Prakash Chand Maheshwari & ANR Vs.
Zila Parishad, Muzaffarnagar & Ors [1971] INSC 158 (7 May 1971)
MITTER, G.K.
MITTER, G.K.
SIKRI, S.M. (CJ) VAIDYIALINGAM, C.A.
RAY, A.N.
REDDY, P. JAGANMOHAN
CITATION: 1971 AIR 1696 1971 SCR 761 1971 SCC
(2) 489
ACT:
Professions Tax Limitation (Amendment and
Validation) Act 1949-Retrospective validation of levy under U. P. District
Boards Act, 1922 contravening limit of Rs. 50 laid down in Profession Tax
Limitation Act XX of 1941-Validity-Procedure under r. 3 of Rules made under
U.P. District Boards Act, 1922 whether unworkable under U.P. Kshetra Samithis
and Zila Parishads Adhiniyam 33 of 1961-Time limit for assessment procedure
under rr. 4 and 5 of Rules under 1922 Act whether mandatory-Rules whether not
properly framed-Kar Adhikari appointed without consulting Public Service
Commission as required by s. 43 of U.P. Kshetra Samithi and Zila Parishads
Adhiniyam Act 1961-Mere sending of papers to Commission after making of
appointment not sufficient compliance with s. 43--Appointment is temporary and
good only for two years-Assessment made after two years invalid.
HEADNOTE:
Tax on circumstances and property we levied
in 1928 on persons residing in or carrying on business in the rural areas of
District Muzaffarnagar under the provisions of the U.P. District Boards Act,
1922. In 1942, the Central Legislature passed the Professions Tax Limitation
Act which laid down that no tax on circumstances and property levied by a local
authority should exceed Rs. 50 except in cases where it was already being
levied. The Act was passed in accordance with the provisions of s. 142-A of the
Government of India Act 1935. In 1948 s. 108 of the U.P. District Boards Act
was amended to provide that a board may continue a tax already imposed on persons
assessed according to their circumstances and property, and that the tax so
imposed shall not be abolished or altered without the previous sanction of the
State Government, In order to get over the decision of the High Court of
Allahabad in District Board of Farrukhabad v. Prag Dutt, (I.L.R. 1949 All. 26)
the Central Legislature passed the Professions Tax Limitation (Amendment and
Validation) Act 61 of 1949. This Act retrospectively exempted the circumstances
and property tax levied by local bodies in U.P. from the upper limit of Rs. 50
laid down by the 1941 Act. On August 22, 1958 the U.P. Antarim Zila Parishad
Act 22 of 1958 was passed by the U.P. Legislature.
The said Act was extended to December 31,
1962 by successive legislation. The U.P. Kshetra Samithis and Zila Parishads
Adhiniyam 33 of 1961 repealed the United Provinces District Board Act 1922 in
relation to a district as from the date on which the establishment of Kshetra
Samithis under the new Act was completed and as from the date on which the U.P.
Antarim Zila Parishad Act was to stand
repealed in relation to that district. Kshetra Samithis and Zila Parishad were
constituted in the District of Muzaffamagar under the Act.
The circumstances and property tax levied
under the repealed Acts was continued under the new Act. 'Me taxing officer
called Kar Adhikari was to be appointed according to the procedure laid down in
s. 43 of the now Act. The appellants who carried on 'khandsari' and 'gur'
business in the rural area of Muzaffarnagar District were, for the year
1967-68, assessed to pay a sum of Rs. 2,000 as circumstances and property tax.
They filed a writ petition under Art. 32 of the Constitution challenging the
levy on 762 the following grounds; (i) Central Act LXI of 1949 was beyond the
legislative competence of the Federal Legislature because the power of the
Federal Legislature having been once exercised to reduce the imposts over Rs.
50 per annum to that sum it was exhausted and could not be exercised a second
time; (ii) Even assuming the said Act was within the competence, of the
legislature, as a result of the amendment of s. 108 of the U.P. Districts
Boards Act in 1948 the board could only continue to levy the tax which was
lawfully being imposed in 1948 on persons assessed according to their
circumstances and properties in accordance with s. 114 and inasmuch as the tax
had been reduced to Rs. 50 by the Central Act of 1941 the validation under the
Professions Tax Limitation (Amendment and Validation) Act, 1949 would not serve
to raise the limit of the tax to beyond Rs. 50 per annum, (iii) under r. 3
framed by the local self government of the U.P. under s. 172 of the Act of 1922
the tax was to be assessed by an assessing officer appointed by the District
Board with the help of the members of the circle but since under the Zila
Parishad Act there was no circle or members, the old rule had become
unworkable; (iv) the prescribed time schedule mentioned in rr. 4 and 5 in the
relevant notification not having been adhered to the assessment was illegal.
