AI Structured Summary
Not yet generated for this judgment
Judgment
S.K. Homchaudhuri, J.—The Petitioner is a company registered under the Companies Act which owns and holds amongst others Tea Estates in the State of Assam and carries on business of growing and manufacturing tea in those Tea Estates. The Petitioner is, therefore, an Assessee to Agricultural Income Tax under the provisions of the Assam Agricultural Income Tax Act, 1939. Annual income earned by the Petitioner in the business of growing, manufacturing and selling tea in the Tea Estates are assessable to Agricultural Income Tax Act and Income Tax Act as follows:
60% of the income treated as Agricultural income, while 40% thereafter is assessed under the Income Tax, 1961.
In respect of the assessment year 1981-82 the Petitioner filed return under the provision of the Assam Agricultural Income Tax Act, hereinafter mentioned as the Act, on 28.12.81 showing Agricultural income at Rs. 64,39,436/- and the Petitioner paid the agricultural, income tax amounting to Rs. 48,29,577/- as per the said return on 31.12.81. But in respect of assessment year 1981-82 the Respondent No. 1 finally assessed the Petitioner''s income at Rs. 78,90,878/- and determined Rs. 59,18,159/- as tax assessable under the provision of the Act. After adjusting the amount of tax deposited with the return the Respondent No. 1 determined Rs. 10,88,502/- as the balance of the tax payable by the Petitioner. Although the Petitioner paid more than 80% of the finally assessed amount of tax with the return, the Respondent No. 1, however, imposed interest @ 12% per annum on and from 1.4.84 to 13.11.84 amounting to Rs. 80,917/-. Total Remand was thus computed as per assessment order at Rs. 11,69,499/- in respect of the assessment year 1981-82.
In respect of the assessment year 1982-83 the Petitioner filed return under the provision of the Act on December, 20, 1982 showing annual income at Rs. 83,01,456/- and as per the said return paid Agricultural Income Tax amounting to Rs. 62,26,092/- on December, 29, 1982, The Petitioner company thereafter made additional payment amounting to Rs. 5,75,000/- on account of Agricultural Income Tax in respect of the said assessment year on December, 14,1984. The Respondent No. 1, however, by the impugned assessment order passed u/s 20(3) of the said Act determined agricultural income of the Petitioner in respect of the assessment year 1987-83 at Rs. 93,14,163/- and assessed Agricultural Income Tax thereon at Rs. 69,85,622/-. After adjusting the tax already paid with the return the Respondent No. 1 determined the balance amount of tax payable by the Petitioner in respect of the assessment year 1982-83 at Rs. 1,84,530/-, Although the Petitioner deposited more than 75% of the tax finally assessed in respect of the assessment year 1982-83 along with the return, the Respondent No. 1, however, charged interest @ 12% per annum on the balance amount of tax on and from 1.4.84 to 31.12.84 amounting to Rs. 64,052/- u/s 20(C)(3) of the said Act.
In respect of the assessment year 1983-84 the Petitioner filed return under the provision of the Act on December, 21, 1983, showing agricultural income at Rs. 1,67,85,386/- and paid Agricultural Income Tax on the basis of the return amounting to Rs. 1,25,89,040/- on 30.12.83. The Petitioner also made further payment of Agricultural Income Tax of Rs. 4,45,000/- on December, 26,1984. The Respondent No. 1 by the impugned assessment order dated 28.6.86 assessed the Agricultural Income of the Petitioner in respect of assessment year 1983-84 at Rs. 1,79,09,922/- and determined Agricultural Income Tax at Rs. 1,34,32,422/-, After adjusting the Agricultural Income Tax paid by the Petitioner, the Respondent No. 1 determined the balance tax due at Rs. 1,98,402/-. Although the Petitioner deposited more than 90% of the finally assessed tax in respect of the assessment year 1983-84 along with the return, the Respondent No. 1 however, charged interest @ 12% per annum on the balance amount of tax worked out after adjusting the amount already deposited with the return, from 1st April, 1984 to June, 25,1986 in respect of the assessment year 198384-which amounted to Rs. 52,238/-.
By the Assam Agricultural Income Tax (Amendment) Act, 1984, Section 20(C) has been inserted in the Act with effect from 1st April, 1984, Section 20(C) reads as follows:
Interest payable by Assessee : 20. C (1) - Whereon making assessment of tax under any provision of this Act for any financial year it is found that the tax paid by or on behalf of the Assessee in respect of the said financial year on or before the 31st day of December of the said financial year falls short of the amount of tax as finally assessed, in respect of the said financial year he shall be liable not with standing anything contained in any law for the time being in force, to pay Simple interest on the amount of short fall at the rate of twelve per centum per annum from the 1st day of January of the said financial year upto the date of assessment;
Provided that if the amount of tax paid in respect of the relevant financial year amounts to or exceeds seventy five percentum of the amount of tax as finally Assessed, no interest under this sub-section shall be payable from the date next following the date on which the tax paid amounts to or exceeds seventy five percentum of the tax as finally assessed.
