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CASE NO.: Appeal (civil)  4498 of 2002

PETITIONER: Ramgarh Cantonment Board & Anr.

RESPONDENT: State of Jharkhand & Ors.

DATE OF JUDGMENT: 11/03/2008

BENCH: Ashok Bhan & Dalveer Bhandari

JUDGMENT: J U D G M E N T

Dalveer Bhandari, J.

1.      This appeal is directed against the judgment passed in  Letters Patent Appeal No.556 of 2001 dated 4th October, 2001  delivered by the High Court of Jharkhand at Ranchi.       2       The central question which arises for adjudication in this  appeal is regarding the power, competence and authority of the  Cantonment Board to levy entry tax on vehicles entering into the  cantonment area.       3.      Appellant No.1, Ramgarh Cantonment Board, a board  constituted under the Cantonments Act, 1924 (hereinafter  referred to as the Act), in exercise of the power vested in it under  section 60 of the Act invited tender for collection of vehicle tax  entering into Ramgarh Cantonment Area.  Respondent no.3 in  this appeal, Mukesh Prasad being the highest bidder was  awarded the contract and was asked to realize vehicle tax at the  rate of Rs.10/- from each goods vehicle entering into the  Ramgarh Cantonment Area for a period of six months starting  from 12.3.2001.  Respondent no.3 deposited the earnest money.   On 8.3.200, a formal agreement was executed between  respondent no.3 and the Cantonment Board.  The Cantonment  Board immediately after executing the said agreement issued a  letter dated 11.3.2001 restraining respondent no.3 from  collecting vehicle entry tax on the directions of the Deputy  Commissioner, Hazaribagh, Bihar.         4.      The Secretary, Road Construction Department, Ranchi vide  letter dated 30.5.2001 informed that prior permission of the  Ministry of Road Transport and the National Highway,  Government of India was necessary for the purpose of putting  barriers to collect tax on the national highway.  The Cantonment  Board is entitled to collect only those taxes which can be realized  by the municipality.  In other words, the Cantonment Board  cannot levy the tax which cannot be levied by the Municipality.       5.      On 26.7.2001, the learned Single Judge allowed the writ  petition filed by respondent No.3 by holding that the Deputy  Commissioner, Hazaribagh could not restrain the Cantonment  Board from levying of entry tax on goods vehicles passing  through the Cantonment Board Area.  The learned Single Judge  quashed the order by which restriction on collecting entry tax  was placed by the Deputy Commissioner, Hazaribagh.       6.      The State of Jharkhand, aggrieved by the order of the  learned Single Judge, preferred an appeal under clause 10 of the

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Letters Patent.  The Division Bench in the impugned judgment  comprehensively examined the power, authority and competence  of the Cantonment Board in levying entry tax on vehicles  entering into the Cantonment Area.  The Cantonments Act, 1924  is vested with section 60 which is the source of power, authority  and jurisdiction for imposition of levy of tax.  Section 60 reads as  under:- \02360. General power of taxation-(1) The Board may,  with the previous sanction of the Central Government,  impose in any cantonment any tax which, under any  enactment for the time being in force, may be imposed  in any municipality in the State wherein such  cantonment is situated.  (2) Any tax imposed under this section shall take effect  from the date of its notification in the Official Gazette  or where any later date is specified in this behalf in  the notification, from such later date.\024      7.      A bare reading of sub-section (1) of section 60 clearly  reveals that the power to levy any tax is dependent upon and co- extensive  with any such corresponding power which may vest in  the municipality being relatable to and dependent upon  legislative enactment concerning, governing or regulating the  powers of such municipality.       8.      The Division Bench has rightly held that sub-section (1) of  section 60 of the Cantonments Act, 1924 is not totally an  independent provision by itself, in the sense that the power by  itself has not been given to the Board to levy tax and the  provision is related to and dependent upon any corresponding  analogous provision in a legislative enactment of the  municipality.  In other words, if the municipality in an area has  the power to levy tax under a relevant enactment, by virtue of the  power created under sub-section (1) of section 60, the same  power would vest in a Cantonment Board.  In order to find out  whether the Cantonment Board has any power to levy entry tax,  it is necessary to find whether the municipality has similar  power to levy entry tax.       9.      Chapter IV of the Bihar and Orissa Municipal Act, 1922   (for short 1922 Act) deals with the subject of municipal taxation.   Part-I of Chapter IV deals with the subject of imposition of taxes.   The relevant portion of section 82 reads as under:- \02382. Power to impose taxes.-(1) The Commissioners  may, from time to time at a meeting convened  expressly for the purpose, of which due notice shall  have been given subject to the provisions of this Act  and with the sanction of the State Government,  impose within the limits of the municipality the  following taxes and fees, or any of them \026  

 xxx           xxx                     xxx

     xxx               xxx                     xxx

(f) a tax on the vehicles, horses and other  animals  named in the First Schedule.

