Full Judgment Text & Judicial Ruling

1963 P T D 765

1963 P T D 765

[Supreme Court Pakistan]

Present: A. R. Cornelius, C. J., S. A. Rahman, Fazle Akbar, B. Z. Kaikaus and Hamoodur Rahman, JJ

(1) THE PROVINCE OF WEST PAKISTAN THROUGH THE CHIEF SECRETARY TO GOVERNMENT OF WEST PAKISTAN, LAHORE, AND

(2) BOARD OF REVENUE, WEST PAKISTAN THROUGH THE SECRETARY, BOARD OF REVENUE, LAHORE Appellants

versus

Malik KHIZAR HAYAT KHAN TIWANA Respondent

Civil Appeal No. 14 of 1961, decided on 16th May 1963.

(On appeal from the judgment and order of the High Court of West Pakistan, Lahore, dated the 6th March 1959, in Writ Petition No. 8 of 1957.)

Punjab Agricultural Income tax Act (VII of 1950)----

----- Ss. 2(2) & 11 (3) "Total land revenue" Expression includes "water-advantage rate" (khush haisiyyati) Punjab Land Revenue Act (XVII of 1887), S. 48 (4) Interpretation of Statutes Taxing statute Minor Canals Act (III of 1905) Northern India Canal and Drainage Act (VIII of 1873), S. 37 Punjab Land Revenue Act (XVII of 1887), Ss. 29 & 61 Punjab Tenancy Act (XVI of 1887), S. 4 (10).

Per Cornelius, C. J. The decisive consideration in the case in my opinion, is that it being possible for a Settlement Officer to assess the land revenue upon any given piece of land in two forms, namely, a fixed land revenue plus a supplement by way of fluctuating land revenue, and in the present case, the Settlement Officer having done this in relation to the lands here in question, and there being no power in him to assess the fluctuating portion of the land revenue otherwise than in his general power of assessment of lard for the purpose of land revenue derived from the Land Revenue Act, it must follow that, however this supplementary imposition might be shown in the land records, it is in fact a part of the land revenue. The practice of showing the khush haisiyyati separately is probably necessitated by the fact that it applies by the acre to land which has been actually cultivated, with the aid of irrigation and thus rests on proof of irrigation from year to year, whereas the fixed portion of the land revenue is payable irrespective of cultivation, and, except where specially remitted, is leviable from year to year until the next Settlement. It is in this light that the statements found passim in the reports of Settlement Officers describing how and why they had imposed the water advantage rate, and that this rate was a part of the land revenue, must be understood. Where there is no source of authority other than the Land Revenue Act to support the action of the Settlement Officers for the imposition of the water advantage rate, as in this case, it seems to me that there is no escape from the conclusion that mere variation of description, even in official documents or disparity in the manner of exhibition of the two charges in the land records, is not in itself a sufficient circumstance to support a distinction of category between the fixed land revenue on the one side and the khush hasiyyati on the other. In fact and in law, both these items put together constitute the land revenue assessed upon the land in question in this case.

Per S. A. Rahman, J. For the purposes of the Punjab Agricultural Income tax Act 1950, "khush haisiyyati" must be included in "land revenue" for assessment of agricultural income-tax.

"Khush haisiyyati" was imposed as part of the "land revenue" on irrigated lands and the imposition derived its authority from the Punjab Land Revenue Act, 1887.

The practice of the Settlement Officers started long before 1873, to split up the "land revenue" into two parts, one representing the imposition on the unirrigated aspect of the land, which was a fixed annual charge and the other, a fluctuating rate per acre, namely, the "khush haisiyyati" imposed only on those lands which used canal water and thus improved their crops. Both were relatable to the net assets of the land which under the Act of 1887, forms the basis of assessment of "land revenue" under section 48 A. This also explains why there is no separate specific provision in the Land Revenue Act for assessment of "khush haisiyyati" or water advantage rate.

The fact further that "khush haisiyyati" is separately shown in the record of rights from the item called "land revenue" cannot mean that "khush haisiyyati" is not "land revenue imposed under the Land Revenue Act". The distinction appears to have been made for facility of collection from the relevant owners, in comparison with those who are not liable to pay this charge. The difference of nomenclature cannot destroy the essence and source of authority of the imposition in question.