(v) the rules of 1928 were not properly framed inasmuch as the procedure laid
down in the relevant Chapter of the Act of 1922 was not followed strictly; (vi)
the appointment of the Kar Adhikari was not made in accordance with the
provisions of s. 43 of the U.P.
Act. XXXIII of 1961 and therefore the
assessment made by him was illegal.
HELD:(i) The proviso to s. 142-A(2) of the
Government of India Act, 1935 could not be read to give the legislature power
to alter the quantum of assessment once for all.
Clearly it gave power to the federal
legislature to fix a rate of such tax in substitution for the one which was
already prevailing on the 31st March, 1939 and it could do so not only once but
from time to time. The use of the words 'unless for the time being' indicates
that the legislature could at any point of time substitute a fresh rate of tax
for the one prevailing. It follows that it was open to the federal legislature
to make such substitution more than once. [771F772B] (ii)The amendment of s.
108 of the U.P. District Boards Act of 1922 in 1948 only allowed the
continuance of the tax already imposed on persons assessed according to their
circumstances and property. The argument that validation of the imposition of a
tax by the Professions Tax Limitation (Validation and Amendment) Act, 1949 with
retrospective effect was not possible could not, be accepted. In the case of M.
P. Sundararamier & Co. this Court clearly laid down that a law authorising
imposition of tax could be both retrospective and prospective. It necessarily
followed that if the Act of 1949 was valid the imposition was saved even after
1950 under the proviso to cl. (2) of Art. 276 of the Constitution. [772H-773F]
B.M. Lakhani v. Malkapur Municipality, A.I.R. 1970 S.C.
1002 distinguished.
M.P.V. Sundararamier & Co. v. State of
Andhra Pradesh, [1958] S.C.R. 1422, relied on.
(iii)The argument that the rules framed under
the District Boards Act became inconsistent with and unworkable under the U. P.
Zila Parishads Act could not be accepted.
The assessment was to be done by the
assessing officer appointed by the District Board. Even if there was a circle
but the members of the circle refused to co-operate with him, the assessment
would not be invalid. The help which they could render would only 763 be
limited to giving information about the assesses. It was quite competent for
the assessing officer to proceed with the assessment even if the members
refused to help him. The situation was not altered by reason of the fact that
the circle and the members had disappeared. [773G-774A] (iv)Rules 4 and 5 which
laid down certain dates by which the work was directed to be taken in hand and
completed were merely directory and not mandatory. There was nothing in these
rules to suggest that if the dates were not strictly observed any prejudice
would be caused to the assessee.
[774B-C] Judgment of Allahabad High Court
dated January 8 1963 in Civil Misc. Writ Petition No. 3160 of 1962,
disapproved.
(v)Even if there was any irregularity in the
framing of the rules under the 19" Act the same was cured by the
publication of the notification under s. 120(3) of the Act of 1922. [774G]
(vi)The appointment of Kar Adhikari (respondent no. 2 in this case) took place
on 8th August 1965, the impugned assessment was made on 6th March 1968 i.e.
more than two years after the date of appointment. Under s. 43 the appointment
of this officer to the post which carried an initial salary of more than Rs.
200 p.m. could be made by the Parishad in consultation with the Public Service
Commission or other Commission or selection Body as might be constituted by the
State Government and if there was a difference of opinion between the
Commission and the Parishad the matter was to be referred to the State
Government whose decision was to be final. In the present case the State Public
Service Commission had been notified of the appointment and they had not
expressed any disapproval of the same. Appointing respondent no. 2 as Kar
Adhikari and merely sending the papers relating to such appointment to the
Public Service Commission would not be compliance with s. 43 of the Act. Even
if it be regarded as a temporary appointment, it could only be effective for
two years and as the assessments in the present case was made beyond that date
it must be held that the assessment was made by a person not competent to make
it. [774H-775H] Chandramouleshwar Prasad v. Patna High Court, [1970] 2 S.C.R.
666, applied.
The position was not improved by the
inclusion of the name of respondent no. 2 in List 'C under paragraph 9(4) of
the U.P. Zila Parishad Central Transferable Cadre Rules, 1966 which came into
force with effect from December 20, 1966.
In terms of s. 47 of U.P. Act of 1961 the
appointment ceased to be valid after two years, the period having expired long before
the hearing of this matter. The order of assessment of Rs. 2,000 on the
petitioners dated 25th March 1968 must therefore be quashed. [776E-H]
ORIGINAL JURISDICTION : Writ Petition No. 435
of 1968.
Petition under Art. 32 of the Constitution of
India for the enforcement of fundamental rights.
E. C. Agarwala, for the petitioners.
C. B. Agarwala, Uma Mehta, S. K. Bagga and S.
Bagga, for respondents Nos. 1 and 2.
