2005 Supreme(Kar) 92

Karnataka High Court
ITC LIMITED, KOLKATA - Appellant
Versus
STATE OF KARNATAKA - Respondent
Decided On : 02-08-05
W.P. : 39753 of 2004

Headnote:Taxing statute

       INTERPRETATION OF STATUES

       Taxing statute - How understood - How to be interpreted.

       [D. V. Shylendra Kumar, J]: To understand the meaning of a section in a taxing statute, the best way is to look into the very section and understand that through the language employed in the section and the language should be understood in its natural meaning and insofar as taxing statute is concerned, the charge of levy is achieved by the very language and not by any other external aids. The levy is not by either an intendment or process of reasoning or processes of inference referred to. This is the well-accepted path as developed in England and in the decisions of House of Lords which have all been followed by the supreme Court in a catena of cases.

       Cases Referred: Relied: AIR 1999 SC 3125: 1997(7) Supreme 1; (2004) 1 SCC 391: 2004(2) Supreme 660; AIR 1972 SC 591: (1972) 1 SCC 240; (2004)8 SCC 173; AIR 1999 SC 1275: (1998)8 SCC 346: 1999 (3) Supreme 25; AIR 2000 SC 109: (1999)8 SCC 667.

       Taxing Statute

       LEGISLATION - Taxing Statute - Components of - Ambiguity as to -Court cannot remove the defect - It is the exclusive domain of legislature.

       Taxing statute

       INTERPRETATION OF STATUES

       Taxing statute - Components of - Ambiguity as to - Court cannot remove the defect - It is the exclusive domain of legislature.

       Relied: AIR 1999 SC 3125: 1997(7) Supreme 1; (2004) 1 SCC 391: 2004(2) Supreme 660; AIR 1972 SC 591: (1972) 1 SCC 240; (2004)8 SCC 173; AIR 1999 SC 1275: (1998)8 SCC 346: 1999 (3) Supreme 25; AIR 2000 SC 109: (1999)8 SCC 667.

       Object of the Act

       KARNATAKA AGRICULTURAL PRODUCE MARKETING (REGULATION) ACT, 1966

       Object of Act - Stated.

       [D. V. Shylendra Kumar, J]: The Act is to protect a farmer and to promote his interest by providing for an assured safe market for his produces. It is in this context that the act provides for declaration of market, market area, market yard and the constitution of the market committees who function on a democratic basis providing for self-governance to the committees with representation being over a cross-section of different players in such activities, which is being led on the participation by the growers, the overall supervision by the Marketing Board on the aspects of finance and other regulatory provisions of the Market Committee and to achieve a sustained growth in the development of its markets.

       Cases Referred: Relied:AIR 1999 SC 3125: 1997(7) Supreme 1; (2004) 1 SCC 391: 2004(2) Supreme 660; AIR 1972 SC 591: (1972) 1 SCC 240; (2004)8 SCC 173; AIR 1999 SC 1275: (1998)8 SCC 346: 1999 (3) Supreme 25; AIR 2000 SC 109: (1999)8 SCC 667.

       Importer

       KARNATAKA AGRICULTURAL PRODUCE MARKETING (REGULATION) ACT, 1966

       Section 2 (14-A) - Importer - Who is.

       [D. V. Shylendra Kumar, J]: The petitioner is the owner of considerable quantities of a notified agricultural produce which is stored in a warehouse situated within the market area, notified to be the market area of the respondent 3- Market Committee. To this extent, there is not dispute. There is also no dispute that it is for the purpose of benefit of the petitioner that such agricultural produces are brought and stored in the warehouse and without any dispute the petitioner has control over the agricultural produces stored in the warehouse. It is at the behest of the petitioner such agricultural produce has been brought in the market area, is stored in the market area and in fact, also leaves the market area as per the instructions and directions of the petitioner. Under such facts and circumstances, the petitioner clearly comes within the definition of an importer as defined under Section 2(14-A) of the Act.

       License by importer

       KARNATAKA AGRICULTURAL PRODUCE MARKETING (REGULATION) ACT, 1966

       Section 8 - License by importer - Notified agricultural produce owned by petitioner stored in a warehouse within market area at the behest of petitioner -Petitioner is an importer - Hence, should obtain license under the provision.

       License by importer

       Section 8 - License by importer - Failure to obtain - Consequences.

       [D. V. Shylendra Kumar, J]: The obligation is on the very person who carries on such activity within the market area. So long as a person carries on that activity which is an activity within enumerated ones for which obtaining of licence is mandatory under Section 8 of the act is carried on by a person, there is no escape for that person from the obligation of obtaining a licence. In fact, non-compliance results in penal consequences. A provision which imposes or creates certain obligations on a person, the non-compliance of which attracts penal consequences is not an activity that can be said to be delegated to some other person for the purpose of avoiding the consequences. It is immaterial whether a person carries out or fulfills the obligation by himself or through an agency.

       Levy of market fee

       KARNATAKA AGRICULTURAL PRODUCE MARKETING (REGULATION) ACT, 1966

       Section 65 (As amended by Act 22/2004) - Levy of market fee - Ley on imported notified produce - Justifiability and legality.

       [D. V. Shylendra Kumar, J]: While providing or not so providing in the statement of objects and reasons in itself would not have been of much consequence in the absence of the very statute having provided for it, by no stretch of imagination or on applying any accepted norm of interpretation can it be understood or described that the amended provision has the effect of subjecting to levy of payment of market fee, a notified processed agricultural produce if it is imported from outside the state and subjected to processing activity in the State. It is not so in the language of the section.

       Object of the section

       KARNATAKA AGRICULTURAL PRODUCE MARKETING (REGULATION) ACT, 1966

       Section 66 - Object - Stated.

       [D. V. Shylendra Kumar, J]: While it cannot be doubted that the provision is intended to check and prevent persons from indulging in the activities for which one has to obtain a licence to prevent one from carrying on the same without obtaining a licence, but also for ensuring that true accounts and state of affairs are revealed so that the loss of revenue is also prevented. The provision also gives a power of entry, search and seizure in favour of the officers of the Market Committees. The provision being one for prevention of evasion and prevention of malpractice in the market area, the construction should be one which is not necessarily confined to understand the provision as one which is co-extensive with the provisions of Section 8 of the Act but which can go beyond. This is particular so because there can be persons who are committing acts of infraction of provisions of Section 8 of the Act.

       Taxing statute

       STATUTE LAW - Taxing statute - Basic components - What are - Ambiguity as to - Effect.

       [D. V. Shylendra Kumar, J]: There are three basic components of a taxing statute. Firstly, subject of the tax in the present situation, is the activity of buying notified agricultural produced within the market area. Secondly, the person liable to pay the tax, and thirdly, the rate, if there is any ambiguity in respect of any of the components in the sense the ambiguity is one which is not capable of resolution by applying any principles of accepted norms of construction, then the very taxing statute fails.