Chennai port trust not exempt from Urban Land Tax says Madras HC
IN THE HIGH COURT OF JUDICATURE AT MADRAS
The Relevant Text of the Order as follows :
10. We considered the submissions of the learned counsel for the respective parties and examined the materials on record.
11. The principal question that arises for consideration is whether the Chennai Port Trust is entitled to an exemption from the payment of urban land tax as per Section 29(a) of the Urban Land Tax Act. Therefore, the first port of call is to examine the text of Section 29(a). Section 29(a) is as under:
“29. Exemptions – Nothing in this Act shall apply to:
(a) any urban land owned by the State or the Central Government” (emphasis added).
From the above exemption provision, it is clear that the exemption would apply provided the land is owned by the State or Central Government. In the present case, the admitted position is that the Lands were previously in the name of the Madras Dock Labour Board. The Madras Dock Labour Board was constituted under the Dock Workers Act 1948. Section 5(a) of the said Act is as under:
“5A. Dock Labour Boards.- (1) The Government may, by notification in the Official Gazette, establish a Dock Labour Board for a port or group of ports to be known by such name as may be specified in the notification.
(2) Every such Board shall be a body corporate with the name aforesaid, having perpetual succession and a common seal with power to acquire, hold and dispose of property and to contract and may, by that name, sue and be sued. (emphasis added).
(3) Every such Board shall consist of a Chairman and such number of other members as may be appointed by the Government:
Provided that every such Board shall include an equal number of members representing-
(i) the Government
(ii) the dock workers, and
(iii) the employers of dockworkers, and shipping companies.
(4) The Chairman of a Board shall be one of the members appointed to represent the Government, and nominated in this behalf by the Government.”
On perusal of Section 5-A, it is clear that the Dock Labour Board was given the status of a body corporate with perpetual succession, a common seal, and, significantly, the power to acquire, hold and dispose of property and contract, sue and be sued in its name. Thus, the Madras Dock Labour Board was a distinct and independent legal entity which was capable of owning and disposing of property and contracting or prosecuting cases in its own name.
12. The documents on record disclose that the revenue records pertaining to the Lands indicate that the Madras Dock Labour Board was the assessee. Indeed, by communication dated 28.02.1994, the Madras Dock Labour Board disputed ownership of lands in Survey Nos. 4035/2 and 4035/4 but admitted ownership of the Lands (Survey Nos. 4035/3, 4035/1, 4036/1 and 3870/1) and further stated as under:
” The urban land tax for the above Survey Numbers are being remitted to the Special Tahsildar, Urban and Development, Tondiarpet periodically”.
The return in respect of the Lands was submitted, thereafter, on 03.03.1994. Therefore, the undisputed position is that the Lands were assessed to property tax in the name of the Madras Dock Labour Board and that such property tax was paid by the Madras Dock Labour Board by admitting ownership and, significantly, without claiming that the Lands were owned by the Central Government.
13. Upon enactment of the Dock Workers Act 1997, it was decided to merge the dock labour boards with the respective port trust. Section 4(1)(a) stipulated as under:
“4. Transfer of assets and liabilities of the Dock Labour Board, etc. to the Board– (1) On the appointed day in relation to a major port-
(a) all property, assets and funds vested in the Dock Labour Board immediately before such day shall vest in the Board.”
The definition of Board was incorporated by reference from Section 2(b) of the Major Port Trusts Act, i.e. the Board of Trustees of the port. Accordingly, by a Gazette notification dated 29.05.2001, the properties, assets and funds of the Madras Dock Labour Board vested with the Board of Trustees of the Chennai Port Trust with effect from the appointed date, namely, 28.05.2001. Consequently, the Lands that were in the name of the Madras Dock Labour Board were vested in the Board of Trustees of the Chennai Port Trust. In C.R.P. No.4550 of 1982, the Court considered the question as to whether the ownership of the properties of the Central Government were transferred to the Board of Trustees of the Madras Port Trust as per Section 29 of the Major Ports Trust Act and not whether the lands of dock labour boards, such as the Madras Dock Labour Board, were owned by the Central Government and whether they continue to be owned by the Central Government notwithstanding the subsequent vesting thereof in the Board of Trustees of the Chennai Port Trust. To put it differently, the question before the Court in C.R.P. No.4550 of 1982 was whether the lands lose their character as Central Government lands upon vesting in favour of the Board of Trustees of the Chennai Port Trust under Section 29 of the Major Ports Trust Act. This position becomes abundantly clear on examining paragraph 7 of the order, wherein the Court set out Section 29(1) of the Major Port Trusts Act and captured the issue that had to be decided as follows:
“Sub-section (1) of Section 29 states thus:-
As from the appointed day in relation to any port-
(a) all property, assets and funds and all rights to levy rates vested in the Central Government or, as the case may be, any other authority for the purposes of the part immediately before such day, shall vest in the Board.” It is in view of this clause in Section 29(1)(a) of the Major Ports Trust Act, 1963, it is contended by learned Government Advocate who is appearing for the petitioner (who is common in all the Revision Petitions) that the Board of Trustees have become the absolute owners, and the Central Government has divested all its right, title and interest in the properties and, therefore, the Port Trust comes within the mischief of the Urban Land Tax Act, 1966. It is the submission of the learned Government Advocate that the word “vest” provided in that Act is meant to convey absolute title to the Board. The said submission is disputed by the Board of Trustees.”
