Shahdara (Delhi) Saharanpur Light
Railwayco. Ltd. Vs. The Municipal Board, Saharanpur  INSC 69 (21 March
21/03/1967 VAIDYIALINGAM, C.A.
CITATION: 1967 AIR 1747 1967 SCR (3) 243
Indian Tramways Act, 1886 (11 of 1886) and
Indian Railways Act 1890 (1 of 1890)-Narrow-gauge railway between Shahdara and
Saharanpur-Originally registered as a Tramway under the 1886 Act-Rail. ways Act
made applicable to it in 1907Company whether a 'railway' or a 'tramway' for the
purpose of exemption from terminal tax levied by Saharanpur municipality under
item 2 of Schedule B to the rules under the U.P. Municipalities Act 1 of 1918.
The appellant company ran a narrow-gauge
railway between Shahdara and Saharanpur. As it operated partly within the
Municipal area of Saharanpur the Municipal Board of that place sought to
subject railway stores and materials brought within the municipal area to
terminal tax as provided by the Rules framed under the United Provinces
Municipalities Act, 1916, as amended by Act 1 of 1918. The exemption from
terminal tax given to railway stores and materials by item 2 to Schedule B of
the said rules was denied to the appellant company on the ground that it was a
'tramway' and not a 'railway'. The company had been originally registered in
1905 under the Indian Tramways Act, 1886, (Act 11 of 1886);
in 1907 the whole of the Indian Railways Act,
1890, (Act 1 of 1890) with the exception of s. 135 had been extended to the
company by the Governor-General-in-Council. The Company's claim that it was a
'railway' entitled to the exemption under item 2 of Schedule B aforesaid, was
rejected by the Municipal authorities as well as in appeal, by the Additional
District Magistrate. The company therefore filed a writ petition before the
High Court which was rejected.
By special leave appeal was filed to this
It was contended on behalf of the appellant
that : (i) in the absence of any special definition contained in the provisions
granting the exemption in question, the expression 'railway' occurring in item
2 of Schedule B of the Terminal Tax Rules must bear the commonly understood
meaning of a "carriage of passenger send goods, on iron rails"; (ii)
by virtue of the definition in s. 311(2) of the Government of India Act, 1935,
and the provision corresponding to it in the Constitution viz., Art. 366(20)
the appellant's system though registered under the Tramway.% Act, was a
railway, (iii) the mere fact that s. 135 of the Railways Act had not been
applied to the appellant's system was not a decisive factor against the
appellant as assumed by the High Court. It was not in dispute that appellant's
system had all the features of a railway.
HELD: Neither the Municipal Act nor the
Terminal Tax Rules give any special definition of the expression 'railway' and
there is nothing in the said Act or Rules to indicate that the word 'railway'
in item 2 of -Schedule B is used only to refer to a 'railway' registered under
the Railways Act or to limit the generality of the expression 'railway' in any
way. Under those circumstances, if the appellant was a 'railway' in fact., as
commonly understoodthere did not appear to be any controversy on the point-it
would be a railway notwithstanding the fact that it was registered.
C.I./67-3 244 as a 'tramway' under the
Tramways Act. The legislature itself had applied the provisions of the Railway
Act to the appellant, and the 'appellant also satisfied the definition of a
'railway' under the Government of India Act, 1935 and the Constitution.
[254B-D] If the appellant was a 'railway' otherwise, the mere fact that the
provisions of s. 135 of the Railways Act had not been applied to it, was of no
consequence. [251H] Blackpool and Fleetwood Tramroad Company v. Thornton Urban
Council, L.R.  1 K.B.D. 568, Thornton Urban Council v. Blackpool and
Fleetwood Tramroad Company, L.R.  AC.
264 and Tottenham Urban Council v.
Metropolitan Electric Tramways, Ltd., L.R.  A.C. 702, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1323 of 1966.
Appeal by special leave from the judgment and
order dated September 10, 1965 of the Allahabad High Court in Civil
Miscellaneous Writ No. 3567 of 1965.
Niren De, Addl. Solicitor-General and N. H.
