The Pioneer Motors (Private) Ltd. Vs.
The Municipal Council, Nagercoil  INSC 24 (27 January 1961)
CITATION: 1967 AIR 684 1961 SCR (3) 609
Profession Tax--Provision for time before
levy, if mandatory--Reasonableness--Commissioner's powers, if can carry out
executive powers of the Municipality--" Profession ", definition
of--Travancore District Municipalities Act,1116 (Act XXIII of the Malayalam
year 1116), ss. 16, 78, 91.
The imposition of "profession tax"
by the respondent Municipal Council under the Travancore District
Municipalities Act (Act XXIII of the Malayalam year 1116) was challenged on the
grounds, inter alia (1) that the requisite notification was not published by
the Municipal Council but by its commissioner, (2) that the period of thirty
days which was given for filing objections to the imposition was insufficient
in law which required a period of " not less than a month ", and (3)
that this was a mandatory provision under the proviso to s. 78 of the Act.
Held, that under s. 16 the Commissioner being
the executive authority of the Municipal Council was authorised to give effect
to the resolutions of the Council and to perform all its executive duties.
The words " not being less than one
month " in the proviso to S. 78 implied the necessity for one clear
month's notice excluding the first and last day of the month, but the use of
the words " reasonable period " before the words " not being
less than one month " showed that the time given must be reasonable. In
view of the facts of the case the period allowed must be regarded as reasonable
and to have complied with the provision which is directory in its later part. Commissioner
of Income-tax v. Ekbal and Co.  13 I.T.R.
154 and Thompson v. Stimpson,  3 All
E.R. 500, distinguished.
Municipal Council, Cuddapah v. The Madras and
Southern Mahratta Railway Ltd. (1920) I.L.R. 52 Mad. 779, The Borough
Municipality of Amalner v. The Pratap Spinning, Weaving and Manufacturing Co.
Ltd., Amalner, I.L.R.  Bom. 918 and Kalu Karim v. Municipality of Broach
(1927) I.L.R. 51 BOM. 764, referred to.
610 The definition of " profession
" as given in s. 81 includes business.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 499 to 502 of 1958.
Appeals from the judgment and decree dated
July 13, 1956, of the former Travancore-Cochin High Court in A. S. Nos. 94, 95,
96 and 156 of 1952.
G. S. Pathak and G. C. Mathur, for the
appellants (in C. As. Nos. 499 to 501 of 58).
P. George and M. B. Krishna Pillai, for the
appellants (in C. A. No. 502 of 58).
T. N. Subramania Iyer, B. Ganapathy Iyer and
G. Gopalakrishnan, for the respondent.
1961. January 27. The Judgment of the Court
was delivered by KAPUR, J.-These four appeals are brought against the judgments
and decrees of the erstwhile High Court of Travancore-Cochin. The appellants
were the plaintiffs in the respective suits out of which these appeals have
arisen and the respondent was the defendant in all the suits. As all the suits
involve a common question of law, it will be convenient to dispose of them by
The facts of the cases are these. On
September 9, 1943, the Nagercoil Municipal Council the respondent, passed a
resolution under s. 78 of the Travancore District Municipalities Act (Act XXIII
of the Malayalam year 1116), hereinafter called the Act. By this resolution, it
was resolved to levy a profession tax at the rates specified in the schedule.
This was notified in the Government Gazette of September 26, 1943, under the
name of the Commissioner of the respondent Council. In this notification, it
was stated :" Any inhabitant of the local municipal town objecting to the
proposal may submit his objection in writing to this office within 30 days of
date of publication of this notification in the Government Gazette.
This notification was also published in a
local newspaper called the Abhimani. It does not appear, nor is there any
assertion or allegation that any 611 objection was raised to this tax by the
appellants or any one else. On January 12,,1944, a resolution under s. 79 of
the Act wag passed, by which the profession tax became payable from the
beginning of the second half of the Malayalam year 1119. A trust, Kottar Chetty
Ninar Desikavinayaga Swamy filed a suit on February 10, 1946, challenging the
legality of this tax. C.A. 502 of 1958 has arisen out of that suit. Amongst
other allegations, which are common to the other suits, which will be mentioned
presently, the trust pleaded that it was not carrying on a profession within
the meaning of the word used in the Act and that it was only a religious trust
and had no profession. That suit was tried by the Munsif and was decreed.
