Rama Krishna Ramanath Vs. The Janpad
Sabha, Gondia [1962] INSC 45 (7 February 1962)
07/02/1962 AYYANGAR, N.
RAJAGOPALA AYYANGAR, N. RAJAGOPALA AIYYAR, T.L. VENKATARAMA SINHA, BHUVNESHWAR
P.(CJ) SUBBARAO, K.
MUDHOLKAR, J.R.
CITATION: 1962 AIR 1073 1962 SCR Supl. (3) 70
CITATOR INFO :
R 1964 SC1013 (14) AFR 1964 SC1166 (6) RF
1991 SC1676 (70,59)
ACT:
Legislative Power-Terminal Tax-Imposition by
District Council under Provincial Statute-Constitution Act Placing tax in
Federal Legislative List-Saving provision-Power of Provincial Legislature to
continue tax C.P. and Berar Local Self Government Act, 1920 (C. P. 4 of
1920)-C.P. and Berar Local Government Act, 1948 (C.P.38 of 1948).s.192-C.P. and
Berar Local Government (Amendment) Act, 1949 (C.P. 32 of 1949)-Government of
India Act, 1045 (36 Geo. 5 Ch. 2. s. 143 (2).
HEADNOTE:
Under the C. P. and Berar Local Self
Government Act 1920, the District Council of Bhandara. in 1925, imposed a
terminal tax on the export of bidis and bidi leaves by rail out of Bhandara
district. By the Government of India Act, 1935, terminal tax was included in
the Federal Legislative List but s. 143 (2) of the Act provided that such a tax
which was being lawfully levied under a law in force on January 1, 1935, may
continue to be levied until provision to the contrary was made by the Federal
Legislature. The District Council continued to leave and collect the tax. In
1948 the C P. and Berar Local Government Act, 1948, came into force which
repealed the 1920 Act. It replaced the District Council, Bhandara, with three
janapada Sabhas.
Clause (c) ;of the proviso to the saving
section s. 192 provided that 'all rates, taxes and cesses due to the District
Council shall be deemed to be due to the Sabha to whose area they pertained, 71
By an amending Act of 1949 the Provincial Legislature replaced cl. (b) of the
proviso to s. 192 by a new cl. (b) which, inter alia, continued in force all
taxes which were in force immediately before the commencement of the 1948 Act,
this amendment was given retrospective effect from the commencement of 1948
Act. The appellant contended that the 1948 Act which repealed the 1926 Act did
not save the terminal tax, and once the tax was discontinued the Provincial
Legislature had no power left to impose it afresh and that the amendment was
accordingly beyond its legislative competence_. The respondent contended that
s. 143 (2) of the Government of India Act, 1935. vested in the Provincial
Legislature plenary power to legislate in respect of every tax which was being
lawfully levied in the province, that cl. (c) of the proviso to s. 192 of the
1948 Act saved the tax and that the amendment was validly made and it saved the
tax with retrospective effect from the date of the repeal of the 1920 Act.
Held, that the terminal tax was validly
continued by the retrospective amendment of cl. (b) to the proviso of s. 192 of
1948 Act. Section 143 (2) of the Government of India Act, 1935, did not confer
upon the Provincial Legislature any plenary power of legislation in respect of
taxes which were being validly imposed. But it did confer upon the Provincial
Legislature a limited legislative power to enact a law with reference to the
tax levy so as to continue it.
The power of the Provincial Legislature to
repeal the 1920 Act which imposed the tax was co-extensive with its power to
enact such a law. In exercise of this limited legislative power the Provincial
Legislature was competent to enact the Amending Act of 1949.
Attorney-General for Ontario v.
Attorney-General for the Dominion, [1896] A.C. 348, referred to.
Clause (c) of the proviso to s. 192 of the
1948 Act did not save the future imposition of the tax; it merely provided for
the collection of taxes already accrued in favour of the District Councils by
the successor Sabhas. The words in this clause "due to the District
Council" referred only to taxes which had accrued on the date of the
repeal of the 1920 Act and did not include taxes which accrued later and became
payable subsequent to that date. The subsequent amendment of 1949 could not be
take a into account in construing cl. (c) and for determining the intention of
the legislature.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 188 to 191 of 1956.
