MUNICIPAL COMMITIEE & Anr. v. RAMASWAMI AND c. A. v AJDIALINGAM

Item 4 in the Schedule to Act XX of 1941 must be construed strictly because, firstly, it is an exemption from the limitation imposed by s. 2 of the Act and, secondly, the effect of s. 3 and item 4 of the Schedule is to continue the leviability of a tax and must therefore be construed like a taxing statute. , Various taxes must have been imposed by the Municipalities in Central Provinces by virtue of notifications issued under s. 66(1) (b) and they would fall within. the ambit of item 4. Item 4 would not therefore be otiose even if it was not treated as a case of mis-description but given the plain meaning I.e. that the C.P. Municipalities Act, 1922, did not mean the C.P. and Berar Municipalities Act, 1922. The word 'imposed' io item 4 meant that the taxes which can be oootinued to be levied should have 'been imposed before Act XX of 1941 came into force. This •wuld be in consonance with •. 142A(2) of Government of India Act. 1935, restricting muni~ipal taxes in rec; pect of any one person to Rs. 50 per annum from March 31, 1939. The pro "fiso to this Section enabled the Dominion Legislature to make a contrary provision where a higher rate was previously in force, but it could not 1D1der the proviso authorise a fresh imposition exceeding Rs. 50. [106 H- 107 DJ CIVIL APPF.LLATE JURISDICTION : Civil Appeals Nos. 1611 and 1612 of 1966. From the judgment and order dated April 29, 1964 of the Bombay High Court, Nagpur Bench in Special Civil Applications Nos. 470 of 1962 and 447 of 1963. F S. V. Gupte, Solicitor-General and Naunit Lal, for the appellant (in both the appeals): G H M. C. Setalvad, N. D. Kharkhanis and A. G. Ratnaparkh for respondent No. 1 (in C.A. No. 1611 of 1966). R. Ganapathy Iyer, S. P. Nayyar and R. H. Dhebar for res pondent No. 2 (in C.A. No. 1611 of 1966). S. N. Kherdekar and A. G. Ratnaparkhi, for the respondent (in C.A. No. 1612 of 1966). The Judgment of the Court W?.s delivered by SiI?'i, J. These two appeals involve the same point and can be convemently disposed of by one common judgment. The relevant facts may be given from one appeal only. 102 SUPREME COURT REPORTS [1967) 2 S.C.R. The respondents, Manila! Manekji Pvt. Ltd., filed a petition under art,. 226 and 227 of the Constitution in the High Court of Judicature at Bombay, Nagpur Bench, praying that cenain demands made by the Municipality of Akot be quashed and that the Munici pality he ordered to refund the advance deposit which the respondent had made. These demancis and advance deposits were in respect of a tax known popularly as 'the gin tax and press tax' levied by the Municipality of Akot. In brief, the case of the respondent was that in view of art. 276 of the Constitution, the notifications under the tax was imposed could not be enforced except to the extent providet: under art. 276(2) of the Constitution. The case of the Municipal Committee, in brief, was that the notifications were in force immediately before the commencement of the Constitu tion and, therefore, were not hit by art. 276(2). / It is now necessary to set out the history of the notifications and the various munic; pal laws which were made applicable to the Municipal Committee, Akot, from time to time. It appears that the Municipal Committee, Akot, was constituted under the Berar Municipal Law. 1886, and under section 41 of the Bernr Municipal Law, 1886. the Committee was empowered to impose certain taxes. It may be mentioned that the llerar Municipal Law. 1886, was pro mulgated by Notification No. 3938-1 dated November 5, 1886. by the Viceroy and Governor-General in Council. Berar, at the rele vant time. was not part of the British India. The Municipal Com mittee. Akot. 1ss;1ed notification No. 98, dated March 14, 1899. regarding levy of profession tn. The relevant part of the noti fication rc:ids as follows: "With reference to section 44, clause (9) of the Berar Municipai LI\\ 1886, it is hereby notified that the Municipal Committee of Akot has, with the sanction of the Resident, directed the imposition with effect from the l~t