Jothi Timber Mart & Ors Vs.
Corporation of Callcut & ANR [1969] INSC 147 (18 July 1969)
18/07/1969 SHAH, J.C.
SHAH, J.C.
SIKRI, S.M.
RAMASWAMI, V.
CITATION: 1970 AIR 264 1970 SCR (1) 629 1969
SCC (2) 348
ACT:
Calicut City Municipal Act 30 of 1961, Section
126--If State Legislature competent to enact under entry 52 List II, 7th
schedule to the Constitution.
HEADNOTE:
Section 126 of the Calicut City Municipal Act
30 of 1961 provided for the levy of a timber tax on timber brought into the
city. The proviso to the section exempted from the levy any timber brought into
the city in the course of transit to any place outside the city and directly
removed out of the city by rail, road or water. On a petition filed by the
appellants, a single bench of the Kerala High Court held that the legislature
was incompetent to enact section 126.
But this decision was reversed in appeal by a
division bench.
It was contended in the appeal to. this Court
the High Court had wrongly considered that entry of timber into the Municipal
area could only be for consumption, use, or sale within the Municipality or in
the course of transit through the limits of the Municipality; such entry could
be for storage or other purposes and a provision levying tax on goods entering
the area. of the Municipality without specification of the purpose was beyond
the legislative powers of the State under entry 52, List II of the 7th schedule
to the Constitution.
HELD: Dismissing the appeal, If the State
Legislature was competent under Entry 52 List II to levy a tax only on the
entry of goods for consumption, use or sale into a local area, the Municipality
could not under legislation enacted in exercise of the power conferred by that
Entry have power to levy tax in respect of goods brought into the local area
for purposes other than consumption, use or sale. The authority of the State
Legislature itself being subject to a restriction in that behalf, s. 126 may
reasonably be read as subject to the same limitations. When the power of the
Legislature with limited authority is exercised in respect of a subject-matter,
but words of wide and general import are used, it may reasonably be presumed
that the Legislature was using the words in regard to that activity in respect
of which it is competent to legislate and no other; and that the Legislature
did not intend to transgress. the limits imposed by the Constitution. [632
B--E] In re Hindu Women's Rights to Property Act, 1937, [1941] F.C.R. 12;
referred to.
The expression "brought into the
city" in s. 126 was rightly interpreted by the High Court as meaning
brought into the municipal limits for purposes of consumption, use or sale and
not for any other purpose. [632
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 1079 to 1086 and 1088 to 1099 of 1966.
Appeals from the judgment and orders dated
August 31, 1965 of the Kerala High Court in Writ Appeals Nos. 134 of 1964 etc.
630 H.R. Gokhale, B. Datta, 1.. B. Dadachanji
and O.C.
Mathur, for the appellants (in all the
appeals).
C.K. Daphtary, A. S. Nambiar and Lily Thomas,
for respondent No. 1 (in all the appeals).
D.P. Singh and M.R.K. Pillai, for respondent
No. 2 (in all the appeals).
The Judgment of the Court was delivered by
Shah, J. In a group of petitions presented before the High Court of Kerala the
appellants challenged the validity of the levy of "timber-tax" by the
Corporation of Calicut on the grounds, inter alia, that the State Legislature
is incompetent to impose that tax under the Kerala Act 30 of 1961. Govindan
Nair, J., declared that the Legislature was incompetent to enact s. 126 of the
Calicut City Municipal Act, 1961 (30 of 1961). The decision of Govindan Nair,
J., was reversed in appeal by a Division Bench of the High Court and the
petitions were dismissed.
By virtue of Art. 246 read with Sch. VII,
Item 52, List II of the Constitution, the State may legislate in the matter of
"tax on the entry of goods into a local area for consumption, use or sale
therein." The appellants contend that s. 126 conferring authority to
impose timber tax violates the restrictions upon the legislative power imposed
by the Constitution and on that account is void.
Section 98 of the Act enumerates the taxes
and duties which the Municipality may levy and one of the taxes described in
el. (e) is "tax on timber brought into the city". Section 126
declares a charge of tax on timber brought into the city: it provides, (insofar
as it is material):
"(1) If the Council by a resolution
determine that a tax shall be levied on timber brought into the city, such tax
shall be levied at such rates, not exceeding five rupees per ton, and in such
manner as may be determined by the Council;
Provided that no tax shall be levied on any
timber brought into the city in the course of transit to any place outside the
city and directly removed out of the city by rail, road or water.
(2) No timber shall, except in the case
referred to in the proviso to sub-section (1) be brought into the city unless
the tax due thereon has been paid.
