09 March 1970
Supreme Court
Download

UNION OF INDIA Vs THE LONAVLA BOROUGH MUNICIPALITY OF LONAVLA, DISTRICT POON

Case number: Appeal (civil) 1641 of 1966


1

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 10  

PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: THE LONAVLA BOROUGH MUNICIPALITY OF LONAVLA, DISTRICT POONA,

DATE OF JUDGMENT: 09/03/1970

BENCH: BHARGAVA, VISHISHTHA BENCH: BHARGAVA, VISHISHTHA SIKRI, S.M.

CITATION:  1971 AIR  211            1970 SCR  (3) 920  1970 SCC  (1) 641

ACT: Bombay  District  Municipal  Act  3  of  1901-S.  59  Bombay Municipal Boroughs Act 18 of 1905-S. 73-Scope  of-Collection of  taxes  from railway as consolidated tax  under  cl.  (c) second  proviso  instead of separate taxes under  the  other provisions of the-two sections -Validty.

HEADNOTE: The respondent Municipality, which at the time was  governed by the Bombay District Municipal Act 3 of 1901 levied a  tax on lands and buildings situated within its municipal  limits at 4 per cent of the annual rental value.  However, no  such tax  was  levied on the buildings and lands  of  the  G.I.P. Railway situated within its limits in view of s. 135 of  the Indian  Railways Act, 9 of 1890.  In 1914,the Government  of India  issued a notification under s. 135 persuant to  which the G.I.P. Railway administration was required to pay  house tax   to   the  respondent.   Upto   1916   the   respondent municipality used to draw water from the Railway’s reservoir but  constructed its own reservoir during that  year.   Both prior  to and after this date, no water rate was charged  by the respondent municipality from the railway. On  4th May, 1916 the respondent promulgated new  rules  for taxation and instead of charging separate house tax under s. 59(1)(i)  or a general water rate under s. 59(1)  (viii)  of the  Act  of 1901, it decided to charge a  consolidated  tax assessed as a rate on buildings and lands in accordance with clause  (c)  of  the  proviso to  s.  59(i).   Although  the respondent  demanded this consolidated tax from the  railway in respect of its lands and buildings, the railway  resisted payment  contending  that under the  notification  of  1914, house  tax only was payable by it.  On 26th July, 1917,  the Government of India issued a fresh notification under s. 135 of  the Railways Act whereby the railway administration  was rendered  liable to pay what was described as "tax on  lands and  buildings".   Thereafter  the  respondent  charged  the railway  the consolidated tax until some time in  1927  when the G.I.P. railway was taken over by the Government.  In the rules promulgated on 4th May, 1916, the consolidated tax was not  chargeable  on Government property.   Relying  on  this provision,  an objection was raised that the charge  of  tax

