D. Basu, J.
1. This application under Article 226 of the Constitution has been presented by ten persons jointly, on the ground that their grievances againsta tax imposed by Kilinarayanpore-Paharpore Anchal Panchayat of which Respondents 2 and 3 are the Prodhan and the Upa-prodhan, respectively involve common questions of law. The Petitioners are all resident of this Anchat Panchayat and they are aggrieved by the imposition of the tax made by the Anchal Panchayat in exercise of its power under Section 57(1) (a) of the West Bengal Panchayat Act, 1950. Three of the Petitioners preferred an appeal against the imposition before Respondent No. 1, the District Panchayat Officer, who is the Appellate Authority, and the latter gave his orders on these appeals on 18-2-60. On the failure of the Petitioners to pay the tax, notices for the issue of distress warrant, were issued on all the petitioners on 25-2-61. The petitioners, accordingly, prayed for quashing all proceedings relating to the assessment of the tax and proceedings subsequent thereto and an order directing the Opposite parties not to give effect to the notices to issue distress warrants.
2. Opposite Party No. 1 has filed affidavit-in
3. A number of grounds has been taken in the opposition, the contents of which will be referred to in their proper places.petition challenging the validity of the imposition as well as the constitutionality of the Act and rules made thereunder. These are -
A. That the provision in Section 57(1) of the Act contravenes Articles VI and 19(1)(f) of the Constitution inasmuch as it makes no provision for the service of notice on the assesses individualls either before or after the assessment.
B. That the imposition of a tax, according to the circumstances and property of the assessee, as provided in Section 57(1) (a) of the Act, is ultra vires the legislative power of the State Legislature. C. That Rules 118-120 of the West Bengal Panchayat Rules. 1958, framed under the Act, providing for the recovery of taxes by distress warrant, are ultra vires.
D. That the provision for recovery by issue of distress warrant offends against Articles 14 and 19(1)(f) of the Constitution.
4. As to the contention that Section 57(1)(a) of the Act is unconstitutional on the ground that it makes no provision for the service of individual notices upon the assessees, the provisions of the Act have got to be read together with the rules framed under Section 120(2) of the Act, Clause (p) of which empowers the State Government to make rules providing for the procedure to be adopted as to the manner of assessment and imposition of taxes Rule 112(3) of the Rules so framed provide for a general publication of the assessment list 'at a conspicuous place, within the jurisdiction of the Gram Panchayat, inviting objections to the assessment list.'
5. Rule 118, again, provides for another general publication of the list of defaulters, in a similar manner, before issuing the distress warrant, referred to in Rules 119-120, for recovery of the tax. The Petitioners are, accordingly, right in their contention that the Act does not provide for the service of individual notices, either before or after the assessment, and there is much force in the contention made on behalf of the petitioners that a taxing statute which does not provide forany reasonable opportunity being offered to the assessee being heard before the liability is imposed upon him may be challenged as imposing a procedurally unreasonable restriction upon the freedom of properly or/and freedom of business guaranteed to him by Article 19(1)(f)(g) of the Constitution. This has been laid down by the Supreme Court in the cases of Kunnnthat v. State of Kerala, : 3SCR77 Balaji v. Income Tax Officer, Special Investigation Circle. Akola : 43ITR393(SC) .
6. I do not, however, think that the Petitioners are entitled to challenge the constitutionality of the impugned provision on this ground in the present proceeding, for two reasons-
(i) Though the statute or the Rules made thereunder do not provide for the service of notices individually, the Anchal Panchayat have, in fact, issued notices under Rule 118 upon the Petitioners individually to show cause why distress warrant shall not issue against them and the Petitioners have come to Court on the service of these notices. The Petitioners could have raised their objections as to the validity of the imposition on receipt of these notices, before the machinery for recovery, was set against them by the Respondents.
(ii) Apart from that, some of the Petitioners did in fact come to know of the proposed assessment from the general publication under Rule 112(3) and not only filed objections before the Anchal Panchayat, but also appealed from the decisions of the Panchayat to the District Panchayat Officer (Respondent No.1) who is the appellate authority under Rule 113 and obtained partial relief from him.
