Full Judgment Text
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PETITIONER:
THE PIONEER MOTORS (PRIVATE) LTD.
Vs.
RESPONDENT:
THE MUNICIPAL COUNCIL, NAGERCOIL.(and connected appeals)
DATE OF JUDGMENT:
27/01/1961
BENCH:
KAPUR, J.L.
BENCH:
KAPUR, J.L.
HIDAYATULLAH, M.
SHAH, J.C.
CITATION:
1967 AIR 684 1961 SCR (3) 609
ACT:
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.
HEADNOTE:
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. [1945] 13 I.T.R.
154 and Thompson v. Stimpson, [1960] 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. [1952] Bom. 918 and
Kalu Karim v. Municipality of Broach (1927) I.L.R. 51
BOM. 764, referred to.
610
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The definition of " profession " as given in s. 81 includes
business.
JUDGMENT:
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 one judgment.
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 profes-
sion. 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
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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 circula-
tion 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
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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
fulfilment 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 requires.
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
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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
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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
particulary 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 a 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) [1945]13 I.T.R. 154.
(2) [1960] 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
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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. [1952] Bom. 918
(3) (1927) I.L.R. 5r Bom. 764.
(4) [1960] 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
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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.