O. P. Rana, for respondent No. 3.
764 The Judgment of the Court was delivered
by Mitter, J.-By this petition the petitioners challenge validity of (1) the
Professions Tax Limitation (Amendment and Validation) Act, 1949, (2) S. 131 of
the U. P. Zila Parishad Act, (3) an order of assessment of Rs. 2,000/dated 25th
March, 1968 made by the Kar Adhikari, Zila Parishad Muzaffarnagar and pray for
incidental reliefs.
The petitioners carry on the business of
manufacture and sale of "khandsari" and "gur" in the
District of Muzaffarnagar, U. P. They own a crusher in village Morna in the
said district where the manufacture of khandsari as sugar is carried on. They
challenge the imposition of "Circumstances and Property" tax of Rs.
2,000/imposed on their business under, the order of assessment passed by
respondent No. 2. Kar Adhikari, Zila Parishad Muzaffarnagar for the year
1967-68. As they did not produce their accounts for their business in khandsari
the Kar Adhikari, an officer appointed by the Zila Parishad of Muzaffarnagar
assessed them to Rs. 2,000/as "Circumstances and Property" tax on the
estimated income of Rs. 96,000/from their property and business for the year.
To appreciate how the Zila Parishad (a
district authority) came to have the power to levy the tax, it is necessary to
take an account of some past legislation. The Local body to administer the
district of Muzaffarnagar in U. P. until the year 1958 was the District Board
of Muzaffarnagar constituted under the U. P. District Boards Act, 1922 (U. P.
Act X of 1922). Chapter VI of the Act containing sections 108 to 132 gave the
Board certain powers of taxation, local rates etc. and prescribed the procedure
for imposition and recovery of the levy. Under S. 114 the Board had the power
to impose a tax on "circumstances and property" subject to certain
conditions, inter alia, that the tax could be imposed only on persons residing
or carrying on business in the rural area with an income above a certain
minimum limit. The rate of tax was not to exceed Rs. 0-0-4 in the rupee on the
total income and the total amount of tax was not to exceed the maximum which
might be prescribed by rule. By s. 115 a Board deciding to impose a tax had to
frame proposals by special resolution, specifying the particular tax out of
those prescribed in s. 108 which it desired to impose, the persons or classes
of persons to be made liable and the description of the property or other
taxable thing or circumstance in respect of which they were to be made liable,
the amount of rate leviable from such persons or classes of persons and any
other matter which the State Government required by rule to be specified. S.
116 enabled any person 765 ordinarily residing or carrying on business in the
district to raise objections to the proposal which had to be considered by the
Board. Under s. 117 the Board had to submit the finally settled proposals to
the State Government which could either sanction the same or return them to the
Board for further consideration. When the State Government had sanctioned the
proposal of the Board, it had to frame rules under s. 172 in respect of the tax
as for the time being it considered necessary after taking into consideration
the draft rules submitted by the Board.
Following on the above, the Board was
required to direct the imposition of the tax with effect from a date to be
specified by special resolution. Under s. 120(1) a copy of the resolution
passed by the Board was to be submitted by it to the State Government.
Government was required to notify in the official gazette the imposition of the
tax from the appointed day upon receipt of the copy, of the board's resolution
and the imposition of a tax was in all cases to be subject to the condition
that it had been so notified.
Under sub-s. (3) of s. 120 a notification of
the imposition of a tax under sub-s. (2) was to be conclusive proof that the
tax had been imposed in accordance with the provisions of the Act. Matters
mentioned in clauses (a) to (f) including inter alia the assessment and
collection of taxes was under s. 123 to be governed by rules except in so far
as the provision therefore was made by the Act. S. 172 empowered the State
Government to make rules consistent with the Act in respect inter alia of
matters mentioned in s.123.
On the 1st of March 1928, the U. P. Local
Self Government issued a notification prescribing rules for the assessment and
collection of a tax on circumstances and property in the rural area of the
Muzaffarnagar District under s. 172 of the Act after the previous publication
thereof as required by s.176. Rule 3 provided that "the tax shall be
assessed by an assessing officer appointed by the District Board with the help
of the members of the circle concerned". Rules 4 and 5 laid down a time
schedule for the work of the assessing officer and the submission of the list
of persons within the district who appeared to be liable to pay the tax to the
board. He was first required to prepare a list on or before 15th December of
each year of all persons who appeared to him to be so liable. He was then to
consider the circumstances and property of every person entered in the list and
to determine the amount of the tax to which such person should be assessed. The
name of every person assessed and the amount of tax to which he was assessed
was to be entered in an assessment list in the form attached to the rules and
was to be completed on or before the 20th of January next. After the
preparation of the list and the submission thereof to the Board 'the latter
could take action to revise the list by a resolution and 766 the Board was to
return the list to the assessing officer by the 15th February.
