- Bookmark
- Share
- CaseIQ
Federation Of A.P Chambers Of Commerce & Industry And Others v. State Of A.P And Others
Factual and Procedural Background
Industrial undertakings in Andhra Pradesh challenged assessments imposed under the Andhra Pradesh Non-Agricultural Lands Assessment Act, 1963 (“the Act”). A three-judge Full Bench of the Andhra Pradesh High Court in S.V. Cement Ltd. v. Revenue Divisional Officer (1993) held that the word “used” in Section 3 of the Act covered land actually used as well as land merely meant to be used or set apart for industrial, commercial or other non-agricultural purposes. Doubting that view, a Division Bench referred the matter to a five-judge Bench, which reaffirmed the wider interpretation. The aggrieved industries and their federation filed the present civil appeals (arising out of SLP (C) No. 2877 of 1998 and cognate matters) before the Supreme Court of India. S.P. Bharucha, J., delivered the judgment granting leave and deciding the appeals.
Legal Issues Presented
- Whether the expression “land is used” in Section 3 of the Andhra Pradesh Non-Agricultural Lands Assessment Act, 1963, refers only to land actually put to industrial/commercial/other non-agricultural use, or also to land merely intended, earmarked or set apart for such use.
Arguments of the Parties
Appellants’ Arguments (Industries and Federation)
- Invoked the rule of strict construction of fiscal statutes, relying on Cape Brandy Syndicate v. IRC (1921) 1 KB 64 and judgments of the Supreme Court, to contend that ambiguity must be resolved in favour of the taxpayer.
- Asserted that Section 3’s wording “land is used” mandates a finding of present, actual use; legislative intention cannot be expanded by implication.
Respondent’s Arguments (State of Andhra Pradesh)
- Cited CED v. Kantilal Trikamlal (1976) 4 SCC 643 to support the High Court’s wider interpretation, suggesting that statutory language should accommodate land kept ready for industrial or commercial operations.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Cape Brandy Syndicate v. IRC (1921) 1 KB 64 | Fiscal statutes must be strictly construed; nothing can be read in or implied. | Quoted to emphasise that “is used” cannot be expanded to include intended or future use. |
| State of Bombay v. Automobile & Agricultural Industries Corp. (1961) 12 STC 122 (SC) | In case of doubt, interpretation favourable to the taxpayer prevails; courts cannot add words to taxing statutes. | Cited to reinforce strict construction and benefit of doubt to the assessee. |
| CED v. Kantilal Trikamlal (1976) 4 SCC 643 | Courts must be guided by the language actually used; cannot invent meanings to satisfy presumed legislative intent. | Relied upon by the State; Supreme Court held the case supports strict construction, not the State’s expansive reading. |
| S.V. Cement Ltd. v. Revenue Divisional Officer (1993) 2 An LT 32 (FB) | Andhra Pradesh High Court precedent giving “used” a broad meaning. | Expressly overruled on this point by the Supreme Court in the present judgment. |
Court's Reasoning and Analysis
The Court focused on the statutory phrase “land is used” appearing thrice in Section 3. Emphasising the present tense and plain wording, it held that:
- The legislature required a factual determination that, at the time of assessment, the land is in praesenti used for an industrial, commercial or other non-agricultural purpose.
- Taxing statutes demand strict construction; courts cannot import notions of land “meant to be used” or “set apart” when the statute is silent.
- Reliance on Cape Brandy Syndicate and related Supreme Court authority underscores that no intendment, equity, or presumption operates in taxation: “Nothing is to be read in, nothing is to be implied.”
- The High Court’s wider interpretation misapplied these principles by imputing an unexpressed legislative intention.
Holding and Implications
Appeals Allowed; High Court judgment set aside insofar as it interpreted “used” in Section 3 to include land merely intended or set apart for non-agricultural purposes.
Consequently, only land actually utilised for industrial, commercial or other non-agricultural purposes can be assessed at the higher rates prescribed for such uses under the Act. The decision narrows the taxing authority’s reach and provides immediate relief to the appellant industries. The Court did not articulate broader doctrinal implications beyond reaffirming strict construction of fiscal legislation.
S.P Bharucha, J.— Leave granted in SLP (C) No. 2877 of 1998.
2. A Bench of five Judges of the Andhra Pradesh High Court interpreted the word “used” in the Andhra Pradesh Non-Agricultural Lands Assessment Act, 1963 (“the said Act”) to mean “non-agricultural lands not only ‘actually used’ but are ‘meant to be used’ or ‘set apart for being used’ ”. This view is contested in these appeals by some industries in Andhra Pradesh and, with permission, by their Federation.
