Full Judgment Text
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PETITIONER:
PRAKASH CHAND MAHESHWARI & ANR.
Vs.
RESPONDENT:
ZILA PARISHAD, MUZAFFARNAGAR & ORS.
DATE OF JUDGMENT07/05/1971
BENCH:
MITTER, G.K.
BENCH:
MITTER, G.K.
SIKRI, S.M. (CJ)
VAIDYIALINGAM, C.A.
RAY, A.N.
REDDY, P. JAGANMOHAN
CITATION:
1971 AIR 1696 1971 SCR 761
1971 SCC (2) 489
ACT:
Professions Tax Limitation (Amendment and Validation) Act
1949-Retrospective validation of levy under U. P. District
Boards Act, 1922 contravening limit of Rs. 50 laid down in
Profession Tax Limitation Act XX of 1941-Validity-Procedure
under r. 3 of Rules made under U.P. District Boards Act,
1922 whether unworkable under U.P. Kshetra Samithis and Zila
Parishads Adhiniyam 33 of 1961-Time limit for assessment
procedure under rr. 4 and 5 of Rules under 1922 Act whether
mandatory-Rules whether not properly framed-Kar Adhikari
appointed without consulting Public Service Commission as
required by s. 43 of U.P. Kshetra Samithi and Zila Parishads
Adhiniyam Act 1961-Mere sending of papers to Commission
after making of appointment not sufficient compliance with
s. 43--Appointment is temporary and good only for two
years-Assessment made after two years invalid.
HEADNOTE:
Tax on circumstances and property we levied in 1928 on
persons residing in or carrying on business in the rural
areas of District Muzaffarnagar under the provisions of the
U.P. District Boards Act, 1922. In 1942, the Central
Legislature passed the Professions Tax Limitation Act which
laid down that no tax on circumstances and property levied
by a local authority should exceed Rs. 50 except in cases
where it was already being levied. The Act was passed in
accordance with the provisions of s. 142-A of the Government
of India Act 1935. In 1948 s. 108 of the U.P. District
Boards Act was amended to provide that a board may continue
a tax already imposed on persons assessed according to their
circumstances and property, and that the tax so imposed
shall not be abolished or altered without the previous
sanction of the State Government, In order to get over the
decision of the High Court of Allahabad in District Board of
Farrukhabad v. Prag Dutt, (I.L.R. 1949 All. 26) the Central
Legislature passed the Professions Tax Limitation (Amendment
and Validation) Act 61 of 1949. This Act retrospectively
exempted the circumstances and property tax levied by local
bodies in U.P. from the upper limit of Rs. 50 laid down by
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the 1941 Act. On August 22, 1958 the U.P. Antarim Zila
Parishad Act 22 of 1958 was passed by the U.P. Legislature.
The said Act was extended to December 31, 1962 by successive
legislation. The U.P. Kshetra Samithis and Zila Parishads
Adhiniyam 33 of 1961 repealed the United Provinces District
Board Act 1922 in relation to a district as from the date on
which the establishment of Kshetra Samithis under the new
Act was completed and as from the date on which the U.P.
Antarim Zila Parishad Act was to stand repealed in relation
to that district. Kshetra Samithis and Zila Parishad were
constituted in the District of Muzaffamagar under the Act.