Hingorani, for the appellant.
R.K. Garg, D. K. Agarwala and M. V. Goswami,
for respondent No. 1.
The Judgment of the Court was delivered by
Vaidialingam, L In this appeal, by special leave, the short question, that
arises for consideration, is as to whether the appellant railway is entitled to
claim exemption from payment of terminal tax, under item 2, of Schedule B, of
the rules framed by the Municipal Board of Saharanpur. The appellant will be so
entitled, if it is held to be 'a railway', as contended, on behalf of the
The High Court of Allahabad, in its order and
judgment, under appeal, has held that the appellant is not a railway, but only
a tramway and, as such, not eligible for exemption, from the tax, in question.
The short facts, leading to this appeal, may now be briefly set out. The
appellant is a limited liability company; and it runs a railway, between
Shahdara, in Delhi, and Saharanpur, in the State of Uttar Pradesh-a distance of
about 95 miles or 148.865 kilo meters.
The appellant company also operates within
the municipal area of Saharanpur. The company was, originally, registered as a
tramway, under the Indian Tramways Act, 1886 (Act XI of 1886) (hereinafter
called the Tramways Act), on November 20, 1905. By Notification, No. 5752,
dated July 5, 1907, the Governor General in Council extended to the appellant
company, the whole of the Indian Railways Act, 1890 (Act I of 245 1890)
(hereinafter called the Railways Act), excepting the provisions of Section 135.
The Municipal Board of Saharanpur, the first
respondent herein, imposes a terminal tax, under the provisions of s.
128(1)(xiii) of the United Provinces
Municipalities Act, 1916, as amended by Act I of 1918. Under the said Act, the
first respondent has prohibited the importation of goods, within the local
limits of the Saharanpur Municipality, by rail, until the tax leviable thereon,
or in respect thereof, has been paid, in accordance with the provisions of the
Act and the Rules. The Board has also framed rules for the assessment and collection
of Terminal Tax, as authorized by the Government Notification No. 856/XI-D.T.
3, dated May 1, 1919. The rules have been amended, as per another notification,
No. 5965/XI-D.T. 3, dated September 21, 1939.
Item 2, of Schedule B, of, these rules,
provides for a list of articles being exempted from payment of Terminal Tax.
The said item is as follows :
"Railway stores and materials, which are
required for use on Railways, whether in construction, maintaining or working
the same and which are not removed outside the Railway land boundaries but not
stores imported into Municipal limits for purchase and consumption by Railway
employees nor stores with which Railway Cooperative Stores are stocked for sale
to Member." It is the claim of the appellant that, till 1961, the first
respondent has never imposed any terminal tax, on 'railway stores and
materials' required for use on the railway of the appellant company, for the
purposes mentioned in item 2 of Schedule B. But, for the first time, in January
1962, according to the appellant, the first respondent imposed tax on such
stores and attempted to make the appellant liable.
The appellant company protested against this
levy, on the ground that, it being a railway, was entitled to the exemption
provided in respect of 'railway stores and materials, which are required for
use on railway'. But, the first respondent, by its order, dated October 11,
1962, over-ruled the appellant's objections in this regard. An appeal, taken by
the appellant company, to the Additional District Magistrate, Saharanpur, under
s. 160 of the Municipalities Act, read with the relevant Rules, did not meet
with success, as the said Magistrate rejected the appeal, by his order dated
May 25, 1965.
The appellant company filed Civil
Miscellaneous Writ No. 3567 of 1965, in the High Court of Allahabad,
challenging the levy of terminal tax and claimed exemption, under item 2, of
Schedule B, referred to earlier. The learned Judges of the Allahabad High
Court, by their judgment, dated September 10, 1965, dismissed 246 the writ
petition. They were of the view that the appellant company was not 'a railway',
but 'a tramway' constructed tinder the Tramways Act. In this connection, the
learned Judges adverted to the Railways Act, which defines both the terms 'tramway'
and ' railway'. It is their view that when a tramway and a railway, are both
separately defined in an Act, a tramway cannot also be a railway.