No doubt, the principle has been universally approved that if two interpretations of a taxing statute are possible, the one that favours the subject must be adopted. It is, however, well-recognised that if the language of the statute is fairly susceptible of a construction which brings a person or a property within some specific charging provisions thereof, then such person or property should not be allowed to escape.

Per Kaikaus, J.? It cannot be a proper contention that the additional income which the land owner gets on account of the use of .water is not subject to land revenue. The State is entitled to a share of the whole of the produce of land whether the land be irrigated or non irrigated and in fact in all those districts where the proposals of Mr. Princep have not been accepted abiana or khush haisiyyali imposed separately by Mr. Princep is included in land revenue. It was only a matter of convenience that the land revenue was split up into that which is leviable in the unirrigated aspect of the land and that which is leviable on account of the additional advantage from water. This part of the land revenue which was due to water had to be given a separate name. The name given to it by Mr Princep in respect of canal irrigation was "water advantage rate" which was translated as "khush haisiyyati".

There cannot be the slightest doubt about khush haisiyyati being a part of land revenue. Whatever is taken by the Government as a share of the produce of land is "land revenue?. At the same time it should be clear that it was being imposed under the Punjab Land Revenue Act, 1887.

The fact that two methods of assessment are mentioned in section 48 (4), Punjab Land Revenue Act, 1887, does not mean that the use of both methods is excluded. As is clear from the opening words of section 48 all land of whatever kind and to whatever purpose applied is subject to the payment of land revenue . . . . In any case as a general rule the mere fact that two methods are mentioned an inference that both cannot be used does not follow. There does not appear to be any good ground why the Legislature should have placed such a strong limitation on the power of the Government to realise its share of the produce.

Ordinarily land revenue on the additional income which is due to means of irrigation is included in the land revenue imposed there being no separate rate in respect of the water advantage. If khush haisiyyati or water advantage rate which is separately imposed was to be excluded from calculation when assessing agricultural income tax the result would be an unjustifiable distinction between cases where the land revenue on income derived from the water advantage is assessed separately and cases where it is not so assessed. The land owner whose land is not assessed to khush haisiyyati would have to pay agricultural income-tax on the basis of the whole land revenue including that which is due to the water advantage whereas the land owner who pays khush haisiyyati would pay this tax only on the amount of land revenue which is payable on the unirrigated aspect of land. There is no reason why we should try to read into the definition of land revenue in the Punjab Agricultural Income tax Act words which are not there and which would lead to unjust results.

[Argument in favour of exclusion of khush haisiyyati from the expression "land revenue", built upon ground of contrast between provisions of Minor Canals Act, 1905 and section 37, Northern India Canal and Drainage Act, 1873, and upon sections 29 and 61, Punjab Land Revenue Act, 1887 and section 4(10), Punjab Tenancy Act, 1887, was not approved.]

Mr. Wilson : "Report on Settlement in Shahpur District", paras. 55, 74, 107, Mr. Leighis "Report on Settlement in Shahpur District", para. 48, Regulation 19 of 1793 and Douie : "Settlement Manual", paras. 2, 3, 60, 61, 63, 64, 72, 445 and 465.

Mushtaq Hussain Additional Advocate General West Pakistan (Ataullah Sajjad Advocate Supreme Court with him) instructed by Ijaz Ali Attorney for Appellants (on 16-4-62).

M. B. Zaman Advocate Supreme

Court instructed by Ijaz Ali Attorney for Appellants (on 18 and 19-3-63).

M. Saleem Senior Advocate Supreme Court (Ismail Bhatti Advocate Supreme Court with him) instructed by Siddiq & Company Attorneys for Respondent.

Dates of hearing: 16th April 1962, 18th and 19th March, 1963.