3. The said Act was enacted to provide for the levy of assessment on lands used for non-agricultural purposes. Section 2(d) defines “industrial purpose”, so far as it is relevant to these appeals, to mean “any purpose connected with an industrial undertaking where the process of manufacturing any article is carried on with the aid of power …”. “Non-agricultural land” is defined by Section 2(g) to mean “land other than the land used exclusively for the purpose of agriculture …”. Section 3 of the said Act is the charging section and, so far as it is relevant, reads thus:
“3. Levy of assessment on non-agricultural lands.—In the case of non-agricultural land in a local area with the population specified in column (1) of the Schedule, there shall be levied and collected by the Government for each fasli year commencing on the first day of July, from the owner of such land, an assessment, at the rate specified in column (2) where the land is used for any industrial purpose, at the rate specified against it in column (3) where the land is used for any commercial purpose and at the rate specified against it in column (4) where the land is used for any other non-agricultural purpose including residential purpose;”
The Schedule that is referred to in Section 3 sets out the rates of assessment per square metre of land used (a) for industrial purposes per fasli year, (b) for commercial purpose per fasli year, and (c) for any other non-agricultural purpose, including residential purpose, per fasli year.
4. The question with which we are concerned came up first before the Andhra Pradesh High Court in the case of S.V Cement Ltd. v. Revenue Divisional Officer (1993) 2 An LT 32 (FB) and a Bench of three learned Judges held:
“In the context it is susceptible of wider meaning. The word ‘used’ means not only ‘actually used’, but it also means any land meant to be used or set apart for being used. The definitions of ‘industrial purpose’ and ‘commercial purpose’ also lend support to the wide meaning given to the word ‘used’. ‘Industrial purpose’ means any purpose connected with industrial undertaking. Likewise, ‘commercial purpose’ means the purpose connected with the undertaking in trade, commerce or business. The definitions do not say that the non-agricultural land should be actually utilised for an industrial or commercial activity, but it is enough if the land is kept for use for a purpose connected with industrial or commercial undertaking.”
5. A Bench of two learned Judges of the Andhra Pradesh High Court took the view that the judgment in S.V Cement Ltd. (1993) 2 An LT 32 (FB) required reconsideration. Accordingly, the writ petitions in which the question was raised were placed before the Bench of five learned Judges. They held that the word “used” had to be interpreted to connote a wider meaning. If that interpretation was adopted, non-agricultural lands not only actually used for industrial purposes but those meant to be so used or set apart for being so used were also liable to assessment as such under the said Act. It was contended before them, based on the celebrated judgment in the case of Cape Brandy Syndicate v. IRC (1921) 1 KB 64 and a judgment of this Court, that fiscal legislation had to be strictly interpreted, and if two interpretations were possible, the one favourable to the assessee would prevail. The learned Judges found that “the contention that the word ‘used’ has to be given the limited meaning ‘actually used’ is not in tune with the intendment of the legislature…. The legislature had intended the word ‘used’ to mean to be used or set apart for being used”. Accordingly, the view taken in the case of S.V Cement Ltd. (1993) 2 An LT 32 (FB) was affirmed.
6. Section 3 of the said Act speaks of “land is used for any industrial purpose”, “land is used for any commercial purpose” and “land is used for any other non-agricultural purpose”. The emphasis is on the words “is used”. For the purposes of levy of assessment on non-agricultural lands at the rate specified in the Schedule for land used for industrial purposes, therefore, there has to be a finding as a fact that the land is in fact in praesenti in use for an industrial purpose. The same would apply to a commercial purpose or any other non-agricultural purpose.
7. It is trite law that a taxing statute has to be strictly construed and nothing can be read into it. In the classic passage from Cape Brandy Syndicate (1921) 1 KB 64 which was noticed in the judgment under appeal, it was said:
“In a taxing Act 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 look fairly at the language used.”
This view has been reiterated by this Court time and again. Thus, in State of Bombay v. Automobile and Agricultural Industries Corpn. (1961) 12 STC 122 (SC) this Court said:
“But the courts in interpreting a taxing statute will not be justified in adding words thereto so as to make out some presumed object of the legislature. … If the legislature has failed to clarify its meaning by the use of appropriate language, the benefit thereof must go to the taxpayer. It is settled law that in case of doubt, that interpretation of a taxing statute which is beneficial to the taxpayer must be adopted.”
8. On behalf of the respondent State, learned counsel drew our attention to the judgment of this Court in CED v. Kantilal Trikamlal (1976) 4 SCC 643. That judgment also is to the same effect and does not avail the respondents. It said:
“The sweep of the sections which will be presently set out must therefore be informed by the language actually used by the legislature. Of course, if the words cannot apply to any recondite species of property, courts cannot supply new logos or invent unnatural sense to words to fulfil the unexpressed and unsatiated wishes of the legislature.”
9. We are in no doubt whatever, therefore, that it is only land which is actually in use for an industrial purpose as defined in the said Act that can be assessed to non-agricultural assessment at the rate specified for land used for industrial purposes. The wider meaning given to the word “used” in the judgment under challenge is untenable. Having regard to the fact that the said Act is a taxing statute, no court is justified in imputing to the legislature an intention that it has not clearly expressed in the language it has employed.
10. In the result, the appeals are allowed and the judgment and order under challenge is set aside insofar as it deals with the interpretation of the word “used” in Section 3 of the said Act.
Alert