The learned Judges, of the High Court, then
referred to the fact that so far as the appellant company was concerned, the
Central Government had not applied s. 135 of the Railways Act, though all the
other provisions of that Act had been applied. They further held that a mere
application of the Railways Act, in whole or in part, to a tramway, will not
convert the tramway into a railway and that, in order to be a railway, it has
to be opened, in accordance with the provisions contained in Chapter IV, of the
So, they concluded that, inasmuch as the
appellant railway was not opened, in accordance with the provisions of the
Railways Act, it had been, from its inception, and it continued to be, not a
railway, but only a tramway. On this line of reasoning, the High Court further
held that in the rules framed by the Municipal Board, the expression 'railway'
must be intended to refer only to 'railways' coming under the Railways Act, and
could not include a 'tramway', like the appellant, opened under the Tramways
Act. In consequence, the claim of the appellant, for exemption, was, according
to the High Court, rightly rejected by the authorities. The result was the
dismissal of the appellant's writ petition, by the High Court.
We shall now refer to the main features of
the appellant company. The appellant railway is worked by steam, or other
mechanical power, and is not wholly within a Municipal area.
The railway line comprises narrow gauge track
of 2 6" gauge, and consists of main line, transportation sidings and
commercial sidings. 'Me line passes through four districts viz. Saharanpur,
Muzaffarnagar, Meerut and Delhi, within the provinces of Uttar Pradesh and
Delhi. The system has about 155 level crossings, comprising of Special Class, Aclass,
B-class and C-class. Some of the level crossings are provided with signalling
and interlocking arrangements and the system takes in 406 bridges, and 26
railway stations' in all. The bridges and culverts are maintained, in
accordance with the instructions contained in 'Way and Works Manual' of the
Indian Railways, and the railway stations are fitted with Morse speakers and
instruments, for working trains, as per general rules applicable to all
railways. There is annual inspection of the railway line, by the Additional
Commissioner of Railways Safety, appointed by the Government, to inspect Indian
Railways. There are -arrangements for through booking of goods and passengers.
From 247 what is stated above, it will be
seen that the appellant company is a 'railway', as commonly understood, and
described in ordinary parlance.
The Tramways Act was an Act passed to facilitate
the construction and to regulate the working of Tramways. Section 3(5) defines
'tramway' as follows :" 'tramway' means a tramway having one, two or more
rails, and includes(a)any part of a tramway, or any siding, turnout,
connection, line or track belonging to a tramway;
(b) any electrical equipment of a tramway;
and (c) any electric supply-line transmitting
power from a generating station or sub-station to a tramway or from a
generating station to a substation from which power is transmitted to a
tramway." The expression 'order', under s. 3(6), means an order
authorizing the construction of a tramway under the Act, and includes a further
Order substituted for, or amending, extending or varying, that order. There are
various other provisions in this Act relating to the construction and
maintenance of tramways, orders authorizing the construction of tramways, and
other incidental matters.
The Railways Act was an Act to consolidate,
amend and add to the law relating to Railways in India. Section 3(1) defines
'tramway' as meaning a tramway constructed under the Tramways Act. or any
special Act relating to tramways.
Section 3(4) defines 'railways' and is as
follows " railway' means a railway, or any portion of a railway, for the
public carriage of passengers, animals or goods, and includes(a)all land within
the fences or other boundary marks indicating the limits of the land
appurtenant to a railway;
(b)all lines of rails, sidings or branches
worked over for the purposes of, or in connection with, a railway;
(c)all stations, offices, warehouses,
wharves, work-shops manufactories, fixed plant and machinery and other works
constructed for the purposes of, or in connection with, a railway; and (d) all
ferries, ships, boats and rafts which are used on inland waters for the
purposes of the traffic of a railway and belong to or are hired or worked by
the authority administering the railway." 248 This Act also contains
various provisions relating to the opening of railways, inspection of railways,
construction and maintenance of works, working of railways and several other
incidental matters. Section 135, occurring in Chapter X, containing
supplemental provisions, relates to taxation of railways by local authorities.
