http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: MAHAPALIKA OF CITY OF AGRA

       Vs.

RESPONDENT: AGRA BRICKKILN OWNERS’ ASSOCIATION & ORS.

DATE OF JUDGMENT23/03/1976

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. CHANDRACHUD, Y.V.

CITATION:  1976 AIR 1160            1976 SCR  (3) 827  1976 SCC  (3)  42

ACT:      Constitution of  India, 1950,  Art. 276,  Government of India Act,  1935,  s.  142A(2)  and  U.P.  Nagar  Mahapalika Adhiniyam (U.P. 2 of 1959), s. 172, proviso-Scope of.

HEADNOTE:      In 1947,  the State  Government issued  a  notification imposing  a   tax  under   s.   128(1)(ii)   of   the   U.P. Municipalities  Act,   1916,  on  brick  manufacturers.  The affected assessees  filed a  suit for a declaration that the tax was  void and  not exigible.  The suit  was decreed. The appellant appealed  to the High Court. By that time the U.P. Nagar Mahapalika  Adhiniyam,  1959,  had  come  into  force, replacing  the   1916-Act.  Section   172  of  the  1959-Act corresponds to s. 128 of the 1916-Act providing for the levy of  various  types  of  taxes  on  professions,  trades  and callings. The  proviso to s. 172 provided that where any tax was  being   lawfully  levied   in  the   area  before   the commencement of  the Constitution,  such tax may continue to be levied  until  provision  to  the  contrary  is  made  by Parliament. Construing the proviso, the High Court held that the maximum tax leviable under s. 172(2), after the 1959-Act had come  into force on Feb. 1, 1960 was only Rs. 50/- since that was  the quantum  of tax levied before the commencement of the  Constitution. Section  142A(2) of  the Government of India Act,  1935, provided  that the total amount payable in respect of  any one person to any one municipality by way of taxes on  professions etc.,  shall not  exceed Rs.  50/- per annum.      Allowing the  appeal of the Mahapalika to this Court in part, ^      HELD :  The period before the Constitution of India had come into  force, that  is, before January 26, 1950, will be governed by  the maximum of Rs. 50/- fixed by the Government of India  Act. Article  276 of  the Constitution also sets a ceiling on  such taxes, but, the maximum is not Rs. 50/- but Rs. 250/-.  Therefore, for the period from January 26, 1950, to the  date when  the 1959-Act came into force, the maximum tax leviable  will be  Rs. 250/- As regards the period after Feb. 1,  1960, the  interpretation put  by the High Court on the proviso  to s.  172 that  it was only the quantum of tax

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

and not  its description  that  was  kept  alive  and  that, therefore, the  valid tax  is only  up to the maximum of Rs. 50/- mentioned  in s. 142A of the Government of India Act is erroneous. The  words ’such  tax’ in  the proviso  to s. 172 relates to  ’any tax’  and saves  all species  or classes of taxes and  does not  merely preserve  the quantum of rate of such tax.  Since the  class or species of tax is the correct connotation of  the expression  ’such tax’ and ’any tax’ the tax on  the trade  or calling  is ssved  and its  rate is as fixed in the Notification, subject to a maximum of Rs. 250/- . Therefore,  the period  after Feb.  1, 1960  will also  be controlled by  the same constitutional maximum of Rs. 250/-, unless  any   supervening  parliamentary   legislation,   as contemplated by  s. 172  of the  1959-Act, comes into being. [829 B, C, G; 830 D-G]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2446 of 1969.      Appeal by  special leave  from the  Judgment and  Order dated 7th  October, 1968 of the Allahabad High Court in S.A. No. 2001/64.      R. N. Sharma and C. P. Lal for the Appellant.      B. P. Maheshwari and Suresh Sethi for the Respondents.      The Judgment of the Court was delivered by      KRISHNA IYER,  J.-A crudely drafted plaint, with little legal light  to make  out a  good cause  of action,  somehow resulted in a decree as 828 prayed for  at the  trial  stage  and  in  appeal.  But  the defendant who  is the appellant before us, the Mahapalika of the City of Agra, pursued the matter in Second Appeal where, regardless of  the scope  of the  suit or the precise ground alleged in  the plaint,  an adverse  judgment  was  rendered affecting the  municipality in a general way. Naturally, the appellant Mahapalika has come to this Court by special leave under Art.  136 of the Constitution, overstepping the limits of law, a little, as will presently appear.      The brief facts necessary to appreciate the contentions on which  the High  Court has  pronounced may now be stated, although, in so doing, we have to depart from the pleadings. Indeed, the  questions are  of general public importance and so, apart  from technical  bounds, we proceed to declare the law.      The Agra  Municipal Board  was  governed  by  the  U.P. Municipalities Act,  1916 (Act  II of  1916). In  1947,  the State Government  issued a notification imposing a tax under s. 128(1)(ii)  of the  said  Act.  The  levy  was  on  brick manufacturers carrying  on that  trade, at  the rate  of  14 annas per  1000  bricks.  The  brick-kiln  owners  who  were affected, along  with their  Association, filed a suit for a declaration that  the tax  was void and not exigible. It may be, stated that, whatever the reasons urged in the pleadings be, the arguments, purely legal, have turned on the validity of the  tax in  the light  of s. 142(A) of the Government of India Act, 1935 and on Art. 276 of the Constitution of India vis a  vis the relevant provisions of the two municipal laws and the  notification already  referred to. One circumstance which occurred  after the  trial court  had decreed the suit deserves to  be stated  for  a  comprehension  of  the  High Court’s decision.  The U.P. Nagar Mahapalika Adhiniyam, 1959 (U.P. Act  II of  1959), came into force on February 1, 1960 repealing and  replacing the  U.P. Municipalities Act. While