In terms of the U. P. District Boards Act,
1922 rules were framed on the 1st March 1928 and the State Government issued a
notification on the 20th April, 1928 under S. 120(2) of the Art to the effect
that the District Board Muzaffarnagar had in exercise of powers conferred by S.
108(2) imposed with effect from May 15, 1928 a tax on all persons ordinarily
residing or carrying on business in the rural area of Muzaffarnagar District
according to their circumstances and property at the rate of Rs. 0-0-3 in the
rupee on incomes of Rs. 300/but not exceeding Rs.1200 per annum and Rs. 0-0-4
in the rupee on incomes of over Rs.1200/per year provided that in the case of
persons residing in notified and town areas and paying tax on circumstances and
property to their respective committees, the rate of tax was to be Rs. 0-0-2 on
the income of Rs. 300 but not exceeding Rs. 1200 and Rs. 0-0-3 on the income of
over Rs. 1200/per annum.
In 1935 the Government of India Act of that
year was enacted whereby the Legislative Lists were defined in the Seventh
Schedule to the Act in terms of ss. 99 to 107 in Chapter I of Part V. Certain
restrictions on legislative powers were also defined in Chapter 11 of the said
Part containing ss.
108 to 110. Item 46 of the Provincial
Legislative List was amended in 1940 to read "Taxes on professions,
trades, callings and employments, subject, (however, to the provisions of
section 142-A of this Act." The said section which also came into force
under the same Amending Act ran as follows :" 142-A. (1) Notwithstanding
anything in section one hundred of this Act, no Provincial law relating to
taxes for the benefit of a Province or of a municipality, district board, local
board or other local authority therein in respect of professions, trades,
callings or employments shall be invalid on the ground that it relates to a tax
on income.
(2)The total amount payable in respect of any
person to that Province or to any one municipality, district board, local
board, or other local authority in the Province by way of taxes on professions,
trades, callings and employments shall not, after the thirty first day of 767
March, nineteen hundred and thirty-nine, exceed fifty rupees per annum:
Provided that, if in the financial year
ending with that date there was in force in the case of any Province or any
such municipality, board or authority a tax on professions, trades, callings or
employments the rate, or the maximum rate, of which exceeded fifty rupees per
annum, the preceding provisions of this sub-section shall, unless for the time
being provision to the contrary is made by a law of the Federal Legislature,
have effect in relation to that Province, municipality, board or authority as
if for the reference to fifty rupees per annum there were substituted a
reference to that rate or maximum rate, or such lower rate, if any (being a
rate greater than fifty rupees per annum), as may for the time being fixed by a
law of the Federal Legislature-, and any law of the Federal Legislature made
for any of the purposes of this proviso may be made either generally or in
relation to any specified Provinces, municipalities, boards or authorities.
(3)The fact that the Provincial Legislature
has power to make laws as aforesaid with respect to taxes on professions,
trades, callings and employments, the generality of the entry in the Federal
Legislative List relating to taxes on income." In exercise of the powers
conferred by the above section the Central Legislature passed the Professions
Tax Limitation Act, 1941 (Act XX of 1941) on 26th November 1941. The preamble
to the Act shows that its object was to limit the total amount payable in
respect of any person in respect of his profession, trade or calling etc. by
way of tax to fifty rupees per annum notwithstanding the provision to the
contrary in s. 142-A of the Government of India Act, 1935.
The Act which contained only three sections
and a Schedule provided by section 2 that the amount of tax payable in respect
of any one person to a Province, municipality, district board etc. was to cease
to be levied to the extent to which such taxes 'exceeded Rs. 50 per annum. The
section ran as follows :
"2. Notwithstanding the provisions of
any law for the time being in force, any taxes payable in respect of any one
person t a Province or to any one municipality, district board, local board or
other local authority in any Province by way of tax on professions, trades,
callings or employments, stall from and after the commencement of this Act
cease to be levied to the extent to which such taxes exceed fifty rupees per,
annum." 768 S.3 was a saving provision whereby the provisions of s. 2 were
not to apply to the taxes specified in the Schedule.
All the five items in the Schedule related to
taxes on professions, trades or callings by certain municipalities.
S.108 of the U. P. District Boards Act, 1922
was amended in 1948 to read "A board(a) shall, by notification in, the,
official Gazette, impose a local rate under section 3 of the United Provinces
Local Rates Act, 1914, as modified by this Act; and (b)I may continue a tax
already imposed on person assessed according to their circumstances and
property............ in accordance with section 114 Provided that the tax on
circumstances and property So imposed shall not be abolished or altered without
the previous sanction of the State Government."' It will be noticed that
after the Professions Tax Limitation Act of 1941 the District boards in U. P.
were not allowed to collect, a tax on circumstances and property of any person
in excess of Rs. 50. The situation was however altered in 1949 when the
Professions Tax Limitation (Amendment and Validation) Act, 1949 was passed with
the assent of the Governor General on 26th December 1949 (Act LXI of 1949).
