1. This is a petition in revision by the plaintiff against a decree of the learned Judge of the Court of Small Causes at Dehra Dun. The suit was for the recovery of a total sum of Rs. 547-6-0 alleged to be due from the defendant as tax on circumstances and property for a certain number of years. The defendant raised various pleas in defence, but we are concerned with only two of them, namely, (1) that the defendant 'did not come within the purview of Section 114, Clause (a), District Boards Amendment Act,' and (2) that, at any rate, a portion of the claim was barred by time. The learned Judge has dismissed the entire suit.
2. The learned Judge has held in favour of the plaintiff that the defendant assessee, residing as he does within the 'rural areas' in question, is not entitled to say that he is outside the purview of Section 114(a), U.P. District Boards Act (10 of 1922). He has however dismissed the suit because, to put it briefly, in his opinion the tax is unjust and would operate harshly, so far, at any rate, as Government servants residing only for certain periods within the jurisdiction of the District Board in question are concerned. We are unable to agree with the learned Judge that such consideration can justify the dismissal of the suit. The provisions laid down in Sections 128 and 131 of the Act make it perfectly clear that the learned Judge was not right in adverting to these considerations and in basing his judgment upon them. Another reason given by the learned Judge for holding in favour of the defendant and dismissing the suit is that the defendant pays income-tax and is 'therefore free from a second assessment.' This view is clearly erroneous. The learned Judge is not right in thinking that the tax on 'circumstances and property' which the District Board imposes is income-tax. No question of a second assessment arises.
3. The previous sanction of the Governor. General, as required by Sub-section 3 of Section 80-A, Government of India Act, then in force, was obtained to the passing of the U.P. District Boards Act (10 of 1922). That being so, the Local Government was entitled to enact the Sections which authorize the imposition of taxes by the District Boards. Section 108, U.P. District Boards Act, runs as follows:
With the previous sanction of the Local Government a Board may, by notification, impose and may in like manner abolish or alter the rate of either or both of the following taxes : (a) a local rate under Section 3, U.P. Local Hates Act, 1914, as modified by this Act; (b) a tax on persons assessed according to their circumstances and property (hereinafter referred to as the 'tax on circumstances and property') in accordance with Section 114:
Provided that a Board shall not effect an increase in the amount of the local rate in force at the commencement of this Act unless a tax on circumstances and property has been imposed under Clause (b).
4. The relevant portion of Section 114 may also be quoted:
The power of a Board to impose a tax on circumstances and property shall be subject to the following conditions and restrictions namely, (a) the tax may be imposed on any person residing or carrying on business in the rural area, provided that such person has so resided or carried on business for a total period of at least six months in the year under assessment.
5. It is perfectly clear therefore that the District Board was authorized in law to impose a tax on persons residing in the rural area assessed according to their circumstances and property. The argument of Mr. Banerji who appears for the defendant respondent, is that the area covered by the Forest Research Institute at Dehra Dun, within which area the defendant resides, is not within the rural area and is therefore outside the jurisdiction of the District Hoard. He refers to Section 1(2) of the Act which lays down that the Act extends to the territories for the time being administered by the Local Government of the United Provinces and urges that the Forest Research Institute is outside such territories. He is unable however to place any materials whatsoever before us which would justify such a conclusion. All that he is in a position to say in support of his argument is that the Forest Research Institute is a department administered by the Government of India. That may be so, but it does not follow from that circumstance that the land covered by the Forest Research Institute is excluded from the territories for the time being administered by the Local Government of the United Provinces. The areas which are excluded from the operation of the U.P. District Boards Act are mentioned in the Act itself in the definition of the expression 'rural area' which is given in Section 3(10) and is as follows:
'Rural area' means the area of a district excluding every Municipality as defined in the United Provinces Municipalities Act 1916 and every cantonment as defined in the Cantonments Act, 1910.
6. This argument of the learned Counsel therefore is without force. The second contention raised by the learned Counsel for the defendant-respondent is that mere residence in the rural area is not sufficient to make a person liable to pay the tax. This contention also is clearly not well-founded as the very words of Clause (a) of Section 114 of the Act clearly show. It may also be pointed out that in the year 1932 Government, acting under the powers conferred on them by Section 124(3) of the Act, had issued G.O. No. 2341/IX-409 dated 10th November 1932, by which they had exempted from the payment of the tax on circumstances and property all Government servants who had resided in their official capacity in the rural area within the jurisdiction of any District Board for a period of less than six months of the year of assessment. That also indicates that residence within the rural area is by itself sufficient to bring a person within the purview of the powers conferred on District Boards to impose the tax. We have therefore come to the conclusion that the decision of the Court below holding that the defendant is not liable to pay the tax is erroneous. The learned Counsel appearing for the plaintiff-applicant has however not been able to show that the decision of the Court below that the claim for all tax due before 30th March 1933 is time barred, is incorrect. The learned Judge is clearly right in arriving at that conclusion.
7. For the reasons given above, we allow this application in revision, set aside the decree of the Court of Small Causes and remand the case to that Court for the determination of the amount due to the plaintiff in accordance with the observations made above. In view of the fact that the District Board included in its claim tax for a period which was clearly beyond limitation, we direct that the parties shall fear their own costs.