Under Section 25 of the Madras Public Health Act, 1939 (Madras Act III of 1939), the Government accord sanction to the levy by the Upplipalayam Panchayat in Coimbatore, of a water tax at 25 per cent. (Twenty five per cent.) of the house tax levied tax in the area, with effect from 1st April, 1960. (By order of the Governor)(Sd.) Subrahmanyam, Deputy Secretary to Government.
After securing the sanction of the Government, the Panchayat merely published a general notice under Exhibit A-4, dated 26th March, 1960 levying the water tax on the abovesaid basis. The plaintiff objected to the enhancement of the property tax and the levy of water tax and his appeal to the Panchayat was dismissed under Exhibit A-7, dated 16th January, 1961, in these terms;
The Panchayat in its resolution No. 265, dated 9th December, 1960 has confirmed the tax of Rs. 10,109-70 on the above assessments.
The plaintiff issued the notice, Exhibit A-8, dated the 17th February, 1961 questioning the legality of the enhancement of the property tax and the levy of the water tax. In paragraph 6 of Exhibit A-8, while questioning the levy of water tax it was specifically mentioned that that there was no scheme as such for the panchayat for water supply and that there was no water supply by the Panchayat to the Buildings in question. To this a cryptic reply was sent by the Panchayat, Exhibit A-9, dated 19th April, 1961 as follows:
I enclose herewith a copy of resolution No. 336, dated 27th February, 1961 of this Panchayat in which the Panchayat has resolved that the levy of house tax on the properties of Coimbatore Cotton Mills Ltd., and Coimbatore Cotton Jubilee Mills Limited, have been fixed according to the powers of Panchayat vested under the Madras Village Panchayats Act, 1950. Further the levy of water tax has been made on the orders of the Government in G.O.Ms. No. 903, Health, dated 21st March, 1960.
In this connection I wish to bring to your kind notice that the annual rental value which was existing prior to 1st April, 1960 to the Mill buildings has not been enhanced. The Panchayat has revised the rate of house tax at 10 per cent. instead of 5 per cent. on the existing annual rental value of the buildings whose annual rental value is above Rs. 1,000. According to the revised schedule of rates the mill buildings have been assessed with effect from 1st April, 1960, without any rise made in the valuation to that of the previous valuation.
In the above circumstances, I wish to inform you that the levy of house tax including water tax on mill buildings is in order.
So far as the levy of water tax is concerned, nothing was mentioned except merely to refer to Exhibit B-3, the sanction of the Government authorising the Panchayat to levy water tax under Section 25. Whether there was any proposal or scheme for water supply, when it would materialise etc. nothing was stated and the statement in Exhibit A-8 that the plaintiff's premises did not receive any water supply was not denied. In paragraph 7 in the plaint it was specifically mentioned that there was no scheme as such by the defendant for any supply of water, that the defendant was not at all supplying any water to the plaintiff and that the plaintiff had made arrangements for water supply to their Mills at enormous cost of their own. In paragraph 7 of the written statement, it is simply stated that ' the Panchayat is contemplating taking up of water supply scheme and that it is not correct to say that water tax could not be levied without supplying water to the plaintiff.'
6. The contention of the learned Counsel for the appellant is that the Government, under Section 25 of the Madras Public Health Act can sanction the levy of property tax only for providing water supply and that there should be a present existing scheme to implement which (though it may in future) finance may be required and the Panchayat authorised to levy water tax under Section 25. Learned Counsel for the appellant did not take up the extreme contention that it is only after the scheme is actually worked out and only after water is supplied that tax can be levied. But he advanced the limited contention that even when the Panchayat can be authorised to levy water tax for providing water supply, the Panchayat must have a scheme which it has considered and finally resolved upon and only then it can approach the Government for sanction under Section 25. In other words, the contention of Mr. M. S. Venkatarama Iyer, the learned Counsel for the appellant is that it is not competent to the panchayat to merely ask for sanction under Section 25 with some vague general idea to provide a scheme for water-supply. There must be a concrete scheme which must have been considered by the Panchayat on its merits and then to implement that scheme and for finance the Panchayat approach the Government under Section 25 even though the actual water-supply may be in future. On this aspect too, the hearing of the second appeal, was adjourned on several occasions to enable the Panchayat to place the records and furnish the materials on the basis of which the Government gave the sanction, Exhibit B-3, i.e., to show whether the Panchayat has any concrete scheme. It is clear that the Panchayat till now has no such scheme. In fact, Exhibit B-5, the communication of the Government to the Panchayat dated 27th December, 1961, shows that the matter is yet to commence and it is still in the stage of investigation of a water supply scheme and the Government had written that the estimated cost of Rs. 4,000 for the investigation of the scheme itself should be borne by the Panchayat. The Executive Officer who has been examined as D.W 2 had not thrown any light whatsoever on this aspect of the matter even though that is the main complaint of the plaintiff. My attention was not drawn to any decision in which the Government had acted under Section 25 even before the Panchayat has investigated into the matter and has resolved upon a particular scheme to secure water supply. The decision in Municipal Council v. Prasadarayadu : AIR1936Mad857 , is easily distinguishable as that dealt with a case under Section 81 of the District Municipalities-Act where the language is, ' hereafter to be provided.'
7. There is also the further fact that no data has been furnished by the Panchayat as to how water tax was fixed on the basis of 25 per cent. of the property tax and there is no material to indicate that the Government bestowed any thought in the matter in sanctioning at this percentage which is undoubtedly very stiff and high. A careful scrutiny of the sub-sections of Section 25 of the Act shows that the Panchayat must have a concrete scheme, must have an estimate of the actual expenses and the recurring expenses, etc. so that the total capital investment and the recurring expenses, may be recovered from the rate-payers in a phased programme. In my view, it is absolutely necessary that there must be a concrete scheme and an estimate and everything should be placed before the Government who is the ultimate authority to sanction the levy of the tax. Sub-section (4) indicates how the total sum collected by way of water tax should be dealt with; it shows that the tax collected will have to be earmarked. Section 25 does not permit levy and collection of water tax en-mass, merely to be kept by the Panchayat leaving it to the Panchayat and the Government later on to decide in what manner this accumulated fund should be utilised. It must be borne in mind that the tax levied in pursuance of Section 25 of the Public Health Act is a separate tax for a definite purpose. It is unlike a general enhancement of tax for augmenting the revenues of the Panchayat when the general expenses are increasing. While it is necessary to invest the Panchayat with powers to levy the water tax after obtaining the requisite sanction from the Government under Section 25, though it may not result in a present or immediate prospect of supply of water, it is, however, essential that there should be a concrete scheme, a rough estimate, concerning the details of the scheme, when it is expected to materialise, what its recurring charges would be and the impact of the financial burden upon the rate-payers. In my view this is the minimum which is implicit under Section 25 of the Act. Neither the Panchayat nor the Government had bestowed thought on this aspect. The levy of the tax in question is illegal and clearly without jurisdiction and a suit in a civil Court questioning the legality of the levy is undoubtedly competent.
8. For all these reasons, the second appeal is allowed and the suit is decreed as prayed for with costs in all the three Courts.
9. Leave refused.