That section reads :
" 135. 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 administrations in aid of the funds of 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 Central Government has, by notification in
the Official Gazette, declared the railway administration to be liable to pay
(2)While a notification of the Central
Government under clause (1) of this section is in force, the railway
administration shall be liable to pay to the local authority either the tax
mentioned in the notification or, in lieu thereof, such sum, if any, as an
officer appointed in this behalf by the Central Government may, having regard
to all the circumstances of the case, from time to time determine to be fair
(3)The Central Government may at any time revoke
or vary a notification under clause (1) of this section.
(4)Nothing in this section is to be construed
as debarring any railway administration from entering into a contract with any
local authority for the supply of water or light, or for the scavenging of
railway premises, or for any other service which the local authority may be
rendering or be prepared to render within any part of the local area under its
(5)'Local authority' in this section means a
local authority as defined in the General Clauses Act, 1887, and includes any
authority legally entitled to or entrusted with the control or management of
any fund for the maintenance of watchmen or for the conservancy of a
river." The point to be noted, in this provision, is that unless a
notification has been issued by the Central Government, under sub-s. (1) of s.
135, declaring a railway administration to be liable to pay a tax, a railway
administration shall not be liable to pay any tax in 249 aid of the funds of
any local authority. Section 146, giving power to the Government to extend the
Railways Act to certain tramways, is as follows:
"146. (1) This Act or any portion
thereof may be extended by notification in the Official Gazette (a) to any
tramway which is wholly within a municipal area or which is declared not to be
a railway under clause (20) of article 366 of the Constitution, by the State
Government; and (b) to any other tramway, by the Central Government.
(2) This section does not apply to any
tramway not worked by steam or other mechanical power." We have already
pointed out that all the provisions of the Railways Act, except s. 135, have
been extended to the appellant company.
The next enactment to be referred to is the
Indian Railway Companies Act, 1895 (Act X of 1895), which provided for the
payment, by railway companies, registered under the Indian Companies Act, 1
882, of interest out of capital during construction. Section 2(1) defines
'railway' as meaning a railway as defined in s. 3, cl. (4) of the Railways Act.
Section 3 provided for a railway company
paying interest on its paid-up share capital, out of capital, for the period,
and subject to the conditions and restrictions contained in that section. There
are other consequential provisions, in this Act.
The Indian Tramways Act, 1902 (Act IV of 1902)
was one to apply the provisions of the Indian Railway Companies Act, 1895, to
certain tramway companies. The preamble to this Act IV of 1902, stated that it
was expedient to apply the provisions of the Indian Railway Companies Act, 1895,
to companies formed for the construction of tramways 'not differing in
structure and working from light railways'.
This preamble will clearly show that, even as
early as 1902, the Legislature considered that though certain systems were
called 'tramways, substantially they did not differ, in structure and working,
from light railways.
The expression 'railway' is defined, in s. 311(2)
of the Government of India Act, 1935, as follows :" railway' includes a
tramway not wholly within a municipal area." It is to be noted that if a
system, though a tramway, is wholly not within a municipal area, that system
will be a 'railway'. Entry 250 58, of List 1 (Federal List) of the Seventh
Schedule to the 1935 Act, was :
"Terminal taxes on goods or passengers
carried by railway or air; taxes on railway fares and freights." It is,
again, to be noted, that under this Entry, in respect of a tramway, which is
not wholly within a municipal area and which will, therefore, be a 'railway',
under s. 311(2), the levy of terminal tax on goods or passengers carried by
such a system, will be within the competence of the Federal Legislature.
Under Art. 366(20) of the Constitution, the
expression 'railway' is dealt with, as follows :
" railway' does not include(a) a tramway
wholly within a municipal area, or (b) any other line of communication wholly
situate in one State and declared by Parliament by law not to be a
railway." It may be noted here that the appellant's system does not come
within the exclusions mentioned in cls. (a) or (b) of this definition. Entry 89
of List 1 (Union List), of the Seventh Schedule to the Constitution, is as
"Terminal taxes on goods or passengers,
carried by railway, sea or air; taxes on railway fares and freights."' It
may be noted that the competent legislative body to levy terminal taxes on
goods or passengers, carried by the appellant's system, which will be a
'railway', under Art.