2

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 10  

was illegal when the railway had become Government property. The   respondent   Municipality  amended   its   rules   and promulgated  fresh  rules  on 6th October,  1931  under  the provisions of the Bombay Municipal Boroughs Act 18 of 1925 under which enactment the respondent municipality  had   by that time been constituted into a Borough. Under these rules the  exemption in respect of  Government    property     was deleted.In pursuance of these amended rules  the  respondent started collecting  from the railway the consolidated  tax assessed  as a rate on its buildings and lands which was  by then being levied under the provisions of s.73 of the Act of 1925 that were similar to those of s.59 of the Act of 1901. In 1940 the railway administration preferred an appeal under s. 110 of the Act of 1925 against one of the demand notices. Although the                                 921 First  Court  set  aside the demand notice,  an  appeal  was eventually dismissed by the High Court with the remark  that the proper remedy to be sought was by means of a suit.   The Union  of India which had become the owner of  the  railway, field  a  suit  in November 1954 for refund  of  the  entire amount  which  was  collected by  the  respondent  from  the railway in pursuance of the rules of 1931.  The, Trial Court granted a decree holding that the levy of this tax was  void inasmuch as, under the notification issued on the 26th July, 1917,  only the rate on lands and buildings was  payable  by the  Railway  Administration.   On appeal,  the  High  Court disagreed  with the trial court and set aside  the  decree., Oil appeal to this Court by a certificate under Art. 133  of the Constitution. HELD : Dismissing the appeal, On  the  proper interpretation of the language used  in  two Acts,  the Rules, the notification, and taking into  account the  circumstances under which the notification of 1917  was issued,  the  only conclusion that could be arrived  at  was that the Railway was made liable to the consolidated tax. It  is true that all taxes are not rates; but all rates  are taxes.  A rate on buildings and lands is a tax on buildings; so  also any other tax -assessed as a rate on buildings  and lands  becomes  a tax on buildings and lands.   It  was  not possible to accept the submission of the appellant that  the expression  "tax  on  buildings  and  lands"  used  in   the notification  of 26th July, 1917 could only refer to a  rate on buildings and lands under clause (i) of s.     59(1)  and would  not cover the consolidated tax referred to in  clause (c)  of  the second proviso.  Although the tax under  clause (c)  of  the  second proviso is not identical  with  and  is different  in  nature from,the rate on buildings  and  lands imposed  under clause (i), that circumstance does not  imply that  it is not a tax on buildings and lands.  The mere  use of  the  word "consolidated" cannot make any  difference  to this  interpretation.   The intention appears  to  be  that, though  the  Municipality  was  empowered  to  impose   four different kinds of taxes, it was permitted under clause  (c) of the second proviso to simplify matters by having a single tax on buildings and lands in lieu of those multiple -.axes. Such  single tax had to be assessed as a rate  on  buildings and  lands.  This being the nature, it obviously  becomes  a tax on buildings and lands, so that the notification of 26th July,  1917 clearly makes the Railway liable to  payment  of this tax.  The position under the Act of 1925 is exactly the same  where  also the language of clause (c) to  the  second proviso is identical with that contained in the Act of 1901, so  that  the  liability  imposed  on  the  Railway  by  the notification  of the Government dated 26th July, 1917  under

3

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 10  

s.  135(1) of the Railways Act continued even under the  Act of 1925. [927 B-H] Borough  Municipality, Ahmedabad v. Ahmedabad  Manufacturing and  Calico  Printing Co. Ltd., A.I.R. 1939 Bom.  478;  Raza Buland  Sugar Co. Ltd.  Rampur v. Municipal  Board,  Rampur, A.I.R.  1962 Alld. 83, Municipal Council, Cuddappah v.  M.,& S.M.  Ry.   Co..  Ltd.,  A.IR  1929  Mad.  746.  and   Patel Gordhandas Hargovindas v. Municipal Commissioner, Ahmedabad, [1964] 2 S.C.R. 608; referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1641 of 1966. Appeal from the judgment and decree dated March 10, 11, 1965 of  the  Bombay  High Court in Appeal No. 26  of  1958  from Original Decree. L10Sup Cl (NP)/70 -14 922 L.   M. Singhvi and B. D. Sharma, for the appellant. H.   R. Gokhale, Y. S. Chitale, Janendra Lal and B. R. Agarwala, for respondent No. 1. The Judgment of the Court was delivered by Bhargava, J. The Union of India, as the owner of the Central Railway,  instituted  a suit for refund  of  Rs.  2,76,967/- collected  as  tax from the Railway  Administration  by  the respondent Municipality during the period from 1931 till the institution  of  the  suit in  November,  1954.   The  facts leading  up to the suit are that the G.I.P.  Railway,  which was  a Private Company, had land situated within the  limits of  the  respondent Municipality.  On this land,  stood  the railway  station, their Water Reservoir at Bhusi,  bungalows of  Officers, and certain other buildings.  There were  also vacant lands and some lands on which railway lines were laid out.   In this area, which belonged to the  G.I.P.  Railway, the Railway Company itself built roads, supplied water  from its Bhusi Reservoir, arranged for the lighting, and provided other  services.  In fact, up to the year 1916, the  Railway used to supply water even to the Municipality from its Bhusi Reservoir  on  payment.  The Municipality was  governed,  at that  time,  by the Bombay District Municipal Act No.  3  of 1901  (hereinafter referred to as "the Act of  1901")  under which  a  tax  on lands and buildings  situated  within  the municipal  limits  used to be charged @ 4 per  cent  of  the annual rental value, but no tax was levied on the  buildings and  lands of the G.I.P. Railway in view of section  135  of the  Indian Railways Act No. 9 of 1890.  In the  year  1914, the  Government of India issued a notification under s.  135 of the Railways Act declaring that the Administration of the G.I.P.  Railway shall be liable to pay, in aid of the  funds of the local authorities set out in the Schedule, the  taxes specified  against each of those authorities.   Against  the ’lame  of Lonavla Municipality, which is the  respondent  in this  case,  the  tax mentioned was  house-tax.   Thus,  the exemption  granted to the Railway Administration  was  taken away by this notification in respect of house-tax and house- tax became payable by the G.I.P. Railway to the  respondent. In 1916, the respondent constructed its own water  reservoir and became independent of the Railway for water supply,  but no water rate was charged from the Railway even  thereafter, though water charges for actual quantities of water supplied in three of the bungalows was charged from the occupants  of the bungalows.  The rest of the Railway Colony continued  to be supplied with water from the Railway Reservoir at Bhusi. On  4th May 1916, the respondent promulgated new  rules  for