This was really to get over the decision of
the Allahabad High Court in District Board of Farrukhabad v. Prag Dutt (1). The
Act was passed to amend the Professions Tax Limitation Act, 1941 and to
validate the imposition in the United Provinces of certain taxes on
circumstances and property. Section 2 of the Act purported, to add items 3-A
and 3-B in the Schedule to the Professions Tax limitation Act, 1941 with
retrospective effect. Items 3-A and 3-B read as follows :"3-A. The tax on
inhabitants assessed according to their circumstances and property, imposed
under clause (ix) of sub-section (1) of section 128 of the United Provinces
Municipalities Act, 1916 (U. P. Act II of 1916).
3-B. The tax on persons assessed according to
their circumstances and property. imposed under clause (b) of section 108 of
the United Provinces District Boards Act, 1922 (J. P. Act X of 1922)." (1)
I. L. R. [1949] Allahabad 26.
769 The usual clauses for validation with
retrospective effect were contained in s. 3 of the Act.
Taxes on professions, trades, callings and
employments again came to be dealt with by Art. 276 of the Constitution in
1950. Clause (1) of the article laid down that "Notwithstanding anything
in article 246, no law of the Legislature of a State relating to taxes for the
benefit of the state or of a municipality, district board, local board or other
local authority therein in respect of professions, trades, callings or
employments shall be invalid on the ground that it relates to a tax on
income." Cl.(2) was aimed at limiting the maximum amount in respect of
such taxes subject to certain qualifications. It ran as follows "The total
amount payable in respect of any one person to the State or to any one
municipality, district board, local board or other local authority in the State
by way of taxes on professions, trades, callings and employments shall not
exceed two hundred and fifty rupees per annum Provided that if in the financial
year immediately preceding the commencement of this Constitution there was in
force in the case of any State or any such municipality, board or authority a
tax on professions, trades, callings or employments the rate, or the maximum
rate, of which exceeded two hundred and fifty rupees per annum, such tax may
continue to be levied until provision to the contrary is made by Parliament by
law, and any law so made by Parliament may be made either generally or in
relation to any specified States, municipalities, boards or authorities."
On August 22, 1968 the U. P. Antarim Zila Parishad Act (XXII of 1958) was
passed by the U. P. Legislature. Under section 1(3) of the Act it was to come
into force on 29th day of April 1959 and to expire on 31st December 1959. The
said Act was purported to be extended to 31st December 1962 by successive
legislation. Under s. 3 (1) of the Act of 1958 all district boards in U.
P.......... and all committees of such boards constituted under the District
Boards Act of 1922 were to cease to function and all members and the President
of each board and all members of each committee were to vacate and be deemed to
have vacated their respective offices.
The U. P. Kshettra Samithis and Zila
Parishads Adhiniyam, .1961 repealed the United Provinces District Boar& Act
1922 49-1 S.C. India/71 770 in relation to a district as from the date on which
the establishment of Kshettra Samithis under the new Act (XXXIII of 1961) was
completed and as from the date on which the U.
P. Antarim Zila Parishad Act was to stand
repealed in relation to that district. The Kshettra Samitis and Zila Parishad
were constituted in the District of Muzffarnagar under the Act. This Act was a
comprehensive Act which prescribed inter alia for dividing all the rural areas
of each district into khands, the establishment of Kshettra Samithis for each
khand, their composition and establishment and incorporation of Zila Parishads.
Each Zila Parishad was to be a body corporate having perpetual succession and a
common seal with power to acquire, hold and dispose of property and to
discharge its functions under the Act. The powers and functions of Kshettra Samitis
and Zila Parishads were specified in Chapter III of the Act. Chapter IV of the
Act containing ss. 39 to 55 laid down provisions-for the appointment of
officers and servants of the Zila Parishads.
Under S. 43(1) appointments to the posts of
Karya Adhikari, Abhiyanta and Kar Adhikari and the posts created under subsection
(2) of S. 39 carrying an initial salary of Rs. 200 or more per month were to be
made by the Parishad in consultation with the State Public Service Commission
or such other Commission or Selection Board as might be constituted by the
State Government in this behalf in the manner prescribed provided that if there
was a difference of opinion between the Commission and the Parishad the matter
was to be referred to the State Government whose decision was to be final.
