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PETITIONER: THE PIONEER MOTORS (PRIVATE) LTD.

       Vs.

RESPONDENT: THE MUNICIPAL COUNCIL, NAGERCOIL.(and connected appeals)

DATE OF JUDGMENT: 27/01/1961

BENCH: KAPUR, J.L. BENCH: KAPUR, J.L. HIDAYATULLAH, M. SHAH, J.C.

CITATION:  1967 AIR  684            1961 SCR  (3) 609

ACT: Profession   Tax--Provision   for  time  before   levy,   if mandatory--Reasonableness--Commissioner’s  powers,  if   can carry out executive powers of the Municipality--" Profession ",   definition   of--Travancore   District   Municipalities Act,1116 (Act XXIII of the Malayalam year 1116), ss. 16, 78, 91.

HEADNOTE: The  imposition  of  "profession  tax"  by  the   respondent Municipal    Council   under   the    Travancore    District Municipalities  Act (Act XXIII of the Malayalam  year  1116) was  challenged  on  the grounds, inter alia  (1)  that  the requisite  notification was not published by  the  Municipal Council  but  by its commissioner, (2) that  the  period  of thirty  days  which was given for filing objections  to  the imposition  was insufficient in law which required a  period of  "  not  less than a month ", and (3)  that  this  was  a mandatory provision under the proviso to s. 78 of the Act. Held, that under s. 16 the Commissioner being the  executive authority  of the Municipal Council was authorised  to  give effect to the resolutions of the Council and to perform  all its executive duties. The  words " not being less than one month " in the  proviso to S. 78 implied the necessity for one clear month’s  notice excluding  the first and last day of the month, but the  use of  the words " reasonable period " before the words  "  not being less than one month " showed that the time given  must be reasonable.  In view of the facts of the case the  period allowed must be regarded as reasonable and to have  complied with the provision which is directory in its later part. Commissioner of Income-tax v. Ekbal and Co. [1945] 13 I.T.R. 154  and  Thompson  v.  Stimpson, [1960]  3  All  E.R.  500, distinguished. Municipal  Council,  Cuddapah  v. The  Madras  and  Southern Mahratta Railway Ltd. (1920) I.L.R. 52 Mad. 779, The Borough Municipality of Amalner v. The Pratap Spinning, Weaving  and Manufacturing Co. Ltd., Amalner, I.L.R. [1952] Bom. 918  and Kalu  Karim    v.  Municipality of Broach (1927)  I.L.R.  51 BOM. 764, referred to. 610

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The definition of " profession " as given in s. 81  includes business.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 499 to  502 of 1958.  Appeals  from the judgment and decree dated July 13,  1956, of the former Travancore-Cochin High Court in A. S. Nos. 94, 95, 96 and 156 of 1952. G.   S.  Pathak and G. C. Mathur, for the appellants (in  C. As.  Nos. 499 to 501 of 58). P.  George and M. B. Krishna Pillai, for the appellants  (in C. A. No. 502 of 58). T.   N. Subramania Iyer, B. Ganapathy Iyer and G. Gopalakrishnan, for the respondent. 1961.  January 27.  The Judgment of the Court was  delivered by KAPUR,  J.-These  four  appeals  are  brought  against   the judgments  and  decrees  of  the  erstwhile  High  Court  of Travancore-Cochin.   The appellants were the  plaintiffs  in the respective suits out of which these appeals have  arisen and  the respondent was the defendant in all the suits.   As all  the suits involve a common question of law, it will  be convenient to dispose of them by one judgment. The facts of the cases are these.  On September 9, 1943, the Nagercoil   Municipal  Council  the  respondent,  passed   a resolution   under   s.  78  of  the   Travancore   District Municipalities  Act (Act XXIII of the Malayalam year  1116), hereinafter  called  the Act.  By this  resolution,  it  was resolved to levy a profession tax at the rates specified  in the  schedule.  This was notified in the Government  Gazette of September 26, 1943, under the name of the Commissioner of the respondent Council.  In this notification, it was stated :-               "  Any inhabitant of the local municipal  town               objecting  to  the  proposal  may  submit  his               objection in writing to this office within  30               days   of   date  of   publication   of   this               notification in the Government Gazette. This  notification was also published in a  local  newspaper called  the Abhimani.  It does not appear, nor is there  any assertion or allegation that any 611 objection  was raised to this tax by the appellants  or  any one else.  On January 12,,1944, a resolution under s. 79  of the  Act  wag  passed, by which the  profession  tax  became payable  from  the  beginning  of the  second  half  of  the Malayalam   year  1119.   A  trust,  Kottar   Chetty   Ninar Desikavinayaga  Swamy  filed a suit on  February  10,  1946, challenging the legality of this tax.  C.A. 502 of 1958  has arisen  out of that suit.  Amongst other allegations,  which are  common  to  the other suits, which  will  be  mentioned presently,  the trust pleaded that it was not carrying on  a profession  within the meaning of the word used in  the  Act and  that it was only a religious trust and had  no  profes- sion.   That suit was tried by the Munsif and  was  decreed. An  appeal  was taken against that decree  to  the  District Judge. Three private limited companies carrying on business brought three  suits challenging the legality of the  imposition  of the  tax out of which the other three appeals,  i.e.,  Civil Appeals  Nos. 499 to 501, have arisen.  In these  suits,  it was  alleged that the publication of the resolution was  not