72 Appeals from that judgment and decree
dated April 13, 1955, of the former "Nagpur High Court in Civil Suits Nos.
3, 4, 9 and 10 of 1955 (Original Nos. M.C.C. 194, 195, 200 and 202 of 1954).
M. C. Setalvad, Attorney-General .for India.
A. V. Viswanatha Sastri, J. V. Jakatdar and I. N'. Shroff, for the, appellant
(in C. A., No. 188 of 56).
H. N. Sanyal, Additional Solicitor General of
India, and G. C. Mathur, for the respondent (in C. A. No. 188 of 56).
J. V: Jakatdar and 1. N. Shroff for the
appellants (in C. As. Nos. 189 to 191 of 56).
S. T. Desai and G. C. Mathur, for the
respondent (in C. A. No. 190 of 56).
G. C. Mathur, for the respondent (in C. As.
Nos. 189 and 191 of 56).
1962. February 7. The Judgment of the Court
was delivered by AYYANGAR, J.-Section 143(2) of the Government of India Act,
1935 enacted.
"43(2). Any taxes, duties, cesses or
fees which, immediately before the commencement of Part III of this Act, were
being lawfully levied by any Provincial Government, municipality or other local
authority or body for the purposes of the Province, municipality, district or
other local area under a law in force on the first day of January, nin eteen
hundred and thirty-five, may, notwithstanding that those taxes, duties, cesses
or fees are mentioned in the Federal Legislative List, continue to be levied
and to be applied to the same purposes until provision to the contrary is made
by the Federal Legislature." The precise import, significance and effect
of the 73 words "continue to be levied and to be applied to the same
purposes until provision to the contrary is made by the Federal
Legislature" is the common question which arises in these four appeals
which come before us by virtue of certificates under Art. 132 of the
Constitution granted by the High Court of Madhya Pradesh at Nagpur.
Section 51 of the Central Provinces and Berar
Local Self Government Act, 1920 enacted :
"51. (1) Subject to the provisions 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)....................................................
(3)...................................................
By virtue of the power thus conferred the
District Council of Bhandara which was "a local authority"
constituted under this Act of 1920 imposed a tax on the export of bidis and
bidi-leaves by rail out of the Bhandara district by a resolution dated May 14,
1925, as amended by another dated April 18, 1926. The tax was at the rate of 4
annas per maund on bidis and 2 annas per maund on bidi leaves. The Local
Government framed rules for the collection of the tax under s. 79 of the Act of
1920, and the said tax was being collected by this local authority on April 1,
1937, when Part III of the Government of India Act came into force. It is now
common ground that the tax thus levied and collected was "a terminal tax
on goods carried by railway" covered by entry 58 in the Federal,
Legislative List-List I in the Seventh Schedule to the Government of India Act
of 1935.
The result of this tax being in the Federal
Legislative List, it is manifest, is that the Provincial Legislature 74 could
not thereafter freshly impose such a tax under its legislative power. By reason
of the provision however of s. 143 (2) of the Government of India Act, 1935,
extracted earlier, the local authority continued to retain the authority to
levy and collect the said tax and the tax continued to be collected by the
District Council even after April 1, 1937 when Part III of the Government of
India Act came into force. While so, the Central Provinces and Berar Local Self
Government Act, 1920, was repealed and was replaced by the Central Provinces and
Berar Local Government Act, 1948, which came into force on June 11, 1948.