An appeal was taken against that decree to
the District Judge.
Three private limited companies carrying on
business brought three suits challenging the legality of the imposition of the
tax out of which the other three appeals, i.e., Civil Appeals Nos. 499 to 501,
have arisen. In these suits, it was alleged that the publication of the
resolution was not in accordance with the provisions of s. 78 of the Act in so
far as (1) it was not published by the respondent Municipal Council, but by the
Commissioner; (2) the newspaper in which the advertisement was published was
not selected by the Council; (3) time given in the notification was fixed not
by the Council, but by the Commissioner; and (4) the period prescribed in the
notification, that is, " within 30 days ", was not fixed by the
Council and was not in accordance with the Act. The respondent Municipal
Council denied these allegations and several issues were raised and the suits
were decreed. The appeal which had been taken in the suit by the Trust was also
decided in favour of that plaintiff.
The result was that all the suits and the
appeal were decided against the respondent Municipal Council. It took four
appeals to the High Court. The decrees were reversed and the suits of the
various plaintiffs were dismissed.
Against those judgments and decrees, these
four appeals have been brought by the plaintiffs, in the various suits, who are
now the appellants.
612 In Civil Appeals Nos. 499 to 501, Counsel
for the appellants has raised two points (1) that the publication was not by
the Council and (2) that the time given in the notification, i.e., "
within 30 days " was not in accordance with the law and as these were
conditions precedent to the legality of the resolution under s. 79 the
resolution was ultra vires and therefore the imposition of the tax was illegal.
It is, therefore, necessary to examine the various provisions of the Act upon
which the whole argument has proceeded.
Chapter VI of the Act deals with Taxation and
Finance. In s. 77 are enumerated the various taxes which can be levied by
Municipal Councils. Section 78 gives the procedure for the levying of the tax
and when quoted it is as follows:"S. 78. Resolution of Council determining
to levy tax or tolls.-Any resolution of a municipal council determining to levy
a tax or toll shall specify the rate at which any such tax or toll shall be
levied and the date from which it shall be levied:
Provided that before passing a resolution
imposing a tax or toll for the first time or increasing the rate of an existing
tax or toll, the council shall publish a notice in Our Government Gazette and
at least in one Malayalam or Tamil newspaper having circulation in the
municipality of its intention, fix a reasonable period not being less than one
month for submission of objections, and consider the objections, if any, received
within the period specified." (Italics are ours).
After the various steps given in s. 78 have
been taken, a Municipal Council has then to adopt the taxes proposed by means
of a resolution under s. 79, which provides :"S.79. Notification of new
taxes and tolls When a municipal council shall have determined subject to the
provisions of Section 78 to levy any tax or toll for the first time or at a new
rate the executive authority shall forthwith publish a notification in Our
Government Gazette and by beat of drum specifying the rate at which the date
from which, 613 and the period of levy, if any, for which such tax or toll
shall be levied." The functions of the executive authority, that is, of
the Commissioner of the Council are contained in s. 16 of the Act, which is as
follows :"S. 16. Functions of the Executive Authority.-The executive
authority of the municipal council shall(a) carry into effect the resolutions
of the council;
(b) furnish to the council such periodical
reports regarding the progress made in carrying out the resolutions of that
body in the collection of taxes as the council may direct; and (c) perform all
the duties and exercise all the powers specifically imposed or conferred on the
executive authority by this Act, and subject, whenever it is hereinafter
expressly so provided, to the sanction of the council, and subject to all other
restrictions, limitations and conditions hereinafter imposed, exercise the
executive power for the purpose of carrying out the provisions of this Act and
be directly responsible for the due fulfillment of the purposes of this
Act." Section 16, which contains the power of the executive authority,
does not support the contention of the appellants, because it provides that the
executive authority has to give effect to the resolutions of the council and
has to perform all duties specifically imposed on the executive authority by
the Act and can also exercise executive power for the carrying out of the
provisions of the Act and can act without sanction, unless the Act otherwise
Therefore, when the Commissioner of the
respondent council got published a notification of the resolution under s. 78
of the Act to impose a tax, he was acting within his powers and the fixing of
the time in which objection had to be made was provided under the Act and was
not exercise of authority by the executive which it did not possess.
