The Amalgamated Coalfields Ltd. &
Ors Vs. The Janapada Sabha, Chhindwara  INSC 45 (10 February 1961)
RAJAGOPALA AYYANGAR, N. RAJAGOPALA SINHA,
BHUVNESHWAR P.(CJ) DAS, S.K.
GUPTA, K.C. DAS
CITATION: 1961 AIR 964 1962 SCR (1) 1
CITATOR INFO :
R 1964 SC 207 (14) R 1964 SC1013
(3,6,8,13,18,24) R 1965 SC1150 (9) RF 1971 SC 57 (3) RF 1977 SC1680 (7)
Coal Tax-Legality of-Local Legislature
authorising such levy by local authority Legislative competence-Central
Provinces Local Self-Government Act 1920 (C. P. 4 Of 1920), s. 51Government of
India Act,1915 (5 & 6 Geo. 5, Ch. 61), ss. 80A(3), 81(1)(3), 84(2)Government
of India Act, 1935 (26 Geo. 5, Ch. 2), S. 143-Constitution of India Art 227.
Section 51 of the Central Provinces Local
Self-Government Act, 1920 empowered a district council, subject to the previous
sanction of the local Government, to impose "any tax, toll or rate, other
than those specified in SS. 24, 48,49, and 50." On March 12, 1935, an Independent.
Mining Local Board functioning in the area in which the petitioners were
working certain mines situated therein, and having vested in it all the powers
of a district council, resolved to impose a tax on coal, coal-dust and coke
manufactured at the mines or sold within the territorial jurisdiction of the
Board. The petitioners who were served with notices of demand requiring them to
pay certain sums of money as the tax due by them for despatches of coal from
their mines, challenged the legality of the levy of the tax on the grounds,
inter alia (1) that the Act which by S. 51 authorised the imposition of the
tax, had been passed by the local legislature without the previous sanction of
the Governor-General, thereby contravening S. 80A(3) of the Government of India
Act, 1915, and that even if it was found that the Act was validly passed before
the coming into force of the Government of India Act, 1919, which introduced S.
80A into the Act of r 1915, the power
conferred by S. 51 to levy tax was exercised only in 1935 and by that date S.80
A had been introduced into the Government of India Act,1915, and that
thereafter there could be no legal imposition of a tax without the previous
sanction of the Governor-General being obtained, (2) that S. 51 Of the Central
Provinces Local Self Government Act, 1920, on its language and in the context
of other provisions referred to in that section, did not authorise .the levy of
a tax of the nature of the coal tax, and (3) that, in any case, the tax ceased
to be legally leviable after the coming 2 into force of the Government of India
Act, 1935, and of the Constitution of India, since a tax like that in question
could be in posed only by the Central Government.
Held: (1) that the Central Provinces Local
Self-Government Act, 1920, having received the assent of the GovernorGeneral,
its validity cannot be challenged in view of the saving clauses in the proviso
to s. 80A(3) and s. 84(2) of the Government of India Act, 1915.
(2) that the validity of Central Provinces
Local Self Government Act, 1920, when enacted, not being open to any objection
under the Government of India Act, 1915, any subsequent amendments to the
latter Act could not in any manner affect its continued validity and operation.
(3) that on the proper construction Of s. 51
of the Act of 1920, the levy of a coal tax is not excluded from the purview of
the local authority.
(4) that the continued levy of the tax in
question even after the coming into force of the Government of India Act, 1935,
and the Constitution of India, is valid in view of s. 143 Of the Act of 1935
and Art. 227 of the Constitution.
ORIGINAL JURISDICTION: Petition No. 31 of
Petition under Art. 32 of the Constitution of
India, for enforcement of Fundamental Rights.
M. C. Setalvad, Attorney-General of India, S.
N. Andley, J. B. Dadachanji, Pameshwar Nath and P. L. Vohra, for the
B. Sen and I. N. Shroff, for the respondent.
1961. February 10. The Judgment of the Court
was delivered by AYYANGAR, J.-This petition under Art. 32 has been filed
impugning the validity of two notices of demand served on the petitioners
requiring them to pay what has been compendiously described as "coal
tax" by the respondent, which is a Local Board constituted under the Central
Provinces & Berar Local Government Act, 1948 (C. P. & Berar Act XXXVIII
of 1948). The ground of challenge is that there was no legislative power for
the levy of the tax and that consequently the fundamental rights of the
petitioners under Art. 19(1)(f) and (g) are being violated.
It may be stated at the outset that the tax
now impugned has been imposed by the local authority, 3 from March 12, 1935 and
that the first occasion when its validity was attacked was in only 1957, though
if the petitioners are right in their submissions their acquiescence might not
itself be a ground for denying them relief Before however we set out the points
urged by the learned Attorney-General in support of the petition, it would be
convenient if we narrate briefly the history of the levy of this tax.
Section 51 of the Central Provinces Local
Self Government Act, 1920 (C. P. Act IV of 1920), which will be referred to
hereafter as the Act, ran:
"51(1). Subject to the provision of any
law or enactment for the time being in force, a district council may, by a,
resolution passed by a majority of not less than two-thirds of the members
present at a special meeting convened for the purpose, impose any tax, toll or
rate other than those specified in sections 24, 48, 49 and 50.