District Councils which were the units of local government administration under
the Act of 1920 were replaced by Janpads which comprised smaller areas and as a
result the area which was under the jurisdiction of the District Council of
Bhandara under the Local Self Government Act of 1920, came to be constituted
into three Janpads, viz., those of Gondia, Bhandara and Sakoli these being the
three Tahsils comprised in the district and the three Janpads were administered
by three Janpad Sabhas formed under the Act of 1948. There were provisions in
the later enactment providing for continuity in the powers to be exercised by
the District Councils whom the former replaced. But what is of relevance to the
points arising in the present appeals are those contained in a. 192 of the Act
of 1948 which, as originally enacted, ran "On and from date on which this
Act comes into force, the Central Provinces and Berar Local Self Government
Act, 1920, shall be repealed :
Provided that (a) all local authorities
constituted under the said Act shall continue to function thereunder for such
time till the constitution of 75 the Sabhas as the Provincial Government may,
by notification, specify;
(b) all rules and bye laws made, all notifications
published, all orders issued and all licences and permissions granted under the
said Act and in force immediately before the commencement of this Act shall, so
far as they are consistent with this Act, be deemed to have been respectively
made, published, issued and granted thereunder;, (c) all rates, taxes and
cesses due to the district Council or Local Board shall be deemed to be due to
the Sabha to whose area they pertain; and (d) all references made in any Act of
the Provincial Legislature to the said Act shall be read as if made to this Act
or to the corresponding provision thereof." Pausing here, two matters
which figured largely in the arguments require to be noticed in the provisions
of this section. The first is that there was an express repeal of the Local
Self Government Act of 1920 effected by the main part of the section. The
second is that the repeal was not absolute and unconditional but was modified,
by a saving which continued the operation of certain of the provisions of the
repealed Act. But the terms in which the right to collect the rates, taxes and
cesges was continued in favour of the Janpad Sabhas which replaced the District
Councils under cl. (c) was capable of being construed as not enabling the
future imposition of the rate, cess etc, by the Janpad sabhas. The scope and
meaning of this clause which is one of the principal matters to be considered
in these appeals we shall reserve for later consideration but at this stage it
might be mentioned that the clause is certainly capable of being understood as
transferring to the Sabhas only 76 the right to collect the rates, taxes or
cesses which had accrued due to the District Councils which had remained unpaid
on the date when by virtue of the first part of 192 the Act of 1920 stood
repealed and the District Councils ceased to exist. If this were the proper
meaning of this clause it is obvious that the Janpad Sabhas could no longer
levy the terminal tax oil bidis and bidi-leaves where the export was effected
on or after June 11, 1948, on which date by virtue of the Act of 1948, coming
into force the earlier Act of 1920, stood repealed.
The Janpad Sabhas were, however, continuing
the levy and the Provincial Legislature sought to put the matter beyond doubt
by an amending Act of 1949 by which cl. (b) of the proviso to s. 192 was
replaced by a new clause reading:
""All rules and bye laws and orders
made, notifications and notices issued, licences and permits granted, taxes
imposed or assessed, ceases (other than additional cesses imposed in accordance
with section 49 of the said Act), fees, tolls or rates levied, contracts
entered into and suits instituted and proceedings taken under the said Act and
in force immediately before the commencement of this Act shall continue to be
in force and in so far as they are not inconsistent with this Act, they shall
be deemed to have been respectively made, issued, granted, imposed or assessed
levied, entered into, instituted and taken under this Act until new provisions
are made tinder the appropriate provisions of this Act." and by s. 39 of
the Amending Act this amendment was given retrospective effect from the
commencement of the Local Government Act of 1948. It was not in dispute that if
the terms of el. (b) as amended by the Act of 1949 had found a place in the
Local Government Act of 1948 when originally enacted. the levy of this tax by
the Janpad Sabhas would 77 have been valid. It is only necessary to add that if
this tax had been lawfully levied by the Janpad Sabhas immediately before
January 26, 1950, they could continue to be levied after Constitution came into
force notwithstanding the repeal of the Government of India Act by the
Constitution and notwithstanding terminal taxes being a tax solely leviable by
the Union List in Sch. VII) by reason of the provision contained in Art. 277 of
the Constitution reading:
"277. Any taxes. duties, ceases or fees
which, immediately before the commencement of this Constitution, were being
lawfully levied by the Government of any State or by any municipality or other
local authority or body for the purposes of the State, municipality, district
or other local area may, notwithstanding that those taxes, duties, ceases or
fees are mentioned in the Union List, continue to be levied and to be applied
to the same purposes until provision to the contrary is made by Parliament by
law." It would thus be seen that in order to sustain the claim, of the
respective Janpad Sabhas who are the respondents in these four appeals to continue
to lawfully levy the terminal tax it should be established either that cl, (c)
to the proviso to a. 192 enabled them to do so or that the amendment effected
to proviso (b) to a. 192 of the Act of 1948 was validly enacted.