xxx               xxx                   xxx.\024

10.     Under section 82 taxes and fees can be imposed on vehicles  and other animals named in the First Schedule.  Therefore, it is  imperative for us to find out what has been incorporated in the  First Schedule.  First Schedule of the Municipality Act 1922 is  extracted as under:-

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    \023The First Schedule\024

TAX ON VEHICLES, HORSES AND OTHER ANIMALS

per quarter      Rs.    P.

For every four-wheeled vehicle drawn by two  horses.

10.00 For every four-wheeled vehicle other than those  specified above.

5.00 For every two-wheeled vehicle including a  Shampani, but excluding a bicycle.

4.00 For every bicycle 1.00 For every cycle rickshaw 2.50 For every jin rickshaw 2.00 For every horse other than a pony 2.00 For every pony, mule, or donkey 1.00 For every elephant 6.00 For every camel 2.00\024

11.     Part IV of Chapter IV deals with tax on vehicles, horses and  other animals.  It would be appropriate to notice the relevant  portion of section 137, which deals with tax on vehicles, horses  and other animals  The relevant portion of section 137  reproduced as under:- \023137. Tax on vehicles, horses and other animals.\027 (1) When it has been determined that a tax on the  vehicles, horses and other animals specified in the  First Schedule shall be imposed, the Commissioners  at a meeting shall, subject to the provisions of section  138, make an order that the owner of every vehicle,  horse and every other animal of the kind specified in  the said schedule, which is kept or is used in the  ordinary course within the municipality, or which is  kept without the municipality and is used in the  ordinary course within it, shall pay the tax in respect  of such vehicle, horse or other animal and shall cause  such order to be published in the manner described in  section 356.

(2)             xxx         xxx xxx       (3)     Such tax shall not be payable in respect of \026

(a)     xxx          xxx        xxx

(b)     vehicles and animals registered under  Chapter X;

(c)     xxx         xxx xxx

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       xxx             xxx         xxx\024

12.     Sub-clause (3) of section 137 clearly lays down that such  tax shall not be payable in respect of vehicles and animals  registered under Chapter X.  Chapter X deals with \021Vehicles  plying for hire\022.  Section 326 of the 1922 Act deals with power to  make bye-laws to regulate motor cars and vehicles plying for  hire.  Therefore, it is necessary to reproduce section 326 also.    The relevant portion of section 326 reads as under:- \023326.  Power to make bye-laws to regulate motor- cars and vehicles plying for hire \026 (1) The  Commissioners at a meeting may make bye-laws to  regulate motor cars and vehicles used for the  conveyance of passengers which are kept or are  offered or ply for hire within the municipality whether  by times or by distance, and may by such bye-laws  provide for all matters relating to such motor cars and  vehicles in respect of which this Act makes no  provision or insufficient provision and provision is  declared by the Commissioners, with the sanction of  the State Government, to be necessary :

Provided that such bye-laws shall not \026

(a)     apply to any vehicle used on a railway or  tramway; and

(b)     impose any fees for the registration of motor  cars or for the grant of a licence to drive a  motor car.

    xxx                xxx             xxx\024

13.     According to section 326, all vehicles plying for hire have  been specifically excluded from levying of such tax by the  municipality and consequently the Cantonment Board also has  no power or competence to levy entry tax on vehicle which ply for  hire.  

