Zila Parishad Moradabad Vs. Nundan
Sugar Mills, Amroha  INSC 155 (18 July 1967)
18/07/1967 SIKRI, S.M.
CITATION: 1968 AIR 98 1968 SCR (1) 1
U.P. District Boards Act (X of 1928)-ss.
115-118, 119-120District Board enhancing maximum limit of circumstances and
property tax by resolution-State Government notifying amendment of rules to
incorporate new limits--Whether tax can be imposed without further resolution
under s. 119 and notification under s. 120.
In July 1925 it was notified under s. 120(2)
of the U. P. District Boards Act, 1922 that the District Board of Moradabad in
exercise of powers conferred by s. 108(2) of the Act had imposed a tax with
effect from September-1, 1925, on the residents of the District according to
their circumstances and property at the rate of 4 pice per rupee on the total
taxable income subject to a maximum of Rs. 200.
In May 1927 the District Board passed a
resolution increasing the maximum from Rs. 200 to Rs. 500 and thereafter the
State Government issued a notification in January 1928, amending the rules for
the assessment-and collection of tax so as to increase the maximum to Rs. 500.
In August 1931, the Board passed another
resolution increasing the maximum further to Rs. 2,000 and the State Government
issued a notification in March 1932 further amending the rules so as to
incorporate the new maximum. No further action was taken by the District Board
to enforce these amendments of the rules.
Upon a writ filed by the respondents under
Act, 226 of the Constitution, the High Court directed the District Board,
Moradabad, not to levy upon the respondent a tax in excess of Rs. 200 per year
on the ground that no special resolution of the Board had been passed nor a
notification issued by the State under ss. 119 and 120 respectively of the Act
imposing the tax with revised maximum limits.
In appeal to the Supreme Court it was
contended on behalf of the appellant that when the procedure laid down in ss.
1.15 to 118 had been followed whereby the amendments had been approved by
resolutions and notified, it was not necessary that there should be a further
resolution and notification under s. 119 and s. 120 respectively.
Held: The tax with the revised maximum limits
introduced in 1928 and 1932 could not be imposed without a resolution under s.
119 and a notification under s. 120. [5B] The object of ss. 119 and 120 is to
fix the date from which the tax can be imposed. If no date is fixed, no tax can
be imposed. Once the Board passes a special resolution under, s. 119, it has to
go to the Government under s. 120, and then the Government notifies the
imposition of tax from the appointed date.. It is then that the notification
becomes conclusive Proof of the fact that the tax has been imposed in
accordance with the provisions of this Act Sub-clause (3) of s. 120 clearly
proceeds on the basis that the imposition of tax takes place on a notification
issued under s. 120 and not on the issue of a notification under s. 118. [4G-5A]
Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur,  1 S.C.R. 970;
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 596 of 1966.
Appeal by special leave from the judgment and
order dated January 27, 1964 of the Allahabad High Court in Special Appeal No.
270 of 1958.
S. T. Desai and C. P. Lal, for the appellant.
C. B. Agarwala and J. P. Agarwal, for the
The Judgment of the Court was delivered by
Sikri, J.--This appeal by special leave is directed against the judgment of the
High Court of Allahabad accepting a petition under Art. 226 of the Constitution
and directing the District Board, Moradabad, not to levy upon M/s Nundan Sugar
Mills,, Amroha, respondent before us, circumstances and property tax for any
one year exceeding the sum of Rs.
200. The High Court held that no special
resolution of the Board had been passed, nor had a notification been made
imposing the tax, under S. 119 and s. 120, respectively, of the United
Provinces District Boards Act, 1922 (U. P. Act of 1922)-hereinafter referred to
as the Act.
The relevant facts out of which this appeal
arises are these On July 28, 1925, it was notified under sub-s. (2) of s. 120
of the Act that the District Board of Moradabad, in exercise of the powers
conferred by s. 108, sub-s. (2), of the Act has imposed the following tax, with
effect from September 1, 1925:
"A tax on. all persons ordinarily
residing or carrying on business in the rural area of the Moradabad District
according to their circumstances and property, at the rate of four pies per
rupee on the total taxable income; provided that the total amount of tax
imposed on any person shall not exceed Rs.
200. Provided also that no income once
assessed shall be reassessed".
On May 28, 1927, the District Board took
action upon a memorandum prepared by the Chairman of the District Board. The
memorandum of the Chairman pointed out:
"......... the maximum amount of tax
recoverable from an assessee should be raised from Rs. 200/to Rs. 500/P.A.
Hence proposal (c) framed under section 115 sanctioned by G. 0. No dated
28-7-25 so be modified as to read as under:
"That there shall be a rate of tax 4
pies in the rupee... provided that the total amount of tax imposed on any
person shall not exceed Rs.
5001 The resolution of the Board was in these
"The bye-laws be modified accordingly
after necessary publication and sanction. The assessing officer to assess them
at 2 pies (sic) in anticipation of final sanction".
3 On January 11, 1928, the Government of United
Provinces issued a, notification amending the rules for the assessment and
collection of a tax on circumstances and property in the rural areas of the
Moradabad District. The following rule 16 was added:
"16. The total amount of tax imposed on
any person shall not in any year exceed the sum of Rs. 5001-." On August
31, 1931, the Board passed another resolution approving the following
"........ The words and figures 'Rs.