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

the latter  Act provided  for levy of various types of taxes on professions, trades and callings under s. 128, the former Act which  followed, contained  a corresponding provision in s. 172  thereof. Thus,  today, s.  128 of  Act II of 1916 is longer in  force and  it is  the later  Act of 1960 which is extant.      To come  to the point straight, there are two questions on which  the High  Court  has  decided  against  the  Nagar Mahapalika.  This   can  be   understood  fully  only  by  a trifurcation  by   periodisation  of   the  municipal  law’s operation, viz., the pre-Constitution era and the post-Nagar Mahapalika Act era, with the intervening spell sandwiched in between these  two. According to the High Court, the levy of tax at the rate of 14 annas per 1000 bricks by virtue of the notification Ex. H of September 18, 1947 cannot be sustained to the extent it exceeds Rs. 50/- per person, per annum. The ground given-and,  we think,  rightly-is that  s. 142A(2) of the Government  of India  Act restricted  ’the total  amount payable in  respect of  any  one  person  ....  to  any  one municipality ...  by way  of taxes  on professions,  trades, callings and  employments, shall not ... exceed Rs. 50/- per annum’. To  the extent  to which  this ceiling was exceeded, the  constitutional   provision  stood   breached   by   the notification  and   was  void.  Therefore,  without  further argument, the  conclusion was reached by the High Court that inevitably the Municipal Board, Agra, could not levy any 829 amount by  way of  this tax in excess of Rs. 50/- on any one person per annum’.      The Government  of India  Act, 1935,  certainly  set  a maximum on  the tax on trades and callings and we agree that the High  Court was  right in  holding  that  the  Municipal Board’s right to levy tax under the notification Ex. H could be valid  only up to Rs. 50/- per year and, to the extent it went beyond  that limit,  was void.  So, we  affirm the High Court’s holding for the period upto January 26, 1950 that no sum higher  than Rs.  50/- as  set out  in the Government of India Act,  1935 can  be exacted  under s.  128 of Act II of 1916.      From the  Raj to  the  Republic  was  a  big  break  in constitutional  law,   but   there   was   some   continuity maintained. A  certain  ceiling  on  taxes  on  professions, trades, callings and employments had been set by Art. 276 of the Constitution of India, but this maximum was not Rs. 50/- as in  the Government  of India  Act, 1935 but Rs. 250/-. We may as  well extract  sub-cl.  (2)  of  Art.  276,  in  this context:           "276. Taxes  on professions,  trades, callings and      employments.-           (1) ...           (2)  The total  amount payable  in respect  of any      one person  to the  State or  to any  one municipality,      district board, local board or other local authority in      the State  by way  of  taxes  on  professions,  trades,      callings and  employments shall  not exceed two hundred      and fifty rupees per annum;           Provided that if in the financial year immediately      preceding the  commencement of  this Constitution there      was in  force in  the case  of any  State or  any  such      municipality, board  or authority a tax on professions,      trades, callings  or  employments,  the  rate,  or  the      maximum rate,  of which  exceeded two hundred and fifty      rupees per  annum, such  tax may  continue to be levied      until provision  to the  contrary is made by Parliament      by law,  and any  law so made by Parliament may be made