Before considering this question it would be
of advantage if we set out the facts of the cases under appeal. It is
sufficient to refer to the facts in Civil Appeal 188 of 1956 because, except
for the identity of the appellants and the amounts involved, the matter in
controversy is exactly similar, Rama Krishna Ramanath-appellant in Civil Appeal
188 is a proprietary concern carrying on business, alia, in manufacturing and
selling bidis. In the 78 course of that business they export bidis to various
places outside the territorial limits of the Janpad Sabha, Gondia.
The Janpad Sabha, Gondia demanded and
collected taxes when the export took place from railway stations within its
territorial jurisdiction. Between January 26, 1950, and June 30, 1952, the
respondent Sabha had collected tax totaling Rs. 3,818/15/3, the appellant
concern contending that from the date of the coming into force of the
Constitution the imposition and collection of the terminal tax by the
respondent Sabha was illegal, because the right to levy terminal taxes was vested
exclusively in the government of the Union under entry 89 in the First List to
the 7th Schedule to the Constitution and sought the refund of this sum of tax
from the respondent Sabha and also required that it should desist from
continuing the imposition and levy of this tax, and when the request was not
needed, served notice on the Sabha. In consequence of this notice though the
Sabha discontinued the collection of the tax, it refused to refund the tax
already collected. Thereupon the appellant instituted a civil suit in the court
of the Civil Judge at Gondia praying for a decree for the sum of Rs. 3,818/15/3
and costs. The suit was resisted and thereafter this along with several similar
suits including three by the appellants in the other three appeals were all
withdrawn to the High Court under Art. 228 of the Constitution for deciding the
substantial question of law as to the interpretation of the Constitution and of
the Government of India Act as to whether the levy of the tax by the respondent
Sabha was lawful or not These suits were consolidated and were disposed of by a
common judgment dated April 13, 1955, by which all the suits were dismissed but
a certificate was granted under Art. 132 of the Constitution.
On the strength of the certificate four of
the aggrieved plaintiffs filed appeals to the Courts and that is how the matter
is before us.
79 Before considering the submissions made to
us by the learned Attorney-General for the appellant it would be convenient to
state the exact factual position relating to the levy of the impugned tax :
(1)The tax being one on goods exported out of
the local area by-rail would answer the description of a terminal tax falling
within the exclusive jurisdiction of the Central Legislature under the
Government of India. Act, 1935. The position has continued to be the same under
the distribution of legislative power in relation to taxes under the
Constitution. The result would, therefore, be that but for the saving contained
in s. 143(2) of the Government of India Act, 1935 it would not have been
legally competent for the local authority to continue to levy the tax after the
Government of India Act came into force ; similarly but for Art. 277 that levy
could not have been continued beyond January 26, 1950. On the facts stated earlier
it would be seen that the right of the local authority to levy the tax would be
ultimately dependent on the same being authorised by s. 149(2) of the
Government of India Act.
(2)The, tax that was sought to be levied by
the respondent Sabhas and which was challenged as unauthorised and illegal was
identical in the incidence as the tax which the District Council of Bhandara
lawfully levied, just prior to the commencement of Part III of the Government
of .India Act, 1935. By incidence we mean the subject matter of the tax, the
taxable event as well as the rate of the duty. In other words, the tax now
sought to be levied and that which was lawfully imposed and collected prior to
April 1, 1937 were exactly identical in their effect and operation.
Similarly there was no controversy as regards
either the identity of the area in aid of whose local administration the tax
*as now sought to be collected, nor as regards the purposes for which they 80
were utilised as compared with what prevailed on April 1, 1937.
The principle contention however, raised on
behalf of the appellant before the High Court was based upon a denial of the
identity of the authorities-three Janpad Sabhas with the District Council,
Bhandars which levied and collected the tax prior to April 1, 1937. The learned
Judges of the High Court rejected this contention and held that the three
Janpad Sabhas which replaced the District Council of Bhandara were in substance
identical with the latter principally for the reason that the area covered by the
three newly created Janpads was the same as that for which the District Council
functioned and that the purposes for which the tax collected would be utilized
which are the, criteria specified in s. 143(2)-were exactly the 'same, Just as
it could not be disputed that if there were any change in the composition of
the District Council the identity of a local authority would not be altered for
the purposes of s. 143(2), the mere splitting up of that local area for being
administered by a plurality of Local Government Units would not affect any
change material for the purposes of the continued exigibility of the tax under
s. 143(2). The learned Attorney-General therefore very properly did not press
before us this point based upon the disappearance of the District Council and
its being replaced by the respondent-Sabhas as any ground for denying to the
respondent-Sabhas the right to levy the tax.
