Mahapalika of City of Agra Vs. Agra
Brickkiln Owners' Association & Ors  INSC 69 (23 March 1976)
CITATION: 1976 AIR 1160 1976 SCR (3) 827 1976
SCC (3) 42
Constitution of India, 1950, Art. 276,
Government of India Act, 1935, s. 142A(2) and U.P. Nagar Mahapalika Adhiniyam
(U.P. 2 of 1959), s. 172, proviso-Scope of.
In 1947, the State Government issued a
notification imposing a tax under s. 128(1)(ii) of the U.P.
Municipalities Act, 1916, on brick
manufacturers. The affected assessees filed a suit for a declaration that the
tax was void and not exigible. The suit was decreed. The appellant appealed to
the High Court. By that time the U.P.
Nagar Mahapalika Adhiniyam, 1959, had come
into force, replacing the 1916-Act. Section 172 of the 1959-Act corresponds to
s. 128 of the 1916-Act providing for the levy of various types of taxes on
professions, trades and callings. The proviso to s. 172 provided that where any
tax was being lawfully levied in the area before the commencement of the
Constitution, such tax may continue to be levied until provision to the
contrary is made by Parliament. Construing the proviso, the High Court held
that the maximum tax leviable under s. 172(2), after the 1959-Act had come into
force on Feb. 1, 1960 was only Rs. 50/- since that was the quantum of tax
levied before the commencement of the Constitution. Section 142A(2) of the
Government of India Act, 1935, provided that the total amount payable in respect
of any one person to any one municipality by way of taxes on professions etc.,
shall not exceed Rs. 50/- per annum.
Allowing the appeal of the Mahapalika to this
Court in part,
HELD : The period before the Constitution of
India had come into force, that is, before January 26, 1950, will be governed
by the maximum of Rs. 50/- fixed by the Government of India Act. Article 276 of
the Constitution also sets a ceiling on such taxes, but, the maximum is not Rs.
50/- but Rs. 250/-. Therefore, for the period from January 26, 1950, to the
date when the 1959-Act came into force, the maximum tax leviable will be Rs.
250/- As regards the period after Feb. 1, 1960, the interpretation put by the
High Court on the proviso to s. 172 that it was only the quantum of tax and not
its description that was kept alive and that, therefore, the valid tax is only
up to the maximum of Rs.
50/- mentioned in s. 142A of the Government
of India Act is erroneous. The words 'such tax' in the proviso to s. 172
relates to 'any tax' and saves all species or classes of taxes and does not
merely preserve the quantum of rate of such tax. Since the class or species of
tax is the correct connotation of the expression 'such tax' and 'any tax' the
tax on the trade or calling is ssved and its rate is as fixed in the
Notification, subject to a maximum of Rs. 250/- . Therefore, the period after
Feb. 1, 1960 will also be controlled by the same constitutional maximum of Rs.
250/-, unless any supervening parliamentary legislation, as contemplated by s.
172 of the 1959-Act, comes into being.
[829 B, C, G; 830 D-G]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 2446 of 1969.
Appeal by special leave from the Judgment and
Order dated 7th October, 1968 of the Allahabad High Court in S.A. No. 2001/64.
R. N. Sharma and C. P. Lal for the Appellant.
B. P. Maheshwari and Suresh Sethi for the
The Judgment of the Court was delivered by
KRISHNA IYER, J.-A crudely drafted plaint, with little legal light to make out
a good cause of action, somehow resulted in a decree as 828 prayed for at the
trial stage and in appeal. But the defendant who is the appellant before us,
the Mahapalika of the City of Agra, pursued the matter in Second Appeal where,
regardless of the scope of the suit or the precise ground alleged in the
plaint, an adverse judgment was rendered affecting the municipality in a
general way. Naturally, the appellant Mahapalika has come to this Court by
special leave under Art. 136 of the Constitution, overstepping the limits of
law, a little, as will presently appear.
The brief facts necessary to appreciate the
contentions on which the High Court has pronounced may now be stated, although,
in so doing, we have to depart from the pleadings.
