P.N. Mookerjee, J.
1. These are two rating appeals under the Calcutta Municipal Act, involving a common question of law. In appeal No. 198, the premises under assessment is No. 8, Judges Court Road. In appeal No. 284, the dispute is with regard to premises No. 10, Circus Avenue. Both the premises admittedly belonged to the Central Government (now the Union of India) on and from April 1, 1943. Prior to that date, the premises were' owned by the Bengal Telephone Corporation. There is no dispute that, during the period of the said ownership, that is, up to March 31, 1943, the premises were, liable to Municipal tax. There is dispute, however, as to whether they were liable to such tax from after that date, or, what is directly relevant for our present purpose, whether they are liable to such tax after the Constitution. This question of liability after the Constitution is, strictly speaking, the only point, arising for decision in these appeals, though, for deciding the same, reference to the earlier dispute may be necessary.
2. The learned Judges of the court below have both answered the above question in the negative. Feeling aggrieved by their decision, the Corporation have come up in appeal in both these cases.
3. The point is short but somewhat interesting, particularly in view of the approach, made by the learned Judges of the court below, and the supporting argument of the assessee, the Union of India, which was accepted by them and which has been repeated before us. It is not denied that both the properties were actually assessed by the appellant Corporation and the assessed rates were actually paid by the respondent Union of India upto the end of the second quarter of 1950-51, that is, upto a post-Constitution period. The Union, however, claims that that assessment was illegal and ultra vires as the properties, immediately they became the properties of the Central Government on April 1, 1943, ceased to be liable to Municipal taxes and the levy and realisation of such taxes was illegal and cannot be taken advantage of by the Corporation. This is denied by the Corporation which contends that the said assessment was perfectly legal and justified and the realisation of the taxes was not in any way unlawful and that, in any event, in view of the said assessment and its payment and realisation, the Union cannot claim exemption of the above premises from the present disputed assessment.
4. The dispute really turns upon the true construction of Article 285 Clause (2) of the Constitution. On its plain language, there is absolutely no difficulty in the facts of the present two cases, but the respondent seeks to introduce considerations of the history of this legislation and the background of the previous state of the law against which this Article was enacted, into the matter of its construction, and that tends to create some complication. We do not think, however, that, in view of the clear language of the Article, such consideration would be very material and we would prefer to construe the Article on its language, as it stands, without reference to any extraneous consideration. We would merely refer to the legislative history and the preexisting state of the law for elucidating the argument of the respondent and for meeting the same in the facts of the present cases.
5. To explain the rival contentions, it is necessary to set out Article 285 of the Constitution and also the corresponding, or parallel sec. 154 of its predecessor, the Government of India Act, 1935. It will also be necessary in that connection to refer to the pre-existing state of the law on the subject. We, accordingly, proceed to do the same.
6. Article 285 of the Constitution contains two Clauses which are in these terms:
'(1) The property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State.
(2) Nothing in Clause (1) shall, until Parliament by law otherwise provides, prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution liable or treated as liable, so long as that tax continues to be levied in that State.'
7. Section 154 of the Government of India Act, 1935 which had a proviso appended to its main part stood as follows:
'Property vested in His Majesty for purposes of the government of the Federation shall, save in so far as any Federal law may otherwise provide, be exempt from all taxes imposed by, or by any authority within, a Province or Federated State:
Provided that, until any Federal law otherwise provides, any property so vested which was immediately before the commencement of Part III of this Act liable, or treated as liable, to any, such tax, shall, so long as that tax continues, continue to be liable, or to be treated as liable, thereto.'
8. We shall refer now to the state of the law in this country on the question of the, liability of Crown properties to local taxation prior to the coming into force of the above sec. 154 of the Government of India Act, 1935. That law then was certainly not definitely settled. It was, to take it at its best, in a fluid state and while some cases (vide, for example, the case of Bell v. Municipal Commissioners for the City of Madras, ILK 25 Mad 457 (A)) generally affirmed such liability, there were also weighty judicial pronouncements lending support to a contrary opinion (vide, for example, Secretary of State v. Mathurabhai, ILR 14 Bom 213 (B).)