(2) Where an Assessee docs not pay the amount of tax demanded from him after an assessment made under any provision of this Act within the date specified in the notice of demand served on him in his behalf, he shall be liable to pay simple interest from 1st day of the month next following the said dale upto the date of full payment at the rate of sixteen per centum per annum on the amount of tax as finally assessed reduced by the amount of tax paid on or before the said first day until the tax is fully paid.
(3) Where the amount of tax paid on or before the 31st day of March, 1984 by or on behalf of any Assessee under this Act in respect of any financial year falling during the period from 1st April, 1967 to 31st March, 1984 falls short, of the amount of tax due from him in respect of such financial year, whether or not such tax has been assessed, the Assessee shall be liable to pay simple interest on the amount of shortfall at the rate of twelve per centum per annum until the tax is paid in full.
Explanation: In this sub-section "amount of tax due" means the amount of tax as finally assessed whether the assessment is made on or before the 31st day of March, 1984 or after that date.
....
It is apparent from the proviso to Sub-section (1) of Section 20C of the Act that if an assesses pays the amount of tax of the relevant financial year on or before 31st December of that financial year, which amounts to or exceeds to 75% percentum of the amount of taxes finally assessed, no interest under this sub-section shall be payable on the shortfall namely, on the balance amount of tax to be paid after final assessment. Sub-section (1) of Section 20C speaks about the financial years beginning from 1st of April 1984. Sub-section (3) of Section 20C of the Act provides for payment of interest on the shortfall i.e. balance amount of tax determined after final assessment in respect of a financial year falling during the period from 1st April. 1967 to 31st March, 1984. But there is no such provision for exempting an Assessee from payment of interest if such Assessee pays taxes amounting to or exceeding 75% of the finally assessed tax on or before 31st December of that financial year. As such the tax paid by the Petitioner in respect of financial year 1981-82, 1982-83 and 1983-84 although exceeded 75% of the total amount of tax finally assessed, the Respondent No. 1 imposed interest @ 12% percentum on the shortfall i.e. on the balance amount of taxes determined to be payable by the Petitioner.
I have heard Mr. J.P. Bhattacharjee, learned Counsel for the Petitioner and Mr. S.N. Bhuyan, learned Advocate General, Assam, Mr. Bhattacharjee has submitted that prior to amendment of the Assam Agricultural Income Tax Act by Act X of 1984 as per provision of the Act an Assessee was not liable to pay any interest on the shortfall if taxes paid by an assesses on or before 31st day of December of the financial year amounted or exceeded 90% of the tax finally assessed.
Mr. Bhattacharjee has submitted that there cannot be any rational or intelligible differentia to extend the benefit of exemption on payment of taxes on the shortfall if the taxes paid by an Assessee within 31st of December of the financial year amounts to or exceeds 75% of the finally assessed tax only on the basis of financial year. There cannot be any difference or reasonable classification in respect of the financial years falling within 1.4.67 to 31.3.84 and the financial year beginning with 1.4.84 i.e. the date on which Act X of 1984 came into force. As such, differential treatment on the basis of financial year is in respect of granting benefit of exemption from payment of interest is arbitrary and discriminatory and Sub-section (3) of Section 20C of the Act is exfacie arbitrary and discriminatory and liable to be struck down.
Mr. Bhattacharjee has further submitted that on conjoint reading of Sub-section (1), (2) and (3) of Section 20C of the Act, harmonious interpretation of the sub-sections would be that exemption from payment of interest on the shortfall, if payment of taxes within 31st December of financial year is made by the Assessee amounts to or exceeds 75% of the taxes finally assessed, shall also be available in respect of the financial years beginning from 1.4.67.
Mr. S.N. Bhuyan, learned Advocate General has submitted that Sub-section (3) of Section 20C of the Act is not discriminatory and is not liable to be struck down as submitted on behalf of the Petitioner. Learned Advocate General has, however, fairly submitted that by reading of the Sub-section (1), (2) and (3), of Section 20C of the Act conjointly, harmonious interpretation can be made by the Court in the exercise of jurisdiction under Article 226 of the Constitution.