April 1899. of a tax under section 41(1) A(b) of the law, on professions and trades practised in that Municipality subject to the following rule. (I) The tax shall, subject to th~ following provision, be assessable on every person who practises any profession or art or any trade in the Akot Muncipality the whole or any part of whose income derived from any sources other than agriculture is n0t less than Rs. 100 per annum. at the rate of o;ie and a quancr per cent on the taxable portion of his estimated income derived from any such source provi ded that, (i) No person or firm shall be assessed at a sum exceeding Rs. 500 per annum or less than eight annas ... " Another notification was issued on July 13, 1908, in the following terms: A B c D E F G H A B c D E F G MUNICIPAL COMMITTEE V. MANILAL (Sikri, /.) 103 "No 1063-With reference to section 44, sub-section (7) and (8), of the Berar Municipal Law, 1886,. it is hereby notified that the Municipal Committee of Akot, in Akola district, has with the sanction of the Chief Commissioner, directed the imposition with effect from 1st August 1908 of a tax on the Ginning and Pressing of Cotton under section 41(1) (A) (b) of the said law to be levied from all persons carrying on within the limit of the AkotJMunici· pality, the trade of ginning cotton and pressing the same into bales by means of steam or mechnical process, at following rates: (1) For ·each boja of ten maunds ginned 8 pies. (2) For each bale of fourteen maunds pressed IO pies. The tax is payable in one instalment on the first of August each year." On January 22, 1924, the following notification was issued by the Governor-General in Council : "No. 58-1. In exercise of the powers conferred Indian (Foreign Jurisdiction) Order in Council, by the 1902 and of all other powers enabling him in that behalf, the Governor-General to direct that the following further amendments shall bemade in the First Schedule to the Notification of the Government of India in the Foreign Department, No. 3510·1. B. dated the 3rd November, 1913, applying certain enactments to Berar, namely : in Council is pelased After Entry No.149 the following entry shall be inserted, namely: "150. The Central Provinces Municipalities Act, 1922 (II of 1922). (1) In Section 2 (a) for sub-section (!) the fol shall be substituted, lowing namely: "(l) The Berar Municipal Law, repealed." 1886, is hereby (b) in sub-section (2), for the words "Acts" the word "Law" shall be substituted." H It is not necessary to set out all the amendments made by the notification in ihe Central Provinces Municipalities Act, 19..!2. 'The effect of this notification, in brief, was to apply the Central Provinces Municipalities Act, 1922, with certain modifications, to· 104 SUPREME COURT REPORTS [I 96 7] 2 S.C.R. Berar and to repeal the Berar Municipal Law, 1886, and furtherto save the taxes imposed and other acts done by the Municipalities by deeming them to have hccn made, imposed or assrssed under the Central Provinces and Berar Act, 1922 (2 of 1922) as aryplied.to Berar. It was further provided by sub-s. (6) of s. 66 that "any tax imposed in a Municipality before the date on which this Act comes into force shall continue in operation notwithstanding that it is not a tax specified in sub-section(!)", and sub-s. (7) of s. 66 enabled a committee to abolish any tax to which sub-section (6) applied as if it were a tax imposed under this Act but may not vary the amou'lt or rate therc,)f. The Jaw as applied to Berar, although called the Central Pro vinces Municipalities Act, 1922, was not the same law as the Central Provinces Municipalities Act, 1922, as in force in the Central Provinoes. On August 1, 1941, the Central Provinoes and Berar Act (XV.of 1941)-called the Berar law.s (Provincial) Act, 1941----0lme into foroe. This Act was passed by the Governor under s. 93 of the Government of India Act, 1935, Berar having become part of the Governor's Province of the Central Provinces and Berar. Section ,47 of the Government of India Act, 1935, provided that "Berar shall continue to be governed together with the