Commissioner of Income tax and another
Zeenat Textile Mills Ltd.
A. M. Sayem CJ
A.B. Mahmud Husain J
Ahsanuddin Choudhury J
Commissioner of Income tax and another… Appellants (In all the Appeals).
Zeenat Textile Mills Ltd. …Respondents (In all the appeals)
Feb 26, 1974.
A. Wadud Chowdhury, Advocate, instructed by A. W. Mallik, Advocate-on-Record. — For the Appellants.
Aminul Huq, Advocate-on-Record—For the Respondent.
Rafiq-ul Huq, Advocate—Amicus Curiae.
Civil Appeal Nos. 22-D, 23-D and 24-D of 1969.
(From the Judgment and Order dated 22nd January, 1969 passed by the Dacca High Court in Petition Nos. 170, 181 and 182 of 1967).
Sayem, CJ.—these three appeals are by special leave. They are by the Commissioner of Income-tax, Dacca and the Income-tax Officer, Companies Circle II and arise out of three writ petitions filed by the respondent, a Company registered under the Companies Act, in the erstwhile High Court of East Pakistan. In the writ petitions the respondent challenged assessment year’s 1960-61, 1963-64 and 1964-65. The levy was purported to have been made under section 45A, which was inserted by the Central Legislature of Pakistan in the income-tax Act, 1922 (hereinafter referred to as the Act) by Act No. 16 of 1963.
The writ petitions which succeeded before the High Court were disposed of by a single judgment. We are also disposing of these appeals by this one judgment.
Civil Appeal No. 22-D of 1969 arises out of writ petition No. 170 of 1967; and Civil Appeal Nos. 23-D and 24-D of 1969 arise, respectively, out of Writ Petition Nos. 181 and 182 of 1967.
2. In April, 1964 the Income-tax Officer assessed the respondent for the assessment years 1960-61 and issued a notice on it demanding a sum of Rs. 2,64,926/-, including penal interest under section 18A of the Act amounting to Rs. 40,666/-. The amount was made payable by the 21st May, 1964. The entire amount was ultimately paid in installments. On the 9th October, 1965 the Income-tax Officer directed the respondent to pay an additional tax of Rs. 7795/- under section 45A for having failed to pay up the demand for the assessment year 1960-61 in time, i.e., by the 21st May, 1964. The respondent then moved the Commissioner of Income-tax (hereinafter referred to as the Commissioner) under section 33A challenging the validity of the order of the Income-tax Officer leaving the additional tax. The commissioner did not give the effect to the respondent’s contention, touching the question of validity of the order, except that he remanded the case to the income-tax Officer directing issuance of a fresh order “showing correct and proper calculation of the additional tax due from the assessee.” Thereafter, upon fresh calculation the Income-tax Officer made are vised orders on 29. 3. 67, in consequence whereof a notice was issued on the respondent demanding a sum of Rs. 6, 287, under section 45A this levy of additional tax under section 45A was challenged in Writ Petition No. 170 of 1967.
Writ Petition Nos. 181 and 182 of 1967 relate to levy of additional tax on the respondent under section 45A for its failure to pay in time the taxes provisionally assessed in December, 1964 under section 23B of the Act for the assessment years 1963-64 and 1964-65, respectively.
3. In Writ Petition No. 182 of 1967 the facts the validity of certain orders of the appellants were these: Having provisionally assessed the relating to levy of additional amounts of tax for delayed payment of taxes assessed for the respondent for the assessment year 1964-65 in December, 1964 Income-tax Officer demanded a sum of Rs. 4,27,700/-, making it payable on or before the 20th January, 1965. A penalty of Rs. 21,300/- was subsequently imposed on the respondent on 25.2.65 under section 46(1) and the same was made payable, together with the tax of Rs. 4,27,700/- on or before the 15th March, 1965. The respondent ultimately paid the entire amount, though in installments. Subsequently, however, by an order dated 15th August, 1966 the Income-tax Officer levied an additional tax of Rs. 19,864/- under section 45A for its failure to pay up the demand for the as; assessment year 1964-65 on or before the due date i.e., by the 15th March, !965. The respondent, thereupon, moved the Commissioner under section 33A and challenged the validity of the order leaving the additional tax. The Commissioner rejected the respondent’s contentions, as to validity of the order, except that he remanded the matter to the Income-tax Officer directing him “to calculate correctly the additional tax payable by the Company and to revise his demand accordingly.” Thereupon, on 29.3.67 the Income-tax Officer passed afresh order levying Rs. 19,630/- as additional tax under section 45A.
