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PETITIONER: JOTHI TIMBER MART & OTHERS

       Vs.

RESPONDENT: CORPORATION OF CALlCUT & ANOTHER

DATE OF JUDGMENT: 18/07/1969

BENCH: SHAH, J.C. BENCH: SHAH, J.C. SIKRI, S.M. RAMASWAMI, V.

CITATION:  1970 AIR  264            1970 SCR  (1) 629  1969 SCC  (2) 348

ACT:     Calicut  City Municipal Act 30 of 1961, Section  126--If State Legislature competent to enact under entry 52 List II, 7th schedule to the Constitution.

HEADNOTE:     Section 126 of the Calicut City Municipal Act 30 of 1961 provided for the levy of a timber tax on timber brought into the city. The proviso to the section exempted from the  levy any timber brought into the city in the course of transit to any  place outside the city and directly removed out of  the city  by  rail, road or water.  On a petition filed  by  the appellants,  a  single bench of the Kerala High  Court  held that  the legislature was incompetent to enact section  126. But  this  decision  was reversed in appeal  by  a  division bench.     It  was contended in the appeal to. this Court the  High Court  had wrongly considered that entry of timber into  the Municipal  area could only be for consumption, use, or  sale within the Municipality or in the course of transit  through the  limits  of the Municipality; such entry  could  be  for storage  or  other purposes and a provision levying  tax  on goods  entering  the  area.  of  the  Municipality   without specification  of  the purpose was  beyond  the  legislative powers  of  the  State under entry 52, List II  of  the  7th schedule to the Constitution.     HELD: Dismissing the appeal,     If  the State Legislature was competent under  Entry  52 List  II  to  levy  a tax only on the  entry  of  goods  for consumption, use or sale into a local area, the Municipality could not under legislation enacted in exercise of the power conferred by that Entry have power to levy tax in respect of goods  brought into the local area for purposes  other  than consumption,  use  or  sale.  The  authority  of  the  State Legislature  itself being subject to a restriction  in  that behalf, s. 126 may reasonably be read as subject to the same limitations.  When the power of the Legislature with limited authority  is exercised in respect of a subject-matter,  but words of wide and general import are used, it may reasonably be  presumed  that the Legislature was using  the  words  in

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regard to that activity in respect of which it is  competent to legislate and no other; and that the Legislature did  not intend   to  transgress.  the   limits   imposed   by    the Constitution. [632 B--E]     In re Hindu Women’s Rights to Property Act, 1937, [1941] F.C.R. 12; referred to.     The  expression  "brought into the city" in s.  126  was rightly  interpreted  by the High Court as  meaning  brought into  the municipal limits for purposes of consumption,  use or sale and not  for  any  other  purpose. [632

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1079 to 1086 and 1088 to 1099 of 1966.     Appeals  from the judgment and orders dated  August  31, 1965  of the Kerala High Court in Writ Appeals Nos.  134  of 1964 etc. 630     H.R.  Gokhale,  B.  Datta, 1.. B.  Dadachanji  and  O.C. Mathur, for the appellants (in all the appeals).     C.K.  Daphtary,  A.  S. Nambiar  and  Lily  Thomas,  for respondent No. 1 (in all the appeals).     D.P.  Singh and M.R.K. Pillai, for respondent No. 2  (in all the appeals).     The Judgment of the Court was delivered by     Shah,  J.  In a group of petitions presented before  the High Court of Kerala the appellants challenged the  validity of the levy of "timber-tax" by the Corporation of Calicut on the  grounds,  inter  alia, that the  State  Legislature  is incompetent  to impose that tax under the Kerala Act  30  of 1961.  Govindan Nair, J., declared that the Legislature  was incompetent  to enact s. 126 of the Calicut  City  Municipal Act, 1961 (30 of 1961).  The  decision of Govindan Nair, J., was reversed in appeal by a Division Bench of the High Court and the petitions were dismissed.     By virtue of Art. 246 read with Sch. VII, Item 52,  List II  of  the  Constitution, the State may  legislate  in  the matter  of "tax on the entry of goods into a local area  for consumption,  use or sale therein." The  appellants  contend that  s.  126  conferring authority  to  impose  timber  tax violates the restrictions upon the legislative power imposed by the Constitution and on that account is void.     Section  98 of the Act enumerates the taxes  and  duties which  the  Muncipality  may  levy  and  one  of  the  taxes described  in  el. (e) is "tax on timber  brought  into  the city".  Section  126  declares  a charge of  tax  on  timber brought  into  the  city: it provides,  (insofar  as  it  is material):                 "(1)   If  the  Council  by   a   resolution                             determine that  a tax shall be levied on timber               brought   into   the city, such tax  shall  be               levied  at  such rates,   not  exceeding  five               rupees  per ton, and in such manner as may  be               determined by the Council;                   Provided  that no tax shall be  levied  on               any  timber  brought  into the  city  in   the               course   of transit to any place  outside  the               city  and directly removed out of the city  by               rail, road or water.                  (2)  No  timber shall, except in  the  case               referred to in the proviso to sub-section  (1)               be  brought  into the city unless the tax  due

