1. MUSHTAQ HUSSAIN, J.-This order will dispose of Writ Petitions Nos. 1418, 1432, 1433, 1516 of 1971, 839, 840, 841, 842, 890, 891, 892, 1001 of 1972, 122, 495 of 1974, 3196, 3197, 1434 of 1975 and Tax References Nos. 6, 7, 8, 9, 10 of 1973.
2. The petitioners in these writ petitions were assessed to income-tax for the assessment years and the amounts mentioned in the writ petitions referred to above. Having been served with notices of demand which remained uncomplied with, `additional tax' was imposed under section 45-A of the Income-tax Act in respect of the assessments referred to above.
3. Aggrieved by these orders the petitioners appealed to the Appellate Assistant Commissioner of Income-tax but their contention was repelled on the simple ground that no appeal was competent against the orders appealed by them. Hence these petitions.
4. The impugned orders are assailed on the following ground- Additional tax levied under section 45-A for default in payment of tax in time is not relatable to income and, therefore, is neither covered by the scope of the Income-tax Act nor of item 43 (c) of Schedule III of the Constitution of 1962 under which section 45-A was enacted.
5. We have not been able to see eye to eye with the learned counsel for the petitioners on this proposition, and consequently dismiss all these petitions with costs for the reasons that follow.
6. Section 2 (6) (c) of the Income-tax Act defines "income" in an elabo--rate way. Section 2 (14) defines "tax" as that payable under this Act and includes any penalty, interest, fee or other charge leviable under this Act. Section 2 (15) defines "total income". Section 3 provides that when any Central Act authorises the charging of income-tax for any year at any rate or rates the same shall be levied in respect of the total income of the previous year of every person.
7. It was submitted at the bar that tax could be charged only on income and since the additional tax was to be computed on the basis of the tax already levied it was not relatable to "income" as defined by section 2 (6)(c), "tax" as defined by section 2 (14) or "total income" as defined by section 2 (15) of the Income-tax Act. It was consequently argued that not be--ing a tax on income it could not be lawfully levied under the Income-tax Act.
8. Section 45-A directs the assessee in circumstances given in it to- "pay an additional amount of tax equal to 8 per cent per annum of the amount of tax due from him . . . . : '
9. Chapter 6 in which this section occurs is entitled "Recovery of Tax and Penalties". Section 45 requires that any amounts specified as payable on the notice of demand under the provisions of the Income-tax Act mentioned in this section shall be paid within the time and place etc. Mentioned in the notice. It further lays down that failure to do so shall be deemed to be a default under the Act. It is, however, provided that in case an appeal is filed by an assessee the Income- tax Officer may treat him as not being in default until the appeal is disposed of. This discretion is, however, subject to the provision of section 45-A.
10. It is, therefore, clear that only that amount can be recovered as tax as has been specified in section
45. Even section 45-A by its very, terms becomes applicable when an assessee "fails to pay the tax due from hill." It consequ--entry assumes that the tax has already been determined and, therefore, any amount demanded under section 45-A is not tax simpliciter but, what has been termed by section 45-A itself, an "additional" tax.
11. Although the expression `tax' has been retained for the purposes of this section but it has been qualified by the prefix "additional" so as to, leave no doubt that the amount being demanded under this section is not "tax" sim--pliciter.
12. The amount under this section is not to be demanded as tax on the income of an individual but, by its very nature, as a recompense for delayed payment.
13. The method of computation has also been detailed under section 45-A (bl as 8 per cent. Per annum of the amount of tax mentioned in the section.
14. Frankly speaking it partakes of the nature of interest and the concept o payment of interest by the assessee on delayed payment and by the Govern--ment on advance payment is not alien to the Act.
15. In fact section 2 subsection (14) makes it clear that the word "tax" wherever used in the Income-tax Act includes any "penalty, interest, fee or other charge leviable under this Act." The use of the word "tax" it section 45-A for an amount, which is more appropriately in the nature of a penalty or interest has, therefore, the authority of the interpretation clause of the Act itself, which authorises the use of the word "tax" for such a purpose.
16. The objection of learned counsel is, therefore, based on the exclu--sion of words duly incorporated in section 2 (14), which defines "tax".
17. The second objection regarding the absence of hearing has 'not been pressed before us and even if it had been pressed it would not have been possible for us to grant any relief on its basis because the assessee has not cared to state in his objection any ground or circumstance, which he could a have urged in favour of a plea for non-imposition of the additional tax and this Court has never reacted favourably to a prayer for the grant of a paper order, which would not produce any result whatsoever and may not even be of an academic interest.
18. A half-hearted argument was also addressed on the vires of the section. Reference was made to the Third Schedule of the 1962 Con--stitution' which prescribed matters with respect to which the Central Legislature had exclusive powers to make laws under Article 131. Item 43 (c) empowers the Central Legislature to pass laws in respect of "Corporation taxes and taxes on income other than agricultural income". It was argued that since the impugned demand was neither a tax on income nor a corporation tax, the Central Legislature had no power to enact section 45-A.