The only point that was urged before us in
challenge of the right of the respondent-Sabhas to continue the levy of this
terminal tax may be formulated thus: The Provincial Legislature of Central
Provinces & Berar in exercise of its legislative power under item 13 of the
Provincial Legislative List enacted the Local Government Act, 81 1948 and
validly repealed the Act of 1920 under which this tax was levied. As part of
the same legislation and taking effect at the same time it was open to that
Legislature to have continued the provisions of the repealed Act of, 1920 under
,which the impugned tax was levied so as to enable the newly created Janpad
Sabhas to exercise the fiscal powers of the District Councils which they
replaced, thus so to speak modifying or qualifying the repeal. Such a
continuance could be provided by a saving clause couched in appropriate
phraseology to effectuate such an intention. If this had been done the source
of legal authority to levy the tax would, even after the Act of 1948 came into
force, have been the repealed Act of 1920 which to the extent of the saving
would be deemed to have continued in force. But this was not done. There was,
no doubt, a saving under the proviso to s. 192 but the saving in respect of the
taxes which was contained in sub-cl.(c) to the proviso was confined to the
recovery of taxes which had accrued due on the date of the repeal but which
still remained uncollected and the purpose of the sub-clause was to effect a
distribution of those assets, viz., of the accrued arrears among the several
Janpad Sabhas which replaced each District Council, so that when on June II,
1948, the Act of 1948 came into force, the effect of it was that the repeal of
the Act of 1920 was for all purposes relevant to the matter now in controversy
complete and with it the power to levy the tax in future stood. extinguished,
save only as regards the right to collect the arrears which had accrued due to
the District Councils before that date. No doubt, the Provincial Legislature
effected an amendment to s. 192 in 1949 by which the saving was extended to
include the right of the Janpad Sabhas to continue to levy the impugned tax and
this amendment was given retrospective effect as from Tune 11, 1948, but 82
this amendment was beyond the legislative com. petence of the Provincial
Lagislature since in pith and substance it was virtually a legislation expressly
conferring upon the Janpad Sabhas the right to levy a terminal tax a right
which they did not possess before that date and unless the Legislature was
competent to enact a law in relation to such a tax it could not validly confer
upon the local authority what in legal effect should be considered to be a
fresh right to levy the tax. The argument was also presented in a slightly
different form by saying that on the terms of s. 143(2) of the Government of
India Act there was a provision only for the continuance of the tax and that
when once that continuity was broken by a valid piece' of legislation such as
took place in this case when the Local Self Government Act 1920 wes repealed
without a properly drafted saving clause enabling the continued levy of the
tax, the discontinuity created thereby could not thereafter be repaired and the
gal) filled by further legislation even though it purported to be with
restrospective effect.
Mr. Sanyal learned Additional Solicitor
General who appeared for the respondent-Sabhas submitted several answers to
sustain the validity of the continued imposition of the tax, He first urged
that the effect of s. 143 (2) of the Government of India Act, 1935 was in
effect to vest in Provincial Legislatures a plenary power to legislate in
respect of every tax which was being lawfully levied by local authorities etc.
in the Province prior to the commencement of Part III of the Government of
India Act so "much so that even if the amendment efrected to s. 192 by the
Local Government (Amendment) Act of 1949 be treated as itself a fresh
imposition of the tax its validity could not be challenged. We must express our
inability to accept this extreme contention. Section 143 (2) which is a saving
clause and 83 obviously, designed, to prevent a dislocation of the finances of
Local Governments and of local authorities by reason of the coming into force
of the provisions of the Government of India Act distributing heads of taxation
on lines different from' those which prevailed before that date, cannot be
construed as one conferring a plenary power to legislate on those topics till
such time as the Central Legislature intervened. Such a construction would' necessarily
involve a power in the Provincial Legislature to enhance the rates of
taxation-a result we must say from which Mr. Sanyal did not shrink, but having
regard to the language of the section providing for a mere continuity and its
manifest purpose this construction must be rejected.
