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PETITIONER: ZILA PARISHAD MORADABAD

       Vs.

RESPONDENT: NUNDAN SUGAR MILLS, AMROHA

DATE OF JUDGMENT: 18/07/1967

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

CITATION:  1968 AIR   98            1968 SCR  (1)   1

ACT: U.P.  District Boards Act (X of 1928)-ss. 115-118,  119-120- District Board enhancing maximum limit of circumstances  and property   tax  by  resolution-State  Government   notifying amendment  of rules to incorporate new  limits--Whether  tax can  be imposed without further resolution under s. 119  and notification under s. 120.

HEADNOTE: In  July 1925 it was notified under s. 120(2) of the  U.  P. District  Boards  Act,  1922  that  the  District  Board  of Moradabad  in exercise of powers conferred by s.  108(2)  of the  Act  had imposed a tax with  effect  from  September-1, 1925,  on the residents of the District according  to  their circumstances  and property at the rate of 4 pice per  rupee on the total taxable income subject to a maximum of Rs. 200. In   May  1927  the  District  Board  passed  a   resolution increasing  the  maximum  from  Rs.  200  to  Rs.  500   and thereafter  the  State Government issued a  notification  in January  1928,  amending the rules  for  the  assessment-and collection of tax so as to increase the maximum to Rs.  500. In  August  1931, the Board passed  another  resolution  in- creasing  the  maximum further to Rs. 2,000  and  the  State Government  issued  a  notification in  March  1932  further amending the rules so as to incorporate the new maximum.  No further  action was taken by the District Board  to  enforce these amendments of the rules. Upon  a writ filed by the respondents under Act, 226 of  the Constitution,  the High Court directed the  District  Board, Moradabad,  not to levy upon the respondent a tax in  excess of Rs. 200 per year on the ground that no special resolution of  the Board had been passed nor a notification  issued  by the  State  under ss. 119 and 120 respectively  of  the  Act imposing the tax with revised maximum limits. In appeal to the Supreme Court it was contended on behalf of the appellant that when the procedure laid down in ss.  1.15 to  118  had been followed whereby the amendments  had  been approved  by resolutions and notified, it was not  necessary that  there should be a further resolution and  notification under s. 119 and s. 120 respectively. Held:     The tax with the revised maximum limits introduced

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in  1928 and 1932 could not be imposed without a  resolution under s. 119 and a notification under s. 120. [5B] The object of ss. 119 and 120 is to fix the date from  which the tax can be imposed.  If no date is fixed, no tax can  be imposed.  Once the Board passes a special resolution  under, s.  119,  it has to go to the Government under s.  120,  and then the Government notifies the imposition of tax from  the appointed  date.. It is then that the  notification  becomes conclusive  Proof of the fact that the tax has been  imposed in accordance with the provisions of this Act Sub-clause (3) of s. 120 clearly proceeds on the basis that the  imposition of tax takes place on a notification issued under s. 120 and not on the issue of a notification under s. 118. [4G-5A] Raza  Buland  Sugar  Co. Ltd. v.  Municipal  Board,  Rampur, [1965] 1 S.C.R. 970; referred to. N)1SCI 2