7. He that as it may the present application being a joint one, when some of the Petitioners did, in fact, get notice of the assessment in time to pursue their statutory remethes, it is not open to challenge the constitutionality of the statute or the Rules made thereunder in the instant proceeding on the ground that they do not provide for the service of individual notices, because the Petitioners have not been affected by the absence of such provision. The present point must, therefore, fail.
8. B. Far more difficult is the question as to the competence of the State Legislature to enact Section 57(1) (a) of the Act and of the Anchal Panchayat to impose the impugned tax in exercise of the power conferred by the said provision.
9. The provision in Section 57 (1)(a) of this Act as well as comparable provisions of other analogous enactments have come up before this Court in numerous eases but not in many of them has the question of vires been investigated and, in fact, it was not possible in many of them to examine this question inasmuch as the question could not arise before the. legislative powers were divided between two Legislatures by the Government of India Act, 1935. The old decisions referred to before me cannot, therefore, be of much assistance.
10. The legislative power, including the power of taxation, was distributed between the Federal and Provincial Legislatures by Schedule VII of the Government of India Act, 1985 and the relevant Entries in that Schedule were Entry 54of List I and Entries 42 and 46 of List II. By Entry 54. List I, the power to levy non-agricultural income tax was vested exclusively in the Federal Legislature, while the Provincial Legislature was given exclusive power to impose, inter alia.
'42. Taxes on lands and buildings, hearths and whitlows.
46. Taxes on professions, trades, callings and employments.'
11. This distribution has been maintained by the Constitution, with respect to the Union and the Siate Legislatures, by Entry 82 of List I and Entries 49 and 60 of List II. Under Entry 82 of List I, the power to levy non-agricultural income tax belongs exclusively to the Union while the State Legislature has the exclusive power to impose-
'49. Taxes on lauds and buildings;
60. Taxes on professions, trades, callings and employments.'
12. The impugned Ad having been enacted in 1956 by the West Bengal Legislature, the point for determination is whether Section 57(1) (a) or the imposition thereunder falls under either or both of the above two entries of List II, i.e. Entries 49 and 60. Section 57(1) of the Act is as follows:
''Subject to such rules and such maximum rates or scales as may be prescribed by the State Government in this behalf, an Anchal Panchayat-
(a) shall impose yearly a tax upon persons who are the owners or occupiers or owners and occupiers of lands or buildings or both within the local limits of the jurisdiction of the Anchal Panchayat according to the circumstances of such persons within the limits of the Anchal Panchayat and according to the value of the property within such limits of the said persons;
(b) may impose a tax on professions, trades or callings.'
13. It is evident at once that Sub-clause (a) of this sub-section purports to provide for a tax on 'lands and buildings' as referred to in Entry 49 of List II while Sub-clause (b) purports to exercise the power to levy a tax on professions, trades or callings, as conferred by Entry 60 of List II. Complication is, however, created by two things:
(a) Though the tax provided for by Sub-clause (a) is a tax on lands and buildings, it is to be imposed according to or on the basis of two factors
(i) the circumstances of the assessee, i.e. the owner or occupier of a land or building, within the limits of the Municipality;
(ii) the value of the property of such person within such limits.
14. Questions have been raised as to the meaning of the word 'circumstances' and also whether it would permit the imposition of a tax on non-agricultural income, the power to levy which belongs exclusively to the Union Parliament.
(b) The Rules framed under the Act add in this complication.
15. Rule 110 of the Rules deals with imposition of taxes. This Rule has several parts, of which we are concerned, in this case, with parts A and B. Part A deals with taxes upon 'persons who are owners or occupiers of lands or building' while Part B relates to 'taxes on professions, trades or callings'. The relevant portion of Part A of Rule 110 is as follows:
'A. Taxes upon persons who are owners or occupiers of lands or buildings.--The maximum rates of tax on persons, who are owners or occupiers or owners and occupiers of lands or buildings or both according to estimated total annual income shall be us follows:
(a)For the first Rs. 150 or less of the income75 Naye Paise.(b)For the next Rs. 750 or less of the income3/4 per cent.(c)For the next Rs. 500 or less of the income1 per cent(d)For the next Rs. 1,000 or less of the income11/2 per cent.(e)For the next Rs. 2,000 or less of the income13/4 per cent.(f)For the balance of the income2 per cent.