9. The two rival contentions may now be set out here. The Corporation contends that the disputed premises were certainly treated as liable to Municipal tax immediately before the Constitution which came into force on January 26, 1950, and, accordingly, they are liable to Municipal assessment under clause (2) of Article 285 of the Constitution, as, admittedly, Parliament has not till now provided otherwise. The respondent, Union of India, on the other hand, contends that, as the disputed properties were not Crown properties immediately before April 1, 1937, when Part III of the Government of India Act, 1935, containing, inter alia, sec. 154 and its proviso, came into force, they were not liable and could not be treated as liable to Municipal taxes under the said proviso and so they could not be regarded as liable or treated as liable to such taxes immediately before the commencement of the Constitution, no matter that they were actually assessed to such taxes at that time and no matter also that such taxes used to be realised by the appellant Corporation and paid by the Union or its predecessor Government upto the second quarter of 1950-51, which was certainly subsequent to the commencement of the Constitution.
The respondent's contention is based on the following two propositions, namely, (i) that a property to be treated as liable for purposes of clause (2) of Article 285 of the Constitution must have been at least of such character as could have been validly treated as liable under the proviso to sec. 154 of the preceding Government of India Act, 1935, and (ii) that a property to be validly treated as liable under the said proviso must have been at least treated as liable to the tax in question as Central Government or Crown property immediately before the coming into operation of Part III of the 1935 Act, and it is argued that, as the disputed premises were not Government properties taut belonged to the Bengal Telephone Corporation immediately before the commencement of Part III of the Government of India Act, 1935, and as, accordingly, on that date they were not assessed to Municipal taxation as Government properties, they would not come within the phrase ''liable or treated as liable', as used in the proviso to sec. 154, for purposes of such assessment and, consequently, they Were not liable and could not be treated as liable to such taxes under the said Act, so as to come within the phrase 'liable or treated as liable immediately before the commencement of the Constitution' in clause (2) of Article 285 and, in that view, the disputed assessments cannot be justified under that clause. The above basic propositions which are necessary to support the respondent's argument are disputed by the appellant Corporation.
10. For our present purpose, however, if is unnecessary to consider the validity or otherwise of proposition No. (ii). It is enough to state for purposes of this case that proposition No. (i), as set out above, is not correct or sound in law and that, until Parliament provides other wise, a Union property would be liable to a particular local tax under Article 285(2) of the Constitution if, at the relevant date, namely, immediately before the commencement of the Constitution, it was, in fact, assessed to such tax as Central Government property and the same was being actually paid and realised, even if such assessment was unlawful, not to speak of cases where as, in the present instances, the invalidity of the particular imposition at the above relevant date is disputed and not altogether free from doubt. The phrase 'treated as liable' has in our opinion, the same legal meaning in both the proviso to Section 154 of the Government of India Act, 1935, and clause (2) of Article 285 of the Constitution and it has the same purpose, namely, 'to avoid a final solution of the dispute as to the legal liability of the particular property to the disputed tax' and to authorise, or validate the levy of the tax in the post-Act and post-Constitution period respectively, at least when such tax was actually levied and realised and paid, in fact, for the particular property as Central Government property for the period immediately before the relevant date, that is, the commencement of Part III of the Government of India Act, 1935, in the one case and the commencement of the Constitution in the other, even if such levy was illegal. Stress was laid by the authors of the Constitution and by the framers of the 1935 Act as well on the fact of the property being treated as liable and not on its legal liability or the validity of such treatment and' that is why the two phrases 'liable' and 'treated as liable' were used both in Section 154 proviso of the Act and the corresponding Article 285(2) of the Constitution and, if it was, in fact, treated as liable to be taxed on the relevant date as aforesaid, even though, in law, it could not or should not have been so treated, it would fall within the said proviso to Section 154 or clause (2) of Article 285, as the case may be, and in the absence of any competent legislation to the contrary, the levy of the tax, however illegal it was before the coming into force of the said section or Article, would become fully validated by the same and it would so remain and continue until the competent legislature by law otherwise provides. This, indeed, is plain and follows, almost as a matter of course, from the language of the relevant provision but if support be necessary from earlier authorities, it can be readily found from the case of the Governor General of India in Council v. Corporation of Calcutta : AIR1948Cal116 where both the learned Judges, Mukherjea and Ormond, JJ., took the same view of the words 'treated as liable' as used in the proviso to Section 154, of the Government of India Act, 1935. In this connection, certain passages from the observations of the said learned Judges on Section 154 of the Government of India Act, 1935, and its proviso are worth quoting here. They appear at pages 175 (of Cal WN): (at p 118 of AIR) and 180-1 (of Cal WN): (at p 122 of AIR) of the report and run as follows:
(1).... ....'The Parliament deliberately used the word 'liable' or 'treated as liable' with a view to avoid a final solution of the question regarding the legal liability of Crown property to taxation in India prior to the corning into operation of Part III of the Act.' (vide 'per Mukherjea, J., as he then was, at page 175 (of Cal WN): (at p 118 of AIR).