JUDGMENT

CORNELIUS, C. J. After mature consideration, I have come to the conclusion that this appeal must be allowed. It is with some regret that I have reached this finding, for the matter lies in the field of taxation, and it is not taxation by percentages, but by multiples. The Act, namely, the Punjab Agricultural Income-tax Act, 1950, in section 2 speaks of the tax being "assessed on the basis of the total land revenue which was payable by an owner of agricultural land." The general rule all over the old Punjab Province for assessment of land revenue was that one quarter of the net assets was taken by the Government, such assets being ascertained by actual crop experiment, deducting from the total income the expenses of cultivation. When it is further mentioned that ordinarily a landlord takes no more than half of the total produce, after customary deductions for menials and for other village purposes have been made, it might be thought that the land revenue is by itself a sufficiently severe tax upon a landlord. It is upon the landlord exclusively that the payment of land revenue falls. But by the Act of 1950, a landlord may be required to pay by way of agricultural income tax, on a schedule of slabs, as much as seven times the land revenue when there is excess above Rs. 15,000 for a year. In the present case, the figures provided by the order of the Collector are that on a total assessment of land revenue of Rs. 49,749 13 6, in which is included a sum of Rs. 7,306 on account of water advantage rate or khush haisiyyati, the assessment of agricultural income tax is no less than Rs. 3,05,811. I observe that the tax was imposed not by a statute of the Provincial Legislature but by an Act of the Governor of Punjab passed at a time when he was administering the Province under section 92 A of the Government of India Act, 1935. It can only be supposed that since this tax has continued to be imposed successfully ever since, there is, in fact, a margin left after a landlord pays his land revenue, sufficient to enable him to pay up to seven times that amount in addition without being deprived totally of the benefit of being a land owner. On the amount of khush haisiyyati, in this case viz., Rs. 7,306 I calculate that the extra levy of agricultural income tax amounts to Rs. 44,054. That is no small sum, and constitutes a sufficient reason for examining with care the question whether in the circumstances, this amount of water advantage rate, is indeed a part of the land revenue "on the basis" of which a further and seemingly enormous burden of tax can be imposed upon the land owner under the law.

The Collector and the Commissioner were clearly of the view that the demand for khush haisiyyati, could not be added to the land revenue. It should be pointed out that the canal which supplies the w4ter oil the bass of which water advantage rate is imposed is, in this case, a private canal, which is governed by the provisions of the Minor Canals Act, 1905. The Collector in a comparatively short order advanced two grounds for thinking that the khush haisiyyati was not land revenue. He thought that as there was no provision in the Punjab Land Revenue Act, 1887, for assessing water advantage rate, that rate could not be land revenue. The argument was advanced before him that a water advantage rate could be imposed under the Northern India Canal and Drainage Act 1873, but there was no similar provision in the Minor Canals Act, and therefore when charged on land watered from a canal under the latter Act, it must be by wav of land revenue, It was rejected on the ground that such an inference was not permissible, when it was a matter of taxation. The Commissioner upheld this view in a more elaborate order. He pointed out that while in Financial Commissioner's Standing Order No. 30, and in two Settlement Reports, it had been said that water advantage rate is assessed under the Land Revenue Act, yet in the Settlement Manual, it was stated that this rate was an owner's rate as defined in the Canal Act of 1873. In the Land Revenue Act, the expression "land revenue" had not been exhaustively defined, but it "certainly does not specifically include water advantage rate." In the Punjab Tenancy Act of 1887, the expression "land revenue" had been so defined for a certain purpose as to include expressly the water advantage rate levied on the land, and if the intention of the Agricultural Income tax Act of 1950 had been to include the rate, there was no difficulty in the way of the Legislature doing so in the manner of the Tenancy Act. It had been urged that the rate was of earlier application, in point of date, than the Canal Act of 1873, but equally, it was earlier than the Land Revenue Act of 1887. Admittedly, where land is irrigated from a Government owned canal, governed by the Canal Act of 1873, the owner's rate is imposed under the latter Act. Since the acquisition of all private canals by the Government, the practice has been to impose the rate under that Act. The mere fact that the water advantage rate is assessed by a Settlement Officer in the course of settlement proceedings was not in the view of the Commissioner sufficient to convert the rate into land revenue, for there were a number of other impositions also assessed by the same officer and recoverable as arrears of land revenue, which satisfied this particular condition. Thus, the Commissioner distinguished the rate from land revenue, and it may be mentioned that the argument could have been fortified by reference to the Record of Rights where the rate has always been shown as an addition to the land revenue.