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in accordance with the provisions of s. 78 of the Act in  so far as (1) it was not published by the respondent  Municipal Council, but by the Commissioner; (2) the newspaper in which the  advertisement  was published was not  selected  by  the Council; (3) time given in the notification was fixed not by the  Council,  but by the Commissioner; and (4)  the  period prescribed in the notification, that is, " within 30 days ", was not fixed by the Council and was not in accordance  with the  Act.   The respondent Municipal  Council  denied  these allegations  and  several issues were raised and  the  suits were  decreed.  The appeal which had been taken in the  suit by  the Trust was also decided in favour of that  plaintiff. The  result  was  that all the suits  and  the  appeal  were decided  against the respondent Municipal Council.  It  took four  appeals to the High Court.  The decrees were  reversed and  the  suits of the various  plaintiffs  were  dismissed. Against those judgments and decrees, these four appeals have been  brought by the plaintiffs, in the various  suits,  who are now the appellants. 612 In Civil Appeals Nos. 499 to 501, Counsel for the appellants has  raised two points (1) that the publication was  not  by the Council and (2) that the time given in the notification, i.e., " within 30 days " was not in  accordance with the law and  as these were conditions precedent to the  legality  of the  resolution under s. 79 the resolution was  ultra  vires and therefore the imposition of the tax was illegal.  It is, therefore,  necessary to examine the various  provisions  of the Act upon which the whole argument has proceeded. Chapter  VI of the Act deals with Taxation and Finance.   In s.  77 are enumerated the various taxes which can be  levied by  Municipal Councils.  Section 78 gives the procedure  for the levying of the tax and when quoted it is as follows:-               "S. 78.  Resolution of Council determining  to               levy   tax  or  tolls.-Any  resolution  of   a               municipal council determining to levy a tax or               toll shall specify the rate at which any  such               tax or toll shall be levied and the date  from               which it shall be levied:               Provided  that  before  passing  a  resolution               imposing  a tax or toll for the first time  or               increasing  the  rate of an  existing  tax  or               toll,  the council shall publish a  notice  in               Our  Government  Gazette and at least  in  one               Malayalam  or Tamil newspaper having  circula-               tion in the municipality of its intention, fix               a  reasonable period not being less  than  one               month   for  submission  of  objections,   and               consider  the  objections,  if  any,  received               within  the  period specified."  (Italics  are               ours).               After  the various steps given in s.  78  have               been  taken, a Municipal Council has  then  to               adopt  the  taxes  proposed  by  means  of   a               resolution under s. 79, which provides :-               "S.79.  Notification  of new taxes  and  tolls               When a municipal council shall have determined               subject  to  the provisions of Section  78  to               levy any tax or toll for the first time or  at               a  new  rate  the  executive  authority  shall               forthwith   publish  a  notification  in   Our               Government   Gazette  and  by  beat  of   drum               specifying  the  rate at which the  date  from               which,               613