4

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 10  

taxation  and,  instead of charging separate  house-tax  and water rate it decided to charge a consolidated tax  assessed as a rate on 923, buildings  and  lands in accordance with clause (c)  of  the proviso to section 59(1) of the Act of 1901.  Thereafter, it appears  that the respondent demanded this consolidated  tax from  the  Railway  in  respect of  the  Railway  lands  and buildings.    The  Railway  felt  that,  since,  under   the notification  of  1914, house-tax only was  payable  by  the Railway  Administration, there was no justification for  the respondent   to  charge  consolidated  tax  from   it   and, consequently,  protested against this payment.   Thereafter, on  26th July, 1917, the Government of India issued a  fresh notification tinder s. 135 of the Railways Act, whereby  the Railway  Administration was rendered liable to pay what  was described as "tax on lands and buildings".  On the issue  of this  notification,  the  respondent  started  charging  the G.I.P.  Railway  this consolidated tax  and  this  continued until  some time in the year 1927 by which time  the  G.I.P. Railway  was  taken  over by the  Government  and  became  a Government  undertaking.   In the Rules promulgated  on  4th May, 1916, the consolidated tax described as a general  rate on  buildings  and lands was not  chargeable  on  government property.   Relying  on  this provision  in  the  Rules,  an objection was raised that the charge of the tax was  illegal when the Railway had become government property. Subsequently, the respondent Municipality amended its  Rules and  promulgated fresh Rules on the 6th October,  1931.   By this time, the respondent Municipality had been  constituted into  a Borough under the Bombay Municipal Boroughs Act  No. 18  of 1925 (hereinafter referred to as "the Act of  1925"). These  new  Rules were thus promulgated under  this  Act  of 1925.   Under  these  Rules, the  exemption  in  respect  of government  property  to the charge of the general  rate  on buildings  and  lands, which was contained in the  Rules  of 1916-  was  deleted and all lands and buildings  within  the Municipal  Borough became chargeable irrespective  of  their being  owned  by  the Government.   A  separate  clause  was incorporated  giving certain exemptions, but, since they  do not  affect the case before us, they need not be  mentioned. In pursuance of these Rules of 1931, the respondent  started collecting  the  consolidated  tax assessed  as  a  rate  on buildings and lands of the Railway from it. In  the year 1940, the Railway Administration  preferred  an appeal  under section 110 of the Act of 1925 against one  of the demand notices issued in respect of this tax on the  6th October,  1940.   This  appeal  came  up  before  the   Sub- Divisional Magistrate Western Division, Poona, who held that the  levy of this consolidated tax was ultra vires  and  set aside  the demand notice.  On a revision by  the  respondent under  section  111  of the Act of 1925,  the  District  and Sessions  Judge  set aside the order of  the  Sub-Divisional Magistrate,  holding  that  the imposition of  the  tax  was valid.   Against this decision, the  Railway  Administration filed a revision 924 before  the  High Court of Bombay under section 115  of  the Code of Civil Procedure.  The High Court, on 12th  February, 1945,  refused to exercise its special powers under  section 115, C.P.C., with the further remark that the proper  remedy to be sought was by means of a suit. Under  these  circumstances, the Union of India,  which  had come  to be the owner of this Railway under the name of  the Central  Railway, filed the suit on 27th November, 1954  for