366(20), is the Parliament.
The only other Act to be referred to is the
Railways (Local Authorities' Taxation) Act, 1941 (Act XXV of 194 1 ), which was
an Act to regulate the extent to which railway property shall be liable to
taxation imposed by an authority.
Section 3(1) of that Act provided that a
railway administration shall be liable to pay any tax in aid of the funds of
any local authority, if the Central Government, by notification in the Official
Gazette, declared it to be so liable. Section 4 provided for the Central
Government, by notification in the Official Gazette, revoking or varying any
notification issued under s. 135(1) of the Railways Act.
The learned Additional Solicitor-General,
appearing for the appellant, pointed out that the expression 'railway' had not
been defined in the United Provinces Municipalities Act, or in the Terminal Tax
Rules. In the absence of any special definition contained in the provisions,
granting the exemption, in question, the expression 'railway', occurring in
item 2, of Schedule B, of the Terminal Tax Rules, must bear the commonly
understood meaning of 'a carriage of passenger and goods, on iron rails'. By
virtue of the definition, in s. 311(2) of the 1935 Act, and the provision, 251
corresponding to it, in the Constitution, viz., Art.
366(20), the appellant's system, though
registered under the Tramways Act, was a railway. The mere fact that s. 135, of
the Railways Act, had not been applied to the appellant's system, is not a
decisive factor against the appellant, as had been assumed by the High Court.
In view of the various features of the appellant's system, and pointed out by
us earlier, it is argued that the appellant's system is a 'railway', both in
law and in fact. It satisfies all the ingredients of a railway and, if that is
so, the appellants are entitled to the exemption provided for, under item 2 of
Schedule B, of the Terminal Tax Rules.
On the other hand, Mr. Garg, learned counsel
appearing for the respondent Board, pressed before us for acceptance the
various reasons, given by the High Court, for holding that the appellant is not
entitled to claim be exemption. In particular, counsel pointed out that there
were two different enactments, one dealing with 'tramways' and the other with
'railways', being the Tramways Act and the Railways Act, respectively.
Therefore, there were two different systems, under two different names, namely
'tramways' and 'railways', which was clearly known to the authorities concerned
at the time when the Terminal Tax Rules were framed, and so when the expression
'railway' was used in the exemption clause, it must have been the intention of
the framers of the Rules to bring, within its ambit, only the 'railways'
constructed under the Railways Act. The appellant's system, though called a
'railway' and though it might have ill the features of i railway, it is pointed
out, nevertheless, that inasmuch is it has been constructed under a different
enactment, viz., the Tramways Act, it cannot be treated as a 'railway' for the
purposes of the exemption.
Counsel also stressed that s. 135 of the
Railways Act had not been applied to the appellant.
We are not impressed with the approach made
by the learned Judges of the High Court, for negativing the claim for
exemption, made by the appellant. It must be borne in mind that the expression
'railway has not been defined either in the concerned Municipalities Act, or the
Rules; if such is the case., the definition must hold the field. Going by the
definition of the expression ' railway', contained in s. 311(2) of the
Government of India Act, 1935, and the corresponding provision in Art. 366(20)
of the Constitution, the appellant's system is a 'railway'. All the provisions
of the Railways Act have been extended to the appellant, excepting s. 135. In
our opinion, if the appellant is a 'railway', otherwise, the mere fact that the
provisions of s. 135, of the Railways Act, have not been applied, is of no
consequence. We have already referred to the fact, which is not in dispute,
that the appellant's railway passes through four districts in U.P. and 252
Delhi, and that it has got all the features of a railway, as ordinarily
In this connection, we may refer to certain
English decisions, where the claim, made on behalf of a system, for being taxed
at a concessional rate, had come up for consideration.