The next point urged by Mr. Sanyal was based
on the construction which he aught to put on cl.(c) of the proviso to s. 192 of
the Local Government Act of 1948. He submitted that the words ,,due to the
District Council" were wide and apt enough to include not merely the taxes
that had accrued due on the date of the repeal of the Act of 1920 but even the
amounts which accrued later and became payable subsequent to that
date-"Due" he said meant ,,payable" and as the words of the
sub-section did not specifically limit the period when the cess became payable
to sometime anterior to the repeal of the Act of 1920. it ought to be read as
including those amounts which accrued due and became payable even thereafter.
We find it difficult to accept this submission either. The difficulty in
accepting it is created only in part by the use of the expression
"due"but the main hurdle in the way of the respondent is that what is
saved by the sub-clause (and is distributed among the Janpad Sabbas which
replaced the District Councils), is specified as a cess' rate etc. due to a
District Council. The rate, cess or duty due to a District Council could
obviously be only that which 84 had accured due to a District Council while
that body was in existence and with the extinction of the District Councils by
the repeal of the Act of 1920 there could be no question of any further sums
being due to such a body. Mr. San-_Val however sought to get over this
situation by suggesting that the words "due to a District Council"
were merely descriptive of the nature of the tax and did not predicate that it
was an amount due to a particular body on the date when it became due. In our
opinion this is not an interpretation which the words could reasonably bear and
we have, therefore, no hesitation in rejecting this argument.
Itwas then submitted that even if the words
of cl. (c) of the proviso would not ordinarily include a saving as regards the
right of the Janpad Sabhas to levy the tax in the future, still we should adopt
that construction as being in consonance with and for giving effect to the intention
of the legislature which made it clear that that was so by enacting the
amendment to s. 192 by the Act of 1949 within a year or so after the Act of
1948. We consider that this submission also deserves, in the circumstances of
the present case, to be rejected. It is a cardinal principle of statutory
construction that the intention of the legislature should be gathered from the
words of the enactment. If, as we have held, those words are incapable of the
construction that there was a savig of the right of the Janpad Sabbas to impose
and collect the taxapart from the right to collect the arrears of tax which
accured due while the District Council was in existence,that construction
cannot be modified and the legislative intent with which that proviso was enacted
supplemented by a reference to what the legislature did later. No doubt, there
is authority for the position that when the meaning of the words used in an
enactment is ambiguos or obscure, subsequent statutes might sometimes be used
as what has been termed "a parliamentary exposition" of the obscure
phraseology. It is hardly 85 necessary to discuss the permissible limits of
this node of construction for the purpose of the present lase, because the
prime conditions for invoking that rule are absent herethere is no obscurity or
ambiguity in the words of el. (c) and secondly if the learned Attorney-General
is right, the Provincial Legislature had no legislative capacity to enact the
Amending Act of 1949-and this must include legislation either by way of
explanation or exposition, and of course by positive enactment. If there is
incapacity to enact retrospective legislation on the matter, the position is
not rendered different by viewing it as parliamentary exposition. The validity
of the amendment effected by the Act of 1949 must be judged independently and
on its own inerits and its terms cannot be used as a guide to the
interpretation of what the legislature in enacting s. 192 of the Act 1948
intended by the words in cl. (c).
The next submission was that as the Act of
1949 amended the terms of s. 192 so as to save the power of the Janpad Sabhas
to levy the cess with retrospective effect from the date when the Act of 1920
stood repealed, there was in the eye of the law a continuity in the levy of the
cese; or rate and so no hiatus or period of discontinuity existed 'such as had
been suggested by the learned Attorney-General and the existence of which was
the entire foundation of his argument. It must, however, be mentioned that the
learned Attorney-General was not oblivious of this feature of the legislation
of 1949, viz., that it purported to operate as it were to close the gap, but
his submission was that if, in fact, the gap existed and there was factually a
period of discontinuity, the legislature which had no authority to enact
positive legislation with reference to the topic in May 1949 was incompetent to
pass an enactment with retrospective effect.