5

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 10  

refund  of  the  entire amount which was  collected  by  the respondent from the Railway in pursuance of the Rules of 193 1.  The trial court held that the levy of this tax was  void inasmuch as, under the notification issued on the 26th July, 1917,  only the rate on lands and buildings was  payable  by the  Railway Administration.  The suit for the refund  filed by  the  Union of India was, on this  ground,  decreed.   On appeal,  the’ High Court disagreed with the trial court  and held  that even the consolidated tax was payable in view  of the  notification  of 26th July, 1917, so that the  tax  had been  rightly  collected.  The High  Court,  thereupon,  set aside the decree of the trial court and dismissed the  suit. It  is against this decree that the Union of India has  come up  in this appeal by certificate under Article 133  of  the Constitution. In  order to    appreciate the submissions made  by  counsel for parties    in  this appeal, it is necessary to  set  out the relevant provisions  of  section 59 of the Act  of  1901 and of section 73 of the Act of 1925 which are as follows :-               "Section 59 of the Act of 1901.               59.  (1)  Subject to any  general  or  special               orders               which  the State Government may make  in  this               behalf,               any Municipality-               many impose, for the purposes of this Act, any               of the following taxes, that is to say,               (i)a  rate  on  buildings or  lands  or  both,               situate within the municipal district;               (vii) a   general   sanitary  cess   for   the               construction    or   maintenance,   or    both               construction   and  maintenance,   of   public               latrines, and for the removal and disposal  of               refuse;               (viii)     a  general water-rate or a  special               water  rate or both for water supplied by  the               Municipality, which may be imposed in the form               of a rate assessed on buildings                                    925               and  lands,  or in any other  form,  including               that of charges for such supply, fixed in such               mode or modes, as shall be best adapted to the               varying circumstances of any class of cases or               of any individual case;               (ix) a lighting tax;                    .    .    .    .     .    .                    .    .     .     .    .    .               Provided further that-                    .     .    .      .    .     .                    .     .     .      .     .     .               (c)   the  Municipality  in lieu  of  imposing               separately  any  two  or  more  of  the  taxes               described  in clauses (i), (vii),  (viii)  and               (ix) may impose a consolidated tax assessed as               a rate on buildings or lands, or both  situate               within the municipal District."               "Section 73 of the Act of 1925               73.   (1)  Subject to any general  or  special               orders which the State Government may make  in               this behalf and to the provisions of  sections               75  and 76, a municipality may impose for  the               purposes  of  this Act any  of  the  following               taxes, namely:-               (i)   a  rate  on buildings or lands  or  both               situate within the municipal borough;