14.     The \021vehicle\022 and \021motor car\022 have been defined in sections  3(30) and 3(30-A) respectively of the 1922 Act.  The definitions  contained in sections 3(30) and 3(30A) read as under:- \0233(30).      \023Vehicle\024 means a wheeled conveyance,  other than a motor car capable of being used on a  road and includes a tricycle, bicycle, cycle rickshaw, a  jinrickshaw and a shampani.\024

\0233(30-A).    \023Motor car\024 means any mechanically  propelled vehicle adopted for use upon roads whether  the power of propulsion is transmitted thereto from an  external or internal source and includes a chassis to  which a body has not been attached and a trailer; but  does not include a vehicle running upon fixed rails or  used solely upon the premises of the owner.\024

        15.     Therefore, from the bare reading of the relevant provisions  and definition of vehicle and motor car given in the Act, it is  abundantly clear that the municipality has no power to levy any  entry tax on mechanically propelled vehicles.  When the  municipality has no power or competence to levy entry tax on  mechanically propelled vehicles, obviously the Cantonment  Board cannot exercise this power because taxing power of the

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Cantonment Board is dependent upon and co-extensive with any  such corresponding power vested in the municipality.          16.     In the impugned judgment, the Division Bench observed  that a combined reading of sections 82 and 137 and also a bare  look at the First Schedule of 1922 Act clearly suggest that the  Municipality in Bihar under 1922 Act has the power, authority  and jurisdiction to levy tax on the vehicles as are enumerated in  the First Schedule, but such tax is leviable only in respect of  such vehicles which are kept or are used in the ordinary course  within the municipality.  This is fortified by the fact that in the  First Schedule the tax rate is with respect to per quarter.         17.     Section 150 of 1922 Act defines \023used in the ordinary  course\024.  The same is reproduced as under:      \023A vehicle, horse or other animal shall be deemed  to be used in the ordinary course within the meaning  of section 137 if it is used on an average thrice a  week.\024                 18.     In section 137 it has been determined that a tax on the  vehicles, horses and other animals specified in the First  Schedule alone can be imposed and the First Schedule, as  extracted above clearly excludes all mechanically propelled  vehicles.         19.     According to section 137, the words that the tax can be  levied on every vehicle, horse or other animal of the kind  specified in the Schedule which is kept or is used in the ordinary  course within the municipality, means that the vehicle, horse or  other animal which is kept or used in the ordinary course within  the municipality would be obliged to pay such tax.  This  obviously does not include levy of entry tax for mechanically  propelled vehicles.  Thus, Sections 82 and 137 or any other  provision of the 1922 Act does not permit the municipality to levy  any entry tax on mechanically propelled vehicles.  Since the  municipality has no such power, competence or authority to levy  tax on entry of mechanically propelled vehicles, the Cantonment  Board, Ramgarh, Bihar obviously cannot exercise those powers.       20.     The learned counsel for the appellants placed reliance on  the case of Cantonment Board, Mhow & Another v. M.P. State  Road Transport Corporation (1997) 9 SCC 450.  This case was  cited for the proposition that since the Cantonment Board in  Madhya Pradesh has been permitted to levy entry tax on motor  vehicles, therefore, the Cantonment Board, Ramgarh, Bihar in  the instant case, is also justified in levying entry tax on motor  vehicles.  In order to avoid any confusion or misunderstanding,  we deem it appropriate to deal with the said case of Madhya  Pradesh in detail.        21.     The Madhya Pradesh State Legislature has specifically given  power under section 127 of the M.P. Municipalities Act, 1961 to  the municipalities of Madhya Pradesh to levy entry tax on the  vehicle.  It may be pertinent to observe that no power to levy  entry tax has been given to the municipalities in Bihar under the  1922 Act.        22.     Relevant portion of section 127 of the M.P. Municipalities  Act, 1961 reads as under:- \023127. Taxes which may be imposed.\027(1) A Council  may, from time to time, and subject to the provisions  of this Chapter, and any general or special order  which the State Government may make in this behalf,

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impose in the whole or in any part of the Municipality  any of the following taxes, for the purposes of this Act,  namely:    (i)  *       *       *    (ii) *       *       *    (iii) a tax on vehicles, boats and animals used as  aforesaid entering the limits of the Municipality but  not liable to taxation under clause (ii).\024