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 596 of 1966. Appeal  by special leave from the judgment and  order  dated January  27,  1964 of the Allahabad High  Court  in  Special Appeal No. 270 of 1958. S.   T. Desai and C. P. Lal, for the appellant. C.   B. Agarwala and J. P. Agarwal, for the respondent. The Judgment of the Court was delivered by Sikri, J.--This appeal by special leave is directed  against the  judgment  of the High Court of  Allahabad  accepting  a petition  under Art. 226 of the Constitution  and  directing the  District Board, Moradabad, not to levy upon M/s  Nundan Sugar  Mills,, Amroha, respondent before  us,  circumstances and  property tax for any one year exceeding the sum of  Rs. 200.  The High Court held that no special resolution of  the Board  had  been passed, nor had a  notification  been  made imposing the tax, under S. 119 and s. 120, respectively,  of the United Provinces District Boards Act, 1922 (U.  P. Act of 1922)-hereinafter referred to as the Act. The relevant facts out of which this appeal arises are these On July 28, 1925, it was notified under sub-s. (2) of s. 120 of the Act that the District Board of Moradabad, in exercise of  the powers conferred by s. 108, sub-s. (2), of  the  Act has imposed the following tax, with effect from September 1, 1925:               "A tax on. all persons ordinarily residing  or               carrying on business in the rural area of  the               Moradabad   District   according   to    their               circumstances  and  property, at the  rate  of               four  pies  per  rupee on  the  total  taxable               income; provided that the total amount of               tax imposed on any person shall not exceed Rs.               200.   Provided  also  that  no  income   once               assessed shall be reassessed". On May 28, 1927, the District Board took action upon a memo- randum prepared by the Chairman of the District Board.   The memorandum of the Chairman pointed out:               ".........   the   maximum   amount   of   tax               recoverable from an assessee should be  raised               from  Rs.  200/-  to  Rs.  500/-  P.A.   Hence               proposal   (c)   framed  under   section   115               sanctioned  by  G. 0. No dated 28-7-25  so  be               modified as to read as under:               "That  there shall be a rate of tax 4 pies  in               the rupee... provided that the total amount of

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             tax imposed on any person shall not exceed Rs.               5001               The  resolution  of  the Board  was  in  these               terms:               "The  bye-laws be modified  accordingly  after               necessary   publication  and  sanction.    The               assessing  officer  to assess them at  2  pies               (sic) in anticipation of final sanction". 3 On  January  11, 1928, the Government  of  United  Provinces issued a, notification amending the rules for the assessment and collection of a tax on circumstances and property in the rural  areas of the Moradabad District.  The following  rule 16 was added:               "16.   The total amount of tax imposed on  any               person shall not in any year exceed the sum of               Rs. 5001-." On  August  31, 1931, the Board  passed  another  resolution approving the following memorandum:               "........  The words and figures ’Rs. 500’  be               substituted  by ’Rs. 2,000’ in rule 16 of  the               rules  for the assessment and collection of  a               tax on circumstances and property in the rural               area of the Moradabad district published  with               Government Notification No.........dated 11-1-               1928". The exact terms of the resolution were:               "Resolved   unanimously   that   thememo.   be               approved  and  necessary action  be  taken  on               it.If publication is required, it be done  and               Government be moved to accord sanction for the               same". On March 18, 1932, the Government of United Provinces issued a  notification amending rule 16.  The amendment it  was  in the following terms:               "In  Rule 16 published with  notification  No.               33/IX185(14-24)  dated January 19,  1928  ’Rs.               2,000’ shall be substituted for ’Rs. 500". It appears that no further action was taken by the  District Board to enforce this amendment in rule 16 or the  amendment dated  January 11, 1928.  Further action is contemplated  by ss.  119  and  120, read with s. 12 1, of  the  Act.   These sections may be reproduced in full.               "   119.    Resolution  of   board   directing               imposition of tax--               Upon  receipt  of the copy of the  rules  sent               under  the preceding section, the board  shall               by special resolution direct the imposition of               the  tax  with  effect  from  a  date  (to  be               specified in the resolution) not less than six               weeks from the date of such resolution".               "  120.  Imposition of tax-(1) A copy  of  the               resolution  passed by the board under  Section               119   shall   be  submitted   to   the   State               Government.  (2) Upon receipt of the  copy  of               the  resolution  the  State  Government  shall               notify in the official Gazette the  imposition               of  the tax from the appointed date,  and  the               imposition of a tax shall in all cases be sub-               ject  to  the condition that it  has  been  so               notified. (3) A notification of the imposition               of  a  tax  Linder sub-section  (2)  shall  be               conclusive proof that the tax has been imposed               in  accordance  with the  provisions  of  this               Act".