6

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 10  

               .      .      .     .     .                 .      .       .     .      .               (viii)a   general   sanitary  cess   for   the               construction   and   maintenance   of   public               latrines, and for the removal and disposal  of               refuse;                  .      .     .      .      .      .                 .       .      .      .       .     .               (x)   a general water-rate or a special water-               rate  or  both  for  water  supplied  by   the               municipality, which may be imposed in the form               of a ’rate assessed on buildings and lands  or               in  any other form, including that of  charges               for  such supply, fixed in such mode or  modes               as  shall  be  best  adapted  to  the  varying               circumstances of any class of cases or of  any               individual case;               (xi)  a lighting tax;                .       .     .       .       .                .      .       .       .      .               926               Provided further that-                 .      .      .      .        .                 .      .       .      .        .               (c)   the  municipality  in lieu  of  imposing               separately  any  two  or  more  of  the  taxes               described in clauses (i), (viii), (x) and (xi)               may  impose a consolidated tax assessed  as  a               rate  on buildings or lands or  both  situated               within the municipal borough." In  the  year  1914, the respondent  Municipality  had  only levied a rate on buildings an& lands under clause (i) of  s. 5  9(1)  of  the  Act of 1901.  There  was  no  question  of imposing  a general or special water rate as the  respondent had  no water works of its own and was taking  water  supply from the G.I.P. Railway.  It was in these circumstances that the notification was issued by the Central Government  dated the 13th May, 1914 making the Railway Administration  liable to  pay  house-tax  to the  Municipality  of  Lonavla.   The notification  was  obviously intended to  make  the  Railway liable  to pay the tax which had been imposed as a  rate  on buildings and lands under s. 59(1)(i) of the Act of 1901  by the  respondent.   Subsequently,,  in  the  year  1916,  the respondent  Municipality not only arranged for water  supply and imposed a general water rate, it proceeded to make rules for  imposition of a consolidated tax assessed as a rate  on buildings  and lands under clause (c) of the second  proviso to S. 59(1) in lieu of the existing tax imposed as a rate on buildings  and lands under clause (i) as well as  the  water rate, imposed under clause (viii) of s. 59(1).   Thereafter, the  Central Government issued the notification  dated  26th July,  1917 under S. 135(1) of the Railways Act  making  the G.I.P.  Railway  liable  -to  tax  on  buildings  and  lands -imposed  by  the Lonavla Municipality.  It is to  be  noted that,  in  this notification, the Government used  the  word "tax"  and not the word " rate".  The tax imposed  under  s. 59(1) was described as "a rate on buildings and lands".   If the  intention  of the Government had been that  the  G.I.P. Railway  should  be liable to that tax only, it  could  have used  the  word  "rate" instead of the  word  "tax’  in  the notification.   In fact, if the, notification had been  left untouched,  the liability of the G.I.P. Railway  would  have continued to be in respect of the rate on buildings or lands because  of the earlier notification of 1914,  under  -which the  Railway  had  been  made  liable  to  House-tax.    The

7

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 10  

notification  of 26th July, 1917 made the Railway liable  to tax on buildings and lands obviously because the  Government intended   that  the  Railway  should  be  liable   to   the consolidated  tax under clause (c) of the second proviso  to S.   59(1).   Clause  (c)  permits  the  imposition   of   a consolidated  tax assessed as a rate on buildings or  lands, or  both.   The  moment  a tax is  assessed  as  a  rate  on buildings or lands, it naturally becomes a tax 9 2 7 on building and lands.  The fact that it was a  consolidated tax was immaterial.  It was this consolidated tax which  was intended  to be made payable by the G.I.P. Railway when  the Central Government used the expression "tax on buildings and lands"  in place of the earlier words "House Tax" and  chose not to refer to the liability being in respect of a rate  on buildings  and  lands.  It is true that all  taxes  are  not rates  but  all rates are taxes.  A rate  on  buildings  and lands  is  ’a  tax  on buildings, so  also  any  other  tax’ assessed  as a rate on buildings and lands becomes a tax  on buildings and lands.  We are unable to accept the submission made  by counsel for the appellant that the expression  "tax on  buildings  and lands" used in the notification  of  26th July, 1917 could only refer to a rate on buildings and lands under  clause (i) of s. 59(1) and would not cover  the  con- solidated  tax  referred  to in clause  (c)  of  the  second proviso.   It is true, as urged by him, that the  tax  under clause (c) of the second proviso is not identical with,  and is different in nature from, the rate on buildings and lands imposed  under  clause (i), but that circumstance  does  not imply that it is not a tax on buildings and lands.  The mere use of the word "consolidated" cannot make any difference to this interpretation.  It is also significant that clause (c) of the second proviso does not purport to lay down that  the consolidated  tax  will  be  the  sum-total  of  the   taxes described  in  clauses  (i), (vii), (viii)  and  (ix).   The consolidated  tax  envisaged by that clause is  in  lieu  of separate  imposition  of  any two or  more    of  the  taxes described in clauses (i), (vii), (viii) and (ix) which means that  the  power to impose. this consolidated tax  has  been given  for the purpose of substituting it for  the  multiple taxes  which  could be imposed under  those  clauses.   This consolidated  tax  cannot, therefore, be held to be  of  the same  nature  as  the  taxes  in  all  those  clauses.   The intention  appears to be that, though the  Municipality  was empowered  to impose four different kinds of taxes,  it  was permitted under clause (c) of the second proviso to simplify matters  by  having a single tax on buildings and  lands  in lieu  of those multiple taxes.  Such a single tax had to  be assessed -as a rate on buildings and lands.  This being  the nature,  it obviously becomes a tax on buildings and  lands, so  that the notification of 26th July, 1917  clearly  makes the  Railway  liable to payment of this tax.   The  position under  the  Act of 1925 is exactly the same where  also  the language  of clause (c) to the second proviso  is  identical with  that  contained  in  the Act  of  1901,  so  that  the liability imposed on the Railway by the notification- of the Government dated 26th July, 1917 under s.135(1) of the rail- ways Act continued even under the Act of 1925. It  is also significant to note that the Rules, which  we’re framed by the Municipality under the Act of 1901 and by  the Municipal  .Borough later under the Act of 1925  which  were promulgated on 928 the  4th May, 1916 and the 6th October,  1931  respectively, described  the tax as a general rate on buildings and  lands