Central Provinces as one Governor's Province under this Act by the name of the Central Provinces and Betar and in the same manner as immediately before the establishment of the Dominion; and any reference in this Act to the Dominion of India shall be construed as including a reference to Berar." By this Act the Governor extended various acts to Berar including the Central Provinces Municipalities, Act, 1922 (II of 1922).. The following amendments were made in the Cmtral Provinces Municipalities Act, 1922: "(I) To sub-section (2) of .;ection 12, the following proviso shall be added, namely:- "Provided that in the case of two adjacent Munici palities in Berar the State '.Jovernment may by a general or special order exclude the residents of one municipality from voting in a special constituency of the other munici pality." . <) After sub-section ( 5) of section 66, the following subs, ~on shall be inserted, namely: "(5A) Any tax imposed in a municipality in Berar before the date on which this Act comes into force shall continue in operation notwithstanding that it is not a tax specified in sub-section (!). A B c D E F G H A B c D E F G H MUNIC!PAL COMMITTEE V. MANILAL (Sikri, /.) 105 (SB) A committee in Berar may abolish any tax to which sub-section (SA) applies as if it were a tax imposed under this Act but may not vary the amount or rate there of." As a result of s. 2(2) of the Central Provinces and Ber:;r Act (XV of 1941), the title of the Central Provinces Municipalities Act, 1922 (II of 1922) became the Central Provinces and Berar Munici palities Act, 1922 (II of 1922). Section 3 of this Act provided inter alia that the Central Provinces Municipalities Act, 1922, which had been applied to Perar by order under the Indian (Foreign Juris diction) Order in Council, 1902, shall cease to have effect "provided that all appointments, delegations, notifications, orders, byelaws rules and regulations which have been made or issued, or deemed to have been made or issued and all other things done or deemed to have been done under, or in pursuance of, any provision of any of the said Acts as applied to Berar by order under the said Order in Council, and which are in force at the commencement of this Act, shall be deemed to have been made or issued or done under or in pursuance of the corresponding provision of that Act as n·ow extended, to, and in force in, Berar." In the meantime a bill was introduced in the Central Assembly on March, 21, 1941, which was ultimately passed as The Professions Tax Limitation Act, 1941 (XX of 1941). This Act came into force on April 1, 1941. This Act provided: "S. 2. Notwithstanding the provisions of any law for the time being in force, any taxes payable in respect of any one person to a Province, or to any one municipality, district board, local board, or other local authority in any Province, by way of tax on professions, trades, callings or employments, the com mencement of this Act cease to be levied to the extent in which such taxes exceed fifty rupees per annum." from and after

#3. The provisions of section 2 shall not apply to any tax specified in the Schedule." The Schedule is as follows: THE SCHEDULli: (See section 3) Taxes to which section 2 does not apply. I. The tax on professions, trades and callings; imposed through fees for annu.al liaences, under Chapter XII of the Calcutta Municipal Act, 1923. M19S\lp.CI/66-8 106 SUPUME 00\lltT llli\l'OATS {l967) 2 S.C.R.

#2. The tax on trades, professions and calling<;, imposed under clause (f) of sub-section (I) of section 123 of the Bengal Municipal Act, 1932.

#3. The tax on trades and callings carried on within the municipal limits and deriving special advantages from, or imposing special burdens on, municipal services, imposed under clause (ii) of sub-section (I) of section 128 'Jf the United Provinces ~iunicipalities Act, 1916.

#4. The tax on persons exercising any profession or art, or carrying on any trade or calling, within the limits of the municipality, imposed under clause (b) of section (1) of section 66 of the Central Provinces Municipalities Act, 1922.