19. We have stated above that section 45-A appears in the Chapter en--titled "Recovery of Tax and Penalties" and have found that it is in the nature of an interest for delayed payment. Although, therefore, it does not relate directly to income, which can be the subject-matter of tax under the Income-tax Act undoubtedly its imposition is meant for en--forcing the demand of income-tax and for facilitating its recovery, matters which are eminently incidental or ancillary to the imposition of tax on income.
20. Item 49 of the List, which runs as follows-"matters incidental or ancil--lary to any matter enumerated in this Schedule" provides the necessary infra-structure for the Legislature to enact a provision like the one, which is assailed before us.
21. Reliance was placed on Zeenat Textile Mills East Pakistan Limited v. Commissioner of Income-tax, Dacca Zone and another (PLD 1969 Dacca 673). A Division Bench of the Dacca High Court accepted the contentions now being raised on behalf of the petitioner for the following reasons-
(a) tax can be levied only on the total income of the previous year of an assessee;
(b) no tax can be levied on any other sum, which cannot be descri--bed as above;
(c) the provisions of the charging sections, namely, 3 and 55 lie dormant until the Finance Act for the particular year is passed which brings these two charging sections to life;
(d) the duty of the Finance Act is to fix the rate for a particular year of the income-tax and super- tax to be paid by an assessee for his total income of the previous year as authorised by sections 3 and 55;
(e) an additional amount of tax being a percentage of the amount of tax due from the assessee is totally outside the scope of the charging sections
(f) the language used by Legislature in the statute according to the accepted principles of interpretation must be given its ordinary plain meaning. Where the language is clear and unambiguous and plain in its meaning there is no scope for the Court to give an interpret--tation to it which the language cannot bear. In section 45-A the language used is "an additional amount of tax equal to 6 percent per annum of the amount of tax due from the date on or before"--------- ---------..It cannot without difficulty be said that the meaning and the intention of the Legislature is so clear and plain from the language used that it meant to levy an "additional tax" on the "tax due" the rate of which will be------------------Thus it will be seen that the rate of . . . . . . Is not referable to the total income and the amount sought to be realised is neither interest nor penalty.
22. With great respect we have not been able to persuade ourselves to agree with the conclusion reached in the judgment quoted above.
23. It is not a case of giving ordinary plain meaning to the language used, for the simple reason that there is an elaborate interpretation clause, parts of which have been quoted above and which has given to the expression "tax" a scope and meaning not otherwise enjoyed by it. The clause has extended the meaning of this expression to interest, penalty, fee etc. And has thus converted it into a technical expression or term of art, which is not susceptible only to its plain meaning given in the dictionary.
24. The whole argument accepted by their Lordships of the Dacca High Court is, therefore, based upon a basic error of completely ignoring the right of the Legislature to clothe specific words of the language with meaning not ordinarily attributable to them but which are necessary for the purpose of achieving an object before it.
25. Their Lordships have not found that the word 'tax' has been used in the sense of penalty or interest in any other section of the Act and it would, therefore, be attributing redundancy to the Legislature, if it were to be said that although it went to the trouble of adding special connotations to the existing meaning of the word "tax" it did not have the intention of using the word in the extended sense.
26. The mere fact that there are provisions in the Act, which deal with penalties and interest and thus call a spade a spade does not mean that in other sections it cannot achieve the same object by using another word, the scope of which it has specially extended to enable it to do so: The charging sections do not mention the Finance Act. Section 3 refers to "any Central Act." Section 55 deals with super-tax and refers action to a "Central Act". The expression "Central Act" has not been defined in section 2 of the Income-tax Act and will, therefore, be given its or--dinary meaning.
27. Can it be denied that the Income-tax Act is a Central Act? The answer will have to be 'no' because the Central Act is an Act, which has either been enacted by the Central Legislature or which by a Con--stitutional change has become relatable to a subject transferred to the Central Legislature though not previously within its domain. Section 45-A is consequently a part of a Central Act and section 3 and section 55 autho--rise the charging of tax where any Central Act so enacts.
28. One may go a step further and adumbrate that section 3 speaks of income-tax and not simply tax.
29. Section 45-A is concerned with "an addi--tional amount of tax" and it does not refer to "income tax". In other words the word "tax" used in section 45-A has been used in the extended mean--ing given to it by section 2.
30. The contention that a notice of demand under section 3 or section 23-A or section 29 or section 31 or section 33 do not mention additional tax, wherefor, such a tax cannot be recovered ignores the fact that section 45-A comes into operation only after such a notice of demand has remained uncomplied with.
31. Naturally, therefore, the computation under section 45-A cannot form part of the notice of demand issued under any of the sections referred to above.
32. Far from detracting from the validity of an imposition under section 45-A it supports it particularly because it makes it clear by the way in which it operates that the additional tax sought to be levied under section 45-A is not in the nature of tax on income as such but as a penalty or interest for enforcing the recovery thereof, which does not suffer from lack of authority.
33. It is consequently incorrect that the Legislature did not have the autho--rity to enact section 45-A.
34. In these circumstances we find that the demand made by the depart--ment under section 45-A of the Income-tax Act is not unwarranted by the law.
35. The result is that the petitions named above are dismissed with costs.
36. S. A. FI.