Under S. 47 "Notwithstanding anything contained in S. 43...... officiating
and temporary appointments to posts mentioned in sub-section (1) of section 43,
may be made by the appointing authority specified in section 43 or in the rules
made under section 44, without consulting the Commission, but no such
appointment shall, except as provided in subsection (2), continue beyond a
period of one year save after consultation with the Commission." Under
sub-s.(2) the appointments made under sub-s.(1) might in special circumstances
and where the appointing authority was the Parishad, with the approval of the
State Government be continued without consulting the Commission for a period
not exceeding two years. Chapter VII of the Act of 1961 contains provisions for
taxation and levy of fees and tolls in ss. 1 19 to 146. S. 120 sanctioned the
continuance of imposition of circumstances and property tax which was imposed
or continued under the U. P. District Boards Act 1922 until abolished or altered
and all rules, regulations and bye-was, orders, notifications were continue in
force as if enacted under the Act of 1961. S. 131(1) 771 enabled the Zila
Parishad to exempt for a period not exceeding one year, from the payment of a
tax or any portion of a tax imposed under the Act, any person who was in its
opinion, by reason of property unable to pay the same and renew the exemption
as often as it deemed necessary. Subss. (2) and (3) allow other such exemptions
either by the Zila Parishad or the State Government.
The main plank of the argument on behalf of
the petitioners was that the Central Act LXI of 1949 was beyond the legislative
competence of the Federal Legislature, but even assuming the said Act was
within the competence of the legislature as a result of the amendment of s. 108
of the U.
P. District Boards Act in 1948 the board
could only continue to levy the tax which was lawfully being imposed in 1948 on
persons assessed according to their circumstances and properties in accordance
with s. 114 and inasmuch as the tax had been reduced to Rs. 50 by the Central
Act of 1941 the validation under the Professions Tax Limitation (Amendment and
Validation) Act, 1949 would not serve to raise the limit of tax to beyond Rs.
50 per annum. In our view, none of these contentions have any force.
On the first branch of his submission,
counsel relied on a passage in Craies on Statute Law (sixth edition, page 283)
reading:
"If a power is given to the Crown by
statute for the purpose of enabling something to be done which is beyond the
scope of the royal prerogative, it is said to be an important constitutional
principle that such a power, having been once exercised, is exhausted and
cannot be exercised again." It was said that the effect of sub-s. (2) read
with the proviso to s. 142-A of the Government of India Act was that although a
tax in respect of professions, trades and callings might have been leviable
after the 31st March 1939 if it was being levied before, the power of the
Federal Legislature having been once exercised to reduce the imposts over Rs.
501per annum to that sum, it was exhausted and could not be exercised a second
time. The argument is patently fallacious. Here there is no question of any
prerogative and the proviso cannot be read to give the legislature power to
alter the quantum of assessment once for all. Clearly it gave power to the
Federal Legislature to fix a rate of such tax in substitution for the one which
was already prevailing on the 31st March 1939 and it could do so not only once
but from time to time as is apparent from the use of the expression :
"unless for the time being provision to
the contrary is made by a law of the Federal Legislature." 772 The words
"unless for the time being" indicate that the Legislature could at any
point of time substitute a fresh rate of tax for the one prevailing. It follows
that it was open to the Federal Legislature to make such substitution more than
once. Having reduced the rate of Rs. 50 by the Professional Tax Limitation Act
the Legislature took power again to substitute the old rate to tax for the sum
of Rs.
50. This substitution became effective as
from the date of the Professions Tax Limitation Act, 1941 by the insertion of
items 3-A and 3-B to the Schedule to the said Act. S. 3 of the Act of 1949
validated imposts for the period intervening between 1941 and 1949.
Counsel sought to rely on a decision of this
Court in B. M. Lakhani v. Malkapur Municipality (1) in aid of his contention
that a fresh Act had to be re-enacted after 1949.
In that case the appellants had filed a suit
to restrain the municipality from recovery of "Bale and Bhoja" tax
for the season 1953-54 and for the subsequent seasons and for a decree for
refund of the amount paid contending that the tax was ultra vires the municipality.
One of the points there canvassed was, whether the levy of the tax by the
municipality was valid in law. The municipality was constituted in 1905 under
S. 41(1) cls.(a) and (b) of The Berar Municipal Act, 1886. It purported to
levy, with effect from October 1, 1912, a tax known as the Bale and Boja tax on
cotton ginned and pressed in Ginning and Pressing factories at certain rates.
On the 2nd October 1939 the municipality resolved to revise the rates and by
notification dated January 2, 1940 under S. 67(5) of the C.
P. and Berar Municipalities Act, 1922 tax was
permitted to be levied at the rate of four annas per, 'bale with effect from
October 1, 1939. The Court observed that the notification of 1940 was not saved
by the proviso to, S.
