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The Municipal Committee of Malkapur Vs. Ballabhdas Mathuradas Lakhani - Court Judgment

LegalCrystal Citation
SubjectMunicipal Tax;Constitution
CourtMumbai High Court
Decided On
Case NumberSecond Appeal No. 374 of 1957
Judge
Reported in(1967)69BOMLR723; 1966MhLJ784
AppellantThe Municipal Committee of Malkapur
RespondentBallabhdas Mathuradas Lakhani
Excerpt:
c.p. municipalities act (c. p. act ii of 1922), sections 66(1)(b), 83-85)-government of india act, 1935 [25 & 26 geo, v, ch. 42], section 142a-constitution of india. article 276-notification imposing tax on quantum of bales ginaed and pressed- validity of notification -suit for refund of tax levied under c.p. act whether competent.;a municipal committee governed by the c.p. municipalities act, 1922, by a notification dated january 2, 1940, imposed a tax on persons carrying on the trade of ginning and pressing cotton on certain quantum of working such as ginning of a bare or pressing of a bale. on the question whether the notification was ultra vires of the powers of the committee, it was contended (1) that as the result of working of the notification in some cases was the.....patel, j.1. this second appeal raises a question of some importance in relation to the 'profession tax' imposed by municipal committee, malkapur, the appellant before us.2. the facts relevant for the decision of the appeal are as below.3. the municipal committee was originally governed by the berar municipal law, 1886. under the powers vested in it under the law to impose a tax on persons carrying on any profession or art or trade within the limits of the municipal committee, it levied certain taxes. in respect of trade of ginning and pressing cotton, notification no, 243, dated march 21, 1912, was as below: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.....
Judgment:

Patel, J.

1. This Second Appeal raises a question of some importance in relation to the 'profession tax' imposed by Municipal Committee, Malkapur, the appellant before us.

2. The facts relevant for the decision of the appeal are as below.

3. The Municipal Committee was originally governed by the Berar Municipal Law, 1886. Under the powers vested in it under the law to impose a tax on persons carrying on any profession or art or trade within the limits of the Municipal Committee, it levied certain taxes. In respect of trade of ginning and pressing cotton, notification No, 243, dated March 21, 1912, was as below:

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(A)(b) of the said Law, to be 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 ... ... ... ... 10The tax is payable in one instalment on the 1st August each year.

This notification was superseded by the following notification under the C. P. and Berar Municipalities Act, 1922:

No. 11-3924-M-XIII :-In exercise of the powers conferred by Sub-section (5) of Section 67 of the C.P. Municipalities Act, 1922 (C.P. Act II of 1922) as applied to Berav, the Governor of the Central Provinces and Berar is pleased to confirm the following schedule of rates toy Municipal, Committee, Malkapur in the Buldana district under Clause (b) of Sub-section (1) of Section 66 of the said Act for the imposition of 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 Control Provinces Gazette notification No. 243 dated the 21st March 1912,

The revised schedule shall come into force from the 1st October 1939 :(i)-For each Boja of 14 maunds or 392 lbs ginned ... ... ... 2 annas.(ii) For each Bale of 14'maunds or 392 lbs pressed ... ... ... 2 annas.

This notification was made on January 2, 1940.

4. The plaintiffs are the owners of a partnership firm named 'Mathuradas Mannalal of Malkapur' doing ginning and pressing business in Malkapur. They paid the tax for the years 1950-51 to 1952-53, totalling a sum of Rs. 6,509-2-0. Thereafter they instituted the present suit for recovery of the whole amount from the Municipal Committee on the ground that the levy of the tax was ultra vires and that no amount could be recovered by the Municipal Committee from them as it contravened the provisions of Section 142A of the Government of India Act, 1935, as then prevailing, and later the provisions of Article 276 of the Constitution, which prescribed the maximum limit of Rs. 250 for professional tax. The plaintiffs also claimed interest on the tax illegally recovered from them.

