Case: UNITED INDIA INSURANCE CO.LTD Vs. ANTIQUE ART EXPORTS PVT. LTD

inter-state sales or outside sales or sales in the course of import into, or export of goods out of the territory of India, but is only for the purpose of classifying dealers within the State and to identify the class of dealers liable to pay such surcharge. The underlying object is to classify dealers into those who are economically superior and those who are not. That is to say, the imposition of surcharge is on those who have the capacity to bear the burden of additional tax. There is sufficient territorial nexus between the persons sought to be charged and the State seeking to tax them. Sufficiency of territorial nexus involves a consideration of two elements viz.: (a) the connection must be real and not illusory, and (b) the liability sought to be imposed must be pertinent to that territorial connection: State of Bombay v.R.M.D. Chamarbaugwala [AIR 1957 SC 699 ], Tata Iron & Steel Co. Ltd. v. State of Bihar[(1958) SCR 1355] and International Tourist Corporation v. State of Haryana [(1981) 2 SCC 318] . The gross turnover of a dealer is taken into account in sub-section (1) of Section 5 of the Act for the purpose of identifying the class of dealers liable to pay a surcharge not on the gross turnover but on the tax payable by them. 11. This Court also noticed the economic superiority principle for the purpose of levy of turnover tax while holding that the interpretation of statute would not depend upon contingency. It is trite law which the Court would ordinary take recourse to golden rule of strict interpretation while interpreting taxing statutes. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation and this is what has been considered by this Court in Commissioner of Customs(Import), Mumbai Vs. Dilip Kumar and Company and Others 2018(9) SCC 1 in para 24 and 34 as under:- "24. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocents might become victims of discretionary decision-making. Insofar as taxation statutes are concerned, Article 265 of the Constitution prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. In other words, when the competent Legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the legislature.34. The passages extracted above, were quoted with approval by this Court in at least two decisions being CIT v. Kasturi and Sons Ltd. (1999) 3 SCC 346 and State of W.B. v. Kesoram Industries Ltd. (2004) 10 SCC 201 (hereinafter referred to as ?Kesoram Industries case?, for brevity). In the later decision, a Bench of five Judges, after citing the above passage from Justice G.P. Singhs treatise, summed up the following principles applicable to the interpretation of a taxing statute:?(i) In interpreting a taxing statute, equitable considerations are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; (ii) Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and(iii) If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of the legislatures failure to express itself clearly.? 12. In the instant scheme of the Act of which reference has been made in detail, the expression ‘total turnover? has been referred to for the purpose of identification/classification of dealers for prescribing various rates/slabs of tax leviable to the dealer and read with first and second proviso to Section 6-B(1), this makes the intention of the legislature clear and unambiguous that except the deductions provided under the first proviso to Section 6-B(1) nothing else can be deducted from the total turnover as defined under Section 2(u-2) for the purpose of levy of turnover tax under Section 6-B of the Act.13. The submission of learned counsel for the appellant that the ‘total turnover? in Section 6-B(1) is to be read as ‘taxable turnover? and the determination of the rate of the turnover tax is to be ascertained on the ‘taxable turnover? on the face of it is unsustainable and deserves outright rejection.14. The judgments on which learned counsel has placed reliance in Indra Das Vs. State of Assam (supra) is in context of the fundamental rights in reference to the provisions of Terrorists & Disruptive Activities (Prevention) Act, 1987, and it was observed that the endeavour of the court should be to try to sustain the validity of the statute by reading it down as possible.15. The judgment in Subramanian Swamy and others Vs. Raju through Member, Juvenile Justice Board and Another 2014(8) SCC 390 was in reference to a challenge to the validity of the Juvenile Justice(Care and Protection of Children) Act, 2000. Though the validity was repelled by this Court, the doctrine of ‘reading down? was discussed. It was held to be inapplicable in the facts of the said case.16. In Rakesh Kumar Paul Vs. State of Assam(supra), this Court has examined the interpretation of Section 167(2) of the Code of Criminal Procedure, 1973 which has a reference to the liberty of a citizen. Either of the cases referred to may not have any remote relevance to the question which has come up before us for consideration.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]12. In the instant scheme of the Act of which reference has been made in detail, the expression ‘total turnover? has been referred to for the purpose of identification/classification of dealers for prescribing various rates/slabs of tax leviable to the dealer and read with first and second proviso to Section 6-B(1), this makes the intention of the legislature clear and unambiguous that except the deductions provided under the first proviso to Section 6-B(1) nothing else can be deducted from the total turnover as defined under Section 2(u-2) for the purpose of levy of turnover tax under Section 6-B of the Act.13. The submission of learned counsel for the appellant that the ‘total turnover? in Section 6-B(1) is to be read as ‘taxable turnover? and the determination of the rate of the turnover tax is to be ascertained on the ‘taxable turnover? on the face of it is unsustainable and deserves outright rejection.14. The judgments on which learned counsel has placed reliance in Indra Das Vs. State of Assam (supra) is in context of the fundamental rights in reference to the provisions of Terrorists & Disruptive Activities (Prevention) Act, 1987, and it was observed that the endeavour of the court should be to try to sustain the validity of the statute by reading it down as possible.15. The judgment in Subramanian Swamy and others Vs. Raju through Member, Juvenile Justice Board and Another 2014(8) SCC 390 was in reference to a challenge to the validity of the Juvenile Justice(Care and Protection of Children) Act, 2000. Though the validity was repelled by this Court, the doctrine of ‘reading down? was discussed. It was held to be inapplicable in the facts of the said case.16. In Rakesh Kumar Paul Vs. State of Assam(supra), this Court has examined the interpretation of Section 167(2) of the Code of Criminal Procedure, 1973 which has a reference to the liberty of a citizen. Either of the cases referred to may not have any remote relevance to the question which has come up before us for consideration.