Explanation 1.--The expression 'annual income' in relation to
(a) agricultural lands, means the estimated market value of the produce of such lands during the year of assessment after deducting fifty per cent. therefrom on account of cost of cultivation and the rent and cesses payable for such lands;
(b) tanks, fisheries, forests, orchards and plantations, means the estimated income accruing therefrom during the year of assessment after deducting such amount from the income as the Anchal Panchayat may consider reasonable on account of the costs incident to such income and the rent and cesses if any, payable therefor;
(c) non-agricultural lands, if such lands are not let out to tenants means the estimated income from such lands during year of assessment after deducting such amount therefrom as the Anchal Panchayat may consider reasonable on account of the Cost incident to such income and the rent and cess payable for such lands, and non-agricultural lands, if let out to tenants, means the gross rental at which such lands have been let out during the year of assessment;
(d) building, if such building is let out to tenants, means the gross rental at which such building has been let out during the year of assessment, and if such building is not let out to tenants, means an amount which shall not exceed seven and a half per cent. of the value of the land and the building at the time of assessment, excluding the value of any furniture which may be on the building.'
16. It is clear that Part A of Rule 110, as reproduced above, gives 'the maximum rates or scales' as is referred to in the opening words of Sub-section (1) of Section 57, in relation to the tax on lands and buildings specified in Clause (a) thereof. Section 120 (2)(p) of the Act gives specific power to the State Government to make rules relating to imposition of taxes. Under the opening words of Sub-section (1) of Section 57, the power conferred upon the Anchal Panchayat to levy the taxes in question is 'subject to such rules and such maximum rates or scales as may be prescribed by the State Government'. It follows that when the State Government has framedrules in exercise of this power, they are to be read as part of Section 57 (1)
17. It is contended on behalf of the Petitioners that part A of Rule 110, read with Section 57 (1) (a) of the Act, converts the tax on lands and buildings into a tax on non-agricultural income which the State Legislature or any authority created by it is not competent to impose under the Constitution. As stated earlier, under the relevant Entry of the 7th Schedule of the Constitution, the State Legislature has the power to impose a tax on 'lands and buildings' but no power to impose a 'tax on non-agricultural income'. If, therefore, while purporting to impose a tax on lands and buildings the State Legislature imposes what is, in its substance, a tax on income on non-agricultural land, such tax will be ultra vires and invalid. in the case of such apparent conflict of legislative jurisdictions, the test to be applied is that of 'pith and substance', as explained by the Federal Court in Ralla Ram v. Province of East Punjab .
18. Before proceeding further, I should point out that as regards a tax on professions, trades or callings, the Constitution itself acknowledges, in Clause (1) of Article 276, that it is, in substance, of the nature of a tax on income and is, accordingly, bound to encroach upon the Union List, which the State Legislature is not otherwise competent to do. In order, to enable the State Legislature to raise sufficient resources for the purposes of the government of the State, the Constitution specifically permits the State Legislature to impose a tax on professional income 'notwithstanding anything in Article 246', subject, however to a limit, namely, that the professions tax imposed by a State Legislature upon an individual shall not exceed the amount of Rs. 250/-, us specified in Clause (2) of Article 276. If it does exceed that amount, there is nothing to prevent the professions tax imposed by the State Legislature being annulled on the ground that it is not competent for the State Legislature to impose a tax on income apart from the specific authority conferred by Article 276. It should always be remembered that, in the case of a tax on 'lands and buildings' there is no saving provision as in Article 276, so that if in imposing a tax on 'lands and buildings' under Entry 49 of List II, the State Legislature or any authority created by it imposes what is, in its substance, a tax on income, such imposition will have to be pronounced to be void, irrespective of the amount of the imposition.
