central Sales Tax Act, 1956 is as follows:
THE CENTRAL SALES TAX ACT, 1956:- 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.
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 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).
The duty of the judicature is to discover and to act upon the true intention of the legislature—the mens or sententia legis. The essence of the law lies in its spirit, not in its letter, for the letter is significant only as being the external manifestation of the intention that underlies it. Grasim Industries Ltd. v. Collector of Customs (2002) 4 SCC 297.
In the words of Mukherjee, J’ Each word, phrase or sentence is to be constructed in the light of the general purpose of the Act itself. Poppatlal Shah V State of Madras AIR 1953 SC 274.
Intention of the Parliament must be deduced from the language used. Beliefs and assumption of those who frame the acts of Parliament cannot make the law. Rakesh Vij v Raminder Pal singh Sethi (2005) 8 SCC 504.
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/s State of AP AIR 1996 SC 1023.
It has also been said that if taxing provision is “so wanting in clarity that no meaning is reasonable clear, the courts will be unable to regard it as of any effect.’’ IRC v. Ross and Coulter, (1948) I All ER 616.
Shah, J., has formulated the principle: 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.
The Preamble of the constitution like the Preamble of any statute furnishes the key to open the mind of the makers of the Constitution more so because the Constituent Assembly took great pains in formulating it so that it may reflect the essential features and basic objectives of the Constitution, including the Preamble is part of the Constitution. The Constitution, including the Preamble, must be read as a whole and in case of doubt interpreted consistent with its basic structure to promote the great objectives stated in the Preamble. (Kesavananda Bharti v. State of Kerala, AIR 1973 SC 1461).
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 the reunder, 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).
In a taxing states 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.
Article 141– Law declared by Supreme court to be binding on all courts- The law declared by Supreme court to be binding on all courts within the territory of India.
“It is impermissible for the High Court to overrule the decision of the Apex Court on the ground that Supreme Court laid down the legal position without considering any other point. It is not only a matter of discipline for the High Courts in India, it is mandate of the Constitution as provided in article 141 that the law declared by the supreme Court shall be binding on all courts within the territory of India”, Suganthi Suresh Kumar v. Jagdeeshan, (2002) 2 SCC 420: AIR 2002 Cri Lj 1003 : 2002 SCC (Cri) 344.
“The judicial discipline to abide by Supreme Court decision cannot be forsaken under any pretext by any authority or court, be it even High Court”, State of Himachal Predesh v. Paras Ram, AIR 2008 SC 930.
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-absolute sententia expositore non indigent: plain language does not need an interpreter.
A Legal maxim of natural justice is- Dura lex sed led which means “the law is hard but it is the law”.
Conclusion:
Therefore, as a sequel to the above discussion, it is clear that the state of Uttarakhand legally cannot collect the vat and Luxury Tax.
Solution
A huge amount of vat and luxury tax has been collected by The State of Uttarakhand.
It is a general equitable principle that no person should be allowed to profit at another’s expense without making restitution for the reasonable value.
In law, unjust enrichment is where one person is unjustly or by chance enriched at the expense of another, and an obligation to make restitution arises.
In state of Maharashtra & others V/S Swanstone Multiplex cinema (P) Ltd. 2009 NTN (Vol 41) – 33 SC.
“It is observed when a person collects illegally, He has to refund it to the taxpayers cannot be found, the court would either direct the same to be paid and/ or appropriated by the State. In a given case, this Court in exercises of its jurisdiction under Article 142 of the constitution of India may also issue other directions, as has been done.”
In India Banks, Association, Bombay and Others V/S Devkala Consultancy Service and Others {(2004) 11 SCC 1} “in a similar situation where it was difficult for the court to direct retund of a huge amount to a large number of depositors from whom the bank had illegally collected, this court directed that the amount be spent for the benefit of the disabled in terms of the provisions of the Persons with Disabilities (Equal Opportunities, Protection of rights and full Participation) Act, 1995.
The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, je cannot collect the duty from his purchaser at one end and also collect the same duty from the state on the ground that it has been collected from him contrary to law. The power of the court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichments is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched.
We, therefore, direct that the state shall realize the amount to the extent the respondent had unjustly enriched itself and pay the same to a voluntary or a charitable organization, which according to it is a reputed civil society organization and had been rendering good services to any section of the disadvantaged people and in particular women and children”.
In Mafatlal Industries Ltd. And Others vs. Union of India And ors., reported in (1997) 5 SCC 536. “The Excise officer cannot tax more than what is permitted by the statute. If the levy is in excess of the statute, then its retention by the State is changing section but something else. Such illegally collected tax is not the property of the State and it not within the disposing power of the State………”
In Sahakari Khand Udyog Mandlal Ltd. Vs. CCE & Customs, reported at (2005) 3 SCC 738.Stated simply, “unjust enrichment” means retention of a benefit by a person that is unjust or inequitable. “Unjust enrichment” occurs when a person retains money or benefits which is justice, equity and good conscience, belong to someone else.
The doctrine of “unjust enrichment”, therefore, is that no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctrine of “unjust enrichment’ arises where retention of a benefit is considered contrary to justice or against equity…….”
We would request Hon’ble the chief Minister of the state to take up the responsibility in this behalf so that full, proper and effective utilization of the amount in question is ensured.
Therefore, in my opinion The Supreme Court of India may in exercise of its jurisdiction under Article 142 of the Constitution of India may direct the state government of the Uttarakhand to pay the amount collected as vat to a voluntary or a charitable organization rendering services for cleansing of holly water of the river “Ganga” as Ganga is not just a river, it is reflection of our culture. It is our collective duty to protect the Ganga and revive it’s purity and sanctity.
Dear Sir, I don’t accept the views of Mr. Advocate Rajnish R. Singla regarding the Uttarkhand Tax Collection. His opinion looks absurd to me. Merely because theres no word “collection” in the preamble doesn’t make the statute useless.