5. The trial Court decreed the suit of the plaintiffs wholly except as to a sum of Rs. 750 which, according to it, the Municipal Committee was entitled under Article 276 to recover. The Municipal Committee went in appeal to the District Court against the decree and the plaintiffs filed cross-objections against the decree disallowing their claim for Rs. 750. The appellate Court came to the conclusion that under Section 142A of the Government of India Act, the upper limit in the case of this Municipal Committee was modified to the rate of tax as levied prior to March 31, 1939, and therefore, the Municipal Committee was entitled to recover the tax at the higher rate that was prevailing before the impugned notification of 1940 was made. It also disallowed interest which was awarded to the plaintiffs by the trial Court. In accordance with its judgment it affirmed the decree of the trial Court only to the extent of Rs. 4,641-14-0 and proportionate costs....

6. The first question that arises is whether the notification of January 2, 1940, is as such ultra vires of the powers of the Municipal Committee, as contended by Mr. Mandlekar. It is not contended, and cannot possibly be contended, that the Municipal Committee is not entitled to levy a tax on profession, trade or calling, because, both under the Government of India Act, 1935, and the Constitution of 1950, the tax on profession, trade or calling, is within the State subjects, and under the Municipal Act, the municipal committee is vested with the power to tax the same. His argument, however, is that the result of the working of the notification in some cases was to contravene the provisions of Section 142A of the Government of India Act and Article 276 of the Constitution, and inasmuch as it contravened the provisions in some cases, the whole notification must be regarded as ultra vires of the powers of the Municipal Committee.

7. Section 142A of the Government of India, Act, which was introduced in that Act on January 31, 1940, laid down the limit upto which this tax could be recovered either by the State Government or by a local authority. It is as below so far as is relevant:

142A. ...

(2) The total amount payable in respect of any one person to the Province or to any one municipality, district board, local board, or other local authority in the Province, by way of taxes on professions, trades, callings and employments shall not, after the thirty-first day of March nineteen hundred and thirty-nine, exceed fifty rupees per annum :Provided that, if in the financial year ending with that date there was is force in the case of any Province or any such municipality, board...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,...as if for the reference to fifty rupees per annum there wore substituted a reference to that rate or maximum rate, or such lower rate, if any,...as may for the time being be fixed by a law of the Dominion Legislature ;

The rest is not relevant for the present purpose.

8. Though the section came into force on January 31, 1940, the terminal date provided by it was March 31, 1939. To that extent, therefore, the section was also retrospective. According to the proviso, if either the State or the local authority was already recovering such a tax at a rate higher than the prescribed maximum of Rs. 50, instead of the prescribed Rs. 50 such maximum was to be substituted as the Dominion Legislature may fix for the time being. If the Dominion Legislature decreased the rate then that was to be substituted in Sub-section (2) as the maximum rate.

9. In 1942 the Dominion Legislature enacted Act XX of 1941, by which it laid down specifically the limit of such a tax at Rs. 50 per annum save the exception created in respect of authorities referred to in the Schedule, and item 4 in the Schedule exempted the taxes levied by all municipal committees, under the C.P. and Berar Municipalities Act, 1922, from the operation of the Act. The effect of this Act was to confirm the taxes exceeding the sum of Rs. 50 which were lawfully being imposed on professions, trades, or callings by these municipal committees.

10. Coming to the argument of Mr. Mandlekar that the whole notification is invalid, we must notice the wording' of Section 142A of the Government of India Act, 1935. It does not state that no tax shall, be levied or imposed by either the Province or the municipal committee exceeding- that limit. It merely says that the total amount payable by any one person to the Province or the municipal committee by way of taxes on trade shall not exceed Ks. 50 per annum. It may be assumed even so that if a Province or a municipal committee had imposed after the coming into force of Section 142A of the Government of India Act, a tax on profession or trade, say at Rs. 500 that would certainly contravene the law. But that is not the case in the present ease. What is, imposed is a tax on certain quantum of working, such as ginning of a bale or pressing of a bale. It may be that in respect of some factory the tax may work out at that rate at an amount exceeding the sum of Rs. 50 or the limit previously existing according to the new notification. But it is equally possible in. the case of some factories that the total tax at the rate mentioned in the notification may not exceed Rs. 50. The considerations, therefore1, which apply to a notification imposing a lump sum as a tax on a particular profession or calling exceeding the Constitutional limit do not arise in such a case where merely a rate of tax is prescribed on a particular quantum of work. Ordinarily, the ginning and pressing factory must per force do a large volume of work. Yet, there may be some dilapidated factories where business must be much less than others. If this be so, then one cannot say that the whole notification of 1940 which prescribes the rates at 2 annas per boja of ginned cotton of 14 maunds or 392 lbs and 4 annas per bale of pressed cotton of 14 maunds or 392 pounds is invalid. If the tax exceeds the maximum limit, either of Es. 50 or the. limit of the prior amount of tax, then he is not liable to pay the excess and the municipal committee cannot recover the same. It is only the excess recovery that would be constitutionally illegal and bad or ultra vires.

