Holding

The notification enhancing the tax rate for Maxi Cabs is illegal as it transgresses the ceiling and proviso in Section 3, and therefore cannot be sustained.

Summary

J. Srinivasa Rao challenged a 1997 notification that altered the tax rate for Maxi Cabs from a fixed Rs 1,000 per vehicle to Rs 600 per seat, alleging it exceeded the ceiling prescribed in the Andhra Pradesh Motor Vehicles Taxation Act, 1963. The High Court dismissed the writ, holding that the schedule rate was valid and that the notification was consistent with other entries that taxed on a per‑seat basis. On appeal, the Supreme Court examined the nature of the tax as compensatory and emphasized that taxing statutes must be construed in favour of the taxpayer and against the revenue, applying the golden rule of interpretation. The Court held that Section 3’s proviso expressly limits the State’s power to enhance rates beyond the maximum specified in the First Schedule, and that the notification unlawfully changed the basis of taxation. Consequently, the notification was declared illegal and the appeal was allowed, setting aside the High Court’s order.

Issues considered

Whether the 1997 notification enhancing the tax rate for Maxi Cabs is valid under Section 3 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963.
Whether a taxing statute must be interpreted in favour of the taxpayer when there is doubt.
Whether the court can supply a casus omissus in interpreting the tax provisions.
Whether the proviso to Section 3 imposes a statutory injunction limiting the State’s power to increase tax rates.

Subjects

taxationmotor vehiclescompensatory taxstatutory interpretationgolden rulenoscitur a sociisejusdem generisprovisonotificationrate enhancementcasus omissus

Judgment

A J. SRINIVASA RAO
v.
GOVT. OF A.P. AND ANR.

NOVEMBER 24, 2006

B (S.B. SINHA AND MARKANDEY KA TJU, JJ.]

Andhra Pradesh Motor Vehicles Taxation Act, 1963; Section 3 and
Notification dated 27.4. 1993 issued thereunder:

c Levy of tax on Motor vehicles/Maxi Cab-Enhancement of rate oftax-
Amendment in the provision by issuing a Notification-Challenge to-
Dismissed by High Court-On appeal, Held: Since the Act provides for
compensat01y nature of tax, it must be construed having regard to the
purport and object for its levying-Proviso to Section 3 of the Act provides
D for statutory injunction limiting power ofi the State to enhance rate of tax-
Jt could be given an appropriate meaning to prevent clear intention of the
legislature from being defeated-Jn case of doubt, construction has to be
given in favour of tax payer and against the Revenue-Courts shall make an
endeavour to give effect to the golden rule of interpretation and would not
supply casus omissus-Notification in question seeks to change the basis of
E mode of taxation, hence, illegal and cannot be sustained-Interpretation of
statutes-Golden Rule.

Doctrines:

Doctrine of'noscitur a sociis' and 'ejusdem generis'-Applicability of
F
State of Andhra Pradesh enacted the Andhra Pradesh Motor Vehicles
Taxation Act, 1963 to consolidate and amend the law relating to levy ofa tax
on motor vehicles in the State. In the Schedule appended to the Act, the rate
of tax for Maxi Cab permitted to carry more than six passengers but not more
than twelve passengers was prescribed at Rs. 1,000/-. By reason of an
G amendment as contained in the Notification dated 27.04.1997, the rate of tax
was modified. Questioning the purported Notification, a writ petition was filed
by the appellant which was dismissed by the High Court holding that having .
regard to the fact that in all other entries of the Schedule, tax was levied on
seat basis, harmonious reading of the provisions thereof would lead to the
-H 534
·-
J. SRINIVASA RAOv. GOVT. OF A.P. 535
conclusion that rate of tax prescribed in the Schedule of Act is valid in law. A
Hence the present appeal.

Appellant contended that the High Court committed a manifest error in
passing the impugned order insofar as it failed to take into consideration that
in case of a doubt as regards construction of a taxing statute it should be
construed in favour of the taxpayer and not the Revenue; and that even B
assuming that there was some casus omissus, the same could not have been
supplied by the Court.