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

    either  generally  or  in  relation  to  any  specified      States, municipalities, boards or authorities.           (3) ......" Inevitably, it  follows that  during  the  post-Constitution period nothing  by way  of taxes on trades or callings above the limit  so set  is recoverable and hence the maximum levy from each  person under the notification issued under Act II of 1916 rises to Rs. 250/-.      A wee-bit  twilit area of law, where the High Court has wobbled and  gone wrong,  if we  may say  so  with  respect, relates to  the  period  after  the  U.P.  Nagar  Mahapalika Adhiniyam, 1959, came into force. The curious conclusion the learned Single  Judge has  reached is  that since  that date i.e. February  1, 1960,  there is to be a sudden drop in the maximum tax  leviable under  s. 172(2) of the Mahapalika Act to Rs.  50/- from  Rs. 250/- by a rather strained process of resuscitation of the Government of India Act, 1935. 830      We  must   accept  the   omnipotence  of   the   Indian Constitution so  far  as  all  legislations  are  concerned, including the  municipal laws.  Therefore, by  the force  of this paramountcy  we have read down the notification Ex.H to limit the  maximum contemplated  by it  to  Rs.  250/-,  the ceiling set by Art. 276(2) of the Constitution. But, how can the ghost  of the  Government of  India Act, which died long ago, revive to haunt the taxing laws of the Republic now and bring down  the maximum  limit from  Rs. 250/- to Rs. 50/- ? The  learned   Judge   himself   felt   that   this   seemed ’paradoxical’, but  thought that ’that is the effect of this express and  categorical proviso’. What is that proviso. The court had in mind the proviso to s. 172 of the Adhiniyam.      The  view  of  the  High  Court  stems  from  a  simple misconstruction of  the proviso  to s. 172 of the Mahapalika Act. The  said proviso operates as a saving clause affecting the whole section and may, for facility of making the point, clearly be read here:      "172 ...           Provided that  where any  tax was  being  lawfully      levied in  the area  included in  the City  immediately      before the  commencement of  the Constitution  of India      such tax  may continue to be levied and applied for the      purposes of this Act until provision to the contrary is      made by Parliament." It is  plain that ’such tax’, in this proviso relates to any tax under  s. 172  and saves all species or classes of taxes and does  not merely  preserve the  quantum or  rate of such tax. It  is typology,  not the  amount that  is saved. So it follows that  the category  of tax  on trade  or calling  is salvaged by the proviso and the notification Ex.H. survives. It is  clearly erroneous  to hold  that what is continued is the rate,  not the  description, of  tax. Of course, if only the quantum  of tax  is kept  alive on  the wording  of  the proviso,  what  remains  valid  is  only  upto  the  maximum mentioned in  s. 142A  of the Government of India Act, 1935. But  if   the  class  or  species  of  tax  is  the  correct connotation of  the expression  ’such tax’ and ’any tax’-and we have  no hesitation  to hold  that way  in  the  context, setting and  language used-the  tax on  trade or  calling is saved. The rate is as fixed in Exhibit H.      This does  not mean that anything beyond Rs. 250/- [the tax freeze  under  Art.  276(2)]  can  be  levied.  No.  The constitutional maximum  prevails as  it covers  all taxes on trade or  calling even  today. Therefore,  until  Parliament makes any  other law,  as contemplated  in the proviso to s. 172 of  the Adhiniyam,  the maximum  of Rs.  250/- binds. We

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

have to  read down  the notification Exhibit H for the post- Constitution  period,   in  tune  and  conformity  with  the Constitution and  uphold  its  validity  to  the  extent  of constitutional permissibility.      We may  thus sum  up our  conclusion. The period before the Constitution of India came to be enacted, i.e., prior to 26th January  1950, will be governed by the maximum fixed by the 1935  Act and  the Municipal  Council of  Agra  will  be entitled to  collect tax  on trade  or calling  at the  rate fixed in  Exhibit H.  but subject to the maximum of Rs. 50/- per person, as already explained. For the second period 831                      (Krishna Iyer, J.) from the  date of  the Constitution  up to  the date  of the Mahapalika Act  II of  1959, the  maximum leviable by way of tax on  trade or calling by the Mahapalika will be Rs. 250/- per person.  The post-Mahapalika  Act period  will  also  be controlled by  the same  constitutional maximum of Rs. 250/- per   person,    unless   any    supervening   parliamentary legislation, as  contemplated by  s. 172  of that Act, comes into being.      In this  view, we  allow the  appeal in part, i.e., for the period  subsequent to the passing of the Mahapalika Act, 1959 and  permit the Mahapalika to levy taxes-as per Exhibit H and  s. 172,  upto a  maximum of  Rs. 250/. Subject to the extent of  this modification, the appeal is allowed. Parties will bear their costs throughout. V.P.S.                                Appeal partly allowed. 832