1957 (12) TMI 23 - SC - Indian Laws

Municipal terminal tax on goods in transit excluded; appeal allowed and prior decision reversed for taxpayer

The issue concerns whether a municipal terminal tax applies to goods merely passing through municipal limits in transit. The court reasoned that ... Goods neither unloaded nor reloaded at Wardha but are merely carried across through the municipal area - Liability of goods in transit for export terminal tax u/s 66(1)(o) of the C.P. & Berar Municipalities Act - Powers of the Municipality to impose, assess and collect taxes - refund the export terminal tax collected on such goods in transit - HELD THAT:- There is no evidence that the actual object of the Act in the present case was to extend the powers of the Municipalities to imposing the tax on articles which were in the course of transit. The vires of the tax has not been assailed but the difference in the language of the two items in List I and II has been pressed before us for the purpose of showing that the word ' terminal ' implies the terminus of a journey and not the end of the jurisdictional limits of a Municipality. Terminal in item No. 58 of List I of the 1935 Constitution Act has reference to the terminus of carriage of goods. There is no reason to give to this word a different meaning in item No. 8 of Scheduled Tax Rules under the Government of India Act of 1915 or in clause (o) of s. 66(1) of the Act. The two sets of taxes in Lists I and 11 have different qualities. The 'terminal tax' under item No. 58 of List I arises at the end of journey by railway wherever the end may be in relation to particular goods' and under item No. 49 of List 11 the tax or cess on entry of goods whatever the nomenclature is imposable when the goods enter a local area for consumption, use or sale therein. The two sets of taxes are so distinct that they may be imposed simultaneously, one when they reach their destination at the end of a railway journey and the other when they enter the limits of a local area for the object above mentioned. But in both cases the activity in regard to the motion of the goods ends, in the one case as the goods are carried no further by railway and in the other as their entry is for consumption, use or sale. Keeping in view the terms and language and the legislative history of the section 66(1) we are unable to enlarge the terms of the section by mere construction so as to include within its operation goods which are in transit and are being transported across the jurisdictional limits of the Municipality. It is a noticeable feature of s. 66(1) that apart from the terminal tax there are 14 other heads of taxation imposable by the Municipality and in the case of each one of these 14 heads the tax is on some activity which takes place within the jurisdictional limits of the Municipality. This supports the contention of the appellant that the terminal tax leviable under cl. (o) properly construed must have reference to some activity within the municipal area i.e., the entry for the purpose of remaining within that area or commencement of journey from that area. We are, therefore, of the opinion that the terminal tax under s. 66(1)(o) is not leviable on goods which are in transit and are only carried across the limits of the Municipality, and would therefore allow this appeal, reverse the decision of the Nagpur High Court. Appeal allowed. Issues: Whether a municipal 'terminal tax' under Section 66(1)(o) of the C. P. & Berar Municipalities Act, 1922 is leviable on goods merely in transit passing through the limits of the municipality (i.e., goods not unloaded, reloaded, or terminating or commencing their journey within the municipal limits).Analysis: The statutory phrase to be construed includes the words 'terminal tax' and the expressions 'imported into or exported from' the limits of the municipality. Historical and comparative legislative material (including Item No. 8 of Schedule II under the Government of India Act, 1915 and Item No. 58 of List I of Schedule 7 of the Government of India Act, 1935) distinguishes terminal taxes tied to the terminus of a journey from taxes on entry for consumption, use, or sale. Dictionary and judicial authorities indicate that 'transit' denotes passage through without termination, while 'import'/'export' in the commercial and historical context imply incorporation into or removal from the local market or the end/start of a journey. Taxing statutes are to be strictly construed, resolving doubt against the taxing authority. Applying these principles, the adjective 'terminal' qualifies the tax to the terminus of the goods' carriage (commencement or termination of journey) rather than to mere crossing of municipal boundaries in transit.Conclusion: The terminal tax under Section 66(1)(o) is not leviable on goods merely in transit through the municipal limits; the appeal is allowed in favour of the assessee.