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PETITIONER: MUNICIPAL COMMITTEE, AKOT

       Vs.

RESPONDENT: MANILAL MANEKJI PVT.  LTD.  AND ANOTHER

DATE OF JUDGMENT: 17/11/1966

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

CITATION:  1967 AIR 1201            1967 SCR  (2) 100  CITATOR INFO :  F          1970 SC1002  (11)  R          1980 SC 428  (4,5,6,16,18)

ACT: Constitution of India, Article 276-Municipal taxes levied by two notifications under the Berar Municipal Law, 1886,-after its  repeal notifications continued in operation  by  saving clause  In  C.P. Municipalities Act,  1922-which  was  later amended  and  re-named C.P. and  Berar  Municipalities  Act, 1922-Central  Profession Tax Limitation Act,  1941  limiting municipal  taxes-s.  3 read with item 4 of  Schedule  saving taxes  levied  under C.P. Municipalities  Act,  1922-Whether taxes  under  two  notifications  saved  and  in  force   at commencement of Constitution-or whether hit by Art. 276(2).

HEADNOTE: The   appellant  Municipality  which  was  constituted   and empowered to impose certain taxes under the Berar  Municipal Law,  1886,  by one notification in 1899 imposed  a  tax  on professions and trades practised in the Municipality; and by another  issued  in 1908, imposed a tax on the  ginning  and pressing of cotton. The  Berar  Municipal Law was repealed in 1924  and  in  its place the C.P. Municipalities Act (11 of 1922), with certain modifications, was applied to Berar.  By virtue of a  saving provision  in  s.  66(6) of the Act,  any  taxes  previously imposed  by  a Municipality continued in operation  even  if they  were not specified in the Act.  After Berar  became  a part  of British India, by the Berar Laws  (Provincial)  Act (XV  of 1941), which came into force on August 1,  1941  and which  was passed by the Governor of the  Central  Provinces and Berar under s. 93 of the Government of India Act,  1935, various  acts including the C.P. Municipalities  Act.  1922, were amended and extended to Berar.  The title of Act 11  of 1922  became the Central Provinces and Berar  Municipalities Act,  1922,  and although the Act as previously  applied  to Berar was to cease to have effect, notifications etc. deemed to  have been made or issued under the  C.P.  Municipalities Act, 1922 were saved. In the meantime, by the Profession Tax Limitation Act (XX of

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1941), passed by the Central Assembly, which came into force on  April  1,  1941, taxes payable to  a  Municipality  were restricted  by s. 2 of the Act in respect of any one  person to Rs. 50 per annum.  However, by s. 3 ’read with item 4  of the Schedule to the Act, any tax levied by a Municipality in respect of any profession, trade, calling etc. imposed under s.  66(1)(b)  of the.  C.P. Municipalities  Act,  1922,  was exempted from the restriction contained in s. 2. The respondents filed writ petitions under Arts. 226 and 227 challenging  certain demands made on them by  the  Municipal Committee,  Akot,  in respect of tax levied  under  the  two notifications  of 1899 and 1908.  It was contended  by  them that in view of Art. 276, the notifications under which  the tax  was imposed could not be enforced except to the  extent Provided under Art. 276(2) of the Constitution.  The case of the  Municipal Committee was that the notifications were  in force   immediately   before   the   commencement   of   the Constitution and therefore were not hit by Art. 276(2).  The High   Court  rejected  this  contention  and  allowed   the petition. 101 In  the appeal to this Court it was contended on  behalf  of the  appellant committee that item 4 in the Schedule to  Act XX of 1941 covered the impugned tax because the Act was  the same under which the tax was being imposed and recovered and the  fact  that the title of the  C.P.  Municipalities  Act, 1922, was changed by the Berar Laws (Provincial) Act,  1941, did  not make any different; that if a tax was deemed to  be imposed  under the C.P. and Berar Municipalities Act,  1922, it  was  still  a tax imposed under s.  66(1)  of  the  C.P. Municipalities  Act,  1922; and that it was a case  of  mis- descriation that the    word Berar had not been mentioned in item 4 of the Schedule. HELD:Dismissing the appeal: 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  the 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’ in item 4 meant that the taxes which  can be  continued to be levied should have been  imposed  before Act XX of 1941 came into force.  This would be in consonance with  s.  142A(2)  of the Government  of  India  Act,  1935, restricting municipal taxes in respect of any one person  to Rs. 50 per annum from March 31., 1939.  The proviso to  this Section enabled the Dominion Legislature to make a  contrary provision  where a higher rate was previously in force,  but it could not under the proviso authorise a fresh  imposition exceeding Rs. 50. [106 H-107 D]

