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PETITIONER: THE AMALGAMATED COALFIELDS LTD. AND OTHERS

       Vs.

RESPONDENT: THE JANAPADA SABHA, CHHINDWARA

DATE OF JUDGMENT: 10/02/1961

BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA SINHA, BHUVNESHWAR P.(CJ) DAS, S.K. SARKAR, A.K. GUPTA, K.C. DAS

CITATION:  1961 AIR  964            1962 SCR  (1)   1  CITATOR INFO :  R          1964 SC 207  (14)  R          1964 SC1013  (3,6,8,13,18,24)  R          1965 SC1150  (9)  RF         1971 SC  57  (3)  RF         1977 SC1680  (7)

ACT: Coal Tax-Legality of-Local Legislature authorising such levy by local authority- Legislative competence-Central Provinces Local  Self-Government Act 1920 (C.  P. 4 Of 1920),  s.  51- Government  of  India Act,1915 (5 & 6 Geo. 5, Ch.  61),  ss. 80A(3),  81(1)(3), 84(2)- Government of India Act, 1935  (26 Geo. 5, Ch. 2), S. 143-Constitution of India Art 227.

HEADNOTE: Section  51 of the Central Provinces  Local  Self-Government Act,  1920  empowered  a district council,  subject  to  the previous  sanction of the local Government, to  impose  "any tax,  toll  or rate, other than those specified in  SS.  24, 48,49,  and  50." On March 12, 1935,  an  Independent.Mining Local Board functioning in the area in which the petitioners were  working  certain mines situated  therein,  and  having vested in it all the powers of a district council,  resolved to impose a tax on coal, coal-dust and coke manufactured  at the mines or sold within the territorial jurisdiction of the Board.   The  petitioners who were served  with  notices  of demand  requiring them to pay certain sums of money  as  the tax  due  by them for despatches of coal from  their  mines, challenged  the  legality  of the levy of  the  tax  on  the grounds,  inter  alia  (1)  that the  Act  which  by  S.  51 authorised the imposition of the tax, had been passed by the local  legislature  without  the previous  sanction  of  the Governor-General,  thereby  contravening S.  80A(3)  of  the Government of India Act, 1915, and that even if it was found that the Act was validly passed before the coming into force of  the Government of India Act, 1919, which  introduced  S. 80A into the Act of r 1915, the power conferred by S.  51 to levy tax was exercised only in 1935 and by that date S.80  A had  been introduced into the Government of India  Act,1915,

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and that thereafter there could be no legal imposition of  a tax  without the previous sanction of  the  Governor-General being  obtained,  (2) that S. 51 Of  the  Central  Provinces Local Self Government Act, 1920, on its language and in  the context of other provisions referred to in that section, did not  authorise .the levy of a tax of the nature of the  coal tax, and (3) that, in any case, the tax ceased to be legally leviable after the coming 2 into force of the Government of India Act, 1935, and of  the Constitution  of  India, since a tax like that  in  question could be in  posed only by the Central Government.  Held: (1) that the Central Provinces Local  Self-Government Act,  1920,  having  received the assent  of  the  Governor- General,  its validity cannot be challenged in view  of  the saving  clauses in the proviso to s. 80A(3) and s. 84(2)  of the Government of India Act, 1915. (2)  that  the  validity  of Central  Provinces  Local  Self Government  Act, 1920, when enacted, not being open  to  any objection  under  the  Government of India  Act,  1915,  any subsequent  amendments  to the latter Act could not  in  any manner affect its continued validity and operation. (3)  that on the proper construction Of s. 51 of the Act  of 1920,  the  levy  of a coal tax is  not  excluded  from  the purview of the local authority. (4)  that  the  continued levy of the tax in  question  even after the coming into force of the Government of India  Act, 1935, and the Constitution of India, is valid in view of  s. 143 Of the Act of 1935 and Art. 227 of the Constitution.