Indeed, the questions are of general public
importance and so, apart from technical bounds, we proceed to declare the law.
The Agra Municipal Board was governed by the
U.P. Municipalities Act, 1916 (Act II of 1916). In 1947, the State Government
issued a notification imposing a tax under s. 128(1)(ii) of the said Act. The
levy was on brick manufacturers carrying on that trade, at the rate of 14 annas
per 1000 bricks. The brick-kiln owners who were affected, along with their
Association, filed a suit for a declaration that the tax was void and not
exigible. It may be, stated that, whatever the reasons urged in the pleadings
be, the arguments, purely legal, have turned on the validity of the tax in the
light of s. 142(A) of the Government of India Act, 1935 and on Art. 276 of the
Constitution of India vis a vis the relevant provisions of the two municipal
laws and the notification already referred to. One circumstance which occurred
after the trial court had decreed the suit deserves to be stated for a
comprehension of the High Court's decision. The U.P. Nagar Mahapalika
Adhiniyam, 1959 (U.P. Act II of 1959), came into force on February 1, 1960
repealing and replacing the U.P. Municipalities Act. While the latter Act
provided for levy of various types of taxes on professions, trades and callings
under s. 128, the former Act which followed, contained a corresponding
provision in s. 172 thereof. Thus, today, s. 128 of Act II of 1916 is longer in
force and it is the later Act of 1960 which is extant.
To come to the point straight, there are two
questions on which the High Court has decided against the Nagar Mahapalika.
This can be understood fully only by a trifurcation by periodisation of the
municipal law's operation, viz., the pre-Constitution era and the post-Nagar
Mahapalika Act era, with the intervening spell sandwiched in between these two.
According to the High Court, the levy of tax at the rate of 14 annas per 1000
bricks by virtue of the notification Ex. H of September 18, 1947 cannot be
sustained to the extent it exceeds Rs. 50/- per person, per annum. The ground
given-and, we think, rightly-is that s. 142A(2) of the Government of India Act
restricted 'the total amount payable in respect of any one person .... to any
one municipality ... by way of taxes on professions, trades, callings and
employments, shall not ... exceed Rs. 50/- per annum'. To the extent to which
this ceiling was exceeded, the constitutional provision stood breached by the
notification and was void. Therefore, without further argument, the conclusion
was reached by the High Court that inevitably the Municipal Board, Agra, could
not levy any 829 amount by way of this tax in excess of Rs. 50/- on any one
person per annum'.
The Government of India Act, 1935, certainly
set a maximum on the tax on trades and callings and we agree that the High
Court was right in holding that the Municipal Board's right to levy tax under
the notification Ex. H could be valid only up to Rs. 50/- per year and, to the
extent it went beyond that limit, was void. So, we affirm the High Court's
holding for the period up to January 26, 1950 that no sum higher than Rs. 50/-
as set out in the Government of India Act, 1935 can be exacted under s. 128 of
Act II of 1916.
From the Raj to the Republic was a big break
in constitutional law, but there was some continuity maintained. A certain
ceiling on taxes on professions, trades, callings and employments had been set
by Art. 276 of the Constitution of India, but this maximum was not Rs. 50/- as
in the Government of India Act, 1935 but Rs. 250/-. We may as well extract
sub-cl. (2) of Art. 276, in this context:
"276. Taxes on professions, trades,
callings and employments.- (1) ...
(2) The total amount payable in respect of
any one person to the State or to any one municipality, district board, local
board or other local authority in the State by way of taxes on professions,
trades, callings and employments shall not exceed two hundred and fifty rupees
Provided that if in the financial year
immediately preceding the commencement of this Constitution there was in force
in the case of any State or any such municipality, board or authority a tax on
professions, trades, callings or employments, the rate, or the maximum rate, of
which exceeded two hundred and fifty rupees per annum, such tax may continue to
be levied until provision to the contrary is made by Parliament by law, and any
law so made by Parliament may be made either generally or in relation to any
specified States, municipalities, boards or authorities.
(3) ......" Inevitably, it follows that
during the post-Constitution period nothing by way of taxes on trades or
callings above the limit so set is recoverable and hence the maximum levy from
each person under the notification issued under Act II of 1916 rises to Rs.