JUDGMENT: CIVIL  APPELLATE 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

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Applications Nos. 470 of 1962 and 447 of 1963. S.   V.  Gupte,  Solicitor-General and Naunit Lal,  for  the appellant (in both the appeals). 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 respondent No. 2 (in C.A. No. 1611 of 1966). S.V. Kherdekar and A. G. Ratnaparkhi, for the  respondent (in C.A. No. 1612 of 1966). The Judgment of the Court was delivered by Sikri,  J. These two appeals involve the same point and  can be  conveniently  disposed of by one common  judgment.   The relevant facts may be given from one appeal only. 102 The  respondents,  Manilal  Manekji  Pvt.   Ltd.,  filed   a petition under arts. 226 and 227 of the Constitution in  the High  Court of Judicature at Bombay, Nagpur  Bench,  praying that  certain  demands made by the Municipality of  Akot  be quashed  and that the Municipality be ordered to refund  the advance  deposit  which  the  respondent  had  made.   These demands 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 which the tax was imposed could not  be enforced except to the extent provided 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 Constitution and,  therefore, were not hit by art. 276(2). It  is  now  necessary  to  set  out  the  history  of   the notifications and the various municipal 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 Berar Municipal Law, 1886, the  Committee was  empowered to impose certain taxes. it may be  mentioned that  the  Berar  Municipal Law, 1886,  was  promulgated  by Notification  No.  3938-1  dated November 5,  1886,  by  the Viceroy  and  Governor-General in Council.   Berar,  at  the relevant  time,  was  not part of the  British  India.   The Municipal Committee, Akot, issued notification No. 98, dated March  14,  1899,  regarding levy of  profession  tax.   The relevant part of the notification reads as follows:               "With  reference to section 44, clause (9)  of               the  Berar  Municipal Law 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               Ist April 1899, of a tax under section 41  (I)               A(b)  of  the law, on professions  and  trades               practised in that Municipality subject to  the               following rule.               (1)The tax shall, subject to the  following               provision,  be assessable on every person  who               practises any profession or art, or any  trade               in the Akot Municipality the whole or any part               of whose income derived from any sources other               than agriculture is not less than Rs. 100  per               annum,  at the rate of one and a  quarter  per               cent  on the taxable portion of his  estimated               income  derived from any such source  provided               that,               (i)No  person or firm shall be assessed  at  a               sum  exceeding Rs. 500 per annum or less  than

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             eight annas.."               Another  notification was issued on  July  13,               1908, in the following terms: 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 Ist 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 Akot Municipality, the trade of ginning               cotton  and  pressing the same into  bales  by               means  of steam or mechanical process, at  the               following rates:               (1)   For  each  boja of ten maunds  ginned  8               pies.               (2) Foreach   bale  of   fourteen   maunds               pressed 10 pies.               The taxis 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 by the Indian (Foreign Jurisdiction)               Order in Council, 1902 and of all other powers               enabling  him  in that behalf,  the  Governor-               General  in Council is pelased to direct  that               the following further amendments shall be made               in  the First Schedule to the Notification  of               the   Government  of  India  in  the   Foreign               Department,  No.  3510-I.  B.  dated  the  3rd               November, 1913, applying certain enactments to               Berar, namely:               After  Entry No.149 the following entry  shall               be inserted,, namely:      "150. The Central Provinces   (1) In Section 2      Municipalities Act, 1922 ( 11      of 1922).                      (a) for sub-section (1)                                     the following    shall                                     be substituted, namely:                               "(1) The Berar Municipal Law,                                 1886, is hereby repealed."                            (b) in sub-section (2), for the                               words "Acts" the word "Law"                                   shall be substituted." It  is not necessary to set out all the amendments  made  by the  notification  in the Central  Provinces  Municipalities Act,  1922.  The effect of this notification, in brief,  was to  apply  the Central Provinces Municipalities  Act,  1922, with certain modifications, to, 104 Berar  and  to  repeal the Berar Municipal  Law,  1886,  and further  to ,save the taxes imposed and other acts  done  by the  Municipalities  by  deeming them  to  have  been  made, imposed  or assessed under the Central Provinces  and  Berar Act, 1922 (2 of 1922) as applied 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 (1)", and sub-s. (7)  of

