Murray Coutts Trotter, Kt., C.J.
1. Under Section 135 of the Indian Railways Act (IX of 1890) it is laid down that a Railway Administration shall not be liable to pay any tax in aid of the funds of any local authority unless the Governor-General in Council has, by notification in the Official Gazette, declared the Railway Administration to be liable to pay the tax. This tax is sought to be imposed by virtue of Act V of 1920, the District Municipalities Act, whereby Municipal Councils are entitled to levy property tax under Section 81. In fact, no notification has been issued by the Government of India since Madras Act V of 1920 came into force and the Municipal Councils can only rely upon a notification of the 24th November, 1911, which was issued under the previous Act. It is said that the new section of the Act of 1920 amounts to no more than a compressing into one category of what under the old Act had fallen under three. To my mind that argument is unsound. Taxing statutes are to be construed strictly and the argument appears to me to violate all recognised principles of statutory construction. That is enough to dispose of this case. That is the conclusion that the learned Judge came to and we think that his judgment should be confirmed and the appeal dismissed with costs.
2. But it is obvious that a wider question is in the offing, and, though it is not necessary for the decision of this case, I think I ought to indicate it, in the hope that a consideration of it may avoid future difficulties. In the notification of 1911 the taxes which the Railway Administration was declared liable to pay were defined generally as house, land and water tax in the schedule to that notification. I entertain very great doubts as to whether a notification in such terms is intra vires of the statute. What an assessee wishes to know is not so much what is the nature of the tax and to what subject-matter it applies as his liability to pay under the section of the District Municipalities Act in force at the time, in other words, he is not greatly interested whether he is paying a. tax on land or in respect of the supply of water, but he is vitally interested to know how much he is called upon to pay and that depends upon the particular section applicable of the District Municipalities Act. I am strongly inclined to think that the notification required should not be in mere general terms specifying the nature of the tax which leaves the Municipality free to impose a tax of any amount they chose provided it falls into the class specified by the notification. However this case can be decided on the narrower ground I have indicated in the first part of this judgment and it is not necessary to base it on the wider one that the mere notification of categories of taxation sectioned without specific reference to the section of the District Municipalities Act which purports to impose such a tax is ultra vires of the Government of India. But I think it is a point which the Government of India should carefully consider and if necessary rectify it in future notifications.
Anantakrishna Aiyar, J.
3. The Municipal Council, Cuddappah, is the appellant in this appeal. The Municipal Council assessed the Madras and Southern Mahratta Railway Company to property tax in respect of certain vacant sites belonging to the Railway Company. After paying the amount of the tax under protest, the Company filed Original Suit No. 615 of 1924 on the file of the District Munsif's. Court, Cuddappah, for a declaration that the assessment was illegal and for refund of the amount of the tax with interest. The suit was transferred, and withdrawn, to the file of the High Court, and the learned Judge who tried the suit on the Original Side of this Court granted the reliefs prayed for by the plaintiff Company.
4. The ground on which the learned Judge held in favour of the plaintiff is that no proper notification has been issued by the Government of India under the Railways Act, making the Railway Company liable to pay the property tax claimed by the Municipal Council. To appreciate the dispute between the parties, it is necessary to state that under Section 135 of the Indian Railways Act (IX of 1890)
Notwithstanding anything to the contrary in any enactment or in any agreement or award based on any enactment the following rules shall regulate the levy of taxes in respect of railways and from Railway Administration in aid of the funds of the local authorities, namely:
(1) A Railway Administration shall not be liable to pay any tax in aid of the funds of any local authority unless the Governor-General in Council has, by notification in the Official Gazette, declared the Railway Administration to be liable to pay the tax.
5. It is common ground that on 29th of November, 1907 a notification was issued by the Government of India under Section 135 of the Indian Railways Act. But on the 24th of November, 1911, Notification No. 230 was issued by the Government of India, Railway Department, in these terms:
In pursuance of Section 135 of the Indian Railways Act, 1890 (IX of 1890) and in supersession of all previous notifications on the subject, the Governor-General in Council is pleased to declare that the administration of the Madras and Southern Mahratta Railway Company shall be liable to pay in aid of the funds of the local authorities set out in the schedules hereto annexed, the taxes specified against each in the 2nd column thereof.
Schedule. Local authorities. Taxes.
Cuddappah . House, Land and Water taxes.
(Sd.) Volkeks, Secretary, Railway Board.