I have considered the submissions made on behalf of the Petitioner as well as by the learned Advocate General, I find force in the submission of the learned Counsel for the Petitioner that giving literal and technical meaning to Sub-section (1), (2) and (3) of Section 20C of the Act would give rise of hostile and absurd result. The learned Assam Board of Revenue while dismissing the appeal of the Petitioner preferred against imposition of interest in respect of assessment year 1981-82, by the judgment dated November, 29, 1986, also observed that provision made in Sub-section (3) of Section 20C of the Act is difficult to reconcile with the provisions made under Sub-section (1) of Section 20C of the Act It is apparent that the legislature intended to exempt an Assessee from payment of interest on the shortfall if the taxes paid by the said Assessee in a financial year within 31st of December amounts to or exceeds 75% of the tax finally assessed. There cannot be any rational basis of intelligible differentia for limiting exemption from payment of interest in respect of financial years beginning from 1.4.84, the date on which the Act X of 1984 came into force, and depriving an Assessee from such benefit in respect of financial years falling prior to 1.4.84. If Sub-section (3) of the Section 20C of the Act is taken independently and literal meaning is given, it will give rise to anomaly and provision of Sub-section (3) of Section 20C of the Act would be exfacie arbitrary and discriminatory and ultravires of Article 14 of the Constitution. However, reading of Sub-section (1), (2) and (3) conjointly, it becomes apparent that slip in the drafting of Section 20C(3) without inserting the proviso exempting from payment of interest if an Assessee pays taxes within 31st December of the financial year amounts to or exceeds 75% of the tax finally assessed in respect of that financial year, escaped notice of the legislature. In para 16 and 17 of the decision in the case of Union of India and Others Vs. Filip Tiago De Gama of Vedem Vasco De Gama, on which Mr. Bhattacharjee has placed reliance the Apex Court held:
The paramount object in statutory interpretation is to discover what the legislature intended. This intention is primarily to be ascertained from the text of enactment in question that does not mean the text is to be construed merely as a piece of prose, without reference to its nature of purpose. A statute is neither a literary (sic) a divine revelation. "Words are certainly not crystals, transparent and unchanged" as Mr. Justice Holmes has wisely and properly warned. (Towne v. Eisner) Learned Hand J. was equally emphatic when he said : "Statutes should be construed, not as theorems of Euclid, but with some imagination of the purposes which lie behind them" Lenigh Valley Coal Co. v. Yensavage.
Section 30(2) provides that intended provisions of Section 23(2) shall apply, and shall be deemed to have applied, also to, and in relation to, any award made by the Collector or court between April, 30, 1982 and September 24, 1984, or to an appellate order therefrom passed by the High Court or Supreme Court. The purpose of these provisions seems to be that the awards made in that interregnum must get higher solatium inasmuch as to awards made subsequent to September 24, 1984. Perhaps it was thought that awards made after the commencement of the Amending Act 68 of 1984 would be taken care of by the amended Section 23(2). The case like present one seems to have escaped attention by innocent lack of due care in the drafting. The result would be an obvious anomaly as will be indicated presently. If there is obvious anomaly in the application of law the court could shape the law to remove the anomaly. If the strict grammatical interpretation gives rise to absurdity or inconsistency, the court could discard such interpretation and adopt an interpretation which will give effect to the purpose of the legislature. That could be done, if necessary even by modification of the language used See Mahadeolal Kanodia v. Administrator General of West Bengal. The legislators do not always deal with specific controversies which the courts decide. They incorporate general purpose behind the statutery words and it is for the courts to decide specific cases. If a given case is well within the general purpose of the legislature but not within the literal meaning of the statute, then the court must strike the balance.
Fortified by the aforesaid decision of the Apex Court, I fond it is a fit case where this Court would be justified in making harmonious construction on reading the provisions of Sub-section (1), (2) and (3) of Section 20C of the Act conjointly. On reading the Sub-sections (1), (2) and (3) of` Section 20C of the Act conjointly, harmonious interpretation would be that the benefit provided under the proviso to Sub-section (1) of Section 20C of the Act would extend in respect of financial years beginning from 1.4.1967 also. Sub-section (3) of section 20C of the Act cannot be read in isolation but should be read along with proviso to Sub-section (1) of Section 20C of the Act. As such, when admittedly the tax paid by the Petitioner in respect of the assessment year 1981-82, 1982-83 and 1983-84 Within 31st December of the respective financial year, having exceeded 75% of the tax finally assessed, no interest could be charged on the shortfall, namely, on the balance amount of the outstanding amount of tax calculated after adjusting the amount of tax paid within 31st December of financial year from the tax finally assessed.
For the reasons Stated above, the petition is allowed. The impugned assessment orders so far these purport to impose interest on the short (all i.e. balance amount of tax payable by the Petitioner in respect of assessment year 1981-82, 1982-83 and 1983-84, are set aside.
It is not disputed that the Petitioner has deposited the entire amount of assessed tax along with interest after receipt of demand notices. The amount of interest in respect of the 3 assessment years as per the impugned assessment order, paid by the Petitioner, should be refunded within 2 (two) months of receipt of this order, failing which the amount will carry interest @ 12% per annum.
I make no order to cost.