19. Giving my anxious consideration to the nature of the tax imposed by Part A of Rule 110, I have no doubt that it seeks to impose a tax on income upon these persons who hold lands or buildings within the territory of the Anchal Panchayat for the following reasons:
I. No doubt, Entry 49 of List II does not lay down any limitations upon the manner in which the tax on lands or buildings is to be imposed. But it must be a tax on the land or building and not a tax upon the income or profits derived from the land or building. As explained by the Federal Court in Ralla Ram's case AIR 1949 PC 81 (ibid), there is nothing wrong in the State Legislature in taking the capital value or annual value of the property as the basis of the tax, because 'If a tax is to be levied on property, it will not be irrational to correlate it to the value of the property to make some kind of annual value the basis of the tax, without intending to tax income' (p. 87 of AIR).
20. But the position changes radically where the State Legislature seeks to impose the tax not on the basis of the annual value of the property, but on the basis of the actual profits or income derived from the property, for then, the nature of the tax changes,--it ceases to be a tax on property and becomes a tax on income. In distinguishing the impugned enactment (which had assessed a land tax on the annual value of the land) from the Income-tax Act, the Federal Court observed
'The real distinction between these two Acts seems to be that whereas the Income-tax Act purports to get at the true income, there is no such pretence in the impugned Act which uses the annual value merely for the purpose of determining the importance or the value of the property to be taxed', (p. 87, ibid.)
'It is true that we must look not to the mere form but to the substance of the levy, and the tax must be held to be invalid, if in the guise of a property tax it is really a tax on income. There is, however, nothing in the impugned Act to show that there was any intention on the part of the Legislature to gel at or tax the income of the owner from the building. It is true that the annual value was used as the basis, but it was very different from the annual value which may be used for getting at the true profits or income. The annual value, as has been pointed out, is it best only notional or hypothetical income and not the actual income'
21. It would follow from the above observations of the Federal Court that if, in purporting to levy a 'lands and buildings' tax, the State Legislature aims to get at the actual profits or income from such property, it must be held that the tax in question is, in its substance, a tax on income and not on property and is, accordingly, ultra vires the State Legislature.
22. It is exactly this that the impugned tax seeks to do. Clauses (b)--(d) of Explanation I to Rule 110, Part A, lay down in unequivocal language that though the basis of the tax is the 'annual income', it is not a hypothetical income from the land or building, but the estimated or actual income derived from the property during the period of assessment which is to be taken as the basis In this context, we have to compare the text of Section 5 of the Punjab Urban Immovable Property Tax Act, 1940, the vires of which was challenged before the Federal Court in Ralla Ram's case, AIR 1949 FC 81, with Part A of Rule 110 of the Rules before us, together with its Explanations. From the text of the Punjab Act (reproduced at it would appear that, whether the property is or is not let out to tenants, that Act took a 'notional or hypothetical rent' as the basis of computation of that annual income. That hypothetical rent is a well-known conception in Municipal legislation and it has been laid down by the highest authorities in England and India that that hypothetical rent is not identical with the actual rent, even where theproperty is let out and is actually paying a rent vide Corporation of Calcutta v. Smt. Padma Debi : 3SCR49 , Lokmanya Mills Barsi Ltd. v. Barsi Borough Municipality : 1SCR306 . That hypothetical pent is the rent at which the property 'might reasonably be expected to let from year to year', as in Section 5 of the Punjab Urban Immovable Property Tax Act, 1940.
23. But, as the first part of Clause (d) of Explanation I of Rule 110 of the Rules before me gays, where the building is let out to tenants, the annual value of the property for the levying of the impugned tax will not be the reasonable rent which a hypothetical tenant would be expected to pay, but
'the gross rental at which such building has been let out during the year of assessment'.
24. As has been held in Padma Devi's case : 3SCR49 , the 'reasonable' rent which may be expected from a hypothetical tenant may be less than the actual rent which the landlord may have actually recovered during the year of assessment. For instance, at a time of scarcity of accommodation, the actual rent may be higher than the 'standard rent' which might be payable under a Rent Control legislation; and the rent that might reasonably be expected from the hypothetical tenant in such a case would be the standard rent and not the actual rent.