6. On the date of the above notification, Madras District Municipalities Act (IV of 1884) was in force in this Presidency. Under that Act the Municipal Council had authority to levy tax on buildings or lands or both (under Section 63) and also levy water tax under Section 75. Act IV of 1884 has since been repealed by Madras Act V of 1920. Under Act V of 1920 Municipal Councils have got authority to levy property tax under Section 81. That section enacts that property tax which shall be levied at a consolidated rate on all buildings and lands shall comprise a tax for general purposes and may also comprise (a) Water and drainage tax, (b) Lighting tax, and (c) A Railway tax.
7. No notification has been issued by the Government of India after Madras Act V of 1920 came into force. The question for consideration is whether the Municipal Council, Cuddappah, is entitled to levy 'property tax' in respect of vacant sites of the Railway Company by virtue of the notification issued by the Government of India in 1911 quoted above. The learned Trial Judge has answered the question in the negative, and in my opinion he is right.
8. It was argued by the earned Counsel who appeared for the Municipal Council that the notification of 1911 should be taken to authorize the Municipal Council to levy what is mentioned as property tax in Section 81 of the District Municipalities Act V of 1920 in respect of lands. He argued that the property tax mentioned in Section 81 was to be levied on all buildings and lands within the Municipal limits and that the same shall comprise a tax for general purposes and may also comprise a water and drainage tax, and that as under the notification the levy of house, land and water taxes was authorised, property tax also should be taken to have been authorised in so far as tax on lands is concerned. I am unable to agree with that contention. Section 135 of the Indian Railways Act makes it clear that a Railway Administration was not to be liable to pay any tax in aid of the funds of any local authority unless the Governor-General in Council has, by notification in the Official Gazette, declared the Railway Administration to be liable to pay the tax. When therefore a Municipal Council seeks to make a Railway Administration liable for any tax, it should be able to produce a notification by the Government of India declaring the Railway Administration to be liable to pay that tax. What is now sought to be levied is 'property tax.' The Municipal Council should produce a notification by the Government of India declaring the Railway Administration to be liable to pay the 'property tax.' It is not enough if the Council is able to produce a notification declaring the Railway Administration liable to pay 'house, land and water taxes.' The two are substantially different. Under Section 63 of the Municipal Act of 1884 there was a limit to the rate at which taxes on buildings and lands could be levied, namely 8 1/2 per cent on the annual value of the buildings or lands or both. Under Act V of 1920 there is no such limit, and what is called the 'property tax' in Section 81 comprises many things which could not be held to come under 'house, land and water tax.' Taxing enactments should be strictly construed and the right to tax should be clearly established. Conditions precedent to the imposition of any tax should be strictly complied with. In the absence of any notification by the Government of India declaring the Railway Administration to be liable to pay 'property tax,' I think the learned Judge was right in his view that the Municipal Council had no right to levy tax in respect of vacant sites owned by the Railway Company in question. The policy of the legislature would seem to be to reserve to the Governor-General in Council the right to decide what taxes the Railway Administrations are to be made liable for and to what extent. The Governor-General in Council had no occasion to consider whether the Railway Administration in question should pay 'the property tax' mentioned in Section 81 of Act V of 1920. The taxes in respect of which the notification was issued in 1911 are in my opinion substantially different from the 'property tax' mentioned in Section 81 of Act V of 1920. The rates are different and the incidence also different. Therefore the notification of 1911 would not, in my opinion, be of any avail to the Municipal Council.
9. It was further argued by the earned Counsel for the appellant that there was a prior notification by the Government of India on 29th November, 1907, under which the Governor-General in Council was pleased to declare that every Railway Administration in British India shall hereafter be liable to pay in respect of property within any local area every tax which may lawfully be imposed by any local authority in aid of its funds under any law for the time being in force. He argued that the words of that notification were wide enough to include any tax which may be imposed by a Municipal Council under any Act. But I think it is enough to say in answer to this contention that the notification of 1907 ceased to exist when the notification of 1911 was issued. For the notification of 1911 specifically says that the same was issued 'in supersession' of all previous notifications on the subject. Its wordings are:
in pursuance of Section 135 of the Indian Railways Act (IX of 1890) and in supersession of all previous notifications on the subject, the Governor-General in Council is pleased to declare, etc., etc.
10. Thus it is clear that the notification of 1907 ceased to be in force after 1911 and that the same could not be invoked by the Municipal Council for the levy of any tax in 1924. I do not therefore consider it necessary to examine whether the notification of 1907 is open to any other legal objection.
11. The arguments of the earned Counsel for the appellant regarding the notification of 1907 therefore fails.
12. For the above reasons, I think the appeal fails and is dismissed with costs.