JUDGMENT: ORIGINAL JURISDICTION: Petition No. 31 of 1959. Petition under Art. 32 of the Constitution of India, for enforcement of Fundamental Rights. M.   C.  Setalvad, Attorney-General of India, S. N.  Andley, J.  B. Dadachanji, Pameshwar Nath and P. L. Vohra,  for  the petitioners. B. Sen and I. N. Shroff, for the respondent. 1961.  February 10.  The Judgment of the Court was delivered by AYYANGAR,  J.-This  petition under Art. 32  has  been  filed impugning  the validity of two notices of demand  served  on the  petitioners  requiring  them  to  pay  what  has   been compendiously  described  as "coal tax" by  the  respondent, which  is  a  Local  Board  constituted  under  the  Central Provinces & Berar Local Government Act, 1948 (C.  P. & Berar Act XXXVIII of 1948).  The ground of challenge is that there was  no legislative power for the levy of the tax  and  that consequently the fundamental rights of the petitioners under Art. 19(1)(f) and (g) are being violated. It may be stated at the outset that the tax now impugned has been imposed by the local authority, 3 from  March  12, 1935 and that the first occasion  when  its validity  was  attacked  was in only  1957,  though  if  the petitioners   are   right   in   their   submissions   their acquiescence  might not itself be a ground for denying  them relief  Before  however we set out the points urged  by  the learned  Attorney-General  in support of  the  petition,  it would be convenient if we narrate briefly the history of the levy of this tax. Section  51 of the Central Provinces Local  Self  Government Act, 1920 (C.  P. Act IV of 1920), which will be referred to

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hereafter as the Act, ran:               "51(1).   Subject to the provision of any  law               or  enactment for the time being in  force,  a               district council may, by a, resolution  passed               by  a majority of not less than two-thirds  of               the  members  present  at  a  special  meeting               convened for the purpose, impose any tax, toll               or rate other than those specified in sections               24, 48, 49 and 50.               (2).  The first imposition of any tax, toll or               rate under sub-section (1) shall be subject to               the    previous   sanction   of   the    local               Government." The  petitioners are working certain mines situated  in  the district of Chhindwara and for the area covered by the mines an  Independent  Mining Local Board was  constituted  in  or about 1926 and such Boards are included in the definition of a Local Board under the Act and they have vested in them all the powers of a District Council.  This Mining Board,  after obtaining  the  previous approval of the  local  Government, passed  on March 12, 1935, by the majority  requisite  under E;.  51(1) of the Act a resolution to impose a tax on  coal, coal-dust and coke in the following terms:               "The tax shall be levied at the rate of  three               pies  per  ton  on coal, coal  dust  or  coke,               manufactured at the mines, sold for export  by               rail or sold otherwise than for export by rail               within  the  territorial jurisdiction  of  the               Independent Mining Local Board." The tax has been levied and collected ever since. The  Local-Self Government Act of 1920 was repealed and  re- enacted  by the Central Provinces & Berar  Local  Government Act, 1948, but nothing turns on 4 this,  because  the later enactment and  certain  amendments made subsequently contain provisions for the continuance  of the Local Boards constituted under.. the repealed  enactment and for the continued exigibility of the taxes and ceases in force  at the date of the commencement of the Act  of  1948. The respondent was, as stated earlier, constituted under the Act  of  1948 and is admittedly the successor of  the  Inde- pendent Mining Board which imposed the tax by its resolution dated  March 12, 1935, and is legally entitled  to  continue the  levy  if the original imposition was valid.   There  is only  one other matter to be mentioned at this stage,  viz., that  the  rate of duty which, as seen from  the  resolution extracted  earlier, was 3 pies per ton when imposed in  1935 was raised by the local body to 9 pies per ton in 1949, this being the rate which now prevails.  On August 23, 1958,  the Chief  Executive Officer of the respondent-Sabha served  two notices  of  demand  on the  first  and  second  petitioners requiring them to pay sums of Rs. 21,898.64 and Rs.  11,838- 09  respectively as the tax due by each, for  despatches  of coal  from their respective mines for the period January  1, 1958, to June 30, 1958.  It is the validity of these notices that is impugned in this petition. The submissions of the learned Attorney-General were three: (1)  The levy of the tax by the Independent Mining Board was invalid at the date of its original imposition in 1935,  and consequently the respondent-Sabha its successor-obtained  no authority to continue the same. (2)  Assuming the levy was valid when originally imposed, it ceased to be legal after the coming into force, first of the Government of India Act, 1935 and later of the  Constitution