     23.     Therefore, the vehicle entry tax levied by the municipalities  in Madhya Pradesh is because of the specific power given by the  Legislature to the municipalities in Madhya Pradesh to levy such  tax.  Once the municipality is invested with the power to levy  entry tax, the Cantonment Board can also exercise the same  power.  No such power is given to the municipalities in Bihar  under the 1922 Act and consequently, the Cantonment Board,  Ramgarh, Bihar cannot levy vehicle entry tax for the vehicles  entering into the Ramgarh Cantonment Board area.  On the  analogy of the Madhya Pradesh case, it cannot be concluded that  the Ramgarh Cantonment Board is also justified in levying the  vehicle entry tax.        24.     We make it clear that levying tax on motor vehicle used or  kept for use is entirely different from levying vehicle entry tax.   We deem it appropriate to extract para 14 of the judgment of  Madhya Pradesh case (supra) which will further clarify the legal  position. \02314. The tax leviable on motor vehicles when used or  kept for use under Section 3(2) of the Madhya Pradesh  Motor Vehicles Taxation Act is different from the tax  leviable on motor vehicles entering the limits of the  Municipality under Section 127(1)(iii) of the Madhya  Pradesh Municipalities Act, 1961 and there is no  repugnancy between the two and both the provisions  can therefore operate in their own fields. Since under  Section 127(1)(iii) of the Municipalities Act,  Municipality could levy a tax on motor vehicles  entering the limits of the Municipality, the same could  be levied by the Cantonment Board in exercise of its  power under Section 60 of the Cantonments Act with  the previous sanction of the Central Government.  Consequently, notifications issued by the Cantonment  Boards of Mhow, Jabalpur and Saugor were valid  notifications issued under Section 60 of the  Cantonments Act and imposition of tax on motor  vehicles entering into the limits of the Cantonment  Boards cannot be said to be invalid or inoperative. The  High Court in our opinion committed error in striking  down those notifications on the ground of repugnancy  with this special legislation, namely, the Madhya  Pradesh Motor Vehicles Taxation Act.\024          25.     In the said judgment this court held that the Cantonment  Board is entitled to levy entry tax on motor vehicles within the  limits of the Cantonment Board.  This was justified on the  ground that similar power was vested in the concerned  municipality.  It is again reiterated that, in the instant case, the  Bihar legislature has not given powers to the municipalities to  levy entry tax, therefore, the Cantonment Board, Ramgarh lacks  an authority or competence to levy entry tax on motor vehicles  entering into the Cantonment Board area.  In this view of the  matter, Madhya Pradesh case (supra) has no application as far  as the instant case of the appellants is concerned.        

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26.     The learned counsel for the appellants has also placed  reliance on Avinash & Others v. State of Maharashtra &  Others  [2004(2) Mah. L.J. 511] and The Secunderabad  Cantonment Board, Secundereabad v. M/s Allied Trading  Corporation & Another [1997 (1) Andhra Weekly Reporter 160].   Since we have already dealt with the Madhya Pradesh case in  detail, therefore, it is not necessary to deal with the facts of the  aforementioned cases in detail, but on the same analogy it is  reiterated that these cases have no application to the controversy  involved in the present case.  The Division Bench in the  impugned judgment rightly observed that the Deputy  Commissioner, Hazaribagh was fully justified in objecting to levy  of impugned tax by the Cantonment Board since similar powers  were not given to the concerned municipalities in Bihar to levy  vehicle entry tax.  In view of the legislative scheme, the  Cantonment Board was precluded from levying such an entry  tax.                27.     We have heard the learned counsel for the parties at length  and perused the relevant provisions. It is abundantly clear that  the power to levy tax under section 137 for vehicle which is used  in the ordinary course within the municipality or which is kept  without the municipality and is used in the ordinary course  within it, is different from levying vehicle entry tax.   What is  permissible according to Act is imposing tax within the  parameters of section 137 for vehicles, horses and other animals  for being kept in the ordinary course within municipality and is  used in the ordinary course within it than levying entry tax by  the Cantonment Board.  The Cantonment Board did not have  any authority or competence to levy tax on the entry of vehicles  in the Cantonment area under section 60 of the Cantonment Act,  1924.  The conclusions arrived at by the impugned judgment of  the Division Bench are quite justified and no interference is  called for.                28.     Before we part with the judgment we would like to observe  that, according to respondent No. 3, the Cantonment Board  authorised respondent no.3 vide order dated 3.3.2001 to realize  the vehicle entry tax and in pursuance to an agreement between  the Cantonment Board and respondent no.3, respondent no.3  deposited Rs.25,000/- and in the auction respondent no.3, being  the highest bidder, deposited Rs.3.35 lacs as per the resolution  of the Board of the Cantonment Board dated 28.2.2001.  In the  peculiar facts and circumstances of this case, whatever amount  has been deposited by respondent no.3 shall be refunded to him  within eight weeks because according to respondent no.3 in view  of the restraint order, respondent no.3 could not collect any  amount towards the levy of entry tax on vehicles.  This direction  is given while keeping the well known Legal Principle of equity,  fairness and good conscience in view.  No further directions are  necessary.                          29.     This appeal is accordingly dismissed with costs.