In effect, the said order dealt with lands that were owned by the Central Government and, thereafter, vested in the Board of Trustees of the Chennai Port Trust. The present case stands on a different footing. The Lands were held in the name of the Madras Dock Labour Board, which was a body corporate with the capacity to own and dispose of land, and, thereafter, vested in the Chennai Port Trust as per Section 4 of the Dock Workers Act 1997. In contrast to that case, there is no evidence that the Lands were owned by the Central Government either prior to or after the vesting thereof in the Board of Trustees of the Chennai Port Trust, whereas there is evidence of ownership by the Madras Dock Labour Board earlier. Therefore, in our view, the order in C.R.P. No.4550 of 1982 and the principle laid down therein does not advance the cause of the Respondent.
14. In the case at hand, it is also pertinent to bear in mind that an exemption provision in a tax statute is being construed and the Constitution Bench of the Hon’ble Supreme Court in Commissioner of Customs v. Dilip Kumar, (2018) 9 SCC 1 (Dilip Kumar), held that an exemption notification in a tax statute should be construed strictly especially as regards the resolution of ambiguity in the applicability thereof, and that such ambiguity should be resolved in favour of the tax authorities. The following paragraphs of the said judgment, including the conclusion of the Hon’ble Supreme Court in paragraph 66, clarify and crystallize the position:
“53. After thoroughly examining the various precedents some of which were cited before us and after giving our anxious consideration, we would be more than justified to conclude and also compelled to hold that every taxing statute including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State.
59. The above decision, which is also a decision of a two-Judge Bench of this Court, for the first time took a view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. The question whether a subject falls in the notification or in the exemption clause, has to be strictly construed. When once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the notification by giving full play bestowing wider and liberal construction. The ratio of Parle Exports case [CCE v. Parle Exports (P) Ltd., (1989) 1 SCC 345 : 1989 SCC (Tax) 84] deduced as follows: (Wood Papers Ltd. Case [Union of India v. Wood Papers Ltd., (1990) 4 SCC 256 : 1990 SCC (Tax) 422] , SCC p. 262, para 6)
“6. … Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally.”
60. We do not find any strong and compelling reasons to differ, taking a contra view, from this. We respectfully record our concurrence to this view which has been subsequently, elaborated by the Constitution Bench in Hari Chand case [CCE v. Hari Chand Shri Gopal, (2011) 1 SCC 236] .
66.To sum up, we answer the reference holding as under:
66.1.Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
66.2. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue.”
15. Upon examining Section 29(a) of the Urban Land Tax Act, we find that it undoubtedly applies to lands owned by the Central or State Government. The learned counsel for the Respondent did not produce any evidence to prove that the Lands were owned by the Central Government and that the Madras Dock Labour Board was only the ostensible owner. Indeed, the evidence on record indicates that the Madras Dock Labour Board was both the ostensible and real owner. The other factor to be borne in mind is that the Lands were assessed to urban land tax and that the Madras Dock Labour Board paid urban land tax as and when demanded. Moreover, the learned Government Pleader cited the Board Circular dated 30.06.1976 whereby it was expressly provided that lands owned by the Madras Port Trust would not be eligible for the exemption under Section 29(a). In light of the above conclusion that there is no evidence of ownership by the Central Government, Article 285 of the Constitution does not come to the aid of the Respondent.
16. When the facts are considered cumulatively in light of the statute and the principle laid down in Dilip Kumar, we are of the view that the Chennai Port Trust failed to establish that it is entitled to an exemption under Section 29(a) of the Urban Land Tax Act. Hence, the order of the learned single Judge is not sustainable. Accordingly, we allow this writ appeal by setting aside the impugned order. Consequently, the connected miscellaneous petition is closed. No costs.
Tags: Judgement, High Court
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