8

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 10  

in rule 1. It is true that, in the heading of the Rules, the expression  used was that "the Rules were for the levy of  a consolidated rate on buildings and lands", but, in the  main provision, the tax was described only as "a general rate  on buildings And lands".  A general rate on buildings and lands is  obviously  a  tax  on buildings  and  lands  and  would, therefore,  be  covered by the notification of  the  Central Government dated 26th July, 1917. Apart from this interpration which we have arrived at on the basis  of the language used in the two Acts, the Rules,  and the  notification of the Central Government, there  are  two circumstances  which indicate that this must be the  correct construction  of  the  notification issued  by  the  Central Government.   The  first  circumstance is  that,  when  this notification  was  issued,  the only  tax  which  was  being imposed  by  the  Lonavla  Municipality  which  the  Central Government could have intended should become payable by the, G.I.P. Railway was-the consolidated tax under clause (c)  of the second proviso.  There was no other tax which could have been   covered   by  this  notification.    In   fact,   the notification  would be meaningless if we were to  hold  that this consolidated tax is not covered by the expression  "tax on buildings and lands".  This notification was issued while the  earlier notification of 1914 was ,already in  existence and,  if the intention was to cover only the rate  mentioned in  clause (i) of s. 59(1), there was no need to issue  this fresh  notification as the liability of the Railway  to  pay that tax already existed under that notification of 1914. The  second circumstance that we can take notice of  is  the historical  background  in which this notification  of  26th July, 1917 was issued.  It appears that, after the Rules for imposition of this consolidated tax came into force in 1916, the  Municipality demanded payment of this consolidated  tax from  the  G.I.P.  Railway.  Thereupon,- the  Agent  of  the G.I.P.  Railway  Company wrote a letter  to  the  Secretary, Railway  Board,  Simla, on the 1st December,  1916,  stating that  the Company did not agree that it should pay  the  new consolidated  tax  as it comprised a house tax and  a  water rate.   The Company had its own arrangements for the  supply of  water  and  it was obviously unfair that  it  should  be called upon tO pay any tax which includes a water rate, when no  municipal  water was being consumed by  the  Railway  at Lonavla.   The  Secretary,  Railway  Board,  forwarded  this letter to the Secretary to the Government of Bombay, General Department,  with  a  letter  dated  12th  December,   1916, enquiring  whether the Agent’s information was correct  and, if  so,  whether the Bombay Government had  any  remarks  to offer on the, Agent’s 92 9 contentions.   On  11th  May, 1917,  the  Secretary  to  the Government  of  Bombay  replied to  the  Secretary,  Railway Board,  pointing.  out that, originally,  the  Municipality, proposed  to  levy a general water rate on  all  houses,  in addition to the existing house tax, but, on  representations from  property  owners  of Lonavla  and  Khandalla,  it  had decided  to.  impose a consolidated rate  on  buildings  and lands  in  lieu of the house-tax and  the  proposed  general water  rate.  Consequently, they were, levying, in  lieu  of house  tax,  a consolidated rate, which included  a  general water  rate, on a sliding scale, on all properties  situated within the municipal limits.  The water rate imposed was not intended  to cover expenses on any service rendered  in  the nature  of  a general tax as opposed to a service  tax.   In equity,  the  Railway Company’s property in Lonavla  had  no better  right  to exemption than the properties  of  private