The only serious question which arises for
decision is whether the period of " within thirty days " given"
in the notification was compliance with the provisions of the Act or not. If it
was not then is the period of 614 time mentioned a mandatory requirement, a
breach of which makes the tax illegal? Counsel for the appellants in the first
three appeals argued, and that argument was adopted by counsel for the
appellant in the fourth appeal, that the words used in the first proviso to s.
78 required that a clear period of one month had to be given for inviting
objections and as "within thirty days" was not a clear period of one
month, the provisions of the section had not been complied with. In support of
his contention that the provision as to time was a mandatory requirement, he
particularly stressed three words and phrases used in that proviso: (1)
"before passing a resolution " ; (2) " shall publish " ;
and (3) " fix a reasonable period not being less than one month for
submission of objections." The argument was that where these words are
used, the effect was that the requirements were mandatory and not merely
directory. It was submitted that the words "before" and ",shall
" provided that what was mentioned in the proviso were conditions
precedent for giving power to the Municipal Council to pass a resolution under
a. 79 and when those two words were read along with " not being less than
one month ", it was a clear indication of the mandatory nature of the
requirements of the section.
Quite a number of cases were relied upon by
Counsel and besides this it was also emphasized that ss. 78 and 79 concerned
taxing matters and as the liability of the taxpayers arises after the tax is
legally imposed, strict compliance with the provisions was necessary. It is not
necessary to discuss all the cases on which reliance was placed.
The words " not being 'less than one
month " do imply that clear one month's notice was necessary to. be given,
that is, both the first day and the last day of the month had to be excluded.
To put it in the language used by Maxwell on Interpretation of Statutes, 10th
Edition, p. 351 :"..when........ not less than' so many days are to
intervene, both the terminal days are excluded from the computation," 615
That does not seem to have been done in the present case.
But in order to decide whether this portion
of the proviso is a mandatory provision, it is convenient to see the object for
which it has been enacted. Under s. 78, the procedure is laid down for the
levying of a. new tax, which has to be done by a resolution. But in the
proviso, it is stated that before such a resolution can be passed, a notice to
that effect has to be published in the official gazette and also in one
Malayalam or Tamil newspaper having circulation within the municipality. Then
comes the period for inviting objections. The object of notifying in the
Gazette and Local Newspaper is both to give notice to the public and particularly
to the persons who are likely to be taxed and to invite their objections. For
this purpose, the proviso requires a reasonable period of not less than one
month to be given. The object of the provision is to give reasonable time and
opportunity and it is given as guidance that reasonable time would be a month.
The use of the words "I reasonable period" before the words, not
being less than one month " is significant. If sufficient time has been
given for the invitation of the objections which only just falls short of the
period mentioned in the proviso, then it would serve the object of the
legislature. The provision in regard to time in the context must be held to be
directory and not mandatory.
The cases under the Income-tax Act like the
Commissioner of Income-tax v. Ekbal and Co. (1) where the notice under s. 22(2)
of the Income-tax Act (which requires the furnishing of a return within such
period not being less than thirty days) of 30 days only was held to be bad,
because it was not a notice of thirty clear days, were so decided because that
notice is the basis of the jurisdiction to tax, and a legal notice is an
obligation imposed in order to tax an individual and it is a mandatory
provision. Similarly, cases under Rent Act will also not apply. In Thompson v. Stimpson
(2) the law required that not less than four (1) 13 I.T.R. 154.
