1. Dispute regarding denial of passengers tax exemption for vehicles transporting students of educational institutions under Section 10, Punjab Passengers and Goods Taxation Act, 1952. (Para 2 )
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2021 Supreme(SC) 1143
SUPREME COURT OF INDIA
DINESH MAHESHWARI, VIKRAM NATH, JJ.
THE STATE OF HARYANA & ANR. - Petitioner(s)
VERSUS
DARONACHARYA COLLEGE OF ENGINEERING MANAGED BY SMT ANGURI DEVI CHARITABLE TRUST (REGD) - Respondent(s)
Petition(s) for Special Leave to Appeal (C) No(s). 31730/2016
Decided On : 27-09-2021
Important Points
The judgment emphasizes the need for a strict construction of exemption provisions and the interpretation of the plain language of the notification, highlighting that exemptions should be construed in favor of the assessee and that the benefit of doubt or ambiguity must go to the State.
Subject
Taxation Law - Exemption Provisions
Act Referred
Headnote
TAXATION - Exemption from Passengers Tax - Punjab Passengers and Goods Taxation Act, 1952, Section 10 - Memo dated 22.09.1970 - Hansraj Gordhandas v. H.H. Dave - Novopan India Ltd., Hyderabad v. Collector of Central Excise and Customs, Hyderabad - Interpretation of exemption provisions - Strict construction of exemption provisions - Construction of exemption notification - Plain language of the notification - Purpose of the exemption - Interpretation of 'school children' - Transportation of students to and from educational institutions
Fact of the Case:
The State of Haryana and its Assistant Excise and Taxation Officer sought leave to appeal against the judgment and order quashing the Show Cause Notice proposing to deny the benefit of exemption from payment of passengers tax in terms of Memo dated 22.09.1970 issued under Section 10 of the Punjab Passengers and Goods Taxation Act, 1952.
Finding of the Court:
The High Court's construction of the exemption notification was based on its plain language and the purpose for which it was issued. The High Court rejected the argument that the exemption was only granted to the children of schools and not to other educational institutions, emphasizing that the exemption was granted in public interest to the educational institutions under Section 10 of the Act.
Issues: Interpretation of the exemption notification, whether the exemption was limited to transporting school children, and the scope of the exemption for educational institutions.
Ratio Decidendi: The court emphasized the need for a strict construction of exemption provisions and the interpretation of the plain language of the notification. It held that the expression 'school children' in the subject-caption of the Memo did not restrict the operation of the exemption to only the children of schools, and the exemption extended to the transportation of students to and from educational institutions.
Final Decision: The special leave petition was dismissed, and the court found no reason to consider interference in the view taken by the High Court.
Legal Category Hierarchy
Advocates:
Advocate Appeared:
For the Petitioner: Ms. Nidhi Gupta, AAG Haryana, Mr. Sanjay Kumar Visen, AOR, Mr. Bhanwar Jadon, Adv.
For the Respondent: Mr. Manoj Kumar Sharma, Adv., Mr. T. Mahipal, AOR
Advocate Appeared:
For the Petitioner: Ms. Nidhi Gupta, AAG Haryana, Mr. Sanjay Kumar Visen, AOR, Mr. Bhanwar Jadon, Adv.
For the Respondent: Mr. Manoj Kumar Sharma, Adv., Mr. T. Mahipal, AOR
Table of Contents
2. Whether the term school children in a notification's subject line restricts tax exemptions to schools, excluding other educational institutions, under the principle of strict construction. (Para 3 , 4 , 8 )
3. The body of the notification grants exemption to educational institutions for transporting children, where children refers to students of any level, regardless of the subject caption. (Para 5 , 9 , 10 )
4. The plain language of the body of an exemption notification prevails over its subject caption in determining the scope of the tax exemption. (Para 9 )
5. Special leave petition dismissed and the High Court's order quashing the show cause notice upheld. (Para 11 , 12 )
6. How should exemption notifications in taxing statutes be interpreted?
Exemption notifications must be construed strictly according to the plain language of the words employed. While there is no room for intendment, the construction is based on the clear meaning of the words and the purpose for which the notification was issued. (Para 3 , 4 , 5 , 9 )
7. Does a subject caption in an exemption notification limit the scope of the exemption?
No, the subject caption is not decisive of the matter. The scope of the exemption is determined by the plain language used in the body of the notification. (Para 9 )
8. Does the term children in the context of educational institution transport exemptions include college and university students?
Yes, the expression children used in the body of the notification refers to students taking instructions in educational institutions, irrespective of their class, standard, or level of education. (Para 9 , 10 )
ORDER :
Delay condoned.
2. The petitioners-State of Haryana and its Assistant Excise and Taxation Officer seek leave to appeal against the judgment and order dated 10.04.2015 in CWP No. 6087 of 2005 whereby the High Court of Punjab and Haryana at Chandigarh accepted the writ petition filed by the present respondents and quashed the Show Cause Notice proposing to deny the benefit of exemption from payment of passengers tax in terms of Memo dated 22.09.1970 issued under Section 10 of the Punjab Passengers and Goods Taxation Act, 1952 (as applicable to the State of Haryana).
3. Ms. Nidhi Gupta, learned Additional Advocate General appearing for the State of Haryana has, with all emphasis, argued that the High Court has been in error in passing the impugned order dated 10.04.2015, while looking at the purported intendment of the exemption notification. The learned counsel would contend that the approach of the High Court is not in conformity with the requirement of law as regards taxing statutes and further as regards the exemption notification or clauses. Learned counsel has referred to the following enunciation in Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise & Customs, Surat and two Ors: (1969) 2 SCR 253 (at p. 259):-
“....It is well-established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax-prayer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the notification or by necessary implication therefrom, the matter is different, but that is not the case here.”
4. Learned counsel has further relied upon the following passage in decision of this Court in the case of Novopan India Ltd., Hyderabad v. Collector of Central Excise and Customs, Hyderabad : (1994) Supp. (3) SCC 606 (at p. 614):-
“16.....The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee – assuming that the said principle is good and sound – does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals: (1992) Supp (1) SCC 21 and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave: (1969) 2 SCR 253 that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption.”
5. While the principles aforesaid are neither of any doubt nor of any dispute, in our view, the same do not advance the case of petitioners in this matter. This is for the simple reason that the construction of the exemption notification by the High Court has been only on its plain language and, of course, while taking note of the purpose for which it was issued.
6. The provision empowering the State to grant exemption, occurring in Section 10 of Punjab Passengers and Goods Taxation Act, 1952 (as applicable to the State of Haryana) reads as under:-
“10. Exemptions. The State Government may, by general or special
