Cola Majors Witness Fuzzy Consumption Pattern

The golden rule followed by Courts in interpreting taxing statutes has been the rule of language implying thereby that where the enacting part of a statute is clear, it cannot be cut down or enlarged by other considerations, like the history of the legislation, its purpose, parliamentary debates, reports of the committees and commissions and similar other such considerations.

This view has again been recently affirmed by the Supreme Court in the case of Mathuram Agarwal v. State of M.P. 1999 (8) SC 505 in the context of interpretation of proviso to Section 127(A)(2)(b) of the Madhya Pradesh Municipalities Act, 1961. The interpretation placed on this proviso was that if in respect of any building or land whose letting value is less than Rs 1800 which is owned by a person who owns any other building or land in the same municipality, the annual letting value of such building or land shall be deemed to be the aggregate annual letting value of all buildings or lands owned by him in the municipality. Such a view was held by the Supreme Court itself in the case of Dattatraya Dhahankar, Advocate JT 1991 (4) SC 400. Overruling, this view, the Court has now said that the construction placed on the said provision does not flow from the plain language of the provision. The proviso requires the exempted property to be subjected to tax and for the purpose of valuing that property alone, the value of the other properties is to be taken into consideration. One cannot determine the ratable value of the small property, by aggregating and adding the value of other properties, and arrive at a figure which is more than possibly the value of the property itself. Moreover what rate of tax is to be applied to such a property is also not indicated. Hence the proviso to clause (b) of sub section (2) of Section 127-A has been held to be contrary to the charging Section and hence has been struck down.

In the context of this situation, the Court has spelled out the rules that have to be kept in view in interpreting taxing statutes. According to the Court, the intention of the Legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act, it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature. The statute should clearly and unambiguously convey the three components of the tax law i.e. the subject of the tax, the person who is liable to pay the tax and the r