Sir Walter Salis Schwabe, C.J:— The question for decision is whether an English company, with sterling capital, is liable to assessment under the heading “Tax on Companies” under the Madras City Municipal Act, IV of 1919. This depends on the proper interpretation of section 110 and of rule (7) of Schedule IV which must be read together. That section runs:

“Every incorporated company transacting business within the city for profit … shall pay by way of licence fee … a half-yearly tax on its paid-up capital on the scale shown in the taxation rules in Schedule IV but in no case exceeding rupees one thousand, if and as soon as it has transacted business in the city for the period prescribed in section 113.”

Turning to rule (7) of Schedule IV, it runs:

“Companies shall be assessed by the Commissioner on the following scale:—

Paid-up capital—lakhs of rupees. Half-yearly tax. Rs. A. More than twenty … … … 1,000 B. More than ten, less than twenty … elcetera.” 500

That has been slightly amended by the Madras Act VII of 1922, which substituted “twenty and more than twenty” and “Ten and more than ten” for the words under (A) and (B), the object being to bring in to tax companies whose capital was exactly twenty or ten lakhs which might have been excluded by the use of the words “more than” and “less than.”

The principle of construction to be applied to taxing statutes is that, if the words of the statute are capable of two otherwise equally apposite constructions, the construction to be adopted is that in favour of the taxpayer: but, to ascertain whether the two possible constructions are equally apposite, the ordinary rules of construction of statutes are to be applied. As pointed out by Rowlatt, J. in Cape Brandy Syndicate v. Inland Revenue Commissioners, the maxim that clear words are necessary in order to tax the subject does not mean, as often contended,

“that words sire to be unduly restricted against the taxing authority. It simply means that 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 only look fairly at the language used.”

That was enunciating no new principle, and I think the matter was clearly stated by Lord Russell, C.J, in Attorney-General v. Carlton Bank, when he said,

“I see no reason why special canons of construction should be applied to any Act of Parliament, and I know of no authority for saying that a taxing Act is to be construed differently from any other Act. The duty of the Court is, in my opinion, in all cases the same, whether the Act to be construed relates to taxation or to any other subject, namely to give effect to the intention of the legislature as that intention is to be gathered from the language employed, having regard to the context in connexion with which it is employed. The Court must no doubt ascertain the subject-matter to which the particular tax is by the statute intended to be applied, but when once that is ascertained, it is not open to the Court to narrow or whittle down the operation of the Act by seeming considerations of hardship or of business convenience or the like. Courts have to give effect to what the legislature has said.”

Now, in this case, we have to see what was the intention of the legislature to be deduced from the words used and the surrounding circumstances. The Act purports to impose a tax on every incorporated company (which words it is admitted includes English companies) carrying on business within the city, and in terms imposes on its paid-up capital a tax on the scale shown in the rules in the schedule. So far the language clearly indicates an intention to tax all incorporated companies. Turning to the rule in the schedule, we find that the company has to pay licence fee at a varying rate in rupees according as its capital is more or less in lakhs of rupees, or, in cases where the capital is an exact amount reckoned in lakhs, then, by the amended Act, on that amount. It is contended that limits the application of the tax to companies whose capital is in shares of a rupee denomination. I do not think that is the plain meaning of the words of the statute, or the proper interpretation to be put upon those words, even though they are capable of bearing that construction. I think it is merely stating the scale in the terms of the currency of this country and I see no difficulty at all in answering the question, how many lakhs of rupees is the capital of an English company with a capital, say, of a million pounds sterling? Given the rate of exchange, it merely provides a simple sum in arithmetic. I entirely fail to see how, in stating the scale by reference to the capital in the currency of the taxing country, it can be properly construed to exclude all companies whose nominal capital is usually expressed in the currency of some other country. I am not sure that there would be anything illegal or impossible in an Indian company registering itself under the Act with its capital in pounds or francs, and if it could do so, it would, under the construction contended for, escape the tax. If it had been intended by the legislature to tax only Indian companies with a rupee denomination of capital, the natural place for such, limitation would have been in the section itself and the words would have been “Every Incorporated Company with a capital in rupees, etc.,” or at the very least, if such exclusion was intended, one would expect to find it when it is not in the section, then in the schedule by a definite explanation or proviso that companies with capital denominated in foreign currency should not be liable to the tax. Nor is it, in my view, an irrelevant consideration that the construction contended for would involve the intention of the legislature having been to give a preference in trade to foreign, over local companies: if it has done so by clear words, that consideration might be irrelevant: but in my view, so far from being clear in that direction, the words used are capable of, and indeed properly bear, the opposite construction.

The answer to the question referred to us must be in the affirmative and the company is liable to be assessed to the tax.

Coutts Trotter, J.:— I do not think anybody could have any doubt as to what was the intention of the section and the rule which we are asked to construe. To my mind, to hold that the legislative body which passed this Act could have intended to discriminate against indigenous companies in favour of foreign companies, because that would be the inevitable result of the construction contended for, is one that is incapable of argument, Mr. Grant has, I think, very wisely put his case upon the ground that the draftsman of the Act, owing to his carelessness, had in fact defeated the intention of the framers of the Act. How great that carelessness was it is almost impossible to imagine. There was a case in Corporation of Calcutta v. Standard. Marine Insurance Company, which was under the Calcutta Municipality Act of 1888, in which exactly the same point was argued, though not decided, as has been raised before us. That was in 1895, and in 1899 a new Act was passed for the Calcutta Municipality and in that Act, ex majori cautela, words were inserted to prevent the opportunity for an argument, such as we have heard today. That the draftsman of the Madras Act should not have taken the trouble to cast a glance over the Acts of other big Municipalities before he set his hand to his task, is to my mind almost incredible; but so it appears to be and we are therefore left with a problem, which ought never to have arisen had the Act been drafted with reasonable care. I do not accede to Mr. Grant's arguments, because I think that the utmost that you find is the absence, so to speak, of a table for the commutation of foreign coinage into the coinage of the country, and it seems to me that failure is not enough to defeat the plain intention of the governing section 110, because it appears to me that the Act might well contemplate that any taxing authority in any country can always, by a not very difficult feat, turn the coinage of one country into the terms of the coinage of the country where the Act is passed and where the tax is received. It appears to me therefore that, just as I should be prepared to hold in England that where an Act expresses the capital in pounds, a French company with capital in francs could be assessed, so here in India, where the rupee is the standard basis, the taxing authorities are not prevented, in the absence of an express provision to the contrary, from per forming the feat of converting the coinage into different terms. I may add that, having regard to the rates of exchange as they have been in later years, it is almost inconceivable to imagine an Act fixing anything in the nature of a table except by reference to some date on which the rate of exchange is to he fixed. It appears to me that it is quite clear that the Act supplies that omission by giving a definite date, the date at which the tax falls due. For the purpose of rule 7 of Schedule IV, I take it that the rate of exchange at the date when the tax falls due must be taken into consideration. I may add that I entirely sympathize with the grievance of the company with regard to the method of imposing the tax, for a more unjust method of taxing than to tax a company upon the whole of its subscribed capital in every place where it carries on trade is, to my mind, difficult to imagine. It is really a very great hardship but one that can only be set right by the legislature. I may add that, though there is a mitigation of the hardship in part by the maxima fixed by rule (7) nevertheless those maxima do not apply to a very large class of cases as Mr. Grant has pointed out.

I agree with the answer proposed by my Lord.

Ramesam, J.:— I agree with the judgments just pronounced and that the answer to the question referred to us must be in the affirmative.

King and Partridge—Solicitors for the appellants.

N.R