11. Mr. Mandlekar emphasized his argument by pressing into service the decision of a Division Bench of this Court in Manilal v. Mun'pal. Comr., Malkapur,' (1961) 64 Bom. L.R. 471, s.c. [1962] N.L.J. 422, and contended that this case has decided that the whole notification is ultra vires the powers of the Municipal Committee. The case came up before the High Court in a writ petition. The Court considered the provisions of Section 142A of the Government of India Act and fixed the content of the section. Thereafter the learned Judges referred to three cases which were decided by the High Court and observed (p. 475) :.There too we took the view that the enhancement of a tax levied after March 31, 1939, by a municipality on ginned ectton in excess of Rs, 50 payable by one person was in contravention of Section 142-A of the Government of India Act, Thus, the view has boon consistently taken both in the Nagpur High Court and in this Court.

The Court rejected the contention of the Municipal Committee that the levy in excess of the limits mentioned there was by reason of the provisions of Section 142A valid. In the same paragraph the Court finally concluded that it must be held that the enhanced rate of tax under the notification of January 2, 1940, could not be imposed or levied by the Municipal Committee after April 1, 1939, because it infringed Sub-section (2) of Section 142A of the Government of India Act. What the Court stated was, as stated earlier, that the Municipal Committee could not impose or levy the enhanced rate of tax because it infringed Sub-section (2) of Section 142A. No doubt the Court does say (p. 475) :.But in the view which bo have taken as to the effect and operation of the proviso to Sub-section (2) of 9. 142-A, it is clear that the notification dated January 2, 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 use of the term 'ultra vires' appears to be by inadvertence. The Court in the body of the judgment purported to hold that the excess levy was contrary to the provisions of Section 142A of the Government of India Act, and that being so, the levy was not a lawful levy which could be operative under Article 276 of the Constitution and therefore could not be validated. In our view, this judgment does not decide that the whole notification is invalid by the terms of the notification itself. There is nothing to show that the tax imposed exceeded the limit prescribed under Section 142A of the Government of India Act. It is also apparent, as held by the Court itself, that the tax was a valid tax inasmuch as it was within the competence of the Municipal Committee, In its working in the case of some persons where the total amount of the tax exceeded the sum of Rs. 50, to that extent the levy or recovery would be ultra vires of the powers of the Municipal Committee.

12. We have also gone through the judgments referred to by the Court in the above case. These are decisions in Gajadhar v. Municipal Comm., Washim (1957) 60 Bom. L.R. 419, s.c. [19581] N.L.J. 326. Karanja Municipality v. New East India Press Co. and the decision of a Bench of the Nagpur High Court in Bharat Kola Bhandar v. Municipal Committee, Dhamangaon (1955) Miscellaneous Petition No. 389 of 1954, decided' by Hidayatullah C..T. and Kaushalondra Rao J., on April 12, 1955 ( Nagpur High Court), which ultimately went to the Supreme Court and is reported at B.K. Bhandar v. Dhamangaon Municipality. : [1966]59ITR73(SC) .

13. In the first ease the decision was that the enhancement of tax in excess of Bs. 50 was ultra virus of the provisions of Section 142-A of the Government of India Act, and when in excess of Es. 250, ultra vires of the provisions of Article 276(2) of the Constitution. At the end of para, 10 the Court said (p. 424) :.Accordingly, the enhancement of the rate from 0-2-3 per bale to 0-4-0 per bale, at which enhanced rate the amount of tax leviable from plaintiff factory would exceed Rs. 250 per annum, was ultra vires Article 270 of the Constitution and wag, therefore, illegal.' (The italics are ours).

14. Similarly, in the second ease, which was also a case of tax on the profession of ginning and pressing cotton, the Court said: 'There is nothing in this contention and we hold that Section 142A applies to this case. That means that the municipality had no power to levy anything in excess of 10 pies per Boja.' The Court was speaking, asn shown by the observations in para. 5, regarding any recovery in excess of the constitutional limits.

