1. The plaintiff company has been paying company tax levied under section no of the City Municipal Act at the rate of Rs. 500 a half year and education tax at the rate of Rs. 75 a half year. Claiming that from 1st April, 1942, onwards the legitimate tax which could be demanded of it was Rs. 25 a half year and an education tax of Rs. 2-8-0, it has brought this suit for the recovery of the excess amount paid during the seven half years immediately preceding the suit. The amount due on this basis was Rs. 3,392-8-0. It, however, claimed on what is now admitted to be a mistaken basis, a further Rs. 75, which brought the suit claim up to Rs. 3,467-8-0. The Corporation contended that their assessment was correct and that the amount payable was what the plaintiff had been paying. They also claimed that the suit should be dismissed for the additional reasons that a claim for a refund of the first payment was barred by time, it having been made more than three years before suit, and that since the other payments were made voluntarily, they could not be claimed back again. The learned Principal Judge, City Civil Court, did not go into the question whether the taxes were properly levied; but accepted the contentions of the Corporation with regard to limitation and voluntary payments, and so dismissed the suit. The plaintiff appeals.
2. In 1940, by the India and Burma (Miscellaneous Amendments) Act, 1940, a new section was introduced in the Government of India Act and numbered as 142-A. According to that section,
the total amount payable in respect of any one person to the Province or to any one Municipality... by way of taxes on professions, trades, callings and employments shall not, after the 31st day of March, 1939, exceed fifty rupees per annum.
The Act then proceeded to enact a proviso similar to that found in Section 143 of the Government of India Act, which is roughly to the effect that if any Municipality or local authority had been already lawfully levying a tax, then they could continue to do so, until provision to the contrary was made by the Federal Legislature. By Act XX of 1941, the Federal Legislature made a provision for the limitation of the profession tax to Rs. 50 per annum which ran in these words,
Notwithstanding, the provisions of any law for the time being in force, any taxes payable in respect of any one person to... any one Municipality...by way of tax on professions, trades, callings or employments, shall from and after the commencement of this Act cease to be levied to the extent to which such taxes exceed fifty rupees per annum.
A reading of Section 142-A of the Government of India Act and of Section 2 of the Professions Tax Limitation Act, 1941 (Act XX of 1941) shows that they are intended to hit at taxes such as are leviable under Section 111 of the City Municipal Act, which enables a Municipal Council to levy a tax on any person or company which
exercises a profession, art or calling or transacts business or holds any appointment, public or private,
and not to affect in any way the right of Municipalities to levy a tax under section no of the City Municipal Act.
3. As companies seem to have been contending that they were entitled to the benefits of Act XX of 1941, an amendment of the Act was made by Act V of 1946. There were certain exceptions to the general rule laid down in Section 2 of Act XX of 1941; and by Act V of 1946, this additional exception was made:
the tax on companies, imposed under section no of the Madras City Municipal Act, 1919.
This naturally suggests that but for this additional exception, companies would not be liable under section no of the City Municipal Act to any tax exceeding Rs. 50 per annum. It however seems to me that this enactment of 1946 was introduced, out of abundant caution to remove any doubt that might have existed, and that even without it Municipalities would have had the right to levy taxes under Section 110.
4. Even if companies would not be liable under Section 110 but for the Amending Act of 1946 to any tax exceeding Rs. 50, I should still hold that the plaintiff was liable for the amount assessed during the half years which were the subject of the suit; because the 1946 Act was given retrospective effect to the date of Act XX of 1941. It is argued that since by an Imperial Act (India and Burma (Miscellaneous Amendments) Act, 1940), Municipalities were given the right to collect taxes only until the Federal Legislature introduced legislation taking away that power, the Municipalities lost that power from the date that Act XX of 1941 came into force, and that it was not within the powers of the Federal Legislature to restore the power to levy such taxes to Corporations and Municipalities. This argument however overlooks the effect of retrospective legislation. The Federal Legislature had the undoubted power to amend its own Act; and by giving it retrospective operation, it had the effect of eliminating the interval between Act XX of 1941 and Act V of 1946, so that the two Acts operated together as from 1st April, 1942.
5. In view of my finding that the tax was properly levied, the questions of limitation and the effect of the voluntary payments of the plaintiff do not arise. It is therefore unnecessary for me to consider the able arguments of the learned Counsel for the appellant on these points on the footing that the taxes paid were collected illegally.
6. The appeal is dismissed with costs.