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             and the period of levy, if any, for which such                             tax or toll shall be levied."               The functions of the executive authority, that               is,  of  the Commissioner of the  Council  are               contained  in  s. 16 of the Act, which  is  as               follows :-               "S.   16.    Functions   of   the    Executive               Authority.-The  executive  authority  of   the               municipal council shall-               (a)   carry into effect the resolutions of the               council;               (b)   furnish  to the council such  periodical               reports   regarding  the  progress   made   in               carrying  out the resolutions of that body  in               the  collection  of taxes as the  council  may               direct; and               (c)   perform all the duties and exercise  all               the  powers specifically imposed or  conferred               on  the executive authority by this  Act,  and               subject, whenever it is hereinafter  expressly               so  provided, to the sanction of the  council,               and   subject  to  all   other   restrictions,               limitations    and   conditions    hereinafter               imposed, exercise the executive power for  the               purpose of carrying out the provisions of this               Act  and be directly responsible for  the  due               fulfilment of the purposes of this Act." Section  16,  which  contains the  power  of  the  executive authority,   does   not  support  the  contention   of   the appellants, because it provides that the executive authority has to give effect to the resolutions of the council and has to perform all duties specifically imposed on the  executive authority  by the Act and can also exercise executive  power for  the carrying out of the provisions of the Act  and  can act  without  sanction, unless the Act  otherwise  requires. Therefore,  when the Commissioner of the respondent  council got  published a notification of the resolution under s.  78 of the Act to impose a tax, he was acting within his  powers and the fixing of the time in which objection had to be made was provided under the Act and was not exercise of authority by the executive which it did not possess. The  only  serious  question which arises  for  decision  is whether  the period of " within thirty days " given" in  the notification  was compliance with the provisions of the  Act or not.  If it was not then is the period of 614 time  mentioned a mandatory requirement, a breach  of  which makes the tax illegal? Counsel  for  the  appellants in  the  first  three  appeals argued,  and that argument was adopted by counsel   for  the appellant  in the fourth appeal, that the words used in  the first  proviso to s. 78 required that a clear period of  one month had to be given for inviting objections and as "within thirty  days"  was  not a clear period  of  one  month,  the provisions  of the section had not been complied  with.   In support of his contention that the provision as to time  was a  mandatory  requirement, he  particularly  stressed  three words and phrases used in that proviso: (1) "before  passing a  resolution  " ; (2) " shall publish " ; and (3) "  fix  a reasonable  period  not  being  less  than  one  month   for submission of objections." The argument was that where these words  are used, the effect was that the  requirements  were mandatory  and not merely directory.  It was submitted  that the  words  "before" and ",shall " provided  that  what  was mentioned  in  the  proviso were  conditions  precedent  for

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giving  power to the Municipal Council to pass a  resolution under a. 79 and when those two words were read along with  " not  being less than one month ", it was a clear  indication of the mandatory nature of the requirements of the  section. Quite  a  number of cases were relied upon  by  Counsel  and besides  this  it  was also emphasized that ss.  78  and  79 concerned  taxing  matters  and  as  the  liability  of  the taxpayers  arises after the tax is legally  imposed,  strict compliance  with  the provisions was necessary.  It  is  not necessary  to  discuss all the cases on which  reliance  was placed. The  words " not being ’less than one month " do imply  that clear  one month’s notice was necessary to. be  given,  that is, both the first day and the last day of the month had  to be  excluded.  To put it in the language used by Maxwell  on Interpretation of Statutes, 10th Edition, p. 351 :- "..when........   not  less  than’  so  many  days  are   to intervene,  both  the terminal days are  excluded  from  the computation," 615 That  does not seem to have been done in the  present  case. But  in order to decide whether this portion of the  proviso is a mandatory provision, it is convenient to see the object for  which it has been enacted.  Under s. 78, the  procedure is laid down for the levying of a. new tax, which has to  be done by a resolution.  But in the proviso, it is stated that before  such  a resolution can be passed, a notice  to  that effect has to be published in the official gazette and  also in  one  Malayalam  or Tamil  newspaper  having  circulation within the municipality.  Then comes the period for inviting objections.   The  object of notifying in  the  Gazette  and Local  Newspaper  is both to give notice to the  public  and particulary to the persons who are likely to be taxed and to invite  their  objections.  For this  purpose,  the  proviso requires  a reasonable period of not less than one month  to be given.  The object of the provision is to give reasonable time  and  opportunity and it is given as  a  guidance  that reasonable  time would be a month.  The use of the words  "I reasonable period" before the words ,not being less than one month  " is significant.  If sufficient time has been  given for  the invitation of the objections which only just  falls short of the period mentioned in the proviso, then it  would serve  the  object  of the legislature.   The  provision  in regard  to time in the context must be held to be  directory and not mandatory. The cases under the Income-tax Act like the Commissioner  of Income-tax  v. Ekbal and Co. (1) where the notice  under  s. 22(2)  of the Income-tax Act (which requires the  furnishing of  a return within such period not being less  than  thirty days) of 30 days only was held to be bad, because it was not a notice of thirty clear days, were so decided because  that notice is the basis of the jurisdiction to tax, and a  legal notice  is  an  obligation  imposed  in  order  to  tax   an individual  and  it is a  mandatory  provision.   Similarly, cases  under Rent Act will also not apply.  In  Thompson  v. Stimpson (2) the law required that not less than four (1)  [1945]13 I.T.R. 154. (2) [1960] 3 All E.R. 500, 79 weeks’  notice shall be given for vacation of premises on  a weekly  tenancy and only one week’s time was given.  It  was held  there that it was a bad notice.  It was  further  held that  four weeks’ notice was a condition precedent  and  the words  had been used which had been interpreted in the  past as providing for four clear weeks and also it was  construed