15. In the third case also the 'Court after considering the various contentions of the parties, issued a writ in the following terms:

In our opinion, ii writ of mandamus should issue to the municipality prohibiting it from resorting to the notification of 1941 for the purpose of collecting the tax in excess of Rs. 250/-per annum.

This would also clearly indicate that the Court did not say that the notification ms such was invalid,

16. Mr. Mandlekar pressed into service the decision in Quilon Municipality v. M/s. H. & C. Ltd. : [1965]1SCR581 , contending that if the notification in its actual working worked a tax exceeding the Constitutional limit, then the notification itself would be ultra vires. This decision has no bearing on the issue before us. There the Court hold that a statute of the Provincial Government which validated the earlier notification and retrospectively applied it, was ultra vires en the ground that it validated something which was illegal and not existing when Article 276 of the Constitution became law.

17. Mr. Mandlekar then contended that in any event since the notification imposing the tax does not itself lay clown the maximum limit of the tax, it must be regarded as invalid. In support of his contention he has cited Shrikrishna v. Ujjain Municipality. A.I.R [1953] M.B. 145. The Municipal Committee' introduced an entertainment and performance tax on cinema houses, and the tax that was levied was as many pies per tickets of a particular denomination. The Court after referring to the provisions of Article 276 of the Constitution said (p. 146) :.There must be something either in the language of such legislation or in the circumstances or manner of the imposition of the tax which makes it clear that the liability of one person to pay taxes on professions, trades and callings to any one Municipality shall not exceed the sum of rupees two hundred and fifty per annum.

As there was no such ceiling of tax mentioned, the Court held that the notification was invalid. Again, in Lachhman Das v. State of Punjab , a similar view was taken following the said decision. Support for this conclusion was drawn from the decision of the Supreme Court in Romesh Thappar v. State of Madras : 1950CriLJ1514 , where the Supreme Court made the following observations in respect of restrictions on fundamental rights (p. 129) :.Where a law purports to authorise the imposition of restriction on fundamental right in language wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting such right it is not possible to uphold it even so far as it may be applied within the constitutional limits, as it is not severable. So long as the possibility of its being applied for purposes not sanctioned by the Constitution cannot be ruled out, it must be held to be wholly unconstitutional and void.

18. It is not as if this notification imposing a professional tax is worded for the first time in such manner. Imposing of professional tax on the basis of earnings or on the basis of work that a person did was not unknown and that is apparent from the terms of Section 142-A Sub-section (1), itself, of the Government of India Act, 1935. Sub-section (1) provides that no such Provincial law relating to taxes for the benefit of a Province or of a municipality in respect of professions, trades, callings or employments shall be invalid on the ground that it relates to a tax on income. Then Sub-section (2) prescribes the maximum limit. If, therefore, such a method of levying taxes was permissible, it could only mean that as soon as the constitutional limit was prescribed, that limit became operative and recovery of any excess could not be permitted. We find it difficult to apply the principle of the decision in Romesh Thappar's case to a case like the present. With respect, therefore, we are not prepared to hold that the notification itself is invalid or ultra vires on the ground that the maximum amount leviable has not been prescribed by the Municipal Committee.