In Blackpool and Fleetwood Tramroad Company
v. Thornton Urban Council(1), the Court of Appeal had to consider as to how far
the Blackpool & Fleetwood Tramroad Company, the appellant before them, was
entitled to the assessment, at a lower rate under s. 211 (1) (b), of the Public
Health Act, 1875 (38 & 39 Viet. c. 55). The material portion of that
section was :
"the occupier of any land . . . used
only as a canal . . . or as a railway, constructed under the powers of any Act
of Parliament, for public conveyance, shall be assessed in respect of the same
in the proportion of onefourth part only of the net annual value thereof."
The question was as to whether the appellant, in that case, was a 'railway', to
whom the said provision would apply.
The appellant company had constructed and
maintained a tramroad connecting two systems of tramways, under the local Acts
of 1896 and 1898. Various provisions of the Railways Clauses Consolidation Act,
1845, had been applied to the tramroad. The tramroad, in that case, was on
rails laid on sleepers, fenced off from adjoining land, excepting at the level
crossings of roads. The Divisional Court had rejected the claim of the
appellant; but the Court of Appeal held that the tramroad was land 'used only
as a railway constructed under the power of an Act of Parliament for public
conveyance, within the meaning of s. 21 1 (1)(b) of the Public Health Act,
1875, and that the company was, consequently, entitled to be assessed, in
respect of the said 'railway', at onefourth of its net annual value. The
appellants contended that the tramroad was and could only be worked as a
railway and was, in fact and in law, used as a railway, and, in consequence,
they urged that the tramroad, maintained by them, is 'land' used only as a
railway. The Court of Appeal noted that the rails were raised and laid on
sleepers, just as a railway is laid, and that was the main distinction between
the appellant's system, and a tramway, which ran along public streets and in
grooved rails. No doubt, it was pointed out for the Urban Council, that the
appellant company had been incorporated under the Tramways Act and the very
fact that certain provisions of the Railway Clauses Consolidation Act were
applied to the appellant's system showed that the appellant was not a railway.
The Court of Appeal held that it was impossible to distinguish the piece of
tramroad, owned by the (1) L. R. [190711 K.B.D. 568.
253 appellants, from a railway and that the
exemption provided for in the Public Health Act applied to the tramroad of the
appellants as it would, to any ordinary railroad passing through parts where it
was not deriving the full benefit from the district rates in those parts. The
Court of Appeal also rejected the contention of the Urban Council that the
tramroad, owned by the appellants could be treated as a 'railway' only for
particular purposes, and not for the purpose of claiming the exemption under
the Public Health Act; because, according to the Court of Appeal, a reading of
s. 211 (1) (b) of the Public Health Act, showed that it applied to land used as
a railway, i.e., constructed as a railway in fact.
This decision was taken up in further appeal,
before the House of Lords, whose decision is reported as Thornton Urban Council
v. Blackpool and Fleetwood Tramroad Company(1), and the decision of the Court
of Appeal was confirmed. In the course of the judgment, after referring to s.
211 of the Public Health Act, Lord Macnaghten observed, at p. 267 :
"Now it cannot be denied that the rails
on which the tramcars run, with the embankment or foundation on which they
rest, and everything that supports them, do form a road or way, and that that
road or way was constructed under parliamentary powers for public conveyance.
Is it 'a railway'? There is nothing in the
Public Health Act, 1875, or in the earlier Acts, in which the same provision is
found, to confine the word ' railway' as used in those Acts to a particular
kind of railway, or to limit the generality of the expression in any way."
His Lordship, further observed at p. 268 :
"It seems to me that if it is a railway
in fact, not differing from other railways in any material particular, it is
nonetheless a railways because the promoters in their special Act chose to call
it a 'tramroad'-a very convenient term to use for the title of their Act and the
name under which they sought incorporation. Nor is it the less a railway
because some only of the sections of the Railways Clauses Consolidation Act are
incorporated in the special Act, or because, if one did not know what the thing
really was, the language used for the purpose of applying the sections which
are incorporated might seem to import that it was not, properly speaking, a
railway at all. You must look at the special Act to see that it confers the
appropriate powers of construction. Everything else in the Act is, I think,
beside the question which this House has now to determine." (1) L.R.