4. The facts in Writ Petition No. 181 of 1967 are similar, except that instead of moving the Commissioner in the first instance the respondent moved the High Court direct. Upon provisionally assessing the respondent in December, 1964 for the assessment year 1963-64 the Income-tax Officer demanded a sum of Rs. 1.44.258/-payable on or before the 20th day of January, 1965. Later, by an order dated 25. 2. 65 a penalty of Rs. 7,200/- was imposed on the respondent under section 46(1). The entire amount was made payable on or before the 15.3.65. The respondent ultimately paid up the entire amount, though in installments- Subsequently, as in the other two cases, on 29. 3. 67 the Income-tax Officer passed an order levying an additional tax of Rs. 12.213/- under section 45A.
5. The High Court noticed that the only two charging sections in the Act were section 3 which authorised levy of income-tax and section 55 which authorised levy of super tax, and that each of these two sections was relatable to the ‘total income” of the assessee in the ‘previous sear or years’. It further noticed that the additional tax provided for in section 45A was not covered by any of these two sections, inasmuch as it would not be relatable to the assessee’s income, nor to they year or years previous to the year in which it would be levied.
6. The High Court was also unable to accept the Department’s contention that what was intended by the legislature to provide for in section 45A was not tax simplicitor but penalty for failure to pay tax assessed under sections 3 and 55 on or before the date an assessee is called upon to pay the same, since such a penalty falls within the definition of tax under subsection (14) of section 2 of the Act which runs as follows:
“(14) Tax means the tax payable under this Act and includes any penalty, interest, fee or other charge leviable under this Act;”
7. The High Court, accordingly, came to the conclusion that the impugned orders of the Income-tax Officer as well as those of the Commissioner were without lawful authority and of no legal effect.
8. With a view to facilitating a close examination of its language and content, section 45A is set down below:—
“45A. Where any assessee fails to pay the tax clue from him he shall, without prejudice to his liability under any other provisions of the law, be liable to pay an additional amount of tax equal to six per cent per annum of the amount of tax due from him from the date on or before which it was originally made payable (hereinafter referred to as the said date) to date of its payment:
Provided that where at the request of the assessee, the tax is allowed to be paid in installments, such additional amount of tax shall be payable in respect of each installment from the said date to the date on which it is said.”
9. It will appear that the section refers to a situation where an assessee fails to pay the tax due from him on or before the date fixed for payment in the notice of demand. The section authorises a levy at the rate of six per cent per annum on the amount assessed as tax, to be calculated for the period commencing on the day following the date fixed for payment and ending on the day on which it is actually paid. The section thus seeks to authorise levy of an additional tax not on income, but on tax already computed and assessed on the total income of the assessee in the previous year or years. There can, therefore, be no doubt that the Legislature intended to create a new charging section by introducing section 45A in the Act by Act No. 16 of 1963.
10. The question accordingly is whether the Legislature, that is, the Central Legislature of Pakistan which introduced the section was competent to enact section 45A. Mr. Rafiqul Huq, learned Counsel who appeared as amicus curiae referred us to the Central List in the third schedule of the then Constitution, i.e., the Constitution of Pakistan of 1962 and pointed out that item No. 43, which dealt with duties and taxes, mentioned only tax on income. Nowhere the List provided for a tax on tax. The Central Legislature of Pakistan was not thus authorised to enact section 45A. This section was thus abinitio void.