The circumstances and property tax levied under the repealed
Acts was continued under the new Act. ’Me taxing officer
called Kar Adhikari was to be appointed according to the
procedure laid down in s. 43 of the now Act. The appellants
who carried on ’khandsari’ and ’gur’ business in the rural
area of Muzaffarnagar District were, for the year 1967-68,
assessed to pay a sum of Rs. 2,000 as circumstances and
property tax. They filed a writ petition under Art. 32 of
the Constitution challenging the levy on
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the following grounds; (i) Central Act LXI of 1949 was
beyond the legislative competence of the Federal Legislature
because the power of the Federal Legislature having been
once exercised to reduce the imposts over Rs. 50 per annum
to that sum it was exhausted and could not be exercised a
second time; (ii) Even assuming the said Act was within the
competence, of the legislature, as a result of the amendment
of s. 108 of the U.P. Districts Boards Act in 1948 the board
could only continue to levy the tax which was lawfully being
imposed in 1948 on persons assessed according to their
circumstances and properties in accordance with s. 114 and
inasmuch as the tax had been reduced to Rs. 50 by the
Central Act of 1941 the validation under the Professions Tax
Limitation (Amendment and Validation) Act, 1949 would not
serve to raise the limit of the tax to beyond Rs. 50 per
annum, (iii) under r. 3 framed by the local self government
of the U.P. under s. 172 of the Act of 1922 the tax was to
be assessed by an assessing officer appointed by the
District Board with the help of the members of the circle
but since under the Zila Parishad Act there was no circle or
members, the old rule had become unworkable; (iv) the
prescribed time schedule mentioned in rr. 4 and 5 in the
relevant notification not having been adhered to the
assessment was illegal. (v) the rules of 1928 were not
properly framed inasmuch as the procedure laid down in the
relevant Chapter of the Act of 1922 was not followed
strictly; (vi) the appointment of the Kar Adhikari was not
made in accordance with the provisions of s. 43 of the U.P.
Act. XXXIII of 1961 and therefore the assessment made by
him was illegal.
HELD:(i) The proviso to s. 142-A(2) of the Government
of India Act, 1935 could not be read to give the legislature
power to alter the quantum of assessment once for all.
Clearly it gave power to the federal legislature to fix a
rate of such tax in substitution for the one which was
already prevailing on the 31st March, 1939 and it could do
so not only once but from time to time. The use of the
words ’unless for the time being’ indicates that the
legislature could at any point of time substitute a fresh
rate of tax for the one prevailing. It follows that it was
open to the federal legislature to make such substitution
more than once. [771F772B]
(ii)The amendment of s. 108 of the U.P. District Boards Act
of 1922 in 1948 only allowed the continuance of the tax
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already imposed on persons assessed according to their
circumstances and property. The argument that validation of
the imposition of a tax by the Professions Tax Limitation
(Validation and Amendment) Act, 1949 with retrospective
effect was not possible could not, be accepted. In the case
of M. P. Sundararamier & Co. this Court clearly laid down
that a law authorising imposition of tax could be both
retrospective and prospective. It necessarily followed that
if the Act of 1949 was valid the imposition was saved even
after 1950 under the proviso to cl. (2) of Art. 276 of the
Constitution. [772H-773F]
B.M. Lakhani v. Malkapur Municipality, A.I.R. 1970 S.C.
1002 distinguished.
M.P.V. Sundararamier & Co. v. State of Andhra Pradesh,
[1958] S.C.R. 1422, relied on.
(iii)The argument that the rules framed under the
District Boards Act became inconsistent with and unworkable
under the U. P. Zila Parishads Act could not be accepted.
The assessment was to be done by the assessing officer
appointed by the District Board. Even if there was a circle
but the members of the circle refused to co-operate with
him, the assessment would not be invalid. The help which
they could render would only
763
be limited to giving information about the assesses. It was
quite competent for the assessing officer to proceed with
the assessment even if the members refused to help him. The
situation was not altered by reason of the fact that the
circle and the members had disappeared. [773G-774A]
(iv)Rules 4 and 5 which laid down certain dates by which the
work was directed to be taken in hand and completed were
merely directory and not mandatory. There was nothing in
these rules to suggest that if the dates were not strictly
observed any prejudice would be caused to the assessee.
[774B-C]
Judgment of Allahabad High Court dated January 8 1963 in
Civil Misc. Writ Petition No. 3160 of 1962, disapproved.