19. The next question then is whether a suit for refund lies. The answer to this question is not free from difficulties.

20. Mr. Kalele contends that a suit for refund cannot lie inasmuch as the Municipal Act has made ample provision and provided proper remedy for refund of any tax improperly imposed or recovered. He relies for this purpose upon the decision of the Supreme Court in Firm Radha Kishan v. Ludhiana Municipality. : [1964]2SCR273 . The case arose under the Punjab Municipal Act of 1911, where a terminal tax on salt was recovered by the Municipal Committee. The plaintiff-appellant filed the suit for recovery of the tax on the ground that the particular commodity on which the tax was recovered was not one on which any tax could be recovered by the Municipal Committee and it was, therefore, unauthorised. The plaintiff failed before the High Court and hence the appeal. In the Punjab Act a right of appeal against demand of tax is given under Section 84, i.e. either against levy or refusal to refund any tax collected under the Act, to the Deputy Commissioner or such other officer as is designated by the State Government. Sub-section (2) of that section further provides that if on the hearing of an appeal any question as to liability or the principle of assessment of the tax arises on which the officer hearing the appeal entertains a reasonable doubt, he will, either on his own motion or on the application of any person interested, state the case to the High Court for opinion, and after the High Court gives its opinion on the question referred to it, the appellate authority shall proceed to dispose of the appeal in conformity with the decision of the High Court. Section 86 of the Act provides that the liability of the person to be taxed cannot be questioned by any authority other than that provided in the Act. Sub-section (2) of Section 86 provides that no refund of any lax shall be claimed by any person otherwise than in accordance with the provisions of the Act and the rules thereunder. The Supreme Court held that the Act gives a remedy to the aggrieved party to challenge the correctness of the levy or to seek refund of the same by providing for an appeal and also further reference to the High Court on the question as to liability or the principle of assessment. To an argument that the appellate authority is not bound to refer the case to the High Court for opinion as the matter lay within his discretion, the Court observed that it could not be assumed that an officer would abuse the discretion vested in him, and deliberately and maliciously refuse to do his duty, and the question was not whether a particular officer abused his powers but it was whether a remedy is available under the Act or not. Mr. Justice Subba Rao after referring to the decisions of Willies J. in The Wolverhampton New Waterworks Co. v. Hawhesforc (1859) 6 C.B. 336 and similar cases, speaking for the Court, said (p. 1550) :.Where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law, there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy the party suing has his election to pursue either that or the statutory remedy. The second class of case is where the statute gives the right to sue merely, but provides, no particular form of remedy, there, the party can only proceed by action at common law. But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it.... The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class.

The Court held that the Civil Court's jurisdiction was ousted. The Court further observed that even if that was the position, a suit in a Civil Court would always lie to question the order of the tribunal created, if its order is expressly or by necessary implication made final and if the said tribunal abuses its power or does not act under the Act but in violation of fits provisions. Applying the principle the Court held that a suit would not lie.

21. The present case is governed by the C.P. and Berar Municipalities Act, 1922, and the relevant sections are 83, 84 and 85. Section 83(1) provides for an appeal against the (a) assessment or (b) levy of or (c) refusal to refund any tax to the Deputy Commissioner or such another officer as the State Government may empower. Sub-section (1)A gives the aggrieved person right to apply to the State Government in revision. Sub-section (2) provides for reference by the appellate authority or the re-visional authority to the High Court as in the Punjab Act and Sub-section (3) says the subsequent proceedings thereafter shall be governed by Section 113 and 0. XLVI of the Civil Procedure Code. Sub-sections (4), (5) and (6) may be omitted for the present purposes. Section 84 relates to conditions of an appeal and Sub-section (3) provides 'no objection shall be taken to any valuation, assessment or levy, nor shall the liability of any person to be assessed or tax be questioned, in any other manner or by any other authority than is provided in this Act.' Section 85 consists of two sub-sections and in Sub-section (1) it is mentioned that the. State Government may make rules under this Act regulating refund of taxes, and such rules may impose limitations on such refunds. Sub-section (2) provides that no refund of any tax shall be claimable by any person otherwise than in accordance with the provisions of this Act and the rules made thereunder. Here it is sufficient to state that rules for repayment of tax recovered by Municipal Committee required to be made by the order of the authority have been made by the State Government and we will have occasion to refer to the same later on.

22. In the present case, the professional tax can be levied by the Municipal Committee up to the limit prescribed by Section 142A of the Government of India Act, 1935 or Article 276 of the Constitution. The maximum limit is not prescribed by the Municipal Act but by the Constitution. But the question still is what is the amount that is payable by the plaintiffs and. what is recoverable by the Municipal Committee. In the case above referred to also the question was as to whether the commodity was liable to tax and what could bo recovered by way of tax. If, therefore, it was held that the suit could not lie, in the present case also by the tests applied there, a suit ought not to lie.

