In this petition is challenged a notice demanding the bales and bojas tax by the Municipal Committee, Malkapur, from the petitioner Manilal Manekji (Private) Limited of Malkapur. The impugned notice demands the taxes as follows :
S. No.Name of wardAmount of all years PaidUnpaidProcessFeeTotal dueName of serverDate ofserviceDate of server's return
181956-57Rs. 250/-43.18nP0.50nP Ukhandi Patil. 1957-58Rs. 250/-1323.50nP 1958-59Rs. 250/-2207.25nP 1959-60Rs.979.37nP 1960-61Rs.1995.37nP
2. No doubt, in the petition itself various other demands of the opponent Committee against the petitioner have been referred to and their amounts mentioned and some grounds also raised; but in the arguments before us Mr. Mandlekar on behalf of the petitioner has confined himself to the demand of the tax by the notice of demand dated 12-12-1960 at annexure A. In their return the Committee have admitted that in regard to the years in question for which, the notice of demand at annexure A was served, they have already recovered certain amounts of the bales and bojas tax from the petitioner. That admission is to be found in paragraph 7 of the return as follows :
'It is admitted that the Respondent Committee has recovered Rs. 750/- from Petitioner on account of Bales and Boja tax for 3 years 1956-57; 1957-53 and 1958-59 at Rs. 250/- per year on 16-1-1959 and three receipts, one, for each year was given to the Petitioner as alleged.'
Therefore, on the admitted position between the parties, for the years 1956-57, 1957-58 and 1958-59 the petitioner has paid Rs. 250/- per year for each of the three years on account of the bales and bojas tax and the demands shown in the impugned notice of demand are in addition to the amounts paid. For the years 1959-60 and 1960-61 however, admittedly the petitioner has not paid any amount against the bales and bojas tax, and therefore the demand for Rs. 979.37 nP and Rs. 1993-37 nP is still outstanding against the petitioner and it is that demand which will have to be considered in this petition.
3. Now, the challenge to the notice of demand and the attempted recovery on behalf of the opponent Committee is, in brief as follows : In regard to the bales and bojas tax there were two notifications issued by the Committee. The first notification is dated 21-3-1912 and runs as follows :
'No. 243 : with reference to Section 44, Sub-sections (7) and (8) of the Berar Municipal Law, 1886, it is hereby notified that the Municipal Committee of Malkapur, in the Buldana District, has, with the sanction of the Chief Commissioner, directed the imposition, with effect from the 1st August 1912, of a tax on the ginning and pressing of cotton under Section 41 (1) (A) (b) of the said Law, to be within the limits of the Malkapur Municipality, levied from all persons carrying on, within the limits of the Malkapur Municipality, the trade of ginning cotton or 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) For each bale of 14 maunds pressed 10 pies.
The tax is payable in one instalment on the 1st August each year.'
The second notification is dated 2-1-1940 and is as follows :
'No. 11-3924-M-XIII. In exercise of the powers conferred by Sub-section (5) of Section 67 of the Central Provinces Municipalities Act, 1922 (C. P. Act II of 1922), as applied to Berar, the Governor of the Central Provinces and Berar is pleased to confirm the following schedule of rates made by the Municipal Committee, Malkapur in the Buldana District, under Clause (b) of Sub-section (i) of Section 66 of the said Act, for the imposition of the tax on persons carrying on the trade or ginning and pressing cotton by means of steam or mechanical process within its limits, in supersession of the one sanctioned under Central Provinces Gazette Notification No. 243, dated 21st March 1912.
The revised schedule shall come into force from 1st October 1939.
1. For each boja of 14 maunds or 392 Ibs. ginned 2 annas.
2. For each bale of 14 maunds or 392 Ibs. pressed 4 annas.'
It will be noticed that the first notification was published under the then existing Berar Municipal Law, 1886, and the second notification under the provisions of the Central Provinces Municipalities Act, 1922, as applied to Berar. The Berar Municipal Law, 1886, under which the first notification was issued was repealed by Section 2 (1) of the C. P. Municipalities Act, 1922, as applied to Berar. But by Section 2 (2) thereof the notifications issued under the enactment so repealed were deemed to have been issued under the Central Provinces Municipalities Act and were therefore continued in operation.
4. Another point of distinction which we may here note and which figured in the arguments was that the first notification purported to levy the tax on all persons carrying on within the limits of the Malkapur municipality
'the trade of ginning cotton or pressing the same into bales by means of steam or mechanical process ........',
whereas the second notification purported to levy the tax
'on persons carrying on the trade of ginning and pressing cotton by means of steam or mechanical process within its limits in supersession of the one sanctioned under Central Provinces Gazette Notification No. 243, dated 21st March 1912'.
The main difference in the wordings of the two notifications is the substitution of the word 'and' in the second notification for the word 'or' in the first occurring between the words 'the trade of ginning' and the word 'pressing.'