(v)Even if there was any irregularity in the framing of
the rules under the 19" Act the same was cured by the
publication of the notification under s. 120(3) of the Act
of 1922. [774G]
(vi)The appointment of Kar Adhikari (respondent no. 2 in
this case) took place on 8th August 1965, the impugned
assessment was made on 6th March 1968 i.e. more than two
years after the date of appointment. Under s. 43 the
appointment of this officer to the post which carried an
initial salary of more than Rs. 200 p.m. could be made by
the Parishad in consultation with the Public Service
Commission or other Commission or selection Body as might be
constituted by the State Government and if there was a
difference of opinion between the Commission and the
Parishad the matter was to be referred to the State
Government whose decision was to be final. In the present
case the State Public Service Commission had been notified
of the appointment and they had not expressed any disappro-
val of the same. Appointing respondent no. 2 as Kar
Adhikari and merely sending the papers relating to such
appointment to the Public Service Commission would not be
compliance with s. 43 of the Act. Even if it be regarded as
a temporary appointment, it could only be effective for two
years and as the assessments in the present case was made
beyond that date it must be held that the assessment was
made by a person not competent to make it. [774H-775H]
Chandramouleshwar Prasad v. Patna High Court, [1970] 2
S.C.R. 666, applied.
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The position was not improved by the inclusion of the name
of respondent no. 2 in List ’C under paragraph 9(4) of the
U.P. Zila Parishad Central Transferable Cadre Rules, 1966
which came into force with effect from December 20, 1966.
In terms of s. 47 of U.P. Act of 1961 the appointment ceased
to be valid after two years, the period having expired long
before the hearing of this matter. The order of assessment
of Rs. 2,000 on the petitioners dated 25th March 1968 must
therefore be quashed. [776E-H]
JUDGMENT:
ORIGINAL JURISDICTION : Writ Petition No. 435 of 1968.
Petition under Art. 32 of the Constitution of India for the
enforcement of fundamental rights.
E. C. Agarwala, for the petitioners.
C. B. Agarwala, Uma Mehta, S. K. Bagga and S. Bagga, for
respondents Nos. 1 and 2.
O. P. Rana, for respondent No. 3.
764
The Judgment of the Court was delivered by
Mitter, J.-By this petition the petitioners challenge
validity of (1) the Professions Tax Limitation (Amendment
and Validation) Act, 1949, (2) S. 131 of the U. P. Zila
Parishad Act, (3) an order of assessment of Rs. 2,000/-
dated 25th March, 1968 made by the Kar Adhikari, Zila
Parishad Muzaffarnagar and pray for incidental reliefs.
The petitioners carry on the business of manufacture and
sale of "khandsari" and "gur" in the District of
Muzaffarnagar, U. P. They own a crusher in village Morna in
the said district where the manufacture of khandsari as
sugar is carried on. They challenge the imposition of
"Circumstances and Property" tax of Rs. 2,000/- imposed on
their business under, the order of assessment passed by
respondent No. 2. Kar Adhikari, Zila Parishad Muzaffarnagar
for the year 1967-68. As they did not produce their
accounts for their business in khandsari the Kar Adhikari,
an officer appointed by the Zila Parishad of Muzaffarnagar
assessed them to Rs. 2,000/- as "Circumstances and Property"
tax on the estimated income of Rs. 96,000/- from their
property and business for the year.
To appreciate how the Zila Parishad (a district authority)
came to have the power to levy the tax, it is necessary to
take an account of some past legislation. The Local body to
administer the district of Muzaffarnagar in U. P. until the
year 1958 was the District Board of Muzaffarnagar
constituted under the U. P. District Boards Act, 1922 (U.
P. Act X of 1922). Chapter VI of the Act containing
sections 108 to 132 gave the Board certain powers of
taxation, local rates etc. and prescribed the procedure for
imposition and recovery of the levy. Under S. 114 the Board
had the power to impose a tax on "circumstances and
property" subject to certain conditions, inter alia, that
the tax could be imposed only on persons residing or
carrying on business in the rural area with an income above
a certain minimum limit. The rate of tax was not to exceed
Rs. 0-0-4 in the rupee on the total income and the total
amount of tax was not to exceed the maximum which might be
prescribed by rule. By s. 115 a Board deciding to impose a
tax had to frame proposals by special resolution, specifying
the particular tax out of those prescribed in s. 108 which
it desired to impose, the persons or classes of persons to
be made liable and the description of the property or other
taxable thing or circumstance in respect of which they were
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to be made liable, the amount of rate leviable from such
persons or classes of persons and any other matter which the
State Government required by rule to be specified. S. 116
enabled any person
765
ordinarily residing or carrying on business in the district
to raise objections to the proposal which had to be
considered by the Board. Under s. 117 the Board had to
submit the finally settled proposals to the State Government
which could either sanction the same or return them to the
Board for further consideration. When the State Government
had sanctioned the proposal of the Board, it had to frame
rules under s. 172 in respect of the tax as for the time
being it considered necessary after taking into
consideration the draft rules submitted by the Board.