(2)  3 All E.R. 500, 79 weeks' notice
shall be given for vacation of premises on a weekly tenancy and only one week's
time was given. It was held there that it was a bad notice. It was further held
that four weeks' notice was a condition precedent and the words had been used
which had been interpreted in the past as providing for four clear weeks and
also it was construed as four clear weeks, so that there might be certainty in
the matter. In other cases, that were relied upon and which related to taxing
statutes, the Municipal Council, Cuddapah v. The Madras and Southern Mahratta
Railway Ltd. (1), The Borough Municipality of Amalner v. The Pratap Spinning,
Weaving and Manufacturing Co. Ltd., Amalner (2) and Kalu Karim v. Municipality
of Broach (3) ; it was held that taxing statutes have to be strictly construed
and requirements which are precedent to the imposition of the tax have to be
complied with before tax can be legally imposed. In every case the words have
to be construed in the context taking into consideration the language used and
the object to be achieved. As we have said above, the use of the words "
not being less than one month " implies the giving of a clear month
excluding both the first and the last day of the month. There is no dispute as
to the meaning of that expression alone which has been so construed and the
observations of Lord Parker in Thompson v. Simpson (4) will apply. But the
question that arises in the present case is: what is the exact significance of
these words when used in the context of the other words used in the proviso.
The power of the municipality to levy the tax
does not depend upon a period prescribed for notice for objections.
The power to tax is derived from the Statute;
the provisions relating to the length of notice inviting objections and
publication are merely procedural. The object of the notification is to inform
the future rate payers and to invite objections from them. The proviso itself
uses words " reasonable time"'. Reading " reasonable time "
and " not being less than one month" together, it is clear that the
(1) (1929) I.L.R. 52 Mad. 779.
(2) I.L.R.  Bom. 918 (3) (1927) I.L.R.
5r Bom. 764.
(4)  3 All E.R. 500.
617 time given must be reasonable and the
legislature has only added a guide so that periods shorter than a month may not
be fixed. In the present case the whole of the period except one day has been
fixed and in view of the other facts it must be regarded as reasonable and to
have complied with the provision which is directory in its later part.
Counsel for the appellants in C. A.
499/501/58 wanted to raise a further objection to the legality of the tax
levied and that ground was that the appellants were not carrying on a
profession as they were only engaged in motor business and trade. This question
was never raised at any previous stage and was not taken in the statement of
the appellants' case.
Therefore, it cannot be allowed' to be
raised. Besides it is without any substance in view of the definition of
profession as given in s. 91 of the Act, which includes business. In our
opinion, the High Court ,Was right in so holding and the three appeals Nos. 499
to 501 of 1958 are dismissed with costs, one hearing fee.
Coming now to Civil Appeal No. 502 of 1958,
in the plaint it was alleged that the trust was a religious trust and was
following no profession and therefore it did not fall within the definition of
the word " profession " as used in s. 91 of the Act. The defendant
joined issue and the matter was put in issue in the following form:
"Is the taxation by defendant of
plaintiff illegal and in contravention of the provisions of the District
Municipalities Act ?" Although no specific finding was given as regards
the operation of s. 91, the suit was decreed and the question whether the trust
followed a profession or not seems to have got lost at the subsequent stages of
the proceedings, that is, in appeal in the court of the District Judge and in
the High Court. It is this point which was urged by counsel for the trust; his
plea was that his case was not covered by s. 91, as being a religious trust it
had no profession and was carrying on none. That is a matter which, in our
opinion, should have been decided, and as neither the District 618 Judge nor
the High Court has given a finding on that point, it is necessary to remit the
case to the High Court with the direction that the appeal be reheard and that
particular question be decided on the materials on the record.
Nothing that has been said in this judgment
must be taken to be an expression of opinion on the merits of this plea taken
by the appellant Trust.
Appeal No. 502 of 1958, is therefore, allowed
and the case remitted to the High Court for decision. The costs in this Court
and in the High Court will abide the decision of the appeal in the High Court.
Appeals nos. 499 to 501 dismissed.
Appeal no. 502 allowed. Case remitted.