The respondents submitted that in construing a taxing statute, addition
of any word is not impermissible; and that rule of strict construction applies C
only to the charging section and 1wt ~.J the machinery provisions of the Act.

Allowing the appeal, the Court

HELD: 1.1. Andhra Pradesh Motor Vehicles Valuation Act enacted by
the State provides for a compensatory nature of tax. A statute involving D
compensatory tax in a given case must be construed having regard to the
purport and object for which it was levied. [539-BJ

Hardev Motor Transport v. State of M.P. & Ors., JT (2006) 9 SC 454,
relied on.

1.2. Section 3 of the Act provides for a charging section stating that E
the tax shall be levied on every motor vehicle used or kept for use in the State
at the rates specified in the First Schedule. The levy of tax, therefore, is on
the motor vehicles. Its rates may vary having regard to the use or category of
the·vehicle. [539-C)
F
1.3. Maxi Cabs although come within the purview of the definition of
"contract carriage", but the rate cf tax therefor has differently been provided
for in the statute itself. Proviso appended to Section 3 of the Act provides for
a statutory injunction limiting the power of the State to enhance the rate of
tax. [539-D[
G
V. V.S. Sugars v. Govt. ofA.P. and Ors., [1999J 4 SCC 192, relied on.

Cape Brandy Syndicate v. Jnland Revenue Commissioner, (1921) l K.B.
64, referred to.

2.1. When the rate of tax is provided under a statute, construction H
536 SUPREME COURT REPORTS [2006) SUPP. 9 S.C.R.

A thereof applying the principles of noscitur a sociis and ejusdem generis would
not apply. The rate of tax was fixed at Rs. 1,000/-. That was a tax on the specified
motor vehicle. The tax was not to be calculated on passenger basis. It may be
that the provisions preceding thereto impose a tax on passenger. But, they
were in relation to motor vehicles which are used for different purposes.

B 2.2. A Maxi Cab although would come within the purview of "contract
carriage" but it cannot carry more than twelve passengers. It is a class within
the class of "contract carriage". 1540-A-B)

2.3. Once the rate of tax is fixed and the same had been realized, any
Notification enhancing the rate thereof cannot be permitted to transgress the
C statutory limits provided for in the proviso appended to Section 3 of the Act.
Section 3 of the Act has to be read in the light of a proviso. It must be given
its proper meaning. [540-B-CI

Gursahai Saigal v. Commissioner of Income - Tax, Punjab, (1963] 3 SCR
D 893, referred to.
2.4. By giving a plain meaning to the Schedule appended to the Act, the
machinery provision does not become unworkable. It did not prevent the clear
intention of the legislature from being defeated. It can be given an appropriate
meaning. In a case of doubt or dispute, it is well-settled, construction has to
E be made in favour of the taxpayer and against the Revenue. It is furthermore
well-known that casus omissus cannot be supplied. (540-D-E; G)

Sneh Enterprises v. Commissioner of Customs, New Delhi, [2006) 7 SCC
714 and Ashok Lanka v. Rishi Dixit, (2005) 5 SCC 598, relied on.

p Champa Kumari Singhi and Ors. v. The Member Board of Revenue, West
Bengal and Ors., AIR (1970) SC 1108: 11970) 1 SCC 404, distinguished.

'The Nature and Sources of the Law' (2nd ed. 192 I) by Gray, referred
to.

G 2.5. It is well settled that construing a taxing statute, the court shall
make an endeavour to give effect to the golden rule of interpretation, i.e.,
principle of literal interpretation and would not supply casus omissus.
[543-D-E]
Hardev Motor Transport v. State of MP. & Ors., JT (2006) 9 SC 454,
H relied on.
.... J. SRINIVASA RAO v. GOVT. OF A.P. [S.B. SINHA,J.] 537

2.6. Giving the plain meaning to the provisions, the rate of tax could not A
be increased in derogation to the proviso appended to Section 3 of the Act.
The notification as it seeks to change the basis of the mode of taxation is
illegal and, thus, cannot be sustained. [543-CI

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5181 of2006 .
B
From the Judgment and Order dated 20-4-2005 of the High Court of
Judicature, Andhra Pradesh at Hyderabad in Writ Petition No. 6179/2005.