Following on the above, the Board was required to direct the
imposition of the tax with effect from a date to be
specified by special resolution. Under s. 120(1) a copy of
the resolution passed by the Board was to be submitted by it
to the State Government. Government was required to notify
in the official gazette the imposition of the tax from the
appointed day upon receipt of the copy, of the board’s
resolution and the imposition of a tax was in all cases to
be subject to the condition that it had been so notified.
Under sub-s. (3) of s. 120 a notification of the imposition
of a tax under sub-s. (2) was to be conclusive proof that
the tax had been imposed in accordance with the provisions
of the Act. Matters mentioned in clauses (a) to (f)
including inter alia the assessment and collection of taxes
was under s. 123 to be governed by rules except in so far as
the provision therefore was made by the Act. S. 172
empowered the State Government to make rules consistant with
the Act in respect inter alia of matters mentioned in s.
123.
On the 1st of March 1928, the U. P. Local Self Government
issued a notification prescribing rules for the assessment
and collection of a tax on circumstances and property in the
rural area of the Muzaffarnagar District under s. 172 of the
Act after the previous publication thereof as required by s.
176. Rule 3 provided that "the tax shall be assessed by an
assessing officer appointed by the District Board with the
help of the members of the circle concerned". Rules 4 and 5
laid down a time schedule for the work of the assessing
officer and the submission of the list of persons within the
district who appeared to be liable to pay the tax to the
board. He was first required to prepare a list on or before
15th December of each year of all persons who appeared to
him to be so liable. He was then to consider the
circumstances and property of every person entered in the
list and to determine the amount of the tax to which such
person should be assessed. The name of every person
assessed and the amount of tax to which he was assessed was
to be entered in an assessment list in the form attached to
the rules and was to be completed on or before the 20th of
January next. After the preparation of the list and the
submission thereof to the Board ’the latter could take
action to revise the list by a resolution and
766
the Board was to return the list to the assessing officer by
the 15th February.
In terms of the U. P. District Boards Act, 1922 rules were
framed on the 1st March 1928 and the State Government issued
a notification on the 20th April, 1928 under S. 120(2) of
the Art to the effect that the District Board Muzaffarnagar
had in exercise of powers conferred by S. 108(2) imposed
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with effect from May 15, 1928 a tax on all persons
ordinarily residing or carrying on business in the rural
area of Muzaffarnagar District according to their
circumstances and property at the rate of Rs. 0-0-3 in the
rupee on incomes of Rs. 300/- but not exceeding Rs.1200 per
annum and Rs. 0-0-4 in the rupee on incomes of over Rs.
1200/- per year provided that in the case of persons
residing in notified and town areas and paying tax on
circumstances and property to their respective committees,
the rate of tax was to be Rs. 0-0-2 on the income of Rs. 300
but not exceeding Rs. 1200 and Rs. 0-0-3 on the income of
over Rs. 1200/- per annum.
In 1935 the Government of India Act of that year was enacted
whereby the Legislative Lists were defined in the Seventh
Schedule to the Act in terms of ss. 99 to 107 in Chapter I
of Part V. Certain restrictions on legislative powers were
also defined in Chapter 11 of the said Part containing ss.
108 to 110. Item 46 of the Provincial Legislative List was
amended in 1940 to read
"Taxes on professions, trades, callings and
employments, subject, (however, to the
provisions of section 142-A of this Act."
The said section which also came into force under the same
Amending Act ran as follows :-
" 142-A. (1) Notwithstanding anything in
section one hundred of this Act, no Provincial
law relating to taxes for the benefit of a
Province or of a municipality, district board,
local board or other local authority therein
in respect of professions, trades, callings or
employments shall be invalid on the ground
that it relates to a tax on income.