(2). The first imposition of any tax, toll or
rate under sub-section (1) shall be subject to the previous sanction of the
local Government." The petitioners are working certain mines situated in
the district of Chhindwara and for the area covered by the mines an Independent
Mining Local Board was constituted in or about 1926 and such Boards are
included in the definition of a Local Board under the Act and they have vested
in them all the powers of a District Council. This Mining Board, after
obtaining the previous approval of the local Government, passed on March 12,
1935, by the majority requisite under E;. 51(1) of the Act a resolution to
impose a tax on coal, coal-dust and coke in the following terms:
"The tax shall be levied at the rate of
three pies per ton on coal, coal dust or coke, manufactured at the mines, sold
for export by rail or sold otherwise than for export by rail within the
territorial jurisdiction of the Independent Mining Local Board." The tax
has been levied and collected ever since.
The Local-Self Government Act of 1920 was
repealed and reenacted by the Central Provinces & Berar Local Government
Act, 1948, but nothing turns on 4 this, because the later enactment and certain
amendments made subsequently contain provisions for the continuance of the
Local Boards constituted under.. the repealed enactment and for the continued
exigibility of the taxes and ceases in force at the date of the commencement of
the Act of 1948.
The respondent was, as stated earlier,
constituted under the Act of 1948 and is admittedly the successor of the Independent
Mining Board which imposed the tax by its resolution dated March 12, 1935, and
is legally entitled to continue the levy if the original imposition was valid.
There is only one other matter to be mentioned at this stage, viz., that the
rate of duty which, as seen from the resolution extracted earlier, was 3 pies
per ton when imposed in 1935 was raised by the local body to 9 pies per ton in
1949, this being the rate which now prevails. On August 23, 1958, the Chief
Executive Officer of the respondent-Sabha served two notices of demand on the
first and second petitioners requiring them to pay sums of Rs. 21,898.64 and
Rs. 11,83809 respectively as the tax due by each, for despatches of coal from
their respective mines for the period January 1, 1958, to June 30, 1958. It is
the validity of these notices that is impugned in this petition.
The submissions of the learned
Attorney-General were three:
(1) The levy of the tax by the Independent
Mining Board was invalid at the date of its original imposition in 1935, and
consequently the respondent-Sabha its successor-obtained no authority to
continue the same.
(2) Assuming the levy was valid when
originally imposed, it ceased to be legal after the coming into force, first of
the Government of India Act, 1935 and later of the Constitution of India in
1950 under which the tax in question or some portions of it became exclusively
leviable by the Central or Union Government and would not be covered by the
saving as to previously existing taxes in s. 143 of the Government of India
Act, 1935, and subsequently of Art. 277 of the Constitution.
5 (3) Assuming further that the provision
contained in s. 143 of the Government of India Act covered the tax, the
protection afforded by it or the continuance for which it provided, is only for
a tax at the rate of 3 pies per ton prevailing before the commencement of the
Government of India Act (April 1, 1937), and the increase in the rate to 9 pies
per ton in 1949 rendered the levy and the demand illegal either in whole or at
least in part.
We shall now proceed to deal with these
points in that order:
(1) That the imposition of the tax by the
Independent Mining Board by resolution dated March 12, 1935, was invalid. This
was sought to be rested on three distinct grounds:
(a) that the levy of the tax was in
contravention of s. 80A(3) of the Government of India Act, 1915. Section 80A(3)
enacted, to quote only the part material:
"The local legislature of any province
may not, without the previous sanction of the Governor-General, make or take
into consideration any law(a) imposing or authorising the imposition of any new
tax unless the tax is a tax scheduled as exempted from this provision by rules
made under this Act; or " The taxes now impugned are not within those
enumerated in the schedules to the Scheduled Taxes Rules and hence the previous
sanction of the Governor-General was required before a bill authorising the
levy of the tax could be taken into consideration. And the Act which by a. 51
authorised the imposition of the tax, had been passed by the local legislature
without the previous sanction of the Government having been obtained.
The petition as filed setting out this
contention proceeds on the basis that the Act was passed after the Government
of India Act, 1919, by which s. 80A was introduced into the Act of 1915 came
into force. If ,that had been the correct position, the proviso to ,S. 80A(3)
6 "Provided that an Act or a provision
of an Act made by a local legislature, and subsequently assented to by the
Governor-General in pursuance of this Act, shall not be deemed invalid by
reason only of its requiring the previous sanction of the Governor-General
under this Act." would be a complete answer to the above objection, since
under the Government of India Act, 1915, before and after its amendment in
1919, every bill passed by a local legislative council had, after receiving the
assent of the Governor, to be transmitted to the Governor-General and could
become law only after the latter had signified his assent (Vide s. 81(1) &
(3) of the Act). That the GovernorGeneral had assented to the Act under this
provision was never in dispute. The saving contained in the proviso is, it
should be noticed, in addition to the general saving contained s. 84(2) of the
Government of India Act (to read only the material words): "...the
validity of any Act of..
any local legislature shall not be open to
question in any legal proceedings on the ground that the Act affects ... a
central subject" which is of wider import and designed to remove all
questions of legislative competence of the type now put forward from the
purview of Courts.