Having failed before the Commissioner, the Punjab Province took the matter in revision before the Board of Revenue, where a learned Single Member, reversed the decisions of the officers below. Certain of the grounds advanced in support in the order of the Board rest on a priori reasoning or in analogy. Thus, it is said :

(1) that water advantage rate is the extra payment of land revenue on account of the irrigation of the land ;

(2) that the rate is imposed on the recommendation of the Settlement Officer who is appointed under the Land Revenue Act, and his proposals are made and orders passed by Government thereon under that Act ;

(3) that the rate is analogous to the owner's rate under the Canal Act 1873, but since that Act is not applicable, it cannot be assumed that the rate is owner's rate under the Canal Act ;

(4) that in the Lyallpur District the assessment is integral, that is land revenue and the owner's rate under the Canal Act 1873 are applied as one levy, and the whole of this levy is taken into account for the imposition of agricultural income-tax, but if the Government had split up the levy into land revenue and owner's rate, then the assessee of agricultural income tax would be the gainer; and

(5) that because the rate is levied on account of the extra benefit through irrigation, therefore the rate possesses the same character as "the fixed land revenue levied on the field in its dry aspect."

But the learned Member added an argument which had not been considered by the Subordinate Revenue Officers, namely, that the case should be considered as one where the land revenue was composed of a fixed charge, plus a fluctuating charge, the latter being water advantage rate at Re. 1 per acre.

Against the decision of the Board of Revenue, the assessee took the matter before the High Court by means of a writ petition, and succeeded in obtaining a direction to the Government to refrain from levying agricultural income tax on the khush haisiyyati which he paid. The reasons given in the judgment of the Division Bench have been enumerated with care in the judgment of my learned brother S. A. Rahman. J., and I do not need to repeat them here in detail. The learned Judges distinguished khush haisiyyati from land revenue (a) because it is always shown as a separate charge (b) because it is not levied on the ownership of the land, but upon the advantage derived from land, (c) because where the revenue law, as in the Punjab Tenancy Act and in section 29 of the Land Revenue Act, intended that the rate should be assimilated to the land revenue for the purpose of enhancing a levy, there was an express inclusion, and among other reasons, one which is of special importance is their finding that by section 48 of the Land Revenue Act, it is provided that land revenue may be imposed either as a fixed annual charge or as a fluctuating rate per acre, but not by both methods.

We have heard elaborate arguments in the case from Mr. M. B. Zaman, Assistant Advocate General for the Province, and from Mr. Saleem on behalf of the assessee. In support of the appeal, in the main the same arguments have been advanced as found favour with the Board of Revenue, and in particular, it was stressed (a) that there was no legal authority for imposing the levy other than the general power of assessment of land revenue under the Act of 1887, and (b) that there was no illegality in imposing upon the same piece of land, a fixed land revenue in its dry aspect and a water advantage rate by the acre actually irrigated, so as to cover the full share of the State as suzerain authority in the produce of the land. To the latter contention, Mr. Saleem was not able to develop an argument in opposition, and in my opinion, there is no good reply possible unless the particular subsection in section 48 of the Land Revenue Act is read as providing for two modes of assessing the charge which are mutually exclusive of each other. Nothing in the wording of the section can, in my opinion, serve to sustain so rigid a view. Further, it is only too plain that the levy of the State's share is not less equally and justly applied, if the charge of water advantage rate is confined to land actually irrigated and as for the main charge of land revenue, that falls equally on such land as it does on unirrigated land. The Settlement and Revenue Officers are required to deal with a great variety of cases, and there can be no doubt that in many of these cases, the application of a fixed as well as a fluctuating assessment to a particular area, was not only the most just, but perhaps also the only practical method of adjusting the State levy to the actual estimated produce of the land.

