JUDGMENT [ENTITY], J.
1. These two writ petitions raise a common question of law and are hence being disposed of by a common judgment.
2. The petitioner is the [ENTITY], Bulandshahr, which has been constituted under the UP Krishi Utpadan Mandi Adhiniyam, 1964. The petitioner has challenged the impugned orders dt. 4th March, 2004 and 15th Oct., 2003 requiring it to furnish income-tax returns for the asst. yr. 2003-04 and also to show-cause why penalty be not imposed for not furnishing the returns in time.
3. The short contention of the learned counsel for the petitioner is that the petitioner is a local authority and is hence exempt from income-tax under [SECTION] of the [ACT].
4. Sri [ENTITY], learned counsel for the petitioner, has submitted that earlier for the asst. yr. 1978-79 an assessment order was passed against the petitioner by the ITO, A Ward, Bulandshahr, on 25th May, 1982 against which an appeal was filed before the CIT(A), Meerut, who by order dt. 6th Sept., 1982 allowed the appeal and held that the petitioner is a local authority and hence exempt from income-tax. True copy of the order dt. 6th Sept., 1982 is Annex. 3 to the writ petition.
5. Learned counsel for the petitioner has relied on the definition of 'local authority' in [SECTION] of the [ACT], and the definitions in some other Acts.
6. In our opinion, there is no merit in this petition. It may be mentioned that although earlier the expression 'local authority' was not defined in the [ACT], subsequently by [ACT] it has been defined in the Explanation to [SECTION] of the [ACT] as follows:
"Explanation: For the purposes of this clause, the expression "local authority" means
(i) Panchayat as referred to in [SECTION] of the [ACT]; or
(ii) Municipality as referred to in [SECTION] of the [ACT]; or
(iii) Municipal Committee and District Board' legally entitled to, or entrusted by the Government with the control or management of a municipal or local fund; or
(iv) Cantonment Board as defined in [SECTION] of the [ACT]);"
7. [SECTION] on which also the petitioner relied has been abolished by the [ACT].
8. A bare perusal of the Explanation of [SECTION] shows that now only four entities are local authorities for the purpose of [SECTION], namely, (i) Panchayat, (ii) Municipality; (iii) Municipal Committee and District Board; (iv) Cantonment Board [ENTITY] is not one of the entities mentioned in the Explanation to [SECTION].
9. It may be noted that the Explanation to [SECTION] uses the word 'means' and not the word 'includes'. Hence, it is not possible for this Court to extend the definition of 'local authority' as contained in the Explanation to [SECTION], vide [PRECEDENT] (para 19). It is also not possible to refer to the definitions in other Acts, as the [ACT] now specifically defines 'local authority'.
10. It is well settled that in tax matters the literal rule of interpretation applies and it is not open to the Court to extend the language of a provision in the Act by relying on equity, inference, etc. It is the first principle of interpretation that a statute should be read in its ordinary, natural and grammatical sense as observed by the Supreme Court of India:
"In construing a statutory provision the first and foremost rule of construction is the literary construction. All that the Court has to see at the very outset is what does the provision say. If the provision is unambiguous and if from the provision the legislative intent is clear, the Court need not call into aid the other rules of construction of statutes. The other rules of construction are called into aid only when the legislative intent is not clear" vide [PRECEDENT].
This principle is applied with particular emphasis while interpreting taxing statutes vide [PRECEDENT], and the fundamental principle of interpreting taxing statutes is the principle of strict construction. In this respect taxing statutes are to be interpreted differently from beneficial legislation (e.g., labour laws) vide [PRECEDENT], or the [ACT] vide [PRECEDENT], where the principle of liberal interpretation applies.
11. The principle of strict interpretation of taxing statutes was best enunciated by [ENTITY], J. in his classic statement in [PRECEDENT]:
"In a taxing statute 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."
12. Learned counsel for the petitioner has submitted that such a view, which we are taking, will cause hardship to the petitioner. It is a well-settled principle of interpretation of taxing statutes that there is no equity in tax, and hence considerations of hardship are irrelevant.
13. In [PRECEDENT], the question was whether under [SECTION] of the [ACT], the interest on the assessee's own contribution to an unrecognised provident fund could be treated as salary. The Supreme Court of India held that the language of [SECTION] was plain and unambiguous, and hence the said amount was not salary but income from other sources and hence taxable under [SECTION].
14. In [PRECEDENT], the question was whether sales outside Delhi would also be included in taxable income. The Supreme Court held that the section used the word 'resale' simpliciter, and hence it referred to all resales and could not be limited to resales within Delhi alone. Thus, the Supreme Court went by the plain language of the statute, and did not speculate on the intention of the legislature.
15. In [PRECEDENT], the Supreme Court of India considered the language of a notification under the [ACT] and held that all that was required for claiming an exemption was that the cotton fabric must be produced on power looms owned by the co-operative society. There was no further requirement in the language of the notification that the cotton fabric must be produced by the society for itself. The Supreme Court refused to go into the question of the intention behind the exemption since the language of the notification was clear.
16. In [PRECEDENT] the concessional rate under the Punjab sales-tax was payable if certain raw materials were used in the manufacture of goods for sale. The contention of the assessee was that the word used in the Act was 'for sale' and not 'for sale by him' and hence the goods sold by a third party were also covered by the provision. This contention was accepted by the Supreme Court, which followed the literal rule of interpretation.
17. In [PRECEDENT], the Supreme Court held that the word 'individual' in the charging section could not be stretched to include an AOP. The Court held that the charging section had to be construed strictly, and if a person could not be brought within the ambit of the charging section by clear words, he could not be taxed at all.
18. In [PRECEDENT] the Supreme Court of India stated the principle as follows:
'If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter."
19. It is said that tax and equity are strangers vide [PRECEDENT]. This view was best expressed by Lord [ENTITY] as follows:
"If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind. On the other hand if the Court seeking to recover the tax cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be."
20. Hence even if prior to [ACT], this Court could have treated the petitioner as a local authority relying on the [ACT], it cannot do so now after the above enactment, since now 'local authority' has been defined in the [ACT] itself.
21. Sri [ENTITY], learned counsel for the petitioner, then submitted that [SECTION] of the [ACT] has been violated because some other statutory bodies are treated as local authorities under the Explanation to [SECTION].
22. In our opinion there is no merit in this submission also.
It may be mentioned that in tax matters the Government has a greater latitude to tax one category and not to tax other categories vide [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT], etc. A taxing statute is not open to attack on the ground that it taxes some persons or objects and not others vide [PRECEDENT]. The State has a wide discretion in selecting the objects or persons that it will tax, and in order to tax something it is not bound to tax everything vide [PRECEDENT], [PRECEDENT]. It can pick and choose objects, areas, persons, rates of tax, etc. vide [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT], etc.
23. The above decisions have been followed by the decision of this Court in [PRECEDENT].
24. For the reasons given above we find no merit in these petitions and they are dismissed.