At the stage of the arguments, however, it
was found. that the Act had become law even prior to the coming into force of
the Government of India Act, 1919, with the result that the contention raised
in the petition based on s. 80A(3) could not be urged. From the recitals at the
beginning of the Act it was found that the previous sanction of the
Governor-General had been obtained to the introduction of the measure in the
Local Legislature under s. 79(2) of the Government of India Act, 1915-i.e.,
before s. 80A(3) introduced into the Government of India Act, 1919, was brought
The learned Attorney-General, therefore,
modified his argument and presented it in this form: No doubt when s. 51 of the
Act was enacted, it was within the competence of the Local Legislature. But the
power conferred by that section to levy the tax was exercised 7 only in 1935 and
by that date s. 80A had been introduced into the Government of India Act and
thereafter there could be no local imposition of a tax, not included in the
Scheduled Taxes Rules without the previous sanction of the Governor-General
being obtained. We consider this argument wholly without force. The validity of
s. 51 of the Act, when enacted, not being open to any objection under the
Government of India Act, 1915, the amendments effected to the Government of
India Act, 1915, by the Act of 1919 did not in any manner, or to any extent,
expressly or even by implication affect or trench upon the continued validity
and operation of that section. Obviously, s. 80A(3) was only concerned to lay
down the preliminaries for enacting a law after that provision came into force
and after a law has once been enacted and is in operation, there is no question
of the procedure laid down for bills being attracted. This apart, all
controversy is set at rest and any argument of the type now urged is precluded
by r. 5 of the Scheduled Taxes Rules which runs:
"Nothing in these rules shall affect the
right of a local authority to impose a tax without previous sanction or with
the previous sanction of the local Government when such right is conferred upon
it by any law for the time being in force." The submission therefore that
before the power conferred by s. 51 of the Act, the previous sanction of the Governor-general
had to be obtained or that there must be fresh legislation, must be rejected.
(b) The second matter urged under this head
was based on the meaning to be given to the opening words of s. 51 of the Act:
"Subject to the provision of any law or enactment for the time being in
force". it was suggested that the provision contained in a. 80A(3) of the
Government of India Act read with the Scheduled Taxes Rules framed under that
section constituted "a law for the time being in force" to ,which the
power to levy the tax was subject. In the first place, it is clear that a law
like that which is found in s.
80A(3) prescribing a procedure for enacting
future Acts of the Local Legislature could not be 8 comprehended within those
words. But even if it did, in the face of r. 5 of the Scheduled Taxes Rules,
the construction suggested could have no basis.
(c) The last reason assigned for disputing
the validity of the original imposition of the tax, was that s. 51 of the Act
on its language and in the context of the other provisions referred to in that
section, did not authorise the levy of a tax or cess of the nature of the
We are wholly unable to accept this argument.
The relevant words of s. 51 are:
"impose any tax, toll or rate other than
those specified in sections 24, 48, 49 and 50".
It is not suggested that "the coal
tax" is one specified in any of the sections set out, and hence there was
power to levy any other tax including that which is now impugned.
The learned Attorney-General however
suggested that the tax authorised by s. 51 should still be somewhat like the
taxes referred to in the other sections, though not identical with them.
Obviously, in the face of the words "other than those..." the rule of
ejusdem generis is contra-indicated and if so on no rule of construction could
"the coal tax" be excluded from the purview of the local authority.
We, therefore, hold that the original
imposition of the tax in 1935 was valid.
(2) The next question is: has the tax ceased
to be legally leviable by reason of the coming into force of the Government of
India Act, 1935 and of the Constitution? Both these constitutional enactments
contain express provisions whereby taxes, cesses, etc., which were previously
lawfully levied by local authorities for the purposes of their local areas,
might continue to be collected and applied for the same purposes
notwithstanding that those taxes could thereafter be imposed only by the
Central or the Union Government, as the case may be (Vide s. 143 of the
Government of India Act, 1935, and Art. 277 of the Constitution). The objection
therefore that "coal tax" or some of the components of it, could have
been imposed only by the Central Government or the Union Government is no
ground for impugning the continued validity and exigibility of the tax. It is
needless to add that if the 9 tax fell within the Provincial or the State List,
the levy would be valid under s. 292 of the Government of India Act and Art.
372 of the Constitution even without the aid of the special provision in s. 143
or Art. 277. In view of those considerations the learned Attorney-General did
not address us seriously on this point.
(3) The last point urged was as regards the
validity of the increase in the rate of tax to 9 pies per ton effected in 1949,
i.e., after the commencement of Government of India Act, 1935. This objection
was not even hinted in the petition now before us, and we did not consider it
proper to permit petitioners to raise the point.
The result is that the petition falls and is
dismissed with costs.