(2)The total amount payable in respect of
any person to that Province or to any one
municipality, district board, local board, or
other local authority in the Province by way
of taxes on professions, trades, callings and
employments shall not, after the thirty first
day of
767
March,nineteen hundred and thirty-nine, exceed
fifty rupees per annum:
Provided that, if in the financial year ending
with that date there was in force in the case
of any Province or any such municipality,
board or authority a tax on professions,
trades, callings or employments the rate, or
the maximum rate, of which exceeded fifty
rupees per annum, the preceding provisions of
this sub-section shall, unless for the time
being provision to the contrary is made by a
law of the Federal Legislature, have effect in
relation to that Province, municipality, board
or authority as if for the reference to fifty
rupees per annum there were substituted a
reference to that rate or maximum rate, or
such lower rate, if any (being a rate greater
than fifty rupees per annum), as may for the
time being fixed by a law of the Federal
Legislature-, and any law of the Federal
Legislature made for any of the purposes of
this proviso may be made either generally or
in relation to any specified Provinces,
municipalities, boards or authorities.
(3)The fact that the Provincial Legislature
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has power to make laws as aforesaid with
respect to taxes on professions, trades,
callings and employments, the generality of
the entry in the Federal Legislative List
relating to taxes on income."
In exercise of the powers conferred by the above section the
Central Legislature passed the Professions Tax Limitation
Act, 1941 (Act XX of 1941) on 26th November 1941. The
preamble to the Act shows that its object was to limit the
total amount payable in respect of any person in respect of
his profession, trade or calling etc. by way of tax to fifty
rupees per annum notwithstanding the provision to the
contrary in s. 142-A of the Government of India Act, 1935.
The Act which contained only three sections and a Schedule
provided by section 2 that the amount of tax payable in
respect of any one person to a Province, municipality,
district board etc. was to cease to be levied to the extent
to which such taxes ’exceeded Rs. 50 per annum. The section
ran as follows :
"2. Notwithstanding the provisions of any law
for the time being in force, any taxes payable
in respect of any one person t a Province or
to any one municipality, district board, local
board or other local authority in any Province
by way of tax on professions, trades, callings
or employments, stall from and after the com-
mencement of this Act cease to be levied to
the extent to which such taxes exceed fifty
rupees per, annum."
768
S.3 was a saving provision whereby the provisions of s. 2
were not to apply to the taxes specified in the Schedule.
All the five items in the Schedule related to taxes on
professions, trades or callings by certain municipalities.
S.108 of the U. P. District Boards Act, 1922 was amended
in 1948 to read
"A board-
(a) shall, by notification in, the, official
Gazette, impose a local rate under section 3
of the United Provinces Local Rates Act, 1914,
as modified by this Act; and
(b)I may continue a tax already imposed on
person assessed according to their
circumstances and property............ in
accordance with section 114
Provided that the tax on circumstances and
property So imposed shall not be abolished or
altered without the previous sanction of the
State Government."’
It will be noticed that after the Professions Tax Limitation
Act of 1941 the District boards in U. P. were not allowed to
collect, a tax on circumstances and property of any person
in excess of Rs. 50. The situation was however altered in
1949 when the Professions Tax Limitation (Amendment and
Validation) Act, 1949 was passed with the assent of the
Governor General on 26th December 1949 (Act LXI of 1949).
This was really to get over the decision of the Allahabad
High Court in District Board of Farrukhabad v. Prag Dutt
(1). The Act was passed to amend the Professions Tax
Limitation Act, 1941 and to validate the imposition in the
United Provinces of certain taxes on circumstances and
property. Section 2 of the Act purported, to add items 3-A
and 3-B in the Schedule to the Professions Tax limitation
Act, 1941 with retrospective effect. Items 3-A and 3-B read
as follows :-
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"3-A. The tax on inhabitants assessed
according to their circumstances and property,
imposed under clause (ix) of sub-section (1)
of section 128 of the United Provinces
Municipalities Act, 1916 (U. P. Act II of
1916).
3-B. The tax on persons assessed according to
their circumstances and property. imposed
under clause (b) of section 108 of the United
Provinces District Boards Act, 1922 (J. P.
Act X of 1922)."
(1) I. L. R. [1949] Allahabad 26.