In our opinion, this argument of Mr. Sanyal
requires serious consideration and the answer would 86 turn on the proper
construction of the terms of s. 143(2) of the Government of India Act. The
first matter to be considered would be the source of the legislative power to
enact the Local Government Act of 1948. In so far as the constitution of local
authorities, their territorial distribution, the endowing them with powers,
jurisdiction and authority in general are concerned, the legislative power
therefore is to be found in entry 13 of the Provincial Legislative List II to
Sch. VII of the Government of India Act, 1935 reading :
"Local Government, that is to say, the
constitution and powers of municipal corporations, improvement trusts, district
boards, mining settlement authorities and other local authorities for the
purpose of local self government on village administration".
It must however be observed that merely
because the legislature is empowered under this entry to constitute local
authorities and vest them with powers and jurisdiction it would not follow that
these local bodies could be vested with authority to levy any and every tax for
the purpose of raising revenue for the purposes of local administration. They
could be validly authorised to raise only those taxes which the Province could
raise under and by virtue of the relevant entries in the Provincial Legislative
List. This is on the principle that the Province could not authorise local
bodies created by it to impose taxes which it itself could not directly levy
for the purposes of the Provincial Government. Now comes the question whether the
Provincial Legislature was competent, by legislation, to discontinue the levy
of the tax by effecting a repeal of the taxing provision contained in the Local
Self Government Act of 1920. There is no doubt that the general principle is
that the power of a legislative body to repeal a law is coextensive with its
power to enact each a law, as would be seen from 87 the following passage in.
the judgment by Lord Watson in Attorney-General for Ontario v. Attorney-General
for the Dominion(1) :
"Neither the Parliament of Canada nor
the provincial legislatures have authority to repeal statutes Which they could
not directly enact." But obviously its application in particular instances
would be controlled by express constitutional provision modifying the same. We
have such provision in the case on hand in s. 143(2) of the Government of India Act, 1935. In the context the relevant words of the sub-section could only mean
"May continue to be levied if so desired by the Provincial
Legislature" which is indicated by or is implicit in the use of the
expression "May" in the clause 'may be continued until provision to
the contrary is made by the Federal Legislature." This would therefore
posit a limited legislative power in the Province to indicate or express a
desire to continue or not to continue the levy. If in the exercise of this
limited power the Province desires to discontinue the tax and effects a repeal
of the relevant statute the repeal would be effective. Of course, in the
absence of legislation indicating a define to discontinue the tax, the effect
of the provision of the Constitution would be to enable the continuance of the
Dower to levy the tax but this does not alter the fact that the provision by
its implication confers a limited legislative power to desire or not to desire
the continuance of the levy subject to the overriding power of the Central
Legislature to put an end to its continuance and it is on the basis of the
existence of this limited legislative power that the right of the Provincial
Legislature to repeal the taxation provision under the Act of 1920 could be
rested. Suppose for instance, a Provincial Legislature desires the continuance
of the tax but considers the rate too High and (1)[1896] A. C. 348, 366.
88 wishes it to be reduced and passes an
enactment for that purpose, it cannot be that the legislation is incompetent
and that the State Government must permit the local authority to levy tax at
the same rate as prevailed on April 1, 1937 if the latter desired the,
continuance of the tax.
If such a legislation were enacted to achieve
a reduction of the rate of the duty, its legislative competence must obviously
be traceable to the power contained in words "may continue to be
levied" in s. 143(2) of the Government of India Act. If we are right so
far it would follow that in the exercise of this limited legislative power the
Provincial Legislature would also have a right to legislate for the continuance
of the tax provided, if of course, the other conditions of s. 143(2) are
satisfied, viz., (1) that the tax was one which was lawfully levied by a local
authority for the purposes of a local area at the commencement of Part III of
the Government of India Act.,.
(2) that the identity of the body that
collects the tax, the area for whose benefit the tax is to be utilised and the
purposes for which the utilisation is to take place continue to be the same and
(3) the rate of the tax is not enhanced nor its incidence in any manner
altered, so that it continues to be same tax. If as we have hold earlier there
is a limited legislative power in the Province to enact a law with reference to
the tax levy so as to continue it, the validity of the Act of 1949 which
manifested the legislative intent to Continue the tax without any break, the
legal continuity being established by the retrospective, operation of the
provision, has to be upheld.
The appeals therefore fail and are
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