A wee-bit twilit area of law, where the High
Court has wobbled and gone wrong, if we may say so with respect, relates to the
period after the U.P. Nagar Mahapalika Adhiniyam, 1959, came into force. The
curious conclusion the learned Single Judge has reached is that since that date
i.e. February 1, 1960, there is to be a sudden drop in the maximum tax leviable
under s. 172(2) of the Mahapalika Act to Rs. 50/- from Rs. 250/- by a rather
strained process of resuscitation of the Government of India Act, 1935.
830 We must accept the omnipotence of the
Indian Constitution so far as all legislations are concerned, including the
municipal laws. Therefore, by the force of this paramountcy we have read down
the notification Ex.H to limit the maximum contemplated by it to Rs. 250/-, the
ceiling set by Art. 276(2) of the Constitution. But, how can the ghost of the
Government of India Act, which died long ago, revive to haunt the taxing laws
of the Republic now and bring down the maximum limit from Rs. 250/- to Rs. 50/-
? The learned Judge himself felt that this seemed 'paradoxical', but thought
that 'that is the effect of this express and categorical proviso'. What is that
proviso. The court had in mind the proviso to s. 172 of the Adhiniyam.
The view of the High Court stems from a
simple misconstruction of the proviso to s. 172 of the Mahapalika Act. The said
proviso operates as a saving clause affecting the whole section and may, for
facility of making the point, clearly be read here:
Provided that where any tax was being
lawfully levied in the area included in the City immediately before the
commencement of the Constitution of India such tax may continue to be levied
and applied for the purposes of this Act until provision to the contrary is
made by Parliament." It is plain that 'such tax', in this proviso relates
to any tax under s. 172 and saves all species or classes of taxes and does not
merely preserve the quantum or rate of such tax. It is typology, not the amount
that is saved. So it follows that the category of tax on trade or calling is
salvaged by the proviso and the notification Ex.H. survives.
It is clearly erroneous to hold that what is
continued is the rate, not the description, of tax. Of course, if only the
quantum of tax is kept alive on the wording of the proviso, what remains valid
is only up to the maximum mentioned in s. 142A of the Government of India Act,
But if the class or species of tax is the
correct connotation of the expression 'such tax' and 'any tax'-and we have no
hesitation to hold that way in the context, setting and language used-the tax
on trade or calling is saved. The rate is as fixed in Exhibit H.
This does not mean that anything beyond Rs.
250/- [the tax freeze under Art. 276(2)] can be levied. No. The constitutional
maximum prevails as it covers all taxes on trade or calling even today.
Therefore, until Parliament makes any other law, as contemplated in the proviso
to s. 172 of the Adhiniyam, the maximum of Rs. 250/- binds. We have to read
down the notification Exhibit H for the post- Constitution period, in tune and
conformity with the Constitution and uphold its validity to the extent of
We may thus sum up our conclusion. The period
before the Constitution of India came to be enacted, i.e., prior to 26th
January 1950, will be governed by the maximum fixed by the 1935 Act and the
Municipal Council of Agra will be entitled to collect tax on trade or calling
at the rate fixed in Exhibit H. but subject to the maximum of Rs. 50/- per
person, as already explained. For the second period 831 (Krishna Iyer, J.) from
the date of the Constitution up to the date of the Mahapalika Act II of 1959,
the maximum leviable by way of tax on trade or calling by the Mahapalika will
be Rs. 250/- per person. The post-Mahapalika Act period will also be controlled
by the same constitutional maximum of Rs. 250/- per person, unless any
supervening parliamentary legislation, as contemplated by s. 172 of that Act,
comes into being.
In this view, we allow the appeal in part,
i.e., for the period subsequent to the passing of the Mahapalika Act, 1959 and
permit the Mahapalika to levy taxes-as per Exhibit H and s. 172, upto a maximum
of Rs. 250/. Subject to the extent of this modification, the appeal is allowed.
Parties will bear their costs throughout.
V.P.S. Appeal partly allowed.