142-A but the municipality collected tax at
the rates set out in the said notification. Accordingly the Court held that if
the notification of 1940 was ineffective under the Government of India Act,
1935 it could not be revived under the Constitution by virtue of Art. 276(2)
proviso.
Clearly, that case is distinguishable from
the facts of the case before us. In this case the impost remained the same
between the passing of the Government of India Act, 1935 and the commencement
of the Constitution. The amendment of S.
108 of the U. P. District Boards Act of 1922
in 1948 only allowed the continuance of the tax already imposed on persons
assessed according to their circumstances and property. We cannot accept the
argument that validation of the imposition of a tax by the Professions Tax
Limitation (Validation and Amendment) Act.
(1) A. I. R. 1970 S. C. 1002.
773 1949 with retrospective effect was not
possible. An argument similar to that raised by the counsel for the petitioners
was raised and negatived in M. P. V. Sundararamier & Co. v. The State of
Andhra Pradesh (1).
There it was contended on behalf of the
assessees that s. 2 of the Sales Tax Laws Validation Act, 1956 which provided
that no law of a State imposing or authorising the imposition of tax on
inter-State sales during the period between April 1, 1951 and September 6, 1955
shall be deemed to be invalid or ever to have been invalid merely by reason of
the fact that sales took place in the course of interState trade, did not
authorise the initiation of fresh proceedings for the imposition but only
validated levies already made. Rejecting this contention it was observed (see
p. 1460):
"What is material to observe is that the
power conferred on Parliament under Art. 286(2) is a legislative. power, and
such a power conferred on a Sovereign Legislature carries with it authority to
enact a law either prospectively or restrospectively, unless there can be found
in the Constitution itself a limitation on that power." and at p. 1461
"While a law prohibiting transfers (the subject matter of the appeal
before the Privy Council in Punjab Province v. Daulat Singh-73 I. A. 59) must
be prospective' a law authorising imposition of tax need not be. It can be both
prospective and retrospective.", It necessarily follows that if the Act of
1949 was valid the imposition was saved even after 1950 under the proviso to
cl. (2) of Art. 276 of the Constitution.
It was next argued that the rules framed
under the District Boards Act became inconsistent with and unworkable under the
U.P. Zila Parishads Act. It was said that under rule 3 framed by the Local Self
Government of the U. P. under s. 172 of the Act of 1922 the tax was to be
assessed by an assessing officer appointed by the District Board with the help
of the members of the circle. As under the Zila Parishad Act there were no
circle or members, the old rule was said to have become unworkable. In our view
this argument has no force. The assessment was to be done by the assessing
officer appointed by the District Board. Even if there was a circle but the
members of the circle refused to cooperate with him, the assessment would not
be invalid.
After all the help which they could render
would only be limited to (i) [1958] S. C. R. 1422.
774 giving information about the assessees.
It was quite competent for the assessing officer to proceed with the assessment
even if the members refused to help him. The situation was not altered by
reason of the fact that the circle and the members had disappeared.
The next argument of counsel that the time
schedule mentioned in rules 4 and 5 in the notification of January 28 not
having been adhered to, the assessment was illegal, must be rejected on the
face of it. These rules laying down certain dates by which the work was
directed to be taken in hand and completed were merely directory and not
mandatory.
There was nothing in these rules to suggest
that if the dates were not strictly observed any prejudice would be caused to
the assessee. We find ourselves unable to accept the observations to the
contrary in a judgment of the Allahabad High Court dated 8th January 1963
rendered in Civil Miscellaneous Writ Petition No. 3160 of 1962 to which
reference was made in this connection.
In paragraph 21 of the petition, a complaint
is made that the Zila Parishad had changed the rate of tax to 3 paise per rupee
which is equivalent to 6 pies (old) per rupee being the rate which was in force
under the District Boards Act and the minimum amount on income for levy of tax
had also been raised under the Zila Parishad Act to Rs. 600 from Rs. 300 under
the District Boards Act. It is pointed out in the counter affidavit of
respondent No. 2 that the above statement is not correct and that the rate of 3
paise per rupee provided under S. 121 of the Zila Parishad Act was not
applicable by virtue of s. 120 of the Act. The respondent further pointed out
that the maximum amount on which the tax was leviable had been raised from Rs.
300 to Rs. 600 before the commencement of the Zila Parishad Act the change
working in favour of the assessee. We are therefore not satisfied about the
genuineness of the petitioners' complaint.
A faint attempt was made to argue that the
rules of 1928 were not properly framed inasmuch as the procedure laid down in
the relevant chapter of the Act of 1922 was not followed strictly and the rules
were not sent to Government for approval. In our view, even if there was any
such irregularity in the framing of the rules, the same were cured by the
publication of the notification under s. 120(3) of the Act of 1922.