(3) The tax shall be levied on timber kept
within the city for sale if the Commissioner has reason to 631 believe that the
tax, if any, due thereon has not been paid:
. . . . . . .
Power to make bye-laws for sale and seizure
of timber in respect of which tax is not paid and for carrying out the
provisions relating to the levy of tax is conferred by s. 126(6) and s. 1369(1)
of the Act. The Corporation of Calicut has framed byelaws relating to the levy
and collection of timber tax. It is provided by el. 3 that the tax on timber
shall be paid immediately on timber being brought into the city. Bye-law 7
provides:
"(1) If timber is brought into the city
and it is', claimed that it is in the course of transit to a place outside the
city and not for consumption, use or sale within. the city and if in the
opinion of the authority or officer authorised to collect the tax on timber,
such timber brought into the city is not for the purpose of 'transit but for
the purpose of consumption, use or sale therein, such authority or officer may
demand from the person claiming exemption an amount equal to the tax leviable
for such timber as security.
(2) If the person, who has paid the security
satisfies Commissioner within 14 days from the date of payment that the timber
in respect Of which the amount was paid was brought into the city in the course
of transit 'wad not for consumption, use or sale therein the Commissioner shall
refund the amount to such person. Otherwise the same shall be appropriated to
wards tax due on such timber.
(3) . . . . . . .
(4) . . . . . . .
The High Court held that timber may be
imported within the limits of the Corporation for four purposes--( 1 ) for
consumption in the city; (2) for use in the city; (3) for sale in the city; and
(4) for transit through the city, and since all the four purposes were within
the enacting part of the section and the proviso. to s. 126(1) having
eliminated the right of the Municipality to levy tax for transit through the
city, "the taxing power conferred by entry 52, List II of the Seventh
Schedule was ensured and its constitutional strength and validity upheld"
thereby.
Counsel for the appellants contends that the
High Court was in error in holding that entry of timber into the Municipal area
may be only for consumption, use, or sale within the Municipality or in the
course of transit through the limits of the municipality. He says that the
entry may for instance be merely for storage of the goods within the limits of
the municipality and a provision levying tax on goods entering the limits of
the municipality with L14 Sup.CI/69--11 632 out specification of the purpose is
beyond the legislative power of the State.
Entry of goods within the local area for
consumption, use or sale therein is made taxable by the State Legislature:
authority to impose a general levy of tax on
entry of goods, into a local area is not conferred on the State Legislature by
item 52 of List II of Sch. VII of the Constitution. The Municipality derives
its power to tax from the State Legislature and can obviously not have
authority more extensive than the authority of the State Legislature. If the
State Legislature is competent to levy a tax only on the entry of goods for
consumption, use or sale into a local area, the Municipality cannot under a
legislation enacted in exercise of the power conferred by item 52, List II have
power to levy tax in respect of goods brought into the local area for purposes
other than consumption, use or sale. The authority of the State Legislature
itself. being subject to a restriction in that behalf, s. 126 may reasonably be
read as subject to the same limitations. When the power of the Legislature with
limited authority is exercised' in respect of a subject-matter, but words of
wide and general import are used, it may reasonably be presumed that the
Legislature was using the words in regard to that activity in respect of which
it is competent to legislate and to no other; and that the Legislature did not
intend to transgress the limits imposed by the Constitution: see In re Hindu
Women's Rights to Property Act, 1937(1). To interpret the expression
"brought into the city" used in s. 126(1) as meaning brought into the
city for any purpose and without any. limitations would, in our judgment,
amount to attributing to the Legislature an intention to ignore the constitutional
limitations. The expression "brought into the city' 'in s. 126 was
therefore rightly interpreted by the High Court as meaning brought into the
municipal limits for purposes of consumption, use or sale and not for any other
purpose.
While we agree with the ultimate conclusion
of the High Court we may observe that we do not agree_ with the assumption made
by the High Court that the entry of goods into the city may be only for the
four purposes mentioned by the High Court; nor do we hold that the proviso
exempts from taxation timber brought into the city in the course of transit
even when it is not directly removed out of the city by rail, road or water.
The proviso, in our judgment, has a limited operation. It merely provides that
the municipality shall not be entitled to levy a tax on timber brought into the
city in the course of transit to any place outside the city and directly
removed out of the city by rail, road or water. But on that account we are
unable to hold that the proviso is enacted with the object of bring- (1) [1941]
F.C.R. 12.
633 ing to tax all entry, of timber which is
not brought into the city in the course of transit to any place outside .the
city and directly removed out of the city by rail, road or water.
The appeals fail and are dismissed. There
will be no order as to costs in these appeals.
R.K.P.S. Appeals dismissed.
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