9

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 10  

individuals  who,  although they did not take  private  pipe connections,  were paying the general water rate.  In  these circumstances, a request was made to the Secretary,  Railway Board,  to  move  the Government of  India  to  declare  the Administration  of the G.I.P. Railway liable to pay  to  the Lonavla Municipality the consolidated tax on  buildings--and lands  in  lieu of the, housetax in respect of  the  railway properties  situated  within the municipal limits.   It  was suggested  that  the Schedule annexed  to  the  notification dated 13th May, 1914 may be amended accordingly.  It was  in pursuance  of  this move by the Bombay Government  that  the notification  of 26th July, 1917 was issued by  the  Central Government.   That the notification of 26th July,  1917  was issued  in pursuance of this correspondence is clarified  by the Memorandum dated 17th August, 1917, with which a copy of the  new  notification was forwarded by  the  Government  of India,  Railway Department (Railway Board) to the  Secretary to the Government of Bombay.  These circumstances, in  which the  notification  of 16th July, 1917 was  issued,  make  it plain  that  the  Government of India, when  they  used  the expression   ’-’tax   on  buildings  and   lands"   in   the notification, intended to make the G.I.P. Railway liable  to the   consolidated  tax  which  had  been  imposed  by   the Municipality under the Rules of 1916. The  decision of the Bombay High Court in  Borough  Munici-. pality,  Ahmedabad  v. Ahmedabad  Manufacturing  and  Calico Printing Co. Ltd. (1) on interpretation of, section 73 and 1 1 0 of the Act, of 1925 also supports the view that we  have taken  above.   The, question that arose in  that  case  was whether  the  right  of an appeal’ envisaged  by  using  the expression  "in the case of a rate on buildings or lands  or both"  in section 110 could be availed of in respect  of,  a general water rate imposed under clause (x) of section 73(1) which described that tax as a general water rate imposed  in the form of a. (1)  A.I.R. 1939 Bom. 478, 930 rate  assessed  on buildings and lands.  It  was  held  that there  was  no -distinction between a rate on  buildings  or lands and a tax in the form of a rate assessed on  buildings or  lands.   In  the case before us,  ,on  that  analogy,  a consolidated  tax assessed as a rate on buildings and  lands cannot be distinguished from a tax on buildings and lands. Reference  may also be made to a decision of  the  Allahabad High  Court  in  Raza  Buland Sugar  Co.,  Ltd.   Rampur  v. Municipal  Board, Rampur(1) where it was held that  a  water rate is a tax on buildings and lands and is not, in fact,  a service  tax  chargeable  in  respect  of  water   supplied. Counsel  for  the appellant referred to a  decision  of  the Madras High Court in Municipal Council, Cuddappah v. M &  S. M. Ry.  Co. Ltd.(1); but that case is of no assistance as it turned  on the special language which had been used  in  the Act and the notification which came up for consideration  in that  case.   In  fact,  the  expression  that  had  to   be interpreted was "property tax" and not "tax on buildings and lands".   We  agree with learned counsel for  the  appellant that much assistance cannot be derived from the decision  of this  Court  in Patel Gordhandas  Hargovindas  v.  Municipal Commissioner,  Ahmedabad ( 3 ) which was relied upon by  the High Court.  However, as we have held ,above, on the  proper interpretation  of  the language used in the two  Acts,  the Rules,  and the notification, and taking- into  account  the circumstances  under  which  the notification  of  1917  was issued, the -only conclusion that can be arrived at is  that the  Railway  was made liable to this consolidated  tax,  so

10

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10  

that the decision of the High Court is perfectly correct. The appeal fails and is dismissed with costs. R.K.P.S.                                              Appeal dismissed. (1)  A.I.R. 1962 Alld. 83. (2)  A.I.R. 1929 Mad. 746. (3)  [1964] 2 S.C.R. 608, 9 3 1