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as four clear weeks, so that there might be certainty in the matter.   In  other cases, that were relied upon  and  which related to taxing statutes, the Municipal Council,  Cuddapah v.  The Madras and Southern Mahratta Railway Ltd.  (1),  The Borough  Municipality  of Amalner v.  The  Pratap  Spinning, Weaving  and Manufacturing Co.  Ltd., Amalner (2)  and  Kalu Karim  v.  Municipality  of Broach (3) ; it  was  held  that taxing   statutes   have  to  be  strictly   construed   and requirements  which are precedent to the imposition  of  the tax  have  to  be complied with before tax  can  be  legally imposed.   In every case the words have to be  construed  in the context taking into consideration the language used  and the  object to be achieved.  As we have said above, the  use of  the words " not being less than one month " implies  the giving  of  a clear month excluding both the first  and  the last  day  of  the month.  There is no  dispute  as  to  the meaning of that expression alone which has been so construed and  the observations of Lord Parker in Thompson v.  Simpson (4) will apply.  But the question that arises in the present case is: what is the exact significance of these words  when used in the context of the other words used in the  proviso. The  power  of  the municipality to levy the  tax  does  not depend  upon a period prescribed for notice for  objections. The power to tax is derived from the Statute; the provisions relating  to  the length of notice inviting  objections  and publication  are  merely  procedural.   The  object  of  the notification  is  to inform the future rate  payers  and  to invite objections from them.  The proviso itself uses  words " reasonable time"’.  Reading " reasonable time " and "  not being less than one month" together, it is clear that the (1)  (1929) I.L.R. 52 Mad. 779. (2)  I.L.R. [1952] Bom. 918 (3)  (1927) I.L.R. 5r Bom. 764. (4)  [1960] 3 All E.R. 500. 617 time  given must be reasonable and the legislature has  only added  a guide so that periods shorter than a month may  not be  fixed.   In  the present case the whole  of  the  period except one day has been fixed and in view of the other facts it must be regarded as reasonable and to have complied  with the provision which is directory in its later part. Counsel  for  the appellants in C. A. 499/501/58  wanted  to raise a further objection to the legality of the tax  levied and that ground was that the appellants were not carrying on a profession as they were only engaged in motor business and trade.  This question was never raised at any previous stage and was not taken in the statement of the appellants’  case. Therefore,  it cannot be allowed’ to be raised.  Besides  it is  without  any  substance in view  of  the  definition  of profession  as  given in s. 91 of the  Act,  which  includes business.   In our opinion, the High Court ,Was right in  so holding  and the three appeals Nos. 499 to 501 of  1958  are dismissed with costs, one hearing fee. Coming now to Civil Appeal No. 502 of 1958, in the plaint it was  alleged  that the trust was a religious trust  and  was following no profession and therefore it did not fall within the  definition of the word " profession " as used in s.  91 of  the Act.  The defendant joined issue and the matter  was put in issue in the following form: "Is  the taxation by defendant of plaintiff illegal  and  in contravention   of   the   provisions   of   the    District Municipalities Act ?" Although  no  specific  finding was  given  as  regards  the operation  of s. 91, the suit was decreed and  the  question whether the trust followed a profession or not seems to have

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got  lost at the subsequent stages of the proceedings,  that is, in appeal in the court of the District Judge and in  the High Court.  It is this point which was urged by counsel for the trust; his plea was that his case was not covered by  s. 91, as being a religious trust it had no profession and  was carrying  on none.  That is a matter which, in our  opinion, should have been decided, and as neither the District 618 Judge nor the High Court has given a finding on that  point, it is necessary to remit the case to the High Court with the direction  that  the appeal be reheard and  that  particular question  be  decided  on  the   materials  on  the  record. Nothing that has been said in this judgment must be taken to be an expression of opinion on the merits of this plea taken by the appellant Trust. Appeal  No. 502 of 1958, is therefore, allowed and the  case remitted to the High Court for decision.  The costs in  this Court  and in the High Court will abide the decision of  the appeal in the High Court. Appeals nos. 499 to 501 dismissed.  Appeal no. 502 allowed.  Case remitted.