23. Mr. Mandlekar relics, upon the decision in B.K. Bhandar v. Dhamangaon Municipality, In this ease the municipality imposed a tax of 4 annas per boja of ginned cotton and 4 annas per boja of pressed bale. Suits were filed to recover the excess tax by factory owners. Before the trial Court and the High Court it was contended by the municipality that the suit was barred under Section 48. The High Court had upheld this contention. Another contention was raised for the first time before the Supreme Court, namely, that by reason of Sections 83, 84 and 85 of the C.P. and Berar Municipalities Act read together a suit would not be competent. By a majority of three to two both the contentions were negatived. Mr. Justice Mudholkar speaking for the majority gave a for grounds for holding that a suit is not barred. The grounds' being that there was, however, no express provision like that of Section 31(1) or Section 33(4) of the Indian Income-tax Act entitling the assessee to a hearing either in the appeal or revision petition. Section 85 empowers the State Government to make rules for regulating the refund of taxes, and such rules may impose limitations on such refunds. Sub-section (2) thereof provides that no refund of any tax shall be claimable by any person otherwise than in accordance with the provisions of this Act and the rules made thereunder. This sub-section can be availed of only if the Act or the rales provide for making a claim for refund, and no such rules were brought to the notice of the Court. The learned Judge then observes (p. 260) :.Even assuming that the Act contemplates obtaining a refund only upon compliance with rules made thereunder, does it contemplate cases where refund or repayment on the ground of the constitutionality of the levy It will be noticed that Sub-section(1) of this section, empowers the State Govt. to impose by rules limitations on the refunds-presumably including limitation on the amount of refunds- and Sub-section (2) bars a claim for refund otherwise than in accordance with the rules made under Sub-section(1). These provisions cannot possibly apply to a case where the right to obtain a refund or repayment is based upon the ground that the action of the Committee was in violation of a constitutional provision. To hold otherwise would lead to the startling result that what was incompetent to the State Legislature to do or authorise a committee to do directly can be permitted to be done indirectly by empowering the State Govt. to make rules for refund thereunder the amount of refunds could be so limited as to permit retention by the committee of the tax recovered by it in excess of the constitutional limit. In our view, therefore, Section 85 of the Act cannot, in any event, be said to provide a machinery for obtaining refunds in cases of this kind. Since Section 85 is inapplicable,, a fortiori Section 83 cannot apply either. We must therefore proceed on the footing that the Act does not provide a*machinery for making a claim for refund or repayment in such cases.

In para. 28 again, his Lordship observes that the remedy of appeal and revision 'cannot be said to provide a sufficiently effective remedy to an assessee to challenge the assessment made against him or to a person who is aggrieved by the action of the Committee levying or refusing to refund a tax.' At the same time his Lordship recegnises that remedy provided by Article 226 of the Constitution cannot be affected by provisions like Section 67 of the Indian Income-tax Act or Section 84(5) of the Municipality Act. We may state with respect that the conclusion reached by the Court in this case is directly opposed to the decision in Radhakishan's case which was not cited before their Lordships. It may also be pointed out with respect that the above observation of their Lordships will enable every assessee of rates to challenge the- assessment by suits.

24. Mr. Kalele contends that rules contemplated by Section 85(1) and rules for making applications for refund under is. 85(2) can have no possible connection with the question with which we are concerned. He says the question of an application for refund and actual refund subject to certain limitations can arise only in eases where a tax is required in the first instance to be paid and thereafter to be refunded such as octroi or terminal taxes. The question of refund or repayment of money as a result of an order in an appeal is entirely a different matter and there he seems to be right.

25. He says even apart from any rule, according to the statutory construction once it is held that an appeal lies it must as a necessary implication of the power of the appellate authority to decide the matter, include the power to direct a refund of the tax wrongly recovered in which ease the Municipal Committee is bound to carry out the order. lie refers us to the following passage in support in Maxwell on Interpretation of Statutes, 9th edn., p. 360. It is 'when an Act confers jurisdiction, it impliedly also grants the power of doing all such Acts, or employing such means, as are essentially necessary to its execution.' The power given by Section 83(6) regarding recovery of costs: may be available for directing the refund. He also points out that rules framed under the Act make this provision. Rule No. 3 at page 236 of the Municipal Manual runs as follows:

3. If the refund of any tax is ordered by the Deputy Commissioner on an appeal under Section 83(1), the municipal committee shall carry out the order within a period of thirty days from the date of its receipt.