25. Similar is the provision in the latter part of Clause (c) of the Explanation as regards annual income from non-agricultural land when it has been let out to tenants during the assessment year. Under the first part of this clause, even when the land has not been let out, the standard is not the rent that could be reasonably expected from the hypothetical tenant but the 'estimated income from such lands during the year of assessment.' Clause (b), relating to plantation, fisheries etc. is similar
26. It is clear from the above provisions that Rule 110 aims at taxing the actual profits or income derived from the land or building, just as a law of income-tax would have done, as pointed out by the Federal Court in Ralla Ram's case , instead of merely adopting a notional annual income as the standard of assessment
27. II. There is another feature which renders the impugned tax a tax on income, in substance.
As observed by the Federal Court in Ralla Ram's case as well as by the Supreme Court in R.C. Jail v. Union of India : (1961)IILLJ383SC , when there is a conflict between two taxing powers, what determines the vires of an impugned tax is the nature or character of the tax. The machinery adopted by the taxing statute, the mode of recovery, the stage at which the tax is imposed, and similar ancillary questions are all immaterial so long as the character of the impost, which is unquestionably within the powers of the legislature concerned, is not lost. In the latter case, the Supreme Court held that the essence of an excite duty was that it was a 'duty on the manufacture or production', and whether a particular import was such duty or not was 'to be decided on a fair construction of the provisions of a particular Act'. So long as this character of the duty was not changed, the Union Legislature did not lose its jurisdiction underits power to levy an excise duty merely becausethe duty imposed was in the form of a cess on allcoal despatched from the collieries.
28. In the case before me, the tax prescribed by Part A of Rule 110 has lost the essential character of the tax which is authorised by Entry 49 of List II of the 7th Schedule of the Constitution namely, that it is a tax on property, as distinguished from a personal tax, such as the income-tax.
29. The subject of income-tax is the person and the basis of taxation is the receipts which flow in or come in to him during a period of time, even though the source of such income may, inter alia, be a property. In the case of a property tax, on the other hand, even though the tax has to be realised from a person, such as the owner or occupier of the property,--simply because a tax cannot be recovered from a property,--the basis of taxation is not the income or profits derived by such person from the property, but the corpus of the property or the fixed physical object, such as land or building.
30. Since an income-tax is a tax on the person, several considerations arise in the matter of imposing an income-tax, which cannot possibly arise when the tax is on a property. Such a consideration, for instance, is the ability of the person taxed to pay. In view of this consideration, almost all systems of taxation of income exempt low-income earners or a minimum slab of the income earned by every assessee on the ground that such a minimum amount is indispensable for the bare maintenance of the assessee and his dependants of which no welfare State can deprive the individual. Another offshoot from this theory of ability to pay is the principle of progressive taxation or the taxation of higher slabs of income at higher rates. According to this principle, the rate of taxation is graduated according to the value of income, rising at particular stages as prescribed by the Legislature. The rationale which underlies this principle of progressive or proportional taxation is the consideration of ability, which was formulated by Adam Smith as follows:
'The subjects of every State should contribute towards the support of the Government as nearly as possible, in proportion to their respective abilities.'
31. In short, the assessee of income-tax may be called upon to pay a higher percentage of income than other assessees as his income exceeds particular grades as specified by the Legislature. But in the case of a property tax, the question of ability of the payer is immaterial because it has no rational connection with the property which is taxed. In the case of a property tax, in other words, the tax may be graded according to the volume or nature of the property, but if it is graded according to the income derived from it, it becomes in its essence, a tax on income. To quote the words of Broomfield J. in Byramjee v. Prov. of Bombay AIR 1940 Bom. 66 (FB) which were approved by the Federal Court in Ralla Ram's case :
'Suppose a tax were imposed of Rs. X on every house in Bombay, payable by the owner. That would be a crude and unequal impost, but perfectly legal. It would be more equitable, butstill 1 imagine perfectly legal, if the tax were graded according in the size of the building, the number of storeys or rooms, or according to the frontage on important streets, or according to the cost of construction. Why should it not be permissible to go a little further in the direction of making the amount of the tax correspond to the value of the properties ...... If annual valuehad been equivalent to income, that would not be possible, for income may not be taxed by the Provincial Legislature '
32. But, as will appear from Part A of Rule 110 of Rules before us, the impugned tax has been graded according to the 'income' earned from the lands or buildings, which income is to be computed in the manner laid down in Explanation J. as already analysed by me. Thus, if the annual income from the property exceeds but does not exceed Rs. 150/-, the maximum tax leviable would be 75 nP. If, however, the income exceeds Rs. 160/-but does not exceed Rs. 750/-, the maximum rate authorised by the Rule is 3/4 per cent of the amount of income. This percentage rises to 1p.c. if the income is between 750/- and 1250/-, and so on.