(2).........'The scheme of the section (Sec. 154) is that in the first part (the main body of it) there is an exemption from taxation in general terms. Then in the second part of the section (the Proviso in it) there is an exception from that exemption. The result is that any property covered by the execution will be liable' to tax in spite of the exemption in the first part ..... .The proviso is worded in a manner which lays down a positive liability to tax in the case of the particular class of Crown property described in it. This makes it .....unnecessary to consider any question as to how far exemption from taxation might otherwise have been claimed for Crown property by reason of the prerogative.
It will be convenient to make here certain introductory comments concerning the wording of the section. The phrase 'treated as liable' used as an alternative to 'liable' has evidently been used with the purpose of imposing for the future, after the passing of the Government of India Act, 1935, an unambiguous liability to taxation against the Crown on Central Government property to the extent to which tax had been in fact collected before the 1st April, 1937. This liability was evidently imposed intentionally and having in mind the fact that it might have been open for the Crown to have contended that such taxes as had in fact been collected before then were not in truth legally enforceable. At the same time, care was also taken not to say anything in the Act which might afterwards be sought to be relied on by opponents as a handle for any argument that the Crown was giving up its rights in respect of its prerogative in India.' (per Ormond. J. at page 180-181 (of Cal WN) (at p 122 of AIR).
11. The Constitution retained and re-employed the same phrase which, as the above observations show, had already been judicially interpreted in the same manner as we have done on the present occasion. That is a strong pointer to the legislative intent and amply supports our construction of the words 'treated as liable' as used in Article 285(2) of the Constitution and, if that construction is correct, there can possibly be no doubt, in the facts of the two instant cases, that the present disputed assessments are valid. The safeguard, so far as Union properties are concerned, is contained in the reservation in the very clause in question, reserving power to the Parliament to provide otherwise. Until, however, Parliament does so provide, Union properties which were treated as liable to a particular local tax immediately before the coming into force of the Constitution would remain liable for the same. Admittedly the disputed premises (as belonging to the Central Government and owned by it) were actually assessed to Municipal tax, and such tax was being paid and realised also, immediately before the, commencement of the Constitution. The premises, therefore, on the aboye construction of the Article, were 'treated as liable' to such tax on that date. Admittedly also. Parliament has not, so far, by law, otherwise provided, as it has undoubtedly the power to do under Article 285(2) of the Constitution.
12. The levy of the disputed tax, therefore, in the disputed post-Constitution period, commencing with the third quarter of 1950-51, is perfectly valid in law and the only question that still needs consideration in these two cases is the propriety of the quantum of assessment in either case.
13. The respondent's objection on this count has not been considered by the court below -- and there is also no evidence on the point in the present record, -- presumably because the parties fought there only on the preliminary point whether the disputed premises were at all liable to be treated to Municipal tax. It is, therefore, necessary that the cases should go back to the learned Small Cause Court Judge for consideration of the propriety or otherwise of the quantum of assessment with liberty to the parties to adduce evidence on the said question in support of their respective cases.
14. We, accordingly, allow these appeals, set aside the orders of the court below and remand the cases for further consideration in the light of the observations, made above.
15. Costs of these appeals will abide the final result.
P.K. Sarkar, J.
16. I agree.