It is unfortunate that Rule 3 was not brought to the notice of the Court in B.K. Bhandar's case. It would also appear from the scheme of the rules that Rules 1 and 2 relate only to those taxes which are payable in the first instance and thereafter refundable on certain contingencies such as octroies and terminal taxes. Rule 3 is an independent rule and carries out the intention of the Act that if an order for refund in appeal is made, the Municipal Committee must fulfil that order. Apart from this Section 56 of the Act enables the State Government to make an order directing any other person having the custody of the fund of the Committee to make payments of money which has become payable by reason of an order of any authority or Government other than the Municipal Committee. Similarly, Section 58-A also makes ample provision for enforcing the orders of the authority. Mr. Kalele, therefore, argued that there is a complete remedy provided by Sections 83, 84 and 85 as held in the decision earlier referred to i.e. Firm Radha Kishan v. Ludhiana Municipality where in respect of provisions exactly similar to those here, the Supreme Court held that the remedy was effective. He is right when he says that relevant provisions of the Act were not pointed out to the Supreme 'Court in Bharat Kola Blumdar v. Dhamangaon Municipality.

26. Both sides have referred us to a few cases arising under various State Sales Tax Acts. Mr. Kalele referred to us the decision of the Supreme Court in Kamala Mills v. Bombay State : [1965]57ITR643(SC) , where the provisions of Section 20 of the Bombay Sales Tax Act were construed, which is as under:

Save as it is provided in Section 23, no assessment made and no order passed under this Act or the rules made thereunder by the Commissioner or any person appointed under Section 3 to assist him shall be called into question many Civil Court and save as is provided in Sections 21 and 22, no appeal or application for revision shall lie against any such assessment or order.

The question arose before the Supreme Court under the following circumstances. The appellant had sold goods outside the State of Bombay of Es. 40,20,623-12-0 and Rs. 1,08,945-13-0. On the first, general sales tax of Rs. 61,885-12-0 was levied, and on the second special sales tax of Rs. 3,301-8-0 was levied. In the suit it was contended that this tax was illegally levied against the appellant. Illegality of the tax was said to be by reason of Article 286 of the Constitution and it was urged that the wide definition of sale in the Act was automatically constitutionally controlled by the Act. The State contended that jurisdiction of the Civil Court was barred by reason of Section 20 of the Sales Tax Act, while the appellant contended that an order which is without jurisdiction or which is passed in excess of the jurisdiction by the assessing authority cannot be protected by Section 20. The Court upheld the contention of the State. The learned Chief Justice in a unanimous judgment of seven Judges after referring to the provisions of Section 9 of the Code of Civil Procedure and the principles underlying decision of such questions said (p. 1947) :

The clause 'an assessment made' cannot mean the assessment properly or correctly made-The said clause takes in all assessments made or purported to have been made under the Act In its plaint, the appellant is undoubtedly calling into question the assessment order made against it, and such a challenge to the assessment order is plainly prohibited by Section 20.

Referring to Bharat Kala Mandir case the learned Chief Justice observed that it would not materially assist in construing Section 20 of the Sales Tax Act which must be construed on its terms. This case has been, explained in a later case by the Supreme Court in Venkataraman & Co. v. State of Madras : [1966]60ITR112(SC) , on which Mr. Mandlekar relied. The Court in that case was considering Section 18-A of the Madras Sales Tax Act in relation to imposition of sales tax on goods used in a works contract which provision was held to be ultra vires of the Constitution by the Supreme Court in another case. The majority judgment was delivered by Mr. Justice Subba Rao (as he then was) and it was held that Section 18-A had no application where the tax was wholly ultra vires, saying that an authority created by the statute could not question the vires of the statute or any provision thereof where under it functions. The observations in Kamala Mill's case were explained on the ground that the decision does not touch the question whether an assessment was made on the basis of the provision which was ultra vires of the Constitution,

27. We do not think it is necessary to refer to all the cases decided under the provisions of the Sales Tax Act. In all Acts the provisions are similar to Section 18-A of the Madras Sales Tax Act. It is possible to say having regard to the language of those Acts that the Authority created by the Act could not try the vires of the Act or a part of it as decided by Mr. Justice Subba Rao. The position here is different in that the appellate authority is not one created by the Act. Deputy Commissioner is an independent authority and so is the State Government.

28. The case is more like Kamala Mills, There the contention was that the sales were not liable to tax by reason of Article 286, and here the contention is that a professional tax of more than the constitutional limit cannot be recovered. Sections 83 and 84 of the Act enable the appellant not only to challenge the principle of assessment but his liability to tax as well and this must include the limit of the liability.