S. Udaya Kumar Sagar, Bina Madhavan, Pooja N. Gupta and Nupur
Kanungo (for Laywer's Knit & Co.) for the Appellant.
c
R. Sundaravardhan, Mrs. D. Bharathi Reddy, Ms. Sneha Bhaskaran and
P. Vinay Kumar for the Respondents.

The Judgment of the Court was delivered by

S.B. SINHA, J. Leave granted. D
The State of Andhra Pradesh enacted the Andhra Pradesh Motor
Vehicles Taxation Act, 1963 (for short "the Act") to consolidate and amend
the law relating to levy of a tax on motor vehicles in the State of Andhra
Pradesh. Section 3 of the Act reads as under:
E
"3(1) The Government may, by notification from time to time, direct
that a tax shall be levied on every motor vehicle used or kept for use
in a public place in the State.

(2) The notification issued under sub-section (I) shall specify the
class of motor vehicles on which, the rates for the periods at which, F
and the date from which, the tax shall be levied:

Provided that the rates of tax shall not exceed the maximum specified
in column (2) of the First Schedule in respect of the classes of motor
vehicles fitted with pneumatic tyres specified in the corresponding
entry in column (I) thereof; and one a half times the said maximum in G
respect of such classes of motor vehicles as are fitted with non-
pneumatic tyres."

In the Schedule appended to the Act, the rate of tax for Maxi Cab
permitted to carry more than six passengers but not more than twelve
H
538 SUPREME COURT REPORTS [2006] SUPP. 9 S.C.R.
...
A passengers was prescribed at Rs. 1,000/-. By reason of an amendment as
contained in the notification dated 27.04.1997, the rate of tax was modified as
under:

"(E) Contract carriages with a seating capacity of 8 in all to 13 in all
covered by intra-State or Inter-State permit for every passenger other
B than the driver the vehicle is permitted to carry.

Rs. 600/-

per seat"

C Questioning the purported notification dated 27 .04.1993, a writ petition
was filed by the appellant herein which by reason of the impugned judgment
was dismissed by the High Court opining that having regard to the fact that
in all other entries of the Schedule tax was levied on seat basis, harmonious
reading of the provisions thereof would lead to the conclusion that rate of
tax prescribed in the Schedule of Act is valid in law.
D
Mr. K. Radha Krishnan, learned senior counsel appearing on behalf of
the appellant, would submit that the High Court committed a manifest error
in passing the impugned order insofar as it failed to take into consideration
that :

E (i) in case of a doubt as regards construction of a taxing statute it
should be construed in favour of the taxpayer and not the
Revenue.
(ii) even assuming that there was some casus omissus, the same
could not have been supplied.
F Mr. R. Sundaravardhan, learned senior counsel appearing on behalf of
the respondents, on the other hand, would submit that in construction of a
taxing statute, addition of any word is not impermissible and rule of strict
construction applies only to the charging section of the Act and ·not to the
machinery provisions.
G
Drawing our attention to the fact that Maxi Cabs come within the
purview of the "contract carriage", the learned counsel would contend that
the provisions must be construed having regard to the charging provision ..
contained in Section 3 of the Act as also the rate of tax imposed on "contract
carriage".
H
J. SRINIVASARAOv.GOVT. OF A.P. [S.B. SINHA,J.] 539

It was submitted that casus omissus can also be supplied in a case A
where there is a clear necessity or where construction of a statute leads to
an absurdity or would run contrary to the plain intention of the legislature.

The Act enacted by the State provides for a compensatory nature of
tax. A statute involving compensatory tax in a given case must be construed
having regard to the purport and object for which it was levied. [See Hardev B
Motor Transport v. State of MP. & Ors., JT (2006)9 SC 454]

Section 3 of the Act provides for a charging section stating that the tax
shall be levied on every motor vehicle used or kept for use in the State at
the rates specified in the First Schedule. The levy of tax, therefore, is on the C
motor vehicles. Its rates may vary having regard to the use or category of
the vehicle.

Maxi Cabs although come within the purview of the definition of
"contract carriage", but the rate of tax therefor has differently been provided
for in the statute itself. Proviso appended to Section 3 of the Act provides D
for a statutory injunction limiting the power of the State to enhance the rate
of tax.