The treatment of this particular point in the judgment of the High Court is somewhat brief. The learned Judges contented themselves with saying with respect to the argument that "it is not possible to say that in respect of the same land there can be two assessments, one fixed, the other fluctuating." They went on to observe that under section 61 of the Land Revenue Act the entire estate and the landowners jointly and severally are liable for the land revenue for the time being assessed on the estate, and if land revenue were to include the water advantage rate, this liability would fall even on those who are not liable for such a payment. The section appears to be intended to impose a communal responsibility upon all the owners in the estate for the default of any one of them, and that default may be in respect of fixed land revenue as easily as it might be in relation to the fluctuating charge. With respect, it seems to me that the conclusion of the learned Judges on this point is not easy to support. Reference was made to the provision in the Agricultural Income tax Act that where land is not assessed to land revenue, it should be deemed to be subject to "the land revenue assessed on similar land in the same estate" and it was argued that there can be a case where the analogy may lead to the imposition of the water advantage rate upon land which had never been irrigated. The case is a remote one and certainly does not arise out of the present facts. Should the analogy have to be drawn, no doubt the responsible authorities could be trusted to interpret the expression "similarly" in a factual sense; so as to avoid the kind of injustice contemplated by the learned Judges.

The argument that since the canal in question fell under the Minor Canals Act 1905, which had not provided for imposition of an owner's rate, therefore, the khush haisiyyati in the present case must be deemed to have been imposed under the general power to levy land revenue, was met by Mr. Saleem in the following manner.

He argued that the Minor Canals Act 1905 does not define the expression "canal" exhaustively, but against this it is to he pointed out that the Act specifies in the Schedule the canals to which it applies. He then pointed out that in the Settlement Report of 1897, the Settlement Officer spoke of applying a water advantage rats in relation to both Government as well as private canals, and at that time, there was no Minor Canals Act in force, consequently, it should be inferred that for applying the water advantage rate, the Settlement Officer was deriving power from section 37 of the Canals Act, 1873. The latter Act is excluded by expression in application to minor canals of the present nature, but it was urged that this exclusion was not for all purposes, but only of these lesser canals as operating enterprizes. Mr. Saleem referred to the definition of "water rate" in section 4(17) of the Minor Canals Act, and suggested that this meant that water advantage rate was distinguishable and separately exigible.

The water rate in the Minor Canals Act is merely the charge for water which the canal owner may levy upon persons using the water, and no advantage for the purposes of the present case can be derived by reference to that definition. As for the argument that water advantage rate can be applied as an owner's rate under section 37 of the Canals Act, 1873, in respect of lands irrigated from a minor canal, it must be said, speaking with) respect to the learned counsel, that the argument is clearly over-stretched. Some of the confusion that has crept into the examination of the essential questions in this case is due to looseness of expression in a number of Settlement Reports and their authoritative publications of the Revenue Department, and merely because one Settlement Officer applied a water advantage rate in relation to both Government as well as private canals, it does not necessarily follow that he was deriving his power to do so from the same source in respect of the two different categories of lands. Nor is an answer provided for the contention that the only legal power for imposing a water advantage rate, as here, is the power of imposing land revenue, under the Act of 1887.

Mr. Saleem referred to the fact that water advantage rate is collected only once a year although there are two harvests, but mere choice of one mode of collection rather than another does not serve to create the differentiation for which he contends. He stressed the obvious inequality of treatment between lands irrigated from Government canals, and those irrigated from private canals, but it is clear that this is a thing of the past, as the private canals have all been acquired by the Government, and, in any case, the factor of inequality cannot determine the question before us.

In my judgment, the principle that nothing should be taxed under a statute which does not fall fairly within the words of the statute, excludes in the present case the importation of arguments, in favour of taxability, such as :

(1) that the water advantage rate possesses the same character as land revenue ; or

(2) that it is imposed by the same person who assessed the land revenue; or

(3) that it is recoverable in the same manner as the land revenue.

But a fair construction of the words of the statute in their application to the present case cannot be based wholly on contrast with the definitions relied upon in section 29 of the Land Revenue Act, and under the Punjab Tenancy Act, which by expression include the water advantage rate in "land revenue"? when laying down the…

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