The last point raised by the petitioners
relates to the appointment of the Kar Adhikari on the ground that it was not
done in consultation with either the Public Service Commission of the State or
any other Commission or body appointed in that behalf by the State Government
Under s. 43 of the, U. P. Kshettra Samithis and Zila Parishads Adhiniyam, 1961
i.e. U.P. Act XXXIII of 1961. The appointment of respondent No. 2 in this case
took place on 8th August 1965; the impugned assessment 775 was made on 6th
March 1968 i.e. more than two years after the date of appointment. Under s. 43
the appointment of this officer to the p t which carried an initial salary of
more than Rs. 200 p.m' could be made by the Parishad in consultation with the
.Public Service Commission or other Commission or Selection 'Body as might be
constituted by the State Government and if there was a difference of opinion
between the Commission and the Parishad the matter was to be referred to the
State Government,.-' whose decision was to be final. Counsel for the
respondents on the materials before this Court was only in a position to in-.
form us that the State Public Service Commission had been notified of the
appointment and they had not expressed any disapproval of the same. We do not
think that this was sufficient compliance with s. 43. In Chandramouleshwar
Prasad v. Patna High Court (1) this Court had to consider the question of
"appointment of persons to be and the posting and promotion of District
Judges" in the State of Bihar which under Art. 233(1) of the Constitution
were to be made by the Governor of the State in consultation with the High
Court. It appeared that there was some difference of opinion between the High
Court and the Government of Bihar with regard to certain appointments and promotions
of District Judges in the State of Bihar and the Government issued a
notification on 17th October 1968 appointing the petitioner as temporary
District and Sessions Judge Singh bhum until the appointment of a permanent
officer in the vacancy caused by the retirement of an incumbent to that office.
This Court found that before issuing the said notification the Government never
attempted to ascertain the views of the High Court with regard to the
petitioner's claim or gave the High Court any indication of its views with
regard thereto. It was. observed that (p. 674) :
"The Governor cannot discharge his
functions under Art. 233 if he makes an appointment of a person without
ascertaining the High Court's views in regard thereto............
Consultation or deliberation is not complete
or effective before the parties thereto make their respective points of view
known to the other or others and discuss and examine the relative merits of
their views." Appointing respondent No. 2 as Kar Adhikari and merely sending
the papers relating to such appointment to the Public Service Commission would
not therefore be in compliance with s. 43 of the Act. Even if it be regarded as
a temporary appointment, it could only be effective for two years and as the
assessment in this case was made beyond that date it must be held that the
assessment was by a person not competent to make it.
(1)[1970] 2 S. C. R. 666.] 776 After the
conclusion of the arguments of both parties, the respondents had an affidavit
affirmed by one K. D. Banerjee, an Assistant in Panchayat Raj 11 Department,
Government of U. P. to the effect that the State Government had created a
Central transferable cadre of the class of officers, acting under s. 44 of Act
XY-XIII of 1961 and that the Government had also framed rules known as U. P.
Zila Parishad Central Transferable Cadre Rules, 1966 which came into force with
effect from December 20, 1966. According to paragraph 8 of the rules,
appointments for the first time to the cadre were to be made from amongst the officers
who on the 26th April 1966 were holding the posts, inter alia, Kar Adhikari.
Further, according to paragraph 9(4) of the
rules, a list known as List 'C' was to be prepared containing the names of
officers who as on 26th April 1966 are holding the posts of Secretary or Kar
Adhikari etc. in a temporary or officiating capacity and the list was to be
arranged in order of seniority. According to the affidavit the respondent No. 2
having been appointed in a temporary officiating capacity continued to be on
that post under sub-r. (4) of rule 9 and his name was included in list 'C' and
was being considered by the Government for permanent appointment in
consultation with the State Public Service Commission.
In our view the matters relied on in the
affidavit do not alter the situation or improve the position of respondent No.
2 in any way. The non-obstante clause in s. 44 of Act XXXIII of 1961 only
relates to sections 41, 42 and 43 and not to s. 47 which deals with officiating
and temporary appointments to certain posts. It would therefore appear that by
the inclusion of the name of respondent No. 2 in list 'C' he still continued to
be in his officiating and temporary capacity. In terms of s. 47 therefore the
appointment ceased to be valid after two years, the period having expired long
before the hearing of this matter.
No argument was advanced to us on the
question of the validity of s. 131 of the U. P. Zila Parishad Act and we do not
express any opinion thereon.
Although the major points raised by the
petitioners are of no substance, we find ourselves unable to uphold the
validity of the levy as it has not been shown to us that Kar Adhikari's
appointment was valid in law. The order of assessment of Rs. 2,000/on the
petitioners dated 25th March, 1968 will therefore be quashed. In view of the
divided success in the writ petition, we make no order as to costs.
G. C. Assessment order quashed.
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