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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 amount or rate thereof. The  law  as applied to Berar, although called  the  Central Provinces Municipalities Act, 1922, was not the same law  as the Central Provinces Municipalities Act, 1922, as in  force in the Central Provinces. On  August 1, 1941, the Central Provinces and Berar Act  (XV of 1941)--called the Berar Laws (Provincial) Act,  1941-came into  -force.  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 Berar  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 Central Provinces Municipalities Act, 1922:               "(1)  To  sub-section (2) of section  12,  the               following proviso shall be added, namely:-               "Provided  that  in the case of  two  adjacent               Municipalities  in Berar the State  Government               may by a general or special order exclude  the               residents of one municipality from voting in a               special  constituency  of  the  other  munici-               pality.  "               (2)   After sub-section (5) of section 66, the               following   subsection  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 (1).                105               (5B) A committee in Berar may abolish any  tax               to  which  sub-section (5A) applies as  if  it               were a tax imposed under this Act but may  not               vary the amount or rate thereof." As  a result of s. 2(2) of the Central Provinces  and  Berar Act  (XV  of  1941),  the title  of  the  Central  Provinces Municipalities  Act,  1922 (II of 1922) became  the  Central Provinces  and Berar Municipalities Act, 1922 (11 of  1922). Section  3 of this Act provided inter alia that the  Central Provinces  Municipalities Act, 1922, which had been  applied to  Berar by order under the Indian  (Foreign  Jurisdiction) 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 now 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

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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,  shall  from               and  after the commencement of this Act  cease               to be levied to the extent in which such taxes               exceed fifty rupees per annum."               3, The provisions of section 2 shall not apply               to any tax specified in the Schedule."               The Schedule is as follows:                               THE SCHEDULE.                              (See section 3)               Taxes to which section 2 does not apply.               1.    The  tax  on  professions,  trades   and               callings  imposed  through  fees  for   annual               licences,  under Chapter XII of the  Calcutta.               Municipal Act, 1923. M19Sup.CI/66-8 106               2.    The  tax  on  trades,  professions   and               callings,  imposed  under clause (f)  of  sub-               section  (1)  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 (1) of section  128               of  the United Provinces  Municipalities  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  I 10 of the Madras  City.   Municipal               Act, 1919." On  behalf of the Municipality 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  City    Municipal Committee of Achalpur)(1). The  learned Solicitor-General, appearing for 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 recovered and  the fact that the title of the Central Provinces  Municipalities Act,  1922, was changed by the Berar Laws (Provincial)  Act, 1941,  does not make any difference.  He says that there  is nothing in the Profession Tax Limitation Act, 1941,. to show that  the  exemption  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 Central Provinces  and  Berar Municipalities  Act,  1922, does not make it  any  the  less imposed  under the.  Central Provinces  Municipalities  Act,

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1922, within item 4; if a tax is -deemed to be imposed under the Central , Provinces and Berar Municipalities Act,  1922, it  is still a tax ’imposed’ under s. 66(1) of  the  Central Provinces  Municipalities  Act, 1922; it is a case  of  mis- description that the word ’Berar’ has not been mentioned  in item 5 of the Schedule to the Profession 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.  First,  item  No. 4 is an  exemption  from  the limitation imposed by s. 2 *Ins. by s. 2 of the Professions Tax Limitation  (Amendment) Act, 1946 (v  of 1946) (retrospectively) (1)  High Court of Judicature at Application No. 104 of 1960 judgment   Special   Civil  Application  No.104   of   1960. Judoicature delivered on August 9, 1960. 107 of  the  Professions  Tax  Limitation  Act,  1941,  and  the exemption must be construed strictly.  Secondly, the  effect of  s.  3  and item 4 of the Schedule  is  to  continue  the leviability of a tax and, in our opinion, this item must  be construed strictly like a taxing 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  imposed  by   the Municipalities  in  the  Central  Provinces  by  virtue   of notifications  issued  under  s. 66(1) (b)  of  the  Central Provinces  Municipalities  Act, 1922, and  they  would  fall within the ambit of item 4. Further if we 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 levied should have been imposed  in  the past  before the Profession Tax Limitation Act,  1941,  came into  force.  This is in consonance with s. 142 A(2) of  the Government  of India Act, 1935, which was in  the  following terms:               "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,  municipality,               board or authority as if for the reference  to               fifty rupees 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

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             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               purposes  of this proviso may be  made  either               generally  or  in  relation  to  any  specific               Provinces,    municipalities,    boards     or               authorities." 108 The  proviso  clearly  shows that the  section  enabled  the Dominion Legislature to make a contrary provision if in  the financial  year ending March 31, 1939, there was in force  a tax on professions, trades, callings or employments the rate of  which exceeded Rs.50/-. The Dominion  Legislature  could not authorise under the proviso a fresh imposition exceeding Rs. 501-. In view of our above conclusions it is not necessary to deal with  the point whether the word "imposed" in item 4 of  the Schedule  to the Profession Tax Limitation Act, 1941,  would include "deemed to be imposed" because by virtue of s. 3  of the  Berar  Laws  (Provincial) Act,1941, the  tax  would  be deemed  to  be  imposed  not  under  the  Central  Provinces Municipalities  Act,  1922, but the  Central  Provinces  and Berar Municipalities Act, 1922. In the result the appeals fail and are dismissed with costs. One hearing fee. R.  K. P. S.                                         Appeals dismissed.. 109