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of  India  in 1950 under which the tax in question  or  some portions of it became exclusively leviable by the Central or Union  Government and would not be covered by the saving  as to previously existing taxes in s. 143 of the Government  of India  Act,  1935,  and  subsequently of  Art.  277  of  the Constitution. 5 (3)  Assuming further that the provision contained in s. 143 of  the  Government  of  India  Act  covered  the  tax,  the protection  afforded by it or the continuance for  which  it provided,  is only for a tax at the rate of 3 pies  per  ton prevailing  before  the commencement of  the  Government  of India Act (April 1, 1937), and the increase in the rate to 9 pies  per  ton  in 1949 rendered the  levy  and  the  demand illegal either in whole or at least in part. We  shall  now  proceed to deal with these  points  in  that order: (1)  That  the  imposition  of the tax  by  the  Independent Mining  Board  by  resolution  dated  March  12,  1935,  was invalid.   This  was sought to be rested on  three  distinct grounds: (a)  that  the  levy of the tax was in contravention  of  s. 80A(3) of the Government of India Act, 1915.  Section 80A(3) enacted, to quote only the part material:               "The  local  legislature of any  province  may               not,  without  the previous  sanction  of  the               Governor-General,    make   or    take    into               consideration    any   law(a)   imposing    or               authorising  the  imposition of  any  new  tax               unless the tax is a tax scheduled as  exempted               from  this provision by rules made under  this               Act; or " The  taxes now impugned are not within those  enumerated  in the  schedules  to the Scheduled Taxes Rules and  hence  the previous  sanction  of  the  Governor-General  was  required before a bill authorising the levy of the tax could be taken into  consideration.  And the Act which by a. 51  authorised the  imposition  of the tax, had been passed  by  the  local legislature without the previous sanction of the  Government having been obtained. The  petition as filed setting out this contention  proceeds on the basis that the Act was passed after the Government of India Act, 1919, by which s. 80A was introduced into the Act of  1915  came into force.  If ,that had  been  the  correct position, the proviso to ,S. 80A(3) reading: 6               "Provided that an Act or a provision of an Act               made by a local legislature, and  subsequently               assented   to  by  the   Governor-General   in               pursuance  of  this Act, shall not  be  deemed               invalid  by reason only of its  requiring  the               previous  sanction  of  the   Governor-General               under this Act." would  be  a complete answer to the above  objection,  since under  the Government of India Act, 1915, before  and  after its  amendment  in  1919,  every  bill  passed  by  a  local legislative  council had, after receiving the assent of  the Governor,  to  be transmitted to  the  Governor-General  and could  become  law only after the latter had  signified  his assent (Vide s. 81(1) & (3) of the Act).  That the Governor- General  had  assented to the Act under this  provision  was never  in dispute.  The saving contained in the proviso  is, it  should  be noticed, in addition to  the  general  saving contained  s. 84(2) of the Government of India Act (to  read only  the material words): "...the validity of any Act  of..