5. Reliance has been placed on behalf of the petitioner on the provisions of Section 142A of the Government of India Act, 1935, and on the provisions of Article 276 of the Constitution in order to show in the first place that the tax beyond the maximum amount mentioned in each of those two provisions could not be demanded from the petitioner. Section 142A was incorporated into the Government of India Act by the India and Burma (Miscellaneous Amendments) Act, 1940 which was enacted on 31-1-1940. But by virtue of the provisions of Sub-section (2) of that very section it was brought into force from 1-4-1939. Sub-section (2) of Section 142A provides as follows :
'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, i 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 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 specified Provinces, municipalities, boards or authorities.'
6. On behalf of the petitioner reliance was placed on the main part of Sub-section (2), whereas on behalf of the opponent Committee refuge-was sought in the provisions of the proviso to that sub-section. So far as the main provisions in the opening clause of Sub-section (2) are concerned, the wording is clear and admits of no doubt or difficulty. The Committee is by virtue of those provisions entitled to recover from any one person by way of taxes on professions, trades, callings and employments a total amount which
'shall not, after the thirty-first day of March nineteen hundred and thirty-nine, exceed fifty rupees per annum'.
If the prohibition had stood at that, the Committee's demand in excess of Rs. 50/- in regard to the present tax would be unjustified. We may say at this stage that it is not in dispute before us on the part of either party that the bales and bojas tax is a category of tax which falls within the words
'taxes on professions trades, callings and employments.'
7. A question of some difficulty and importance arises under the proviso to Sub-section (2) of section 142A. The proviso in effect says that if in the financial year ending with 31-3-1939 there was in force in any municipality a tax on professions, trades, callings or employments the rate or the maximum rate of which exceeded Rs. 50/per annum, the preceding provisions of Sub-section (2) 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 ............municipality ....... as if for the referenceto fifty rupees per annum there were substituted a reference to that rate or maximum rate of such lower rate, if any (being a rate greater than fifty rupees per annum), as may for the time being be fixed by a law of the Dominion Legislature ......'
It is clear from this proviso that the Legislature contemplated two distinct classes of legislation which they intended to provide for : (i) a case where a tax on professions, trades, callings or employments was already in force in a municipality of which the rate or the maximum rate exceeded Rs. 50/- per annum; and (2) a case where the Dominion Legislature made a provision to the contrary; and in our opinion all that the proviso intended to say was that in the event of the first of these two contingencies being fulfilled the tax which was recoverable could be recovered as if a reference to that tax or that rate of tax were substituted for the words 'fifty rupees per annum' in Sub-section (2). If the second contingency were fulfilled, then the Dominion (or now Parliamentary) legislation shall prevail.
8. It is the contention on behalf of the Committee that the provisions contained in the proviso to Sub-section (2) would thus save the second notification which was in force prior to the enactment of section 142A.
9. This position is further contested on behalf of the petitioner. If was urged on behalf of the petitioner that the effect of the proviso to Section 142A is merely to save the rate or the maximum rate which was in force prior to the coming into force of section 142A. It was not the intention of the proviso, nor does it say so that the power to tax or levy the tax was saved. The notification dated 2-1-1940 in effect purports to impose the tax on persons carrying on the trade of ginning and pressing cotton in purported exercise of the powers under section 66 (1) (b) read with section 67 (5) of the C. P. Municipalities Act as applied to Berar, Section 66 (1) (b) says:
'66 (1) A committee may, from time to time, and subject to the provisions of this chapter, impose in the whole or in any part of the municipality any of the following taxes, for the purpose of this Act, namely: -
(b) a tax on persons exercising any profession or art, or carrying on any trade or calling, within the limits of the municipality.'
Therefore, on the face of it, the notification purports to impose a tax in exercise of the powers given to the Committee under Section 66 (1) (b). What is more, the notification also refers to Sub-section (5) of Section 67 which requires that on receiving the proposals for the imposition of a tax from a Committee, the Provincial Government may sanction the same or sanction them subject to such modifications as it may think fit, or return them to the Committee for further consideration.
10. It is clear therefore that the notification purports to impose a tax on the trade of ginning and pressing cotton and simultaneously brings into force a schedule of rates which is a new schedule as compared to the schedule in the first notification dated 21-3-1912. It may be noticed here that this revised schedule brought into force by the second notification dated 2-1-1940 was to come into force from 1-10-1939 as stated in the notification but it was in any case after the provisions of Sub-section (2) of Section 142A came into force. We, have already indicated that by Sub-section (2) of Section 142A, that section was made applicable, so to say, retrospectively from 1-4-1939. Therefore, on and after 1-4-1939 no municipality could recover the bales and bojas tax in excess of Rs. 50/- per annum unless the rate or the maximum rate of that tax already in force exceeded Rs. 50/- per annum or Parliament passed any legislation. Now, on 1-4-1939 the rate or the maximum rate of the tax in the present case was not the rate shown in the schedule annexed to the notification dated 2-1-1940. Whether or not it was the rate under the first notification is not the question we are called upon to decide, because it is clear that in the present case the notices of demand were issued and are sought to be justified only upon the second notification dated 3-1-1940. We need not therefore here enter into the further controversy that was raised before us as to whether the rates under the first notification still enure and can be validly enforced. So far as the rates under the second notification dated 2-1-1940 are concerned, it is clear that those were not the rates in force on the date on which section 142A came into force, that is to say, on 1-4-1939. The opponent Committee, I therefore, cannot, in our opinion, take advantage of the proviso to Sub-section (2) of Section 142A of the Government of India Act.