#5. The tax on companies, imposed under section 110 of the Madras City Municipal A~t. 1919.*" On behalf of the Municipdity it was inter alia contended before the High Court that the impugned tax fell within item 4 of the Schedule to the Profession Tax Limitation Act, 1941, but the High Court negatived the contention following an earlier judgment of the High Court in an unreported case (Bidarbha Mills Berar Limited v. The Citv Municipal Committee of Acha/pur)( 1). The learned Solicitor-General, appearing fer the appellant Municipal Committee, contended that item No. 4 in the Schedule covers the impugned tax because the Act is the same under which the tax is being imposed and re~vered and the fact that the title of the Central Provinces Municipalities Act, 1922, was changed by the Berar Laws (Provincial) Act, 1941, docs not make any difference. He says that there is nothing in the Profession Ta\ Limitation Act, 1941, to show that the exemp~ion was intended to be given only to a particular territory. He further urges as follows: The fact that this notification, No. 98 dated March 14, 1899, is now deemed to be issued under the \,entr:ll Provinces and Bcrar Municipalities Act, 1922, does not make it any the less imposed under the Central Provinces Municipalities Act, 1922, within item 4; if 11 tax is deemed to be imposed under the Central Provinces and Berar Muniripalities Act, 1922, it is still a tax 'imposed' under s. 66{1) of the Central Provinces Municipalities Act, 1922; it is a case of misdescrip tion that the word 'Berar' has not been mentioned in item 5 of the Sct.edule to the Professioa Tax Limitation Act, 1941; the item will be otiose if any other meaning is ascribed to it. In our opinion the High Court came to the correct conclusion. item No. 4 is an exemption from the limitation imposed bys. 2 Fil •Ins. bys. 2 of the Prorwiom Tu Umltalioo (Amaldmont) Jv;t, 1946 (V of 1946) (rctrospoctivcly) (I) High Court of Judicature at Bombay (Na11>11r Bran<b) Special Civil ApplicatiOD No. J°' of 1960---juelgmem dcli'l'trcd on A ...... !>, 19do. A B c D E F G H A B c D E G H MUNICIPAL COMMl'l'Yl!E v. MANlLAL (Sllcri, J.) 107 of die Professions Tax Limitation Act, 1941, and the exemptior. muss be construed strictly. Seoondly, the effect of s. 3 and item 4 of th<: Sehedule is to continue the leviability of a tax and, in our opinion, this irem must be construed strictly like a taxin£ statute. If Mr. Gupte had been able to convince us that the item would be otiose if this interpretation is put there would be something to say in his favour. But the item will not be otiose even if we do not treat item 4 as a case of misdescription but give the plain. meaning that the Central Provinces Municipalities Act, 1922, means the Central Provinces Municipalities Act, 1922, and not the Central Provinces and Berar Municipalities Act, 1922. Various taxes must have been iniposcd by the Municipalities in the Central Provinces by vir$Ue. of notifications issued under s. 66(1.) (b) of the Central Provinces fall within Municipalities Act, 1922, and ambit of item 4. Further accept Mr. Gupte's argument we will not be giving full effect to the word "imposed". This, in our view, means that the taxes which can continue to be le~ should have been imposed in the past before the Profession Tax Limitation Act, 1941, came into force. This is in consonance withs. 142 A(2) of the Government oflndia Act, 1935, which was in the following terms: they would if we "142A(2). The total amount payable in respect of any one person to the Province or to any one municipality, district board, local board, or other local authority in the Province by way of taxes on professions, trades, callings and employments shall not, after the thirty-first day of March nineteen hundred and thirty nine, exceed fifty rupees per annum; Provided that, if in the financial year ending with that date there was in force in the case of any Province or any such municipality, board or authority a tax on professions, trades, callings or employments the rate, or the maximum rate, of which exceeded fifty rupees per annum the preceding provisions of this sub-section shall, unless for the time being provision to the contrary is made by a law of the Dominion Legislature, have effect in relation to that Province, munici· pality, board or authority as if for the reference to fifty mpees per annum there were substituted a reference to that rate or maximum rate, or such lower rate, if any (being a rate greater than fifty rupees per annum), as may for the time being be fixed by a law of the Dominion Legislature; and any law of the Dominion Legislature made for any of the !'llrposes of this proviso may be made either generally or in relation to any specific Province~. municipalities, boards or authorities." 108 (1967)2 I.CL The proviso clearly shows that the section enabled the A Dominion Legislature to make a contrary provision if in the finan- cial year ending March 31, 1939, there was in force.a tax on pro fessions, trades, callings or cmpluymcnts the rate of which exceeded Rs. 50/-. Tue Dominion Legislature could not authorise under the proviso a fresh iniposition exceeding Rs. 50/-. In view of our above conclusions it is not necessary to deal with the poi;.,t whether the word "iniposed" in item 4 of the Schedule to the Profession Tax Limitation Act, 1941, would include "deemed to be iniposed" because by virtue of s. 3 of the Berar Laws (Provincial) Act, I 94 I, the tax would be deemed to be iniposed not under the Central Provinces Municipalities Act, 1922, but the Central Pro· C vinces and Berar Municipalities Act, 1922. a In the result the appeals fail and are dismissed with costs. One hearing fee. R. LP. S. A.ppeo/s dismls3etl.