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any  local legislature shall not be open to question in  any legal  proceedings on the ground that the Act affects ...  a central  subject" which is of wider import and  designed  to remove  all questions of legislative competence of the  type now put forward from the purview of Courts. At  the stage of the arguments, however, it was found.  that the  Act had become law even prior to the coming into  force of  the Government of India Act, 1919, with the result  that the  contention  raised in the petition based on  s.  80A(3) could  not be urged.  From the recitals at the beginning  of the  Act  it  was found that the previous  sanction  of  the Governor-General  had been obtained to the  introduction  of the  measure in the Local Legislature under s. 79(2) of  the Government of India Act, 1915-i.e., before s. 80A(3)  intro- duced  into the Government of India Act, 1919,  was  brought into force. The   learned  Attorney-General,  therefore,  modified   his argument and presented it in this form: No doubt when s.  51 of the Act was enacted, it was within the competence of  the Local Legislature.  But the power conferred by that  section to levy the tax was exercised 7 only  in  1935 and by that date s. 80A had  been  introduced into the Government of India Act and thereafter there  could be  no  local  imposition  of a tax,  not  included  in  the Scheduled  Taxes Rules without the previous sanction of  the Governor-General being obtained.  We consider this  argument wholly  without  force.  The validity of s. 51 of  the  Act, when  enacted,  not being open to any  objection  under  the Government  of India Act, 1915, the amendments  effected  to the  Government of India Act, 1915, by the Act of  1919  did not  in any manner, or to any extent, expressly or  even  by implication affect or trench upon the continued validity and operation  of that section.  Obviously, s. 80A(3)  was  only concerned  to lay down the preliminaries for enacting a  law after  that  provision came into force and after a  law  has once been enacted and is in operation, there is no  question of the procedure laid down for bills being attracted.   This apart,  all controversy is set at rest and any  argument  of the  type  now urged is precluded by r. 5 of  the  Scheduled Taxes Rules which runs:               "Nothing in these rules shall affect the right               of  a local authority to impose a tax  without               previous   sanction  or  with   the   previous               sanction  of  the local Government  when  such               right is conferred upon it by any law for  the               time being in force." The submission therefore that before the power conferred  by s.  51  of the Act, the previous sanction of  the  Governor- General  had  to  be obtained or that there  must  be  fresh legislation, must be rejected. (b)  The  second matter urged under this head was  based  on the meaning to be given to the opening words of s. 51 of the Act:  "Subject to the provision of any law or enactment  for the  time  being  in  force".  it  was  suggested  that  the provision contained in a. 80A(3) of the Government of  India Act  read with the Scheduled Taxes Rules framed  under  that section  constituted "a law for the time being in force"  to ,which the power to levy the tax was subject.  In the  first place, it is clear that a law like that which is found in s. 80A(3)  prescribing a procedure for enacting future Acts  of the Local Legislature could not be 8 comprehended within those words.  But even if it did, in the

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face of r. 5 of the Scheduled Taxes Rules, the  construction suggested could have no basis. (c)  The last reason assigned for disputing the validity  of the  original imposition of the tax, was that s. 51  of  the Act  on  its  language  and in  the  context  of  the  other provisions  referred to in that section, did  not  authorise the  levy of a tax or cess of the nature of the "coal  tax". We are wholly unable to accept this argument.  The  relevant words of s. 51 are:               "impose any tax, toll or rate other than those               specified in sections 24, 48, 49 and 50". It is not suggested that "the coal tax" is one specified  in any  of the sections set out, and hence there was  power  to levy  any  other tax including that which is  now  impugned. The learned Attorney-General however suggested that the  tax authorised by s. 51 should still be somewhat like the  taxes referred to in the other sections, though not identical with them.   Obviously,  in  the face of the  words  "other  than those..."  the rule Of ejusdem generis  is  contra-indicated and if so on no rule of construction could "the coal tax" be excluded from the purview of the local authority. We, therefore, hold that the original imposition of the  tax in 1935 was valid. (2)  The next question is: has the tax ceased to be  legally leviable  by  reason  of  the  coming  into  force  of   the Government of India Act, 1935 and of the Constitution?  Both these  constitutional enactments contain express  provisions whereby taxes, cesses, etc., which were previously  lawfully levied by local authorities for the purposes of their  local areas,  might continue to be collected and applied  for  the same   purposes  notwithstanding  that  those  taxes   could thereafter  be  imposed  only by the Central  or  the  Union Government,  as  the  case  may  be  (Vide  s.  143  of  the Government  of  India  Act,  1935,  and  Art.  277  of   the Constitution).   The objection therefore that "coal tax"  or some  of the components of it, could have been imposed  only by  the  Central Government or the Union  Government  is  no ground for impugning the continued validity and  exigibility of the tax.  It is needless to add that if the 9 tax  fell within the Provincial or the State List, the  levy would  be valid under s. 292 of the Government of India  Act and Art. 372 of the Constitution even without the aid of the special  provision in s. 143 or Art. 277.  In view of  those considerations the learned Attorney-General did not  address us seriously on this point. (3)  The last point urged was as regards the validity of the increase  in the rate of tax to 9 pies per ton  effected  in 1949,  i.e., after the commencement of Government  of  India Act,  1935.   This  objection was not  even  hinted  in  the petition now before us, and we did not consider it proper to permit petitioners to raise the point. The result is that the petition falls and is dismissed  with costs. Petition dismissed.