769
The usual clauses for validation with retrospective effect
were contained in s. 3 of the Act.
Taxes on professions, trades, callings and employments again
came to be dealt with by Art. 276 of the Constitution in
1950. Clause (1) of the article laid down that
"Notwithstanding anything in article 246, no
law of the Legislature of a State relating to
taxes for the benefit of the state or of a
municipality, district board, local board or
other local authority therein in respect of
professions, trades, callings or employments
shall be invalid on the ground that it relates
to a tax on income."
Cl.(2) was aimed at limiting the maximum amount in respect
of such taxes subject to certain qualifications. It ran as
follows
"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 em-
ployments shall not exceed two hundred and
fifty rupees per annum
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."
On August 22, 1968 the U. P. Antarim Zila Parishad Act (XXII
of 1958) was passed by the U. P. Legislature. Under section
1(3) of the Act it was to come into force on 29th day of
April 1959 and to expire on 31st December 1959. The said
Act was purported to be extended to 31st December 1962 by
successive legislation. Under s. 3 (1) of the Act of 1958
all district boards in U. P.......... and all committees of
such boards constituted under the District Boards Act of
1922 were to cease to function and all members and the
President of each board and all members of each committee
were to vacate and be deemed to have vacated their
respective offices.
The U. P. Kshettra Samithis and Zila Parishads
Adhiniyam, .1961 repealed the United Provinces District
Boar& Act 1922
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49-1 S.C. India/71
770
in relation to a district as from the date on which the
establishment of Kshettra Samithis under the new Act (XXXIII
of 1961) was completed and as from the date on which the U.
P. Antarim Zila Parishad Act was to stand repealed in
relation to that district. The Kshettra Samitis and Zila
Parishad were constituted in the District of Muzffarnagar
under the Act. This Act was a comprehensive Act which
prescribed inter alia for dividing all the rural areas of
each district into khands, the establishment of Kshettra
Samithis for each khand, their composition and establishment
and incorporation of Zila Parishads. Each Zila Parishad was
to be a body corporate having perpetual succession and a
common seal with power to acquire, hold and dispose of
property and to discharge its functions under the Act. The
powers and functions of Kshettra Samitis and Zila Parishads
were specified in Chapter III of the Act. Chapter IV of the
Act containing ss. 39 to 55 laid down provisions-for the
appointment of officers and servants of the Zila Parishads.
Under S. 43(1) appointments to the posts of Karya Adhikari,
Abhiyanta and Kar Adhikari and the posts created under sub-
section (2) of S. 39 carrying an initial salary of Rs. 200
or more per month were to be made by the Parishad in
consultation with the State Public Service Commission or
such other Commission or Selection Board as might be
constituted by the State Government in this behalf in the
manner prescribed provided that if there was a difference of
opinion between the Commission and the Parishad the matter
was to be referred to the State Government whose decision
was to be final. Under S. 47
"Notwithstanding anything contained in S.
43...... officiating and temporary
appointments to posts mentioned in sub-section
(1) of section 43, may be made by the
appointing authority specified in section 43
or in the rules made under section 44, without
consulting the Commission, but no such
appointment shall, except as provided in sub-
section (2), continue beyond a period of one
year save after consultation with the Commis-
sion."
Under sub-s.(2) the appointments made under sub-s.(1) might
in special circumstances and where the appointing authority
was the Parishad, with the approval of the State Government
be continued without consulting the Commission for a period
not exceeding two years. Chapter VII of the Act of 1961
contains provisions for taxation and levy of fees and tolls
in ss. 1 19 to 146. S. 120 sanctioned the continuance
of imposition of circumstances and property tax which was
imposed or continued under the U. P. District Boards Act
1922 until abolished or altered and all rules, regulations
and bye-was, orders, notifications were continue in force as
if enacted under the Act of 1961. S. 131(1)
771
enabled the Zila Parishad to exempt for a period not
exceeding one year, from the payment of a tax or any portion
of a tax imposed under the Act, any person who was in its
opinion, by reason of property unable to pay the same and
renew the exemption as often as it deemed necessary. Sub-
ss. (2) and (3) allow other such