33. The net result of the foregoing discussion is that Part A of Rule 110, in essence, imposes a tax on non-agricultural income, on the pretence of imposing a tax on 'lands and buildings' which latter, is within the competence of the State Legislature, and, accordingly, of the Panchayat. This Rule, must, accordingly, be held to be ultra vires the Constitution, and, so long as rule 110 in its present form, stands, Section 57(1) (a) of the Act must also be tainted with that invalidity. But if the Rule is amended so as to bring it within Entry 49 of last II, Section 57(1)(a) would be saved from unconstitutionalily on the present ground.
34. It has, however, been suggested on behalf of the Respondents that Section 57(1)(a) authorises not only a tax on property but also a tax on 'circumstances' and that Rule 110, part A imposes a composite tax, combining these two elements and that, accordingly, the Panchayat would be entitled to tax not only the property itself but also the income arising therefrom. To this, the short answer would be that if Section 57(1) (a) authorises the imposition of a tax on income derived from non-agricultural property, it would itself be liable, to be annulled as ultra vires, because the State Legislature is not competent to levy a tax on non-agricultural income. We have, therefore, to find out the meaning of the word 'circumstances' in Section 57 (1) (a).
35. The words 'circumstances and properly' came up for review before the Supreme Court in the case of Ram Narain v. State of U.P : 1SCR664 , as those words occur in Section 14(1) of the U.P. Town Areas Act, 1914, a provision which is in some respects analogous to Section 57(1) of the Act before me. The impugned tax in that case was whether under the power to tax 'circumstances and property', the Municipality could levy a tax on the business of plying motor bus, when there was a separate clause in the same section, conferring the power to tax 'trades, callings or professions', namely, Clause (d). The Supreme Court held that though there was a separate clause authorising the imposition of atax on business, the word 'circumstances' enables the Municipality to impose a tax on business also under Clause (f), and that there was nothing wrong in this overlapping between the two clauses, but that if the Municipality chose to use its power to impose a tax on business under Clause (f), it must also be subject to the limitation as regards the maximum amount of levy to whish a professions tax was subject, namely the sum of Rs.200/-per annum, because the power of the State Legislature to impose a tax on professions was subject to a constitutional limitation as to amount, and this limitation was embothed in Rule 3(2) of the Rules framed under the U.P. Act, after the Constitution came into force. Subject to this limitation.
'a tax on circumstances and property is a composite tax and the word 'circumstances' means a man's financial position, his status as a whole depending, among other things, on his Income from trade or business.'
36. This decision does not, however, uphold the validity of the impugned tax before us, for the following reasons:
37. The Supreme Court decision, just cited, is authority for the proposition that the word 'circumstances' authorises the Municipality to impose a tax on business, provided the maximum limit of a professions tax is not transgressed. It does not say that it enables the Municipality to impose a tax on income from property, and that irrespective of the limit to the professions tax which Article 276(2) of the Constitution imposes.
38. Explanation I to Rule 111 of the Rules framed under the Act before me says-
'The expression 'total assessable income' means the income which a person derives from lands or buildings, trade or business or any other occupation held within the limits of the Anchal Panchayat.'
39. There was nothing in the U.P. Act or in the Rules framed thereunder to authorise the Municipality to impose a tax on income derived from lands and buildings. Even if the income from lands and buildings be held to be an income from a trade or calling,--which I think it cannot legitimately be held,--it must be subject to the maximum limit of Rs. 250/- per annum which is imposed by Article 276(2) upon the levy of a tax on professions, trades, callings or employments. But, as Clause (f) of Part A of Rule 110 makes it clear, there is no limit as to the amount imposed by the Rules on the tax on lands and buildings authorised by that Rule. It says that where the annual income from lands and buildings exceeds Rs. 44,000/-, the maximum rate may be 2 p.c. on the balance over 44,000/-. It is quite imaginable that in particular case, the amount of levy under Part A of Rule 110 may exceed Rs. 250/-, particularly when the maximum limit is not imposed by the Act itself. The question whether in any of the cases complained of the levy has actually exceeded Rs. 250/- per annum or whether it is possible for any person having lands and buildings which the Anchal Panchayat to earn such a heavy income from such property as to be subject to a levy exceeding Rs. 260/- is immaterial in determining the vires of the Rule which does not, per se, impose any limitation.