In Cape Brandy Syndicate v. Inland Revenue Commissioner [(1921) I
K.B. 64], Rowlatt, J. stated:
E
"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 a tax. Nothing is to be read in, nothing is to
be implied. One can only look fairly at the language used."

Inv. v.s. Sugars V. Govt. ofA.P. and Ors. [1999] 4 sec 192, this Court F
held:

"4. The said Act is a taxing statute and a taxing statute must be
interpreted as it reads, with no additions and no subtractions, on the
ground of legislative intendment or otherwise."
G
When the rate of tax is provided under a statute, construction thereof
~ applying the principles of noscitur a sociis and ejusdem generis would not
apply. The rate of tax was fixed at Rs. 1,000/-. That was a tax on the specified
motor vehicle. The tax was not to be calculated on passenger basis. It may
be that the provisions preceding thereto impose a tax on passenger. But, they H
540 SUPREME COURT REPORTS [2006] SUPP. 9 S.C.R.

A were in relation to motor vehicles which are. used for different purposes.

A Maxi Cab although would come within the purview of "contract ..
carriage" but it cannot carry more than twelve passengers. It is a class within
the class of "contract carriage".

B Once the rate of tax is fixed and the same had been realized, any
notification enhancing the rate thereof cannot be permitted to transgress the
statutory limits provided for in the proviso appended to Section 3 of the Act.
Section 3 of the Act has to be read in the light of a proviso. It must be given
its proper meaning.

C In Gursahai Saigal v. Commissioner of Income - Tax, Punjab [1963] 3
SCR 893, the question which fell for consideration before this Court was
construction of the machinery provisions vis-a-vis the charging provisions.
Schedule appended to the Motor Vehicles Act is not machinery provision. It
is a part of the charging provision.

D By giving a plain meaning to the Schedule appended to the Act, the
machinery provision does not become unworkable. It did not prevent the clear
intention of the legislature from being defeated. It can be given an appropriate
meaning.

In a case of doubt or dispute, it is well-settled, construction has to be
E
made in favour of the taxpayer and against the Revenue. [See Sneh Enterprises
v. Commissioner of Customs, New Delhi, [2006] 7 SCC 714]

In Mis. /spat Industries Ltd. v. Commissioner of Customs, Mumbai [JT
(2006) 12 SC 379: (2006) 9 SCALE 652], this Court opined:
F "In our opinion if there are two possible interpretations of a rule, one
which subserves the object of a provision in the parent statute and
the other which does not, we have to adopt the former, because
adopting the latter will make the rule ultra vires the Act."

G It is furthermore well-known that casus omissus cannot be supplied.

In Ashok Lanka v. Rishi Dixit [2005] 5 SCC 598, this Court opined:

"66. The question as to whether it can be given effect to or not is,
thus, required to be judged on its own without reference to the
H circular issued by the Commissioner of Excise. Casus omissus, it is
J. SRINIVASARAOv.GOVT. OF A.P. [S.B. SINHA,J.] 541
well iq}.Qwa;-cann~pplf~d-oythe court. (See P. T. Rajan v. T.P.M. A
~"
Gray in 'The Nature and Sources of the Law' (2nd ed. 1921 pp. 172-73)
observed thus:
I

"Interpretation is generally spoken of as if its chief function was to B
discover what the meaning of the Legislature really was. But when a
Legislature has had a real intention, one way or another, on a point,
it is not once in a hundred times that any doubt arises as to what its
intention was . .. The fact is that the difficulties of so-called
interpretation arise when the Legislature has had no meaning at all;
when the question which is raised on the statute never occurred to C
it ... (In such cases) when the judges are professing to declare what
the Legislature meant, they are in truth, themselves legislating to fill
up casus omissi. "