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             thereon has been paid.                  (3) The tax shall be levied on timber  kept               within  the city for sale if the  Commissioner               has reason to 631 believe that the tax, if any, due thereon has not been paid:     .     .      .     .       .     .     .     Power to make bye-laws for sale and  seizure of   timber in respect of which tax is not paid and for carrying out the provisions  relating to the levy of tax is conferred  by  s. 126(6) and s. 1369(1) of the Act. The Corporation of Calicut has  framed byelaws relating to the levy and  collection  of timber  tax. It is provided by el. 3 that the tax on  timber shall  be paid immediately on timber being brought into  the city.  Bye-law 7 provides:                    "(1)  If timber is brought into the  city               and  it  is’, claimed that it is in the course               of transit to a place outside the city and not               for consumption, use or sale within. the  city               and  if  in the opinion of  the  authority  or               officer  authorised  to  collect  the  tax  on               timber,  such  timber brought into the city is               not  for the purpose  of ’transit but for  the               purpose  of consumption, use or sale  therein,               such authority or officer may demand from  the               person  claiming exemption an amount equal  to               the   tax   leviable   for  such   timber   as               security.                    (2)  If   the person, who  has  paid  the               security satisfies Commissioner within 14 days               from  the date of payment that the  timber  in               respect  Of  which the  amount  was  paid  was               brought  into  the  city  in  the   course  of               transit ’wad not for consumption, use or  sale               therein  the  Commissioner  shall  refund  the               amount   to  such person. Otherwise  the  same               shall be appropriated to wards tax due on such               timber.               (3)  .      .     .    .     .      .      .               (4)  .     .    .     .     .      .     . The  High Court held that timber may be imported within  the limits  of  the  Corporation for four purposes--(  1  )  for consumption  in the city; (2) for use in the city;  (3)  for sale in the city;  and (4) for transit through the city, and since all the four purposes were within the enacting part of the section and the proviso. to s. 126(1) having  eliminated the  right   of  the Municipality to levy  tax  for  transit through the city, "the taxing power conferred  by entry  52, List  II  of  the Seventh Schedule  was   ensured   and  its constitutional strength and validity upheld" thereby.     Counsel for the appellants contends that the High  Court was  in  error  in holding that entry  of  timber  into  the Municipal  area  may be only for consumption, use,  or  sale within the Municipality or in the course of transit  through the  limits of the municipality. He says that the entry  may for  instance be merely for storage of the goods within  the limits  of the municipality and  a provision levying tax  on goods entering the limits of the municipality with L14 Sup.CI/69--11 632 out  specification of the purpose is beyond the  legislative power of the State.    Entry of goods within the local area for consumption, use or  sale therein is made taxable by the  State  Legislature: authority to impose a general levy of tax on entry of goods,

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into a local area is not conferred on the State  Legislature by  item 52 of List II of Sch. VII of the Constitution.  The Municipality  derives  its  power  to  tax  from  the  State Legislature  and  can  obviously  not  have  authority  more extensive  than the authority of the State  Legislature.  If the State Legislature is competent to levy a tax only on the entry  of  goods for consumption, use or sale into  a  local area, the Municipality cannot under a legislation enacted in exercise  of  the power conferred by item 52, List  II  have power to levy tax in respect of goods brought into the local area for purposes  other than consumption, use or sale.  The authority of the State Legislature itself. being subject  to a restriction in that behalf, s.  126 may reasonably be read as  subject to the same limitations. When the power  of  the Legislature with limited authority is  exercised’ in respect of a subject-matter, but words of wide  and  general  import are used, it may reasonably be presumed that the Legislature was using the words in regard to that activity in respect of which it is competent to legislate and to no other; and that the  Legislature  did not intend to  transgress  the  limits imposed by the Constitution: see In re Hindu Women’s  Rights to   Property  Act, 1937(1).   To interpret  the  expression "brought into the city" used in s. 126(1) as meaning brought into  the city for any purpose and without any.  limitations would,  in  our  judgment,  amount  to  attributing  to  the Legislature  an  intention  to  ignore  the   constitutional limitations.  The expression "brought into the city’ ’in  s. 126  was therefore rightly interpreted by the High Court  as meaning  brought into the municipal limits for  purposes  of consumption, use or sale and not for any other purpose.    While  we agree with the ultimate conclusion of the  High Court    we   may   observe   that   we   do   not    agree_ with   the   assumption  made  by  the   High   Court   that the entry of goods into the city may be only for the    four purposes  mentioned by the High Court; nor do we  hold  that the  proviso exempts from taxation timber brought  into  the city  in the course of transit even when it is not  directly removed out of the city by rail, road or water. The proviso, in our judgment, has a limited operation. It merely provides that the municipality shall not be entitled to levy a tax on timber brought into the city in the course of transit to any place outside the city and directly removed out of the  city by rail, road or water. But on that account we are unable to hold that the proviso is enacted with the object of bring- (1) [1941] F.C.R. 12. 633 ing  to tax all entry, of timber which is not  brought  into the city in the course of transit to any place outside  .the city  and directly removed out of the city by rail, road  or water.     The  appeals  fail and are dismissed. There will  be  no order as to costs in these appeals. R.K.P.S.                                 Appeals dismissed. 634