11. An almost similar challenge was made to a tax levied by the Municipal Committee, Dhamangaon, in Misc. Petition No. 389)) of 1954 decided on 12-4-1955 by the then High Court of Judicature at Nagpur, and considering the provisions of the proviso to Sub-section (2) of section 142A, a Division Bench of that Court observed:
'........ Thus, the, municipality could continue to levy a profession tax, albeit in excess of Es. 50/- per annum, provided the tax at that ratewas collected before 31st March 1939, and the effect of the proviso was to substitute that rate for the limit created by the second sub-section. In short, what was saved by the proviso was only the rate then prevailing, not the prior power to tax at any rates.
9. The municipality, here, however, did not continue the rate which was in force on the 31st March, 1939, but changed it in 1941. Taking the proviso as it stands, it is impossible to read the new rate by a fiction into Sub-section (2) of Section 142A. The rate introduced by the notification of 1941 must be held to be outside the proviso which only preserved the rate in force prior to 31st March, 1939'.
In that case also, the municipality had purported to change the rate of tax and levied the tax at an enhanced rate but after 31-3-1939 as in the present case. The above remarks have our respectful concurrence.
12. Similar observations are also to be found in a decision of this Court in Gajadhar v. Municipal Committee, Washim, : AIR1958Bom378 (to which decision one of as, Kotwal, J., was a party). In that case we followed the view taken in Municipal Committee Karanja v. New East India Press Co., Ltd., Bombay and the decision of a Division Bench of that High Court in M. P. No. 389 of 1954 (cit. sup.). There too we took the viewthat the enhancement of a tax levied after 31-3-1939 by a municipality on ginned cotton in excess of Rs. 50/- payable by one person was in contravention of section 142A of the Government of India Act. Thus, the view has beer consistently taken both in the Nagpur High Court and in this Court. It is a view upon a local law and follows directly from the provisions of section 142A of the Government of India Act read with the provisions of the C. P. and Berar Municipalities Act, 1922. Upon that view it must be held that the enhanced rate of tax under the notification dated 2-1-1940 could not be imposed of levied by the opponent Committee after 1-4-1939 because it infringed Sub-section (2) of section142A of the Government of India Act.
13. Reference was then made to Article 276 of the Constitution which virtually re-enacts the provisions of section 142A of the Government of India Act but raises the permissible limit of tax under this head to Rs. 250/-. The proviso to Clause (2) of Article 276 is in similar terms as the proviso to Sub-section (2) of Section 142A of the Government of India Act. But in the view which we have taken as to the effect and operation of the proviso to Sub-section (2) of Section 142A, it is clear that the notification dated 2-1-1940 was ultra vires of Sub-section (2) and therefore does not survive and so it will not keep alive the tax imposed thereunder and therefore the proviso to Clause (2) of Article 276 of the Constitution will not be attracted. The article therefore does not carry the case on behalf of the opponent Committee any further.
14. Some reference was also made in the arguments before us to the provisions of the professions Tax Limitation Act, 1941 (No. XX of 1941) by which a limit was placed on the amount of tax payable by any person by way of tax on professions, trades, callings or employments. By the provisions of that Act, the amount of such tax recoverable was limited to Rs. 50/- per annum per person. But the schedule attached to that Act under the exemptions granted under Section 3 of that Act exempted 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 Sub-section (i) of Section 66 o the Central Provinces Municipalities Act, 1922. Therefore, the position so far as the present demand is concerned is as if Act No. XX of 1941 had not been enacted. Section 2 of that Act limited the recovery to Rs. 50/-, whereas the schedule exempted the present recovery from its operation. The provisions of Act No. XX of 1941 also therefore cannot be availed of by municipality to justify the imposition.
15. In the view we have taken it must be declared that the opponent Committee is not entitled to recover from the petitioner the tax under the notification dated 2-1-1940. In this view we need not consider the further question which Mr. Mandlekar on behalf of the petitioner had raised that the tax under that notification is a completely new tax because it imposes a tax on the trade of ginning and pressing cotton, whereas the previous notification imposed a tax on the trade of ginning or pressing cotton. He urged that if this were a new tax as he submitted, then the provisions of section 67 of the C. P. and Berar Municipalities Act had not been followed and therefore the imposition of the tax was illegal under that Act. But since as we have said the notification dated 2-1-1940 cannot be given effect to because of the provisions of section 142A of the Government of India Act, we need not decide this point.
16. The petition is allowed and the notice of demand of tax at annexure A is quashed and the opponent Committee is prohibited from recovering the tax indicated therein. The opponent Committee shall pay the costs of the petitioner.
17. Petition allowed.