29. We are bound to follow the decision in B.K. Bhandur v. Dhamaiigaon Municipality but in view of the fact that the relevant provisions were not brought to the notice of the Court and in view of the fact that the decision in Firm Radha Kishan's case holds that the remedy provided by similar provisions is adequate and a suit does not lie we are constrained to hold that under the Act the suit is incompetent.

30. If we were wrong on the view that we have taken, the question as to whether the trial Court was right in making a decree for the entire amount minus a sum of Rs. 750 or whether the appeal Court was right in modifying the decree and increasing the amount by the limits of the original tax would fall to be considered. Mr. Mandlekar says, that the entire claim must be allowed on the footing that the second notification is wholly unwarranted. As we have said, the authorities of this Court indicate that it cannot be regarded as wholly void but only in respect of a particular individual nothing more than the constitutional limits can be levied. 'We have held in para. 19 earlier that where such a tax was levied prior to the terminal date, and the amount of the tax which a person was liable to pay exceeded the said amount of Rs. 50, then such amount was deemed to have been substituted in the section if the Dominion Legislature had affirmed that levy. As we have shown, the Dominion Legislature had affirmed that levy by Act XX of 1941. The limit, therefore, became modified to the limit which was operative by the notification in each individual case. If this view is correct, then the decree made by the lower appellate Court is justified.

31. The plaintiffs have filed cross-objections in respect of the decree disallowing the claim for interest. Interest is not awarded as a matter of course. Under the Interest Act it can be awarded if there is an agreement in writing in respect of the same or the case falls within its terms or on grounds of equity. On the latter ground there are very few well recegnised heads under which interest can be allowed. See the decision in Bengal Nagpur Railway Co., Limited v. Ruttanji. (1937) 40 Bom. L.R. 746. Following- this decision it was held by a Bench of this Court in Ahmedabad Municipality v. Vadilal Dalsukhram (1943) 46 Bom. L.R. 408, that interest was not recoverable on the amount of refund of tax illegally recovered. The lower Court, therefore, rightly disallowed the interest.

32. The plaintiffs had asked for an injunction restraining the Municipality from recovering any tax on ginned and pressed cotton for the season 1953-54 and for subsequent seasons. The trial Court had granted the injunction but the appellate Court has set aside that part of the decree. Mr. Mandlekar has argued that the notification dated January 2, 1940, purported to impose a wholly new tax, in that the notification of 1912 imposed the tax on all persons carrying on the trade of ginning cotton or pressing the same into bales, while the notification of 1940 imposed the tax on persons carrying on the trade of ginning and pressing cotton. He contends that the earlier notification imposed tax on a trader who carried on either of the professions while the later notification purported to impose the tax on a trader who carried on both together. If any trader carries on any one of the trades, then he was not liable to tax. In our view if one reads both these notifications, there is nothing to show that it was intended to change the incidence of the tax. The first notification of 1912 levied a tax on the ginning and pressing of cotton and provided tax on each process at the rates fixed. Similarly, the second notification also prescribes the tax on each process of the trade of ginning and pressing. The language is slightly altered but the intention remains the same. According to what we have said above, under Section 142-A of the Government of India Act, 1935, the rates of tax which were operative by the notification of 1912, came to be substituted qua this Municipal Committee as the maximum rates of tax permitted under that section. If the Municipal Committee exceeds that limit, then additional recovery would be invalid. In our view, therefore, the learned appellate Judge was right in holding that the Municipal Committee must be restrained from recovering anything more than what could have been recovered under the earlier notification of 1912.

33. In the result, we modify the decree of the trial Court by discharging the money decree made in favour of the plaintiff but confirm the injunctions granted by the appellate Court restraining the Municipal Committee from recovering the tax in excess of the rates imposed by the earlier notification of 1912, The decree of the Court below decreeing in favour of the plaintiffs a sum of Its. 4,641-14-0 is set aside. The appeal partly succeeds. As each of the parties have succeeded partly, parties will bear their own costs.

34. Mr. Mandlekar prays that a certificate should be granted under Article 133(1)(c) of the Constitution that it is a fit case for appeal to the Supreme Court. 'We think that this is a proper case where certificate ought to be granted. We accordingly grant certificate in terms of Article 133(1)(c)f.


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