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             4               "121. Procedure    for   altering    taxes-The               procedure for abolishing or suspending a  tax,               or  for  altering  a tax  in  respect  of  the               matters  specified in clauses (b) and  (c)  of               sub-section  (1) of Section 115 shall, so  far               as  may  be, be the  procedure  prescribed  by               Sections  115 to 120 for the imposition  of  a               tax".               Clauses  (b) and (c) of sub-section (1) of  s.               115, referred to in s. 121, read:               "(b)  the  persons or class of persons  to  be               made   liable  and  the  description  of   the               property    or   other   taxable   thing    or               circumstances in respect of which they are  to               be made liable, except where and in so far  as               any  such  class ,or  description  is  already               sufficiently defined under clause               (a)   or by this Act-,               (c)   the  amount or rate leviable  from  each               such person or               class of persons;" It is common ground that the procedure laid down in ss.   II 5  to 118 has been followed by the Board.  The only  dispute between  the  parties  is whether it  is  necessary  that  a resolution should be passed under s. 119 and a  notification issued  under  s.  120  before effect  can  be  given  to  a notification made under s. 118 altering the rules.  In other words,  was it necessary to pass a resolution under  s.  119 after the issue of the notification dated March 18, 1932, or the notification dated January 11, 1928, referred to  above? Both  the learned Single Judge, and the Division  Bench  who heard the appeal from the learned Single Judge, have come to the conclusion that without a resolution under s. 119 and  a notification under s. 120, no tax can be levied in pursuance of  the notification dated March 18, 1932,  or  notification dated January 11, 1928. It  may  be  mentioned  that the  High  Court  directed  the District Board not to-levy upon the petitioner circumstances and  property  tax  for any year exceeding the  sum  of  Rs. 200/-.   There is no dispute that the Board could levy  upon the petitioner tax up to the sum of Rs. 200/-. The  learned counsel for the appellant contends that if  the procedure laid down in ss. 115 to 118 has been followed,  it is not necessary that there should be a resolution under  s. 119 and a notification under s. 120.  He says that rules can be  made  under s. 172, read with s. 1.76, of the  Act,  and once  rules are made there is nothing more to be done.   But there is one fallacy underlying the argument of the  learned counsel,  and that is that it misses the object of  ss.  119 and  120 which is to fix the date from which the tax can  be imposed.  If no date is fixed, no tax can be imposed.   Once the  Board passes a special resolution under s. 119, it  has to  go  to  the  Government  under  s.  120,  and  then  the Government notifies the imposition of tax from the appointed date.   It is then that the notification becomes  conclusive proof of the fact that the 5 tax  has been imposed in accordance with the  provisions  of this Act.  Sub-clause (3) of S. 120 clearly proceeds on  the basis   that  the  imposition  of  tax  takes  place  on   a notification  issued under s. 120 and not on the issue of  a notification under S. 118. The  learned  counsel invited our attention to  Raza  Buland Sugar  Co.  Ltd. v. Municipal Board, Rampur(1)  but  we  are

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unable to see how that case assists him.  No question of ss. 119 and 120 being directory arises in this case because,  in our   view,  without  a  resolution  under  s.  119  and   a notification under s. 120, no tax can be imposed. The learned counsel also urges that:-               (a)   no   writ   petition   is   maintainable               challenging a preConstitution matter, and               (b)   the respondent not having appealed under               S.  128  of  the Act,  the  petition  was  not               maintainable. In  our view, there is no merit in these  contentions.   The respondent is being charged tax now.  He is entitled not  to be taxed  except  under the authority of law, vide Art.  265 of  the Constitution.  There is no question  of  challenging any pre-Constitution matter.  The respondent is  challenging a  post-Constitution action on the ground that there  is  no authority of law for the action. Regarding  the  second point, the High Court  held  that  an appeal  to  the  District Magistrate under s.  128  was  not likely  to  be  of much assistance  to  the  petitioner  and rejected  the  contention.   It  is  well-settled  that   a, provision like s. 128 does not oust the jurisdiction of  the High Court to entertain a petition under Art. 226 and it  is for  the  High Court to exercise its discretion  whether  to entertain the petition or not.  The learned counsel has  not pointed  out anything to us to show that the discretion  has not been  properly exercised. In the result the appeal fails and is dismissed with costs. R.K.P.S. Appeal dismissed (1) [1905] 1 S.C.R. 970,      6