500' be substituted by 'Rs. 2,000' in rule 16 of the rules for the assessment
and collection of a tax on circumstances and property in the rural area of the
Moradabad district published with Government Notification No.........dated 11-11928".
The exact terms of the resolution were:
"Resolved unanimously that thememo. be
approved and necessary action be taken on it. If publication is required, it be
done and Government be moved to accord sanction for the same".
On March 18, 1932, the Government of United
Provinces issued a notification amending rule 16. The amendment it was in the
"In Rule 16 published with notification
No. 33/IX185(14-24) dated January 19, 1928 'Rs. 2,000' shall be substituted for
It appears that no further action was taken
by the District Board to enforce this amendment in rule 16 or the amendment
dated January 11, 1928. Further action is contemplated by ss. 119 and 120, read
with s. 12 1, of the Act. These sections may be reproduced in full.
" 119. Resolution of board directing
imposition of tax-Upon receipt of the copy of the rules sent under the
preceding section, the board shall by special resolution direct the imposition
of the tax with effect from a date (to be specified in the resolution) not less
than six weeks from the date of such resolution".
" 120. Imposition of tax-(1) A copy of
the resolution passed by the board under Section 119 shall be submitted to the
State Government. (2) Upon receipt of the copy of the resolution the State
Government shall notify in the official Gazette the imposition of the tax from the
appointed date, and the imposition of a tax shall in all cases be subject to
the condition that it has been so notified. (3) A notification of the
imposition of a tax Linder sub-section (2) shall be conclusive proof that the
tax has been imposed in accordance with the provisions of this Act".
4 "121. Procedure for altering taxes-The
procedure for abolishing or suspending a tax, or for altering a tax in respect
of the matters specified in clauses (b) and (c) of sub-section (1) of Section
115 shall, so far as may be, be the procedure prescribed by Sections 115 to 120
for the imposition of a tax".
Clauses (b) and (c) of sub-section (1) of s. 115,
referred to in s. 121, read:
"(b) the persons or class of persons to
be made liable and the description of the property or other taxable thing or
circumstances in respect of which they are to be made liable, except where and
in so far as any such class ,or description is already sufficiently defined
under clause (a) or by this Act-, (c) the amount or rate leviable from each
such person or class of persons;" It is common ground that the procedure
laid down in ss. II 5 to 118 has been followed by the Board. The only dispute
between the parties is whether it is necessary that a resolution should be
passed under s. 119 and a notification issued under s. 120 before effect can be
given to a notification made under s. 118 altering the rules. In other words,
was it necessary to pass a resolution under s. 119 after the issue of the
notification dated March 18, 1932, or the notification dated January 11, 1928,
referred to above? Both the learned Single Judge, and the Division Bench who
heard the appeal from the learned Single Judge, have come to the conclusion
that without a resolution under s. 119 and a notification under s. 120, no tax
can be levied in pursuance of the notification dated March 18, 1932, or
notification dated January 11, 1928.
It may be mentioned that the High Court
directed the District Board not to-levy upon the petitioner circumstances and
property tax for any year exceeding the sum of Rs. 200/-. There is no dispute
that the Board could levy upon the petitioner tax up to the sum of Rs. 200/-.
The learned counsel for the appellant
contends that if the procedure laid down in ss. 115 to 118 has been followed,
it is not necessary that there should be a resolution under s.
119 and a notification under s. 120. He says
that rules can be made under s. 172, read with s. 1.76, of the Act, and once
rules are made there is nothing more to be done. But there is one fallacy
underlying the argument of the learned counsel, and that is that it misses the
object of ss. 119 and 120 which is to fix the date from which the tax can be
imposed. If no date is fixed, no tax can be imposed. Once the Board passes a
special resolution under s. 119, it has to go to the Government under s. 120,
and then the Government notifies the imposition of tax from the appointed date.
It is then that the notification becomes conclusive proof of the fact that the
5 tax has been imposed in accordance with the provisions of this Act.
Sub-clause (3) of S. 120 clearly proceeds on the basis that the imposition of
tax takes place on a notification issued under s. 120 and not on the issue of a
notification under S. 118.
The learned counsel invited our attention to
Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur(1) but we are unable to
see how that case assists him. No question of ss. 119 and 120 being directory
arises in this case because, in our view, without a resolution under s. 119 and
a notification under s. 120, no tax can be imposed.
The learned counsel also urges that:(a) no
writ petition is maintainable challenging a pre Constitution matter, and (b)
the respondent not having appealed under S. 128 of the Act, the petition was
In our view, there is no merit in these
contentions. The respondent is being charged tax now. He is entitled not to be
taxed except under the authority of law, vide Art. 265 of the Constitution.
There is no question of challenging any pre-Constitution matter. The respondent
is challenging a post-Constitution action on the ground that there is no
authority of law for the action.
Regarding the second point, the High Court
held that an appeal to the District Magistrate under s. 128 was not likely to be
of much assistance to the petitioner and rejected the contention. It is
well-settled that a, provision like s. 128 does not oust the jurisdiction of
the High Court to entertain a petition under Art. 226 and it is for the High
Court to exercise its discretion whether to entertain the petition or not. The
learned counsel has not pointed out anything to us to show that the discretion
has not been properly exercised.
In the result the appeal fails and is
dismissed with costs.