40. Secondly, the Supreme Court decision is no authority for imposing a progressive tax on the volume of income even if it be conceded that it might approve of a tax on the income derived from property.
41. Since, therefore, Explanation 1 to Rule 111, which has to be read as a commentary on and part of Section 57(1)(a) of the Act, provides for a tax on income from lands and buildings and that without any limitation in amount, it must be held that it is beyond the powers of the State Legislature under Entries 49 and 60 of List II, even though the word 'circumstances' in Section 57(1) (a) may envisage such a tax. In this view, the relevant parts of Section 57(1) (a), and Rules 110 and 111, Expl. 1 must be held to be invalid.
42. C. The next contention that Rules 118-120 which provide for recovery of the tax by issuing distress warrant are ultra vires inasmuch as there is nothing in the Act itself to authorise recovery by such mode, may be rejected at once. Clause (1) of Sub-section (2) of Section 120 of the Act authorises the State Government to make rules to provide for 'the procedure of recovery' of the taxes leviable under the Act.
43. Hence, the Rules cannot be held to be ultra vires.
44. D. The last contention is that the mode. of recovery by issuing a distress, warrant, which is more drastic than the ordinary mode of a money debt under the general law offends against Articles 14 and 19(1)(a).
45. In my opinion, since the impugned tax fails on the ground of vires as held by me, it is needless for me to enter into the question of unconstitutionality on the present ground, for a Court should not enter into the question of constitutionality of a law more than is necessary for the disposal of the case before it. Nevertheless, it may be observed, for a complete disposal of all the issues raised before me, that there is a presumption in favour of the Legislature as regards a reasonable classification under Article 14. The Legislature might have armed the Anchal Panchayat with this drastic power upon the consideration that the resources of these primary units of our nation-building are not sufficient enough for achieving the objects of the Welfare State and that a speedy means for recovery would be conducive to the interests of the general public residing within the Anchal Panchayat apart from the remoter interests of the nation at large, Sufficient materials have not been placed on behalf of the Petitioners to arrive at a contrary conclusion.
46. For the same reason, the substantive reasonableness of the provision may be upheld under Article 19(1)(a). Procedurally, however. I am inclined to think that a provision for issuing distress warrant without first serving a notice upon the assessee personally may possibly be held to be unreasonable and the Rule-making authority under the Act might advert to this consideration in amending the Rule in this behalf, but, for the the various reasons given by me earlier, it is not necessary for me to pronounce a definite finding on this point.
47. A plea has been taken in para 14 of the counter-affidavit that since no distress warrant hasactually been issued against the Petitioners so far and what has been issued is only a notice to show cause why distress warrant shall not be issued and that, accordingly, the Petition should be dismissed as premature has little substance. An application under Article 226 can be presented not only after the Petitioners' legal rights have been invaded already but also when they have been threatened with an immediate peril vide Bengal Immunity Co. v. State of Bihar : 2SCR603 . The notices which have been served unmistakably show that the Respondents will recover the demand, which is held by me to be illegal, unless restrained by the Court. Hence, there is a threat of immediate injury to the Petitioners.
48. In the result, the application must be allowed on the ground that Section 57(1)(a) of the Act and Rule 110, Part A and Expl. 1 to Rule 111 of the Rules made under the Act are ultra vires. Since it is a composite tax it is not possible to save any portion of the impugned demand as may be within the legitimate powers of the State legislature or the Anchal Panchayat. The Rule is accordingly made absolute. Let proceedings relating to the assessment and recovery of the impugned tax be quashed and the Opposite Parties be directed, by an order in the nature of mandamus, not to give effect to the notices to issue distress warrants, served upon the Petitioners. Parties must bear their own costs.