Reliance placed by Mr. Sundarvardhan on Champa Kumari Singhi and
ors v. The Member Board of Revenue, West Bengal and Ors. [AIR 1970 SC D
1108: [1970] 1 SCC 404] is misplaced. In that case, this Court was considering
a voluntary disclosure scheme vis-a-vis the time limit specified therefor. The
applicant made certain defaults in payment of instalments. Having regard to
the purport of the scheme, it was stated:
E
" .... The language of clause (iv) of the proviso was unfortunate in
expressing this intent and has now been corrected in the new Act but
the intention was always obvious. Even in the second agreement
which replaced the first agreement the same condition obtained. There
was a concession shown in the matter of penalty and smaller
instalments were fixed. But the Central Board of Revenue had stipulated F
even then that the concession mentioned above would only be
available if the revised scheme of payment was strictly followed. In
other words, payment was to be made by instalments and this
concession therefore attracted the provisions of clause (iv). The
Government could always accept any instalment even if paid late G
without having to worry about the period of limitation of one year
from the date of demand, since clause (iv) of the first proviso gave
them an option to wait till the last instalment was payable~ The
scheme of the instalments took the matter out of the main part of sub-
section (7) and brought it within the proviso to clause (iv)"
H
542 SUPREME COURT REPORTS [2006) SUPP. 9 S.C.R.

A Clause (iv) of the proviso appended to Sub-section (7) of Section 46 of
the Income Tax Act, 1922 came up for consideration therein which reads as
under:

"Save in accordance with the provisions of sub-section (I) of Section
42 or to the proviso to Section 45, no proceedings for the recovery
B of any sum payable under this Act shall be commenced after the
expiration of one year from the last day of the financial year in which
any demand is made under this Act:

Provided that the period of one year herein referred to shall

c * * *
(iv) where the sum payable is allowed to be paid by intalments, from
the date on which the last of such instalments was due."

Whereas the contention of the appellants therein was that they could
D have been treated as defaulters in terms of Sub-section (I) of Section 46 only,
the Revenue contended that the matter was covered by Clause (iv) of the
proviso to Sub-section (7) of Section 46 which allows limitation of one year
to be calculated from the date on which the last instalment was due in that
case.

E Herein we are not concerned with such a provision as the Schedule can
be given effect to in the light of the charging provisions contained in Section
3 of the Act.

Reliance has also been placed upon a decision of this Court in
Commissioner ofIncome Tax, Central Calcutta v. National Taj Traders [1980]
F I SCC 370, wherein this Court opined that the rule ofliteral construction.can
be departed from when it would lead to manifestly absurd result not intended
by legislature.

There cannot be any dispute with regard to the aforementioned
proposition of law.
G
However, we may notice that therein only Tulzapurkar, J. stated the law
thus:

" .... .fn other words, under the first principle a casus omissus cannot
be supplied by the Court except in the case of clear necessity and
H when reason for it is found in the four corners of the statute itself but
J. SRINIVASARAOv.GOVT. OFA.P. [S.B. SINHA,J.) 543
at the same time a casus omissus should not be readily inferred and• A
for that purpose all the parts of a statute or section must be construed
together and every clause of a section should be construed with
reference to the context and other clauses thereof so that the
construction to be put on a particular provision makes a consistent
enactment of the whole statute. This would be more so if literal
construction of a particular clause leads to manifestly absurd or B
anomalous results which could not have been intended by the
Legislature .... "

Given this plain meaning to the provisions referred to hereinbefore, in
our opinion, the rate of tax could not be increased in derogation to the C
proviso appended to Section 3 of the Act. The notification in our opinion as
it seeks to change the basis of the mode of taxation is illegal and, thus, cannot
be sustained.

It is not a case where language is obscure which would give rise to two
different meanings; one leading to _the workability of the Act and another to D
absurdity. In such a case, a presumption as regard constitutionality of statute
may be raised. It is well settled that construing a taxing statute, the court shall
make an endeavour to give effect to the golden rule of interpretation, i.e.,
principle of literal interpretation and would not supply casus omissus.

In Hardev Motor Transport (supra), Clause (g) of Entry IV of the First E
Schedule of the M.P. Motor Vehicles Taxation Act was struck down inter alia
on the ground that the same was contrary to the charging provisions.

For the reasons aforementioned, the impugned judgment cannot be
sustained which is set aside accordingly. The appeal is allowed. No costs.
F
S.K.S. Appeal allowed.

; .