 A.C. 264.
254 In our opinion, the observations of the
House of Lords, extracted above, are apposite, to the case on hand. We have
already pointed out that neither the Municipal Act, nor the Terminal Tax Rules
give any special definition of the expression 'railway', and, so far as we
could see, there is nothing in the said Act or the Rules to indicate that the
word 'railway', in item 2 of Schedule B, is used only to refer to a 'railway'
registered under the Railways Act or to limit the generality of the expression
'railway' in any way.
Under those circumstances, if the appellant
is a 'railway' in fact, as commonly understood-there does not appear to be any
serious controversy on that point-it will be a 'railway', notwithstanding the
fact that it is registered as a 'tramway', under the Tramways Act. The
legislature itself has applied the various provisions of the Railways Act to
the appellant, and the appellant also satisfies the definition of a 'railway'
under the Government of India Act, 1935, and the Constitution. The provisions
of the Indian Railway Companies Act, 1895, have also been applied to the
tramways constructed, under the Tramways Act, by the Indian Tramway Act of
1902. The second preamble to the last mentioned Act, clearly shows that the
tramways, to which the Indian Railway Companies, Act was made applicable, '#,lo
not differ in structure and working from railways'.
The object underlying the exemption under
item 2, of Schedule B, to the Terminal Tax Rules, is also not far to seek.
The railways pass through areas where it is
not deriving the full benefit of all the amenities provided by the Municipal
Boards. Therefore, in our opinion, the appellant satisfies the definition of a
'railway', so to be entitled to the exemption provided under item 2 of Schedule
Before we close the discussion, we ",ill
also refer to the decision of the House of Lords in Tottenham Urban Council v. Metropolitan
Electric Tramways, Ltd.(1). The same question regarding the eligibility of a
'tramway' for exemption, under s. 21 1(1)(b) of the Public Health Act, 1 875,
came up for consideration in that case. From the judgment, it will be seen that
the company were working, as a connected system, a tramway and a light railway,
which were constructed in and along certain public streets and roads, in the
district of the urban Council. The 'tramway' was constructed under the Tramway
Acts and Orders and the 'railway,' under the Light Railways Act, 1896. Both
were identical as to the mode of construction and materials used.
The claim of the company in respect of the
'railway', as such, for assessment at a lower rate. was accepted; but, so far
as the 'tramway' ",as concerned, the House of Lords held that it is not a
'railway', within the meaning of s. 21 1(1)(b), of the Public Health Act, 1875.
The (1) L. R. 1 A. C. 702.
255 reason given by the House of Lords, for
not accepting the claim of the tramway, was that in the great bulk of public
legislation, relating to railways, the legislation has universally been
understood and interpreted by Courts as applying only to that which is
popularly known as a 'railway', and not to that which is Popularly known as a
'tramway'. And special emphasis is laid by the House of Lords that the
legislature has used the word 'railways' and not 'railways and tramways', in s.
211 of the Public Health Act, 1875.
We are only adverting to this decision to
show that, on the basis of an interpretation placed by the Courts, the House of
Lords held that the word 'railways', in the Public Health Act, 1875, will not
take in 'tramways'. But, no such circumstances, as pointed out by the House of
Lords, in the said decision, exist in the present case before us. On the other
hand, the position is -exactly the opposite, as will be seen from the
Government of India Act, 1935, and the Constitution. Even applying the popular
test, adopted by the House of Lords, in this case, the appellant is undoubtedly
In our opinion, the principles laid down by
the House of Lords in Thornton Urban Council v. Blackpool and Fleetwood
Tramroad Company(1), apply to the particular matter on hand and, we hold that
the appellant, being a 'railway', is entitled to the exemption under item 2, of
Schedule B, to the Terminal Tax Rules, in question.
We, accordingly, allow the appeal and set
aside the judgment of the High Court, and further direct that a writ will
issue, as prayed for by the appellant. The appellant will be entitled to its
costs, from the first respondent, both in this Court and in the High Court.
G. C. Appeal allowed.
(1) L. R.  A. C. 264.