11. To be fair to the Counsel appearing for the Department, it needs being said that he confined his submissions before us to the contention that section 45A authorised imposition of penalty for delayed payment of tax already computed and assessed under sections 3 and 55 submitted that instead of reading the section as having authorised levy of additional tax, it would be read as having been intended to authorise imposition of penalty for delayed payment of tax. He maintained that since penalty was also tax as defined in section 2(14), the words as found in the section could be read as having authorised imposition of penalty.
12. Penalty for failure to pay tax by the due date is, however, provided in section 46(1) which says: “When an assessee is in default in making a payment of income-tax, the Income-tax Officer may in his discretion direct that, in addition to the amount of the arrears, a sum not exceeding that amount shall be recovered from the assessee by way of penalty.” Besides, as notice earlier, the Income-tax Officer did take recourse to section 46(1) in two of these three ceases, and imposed penalty thereunder for the respondent’s failure to pay the taxes on or before the dates mentioned in the notices issued under section 29.
13. It is not only that by section 46(1) the legislature has made provision for imposing penalty for failure to pay up demands for tax under sections 3 and 55 on or before the due date, but the procedure for recovery thereof has been provided in section 47 reproduced below :—
“47. Any sum imposed by way of penalty under the provisions of sub-section (2) of section 25, section 28 sub-section(6) of section 44E, sub-section (5) of section 44F or sub-section (I) of section 46 and any interest payable under the provisions of subsection (4), (6), (7) or (8) of section 18A, shall be recoverable in the manner provided in this Chapter for the recovery of arrear of tax.”
14. It will appear that section 47 does not mention section 45A. Had the legislative intent been to provide for penalty by section 45A, then this section would certainly have been mentioned in section 47 for recovery of such impositions under the section.
15. Sub-section (14) of section 2 of the Act can be of no avail to the Department. “The sub section separates “Penalty” like interest, fee or other charges leviable under the Act from “tax payable under this Act” by the words “and includes”, clearly indicating thereby that penalty, interest etc. are no doubt brought within the definition but, in reality, tax means the sum assessed under the charging sections.
16. Be that as it may, the language of section 45A is very clear and docs not admit of doubt. That the Legislature did not intend the levy under it to be penalty is clear from the phrase “additional amount of tax” which is unequivocally descriptive of the levy sought to be made under the section. The proviso also fully supports this view, inasmuch as it authorises the levy notwithstanding the assessee obtaining permission to pay the tax due from him in installments.
17. The language of section 45A being unambiguous in terms, we will not be justified in attempting to give it a meaning by construction as suggested by learned Counsel for the Department. It is a well-settled rule of construction that where the language is plain and unambiguous the Court is bound to give an enactment the meaning which naturally flows from the words used therein. We respectfully agree with the view expressed on this question by Hamoodur Rahman C. J. in Md. Ismail Vs. State, reported in 21 D.L.R. (SC) 161 in the following words:—
“The purpose of construction or interpretation of a statutory provision is no doubt to ascertain the true intention of the Legislature, yet that intention has, of necessity, to be gathered from the words used by the Legislature itself. If those words are so clear and unmistakable that they cannot be given any meaning other than that which they carry in their ordinary grammatical sense, then the Courts are not concerned with the consequences of the interpretation however, drastic or inconvenient the result, for, the function of the Courts is interpretation, not legislation.”
18. Besides, it is well established cannon of interpretation of fiscal statutes that the language employed in the section has to be strictly construed and given its plain and natural meaning. In a Taxing statute one has to look merely at what is clearly said. There is no room for any intendment. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used: See Maxwell, Eleventh Edition, page 278. The language employed being “additional amount of tax” we are unable to read it as a penalty. The impugned orders with regard to levy of additional amounts of tax under section 45A, which we have earlier held to be unconstitutional, was thus rightly declared by the High Court of East Pakistan to have been made without lawful authority and being of no legal effect.
The appeals are dismissed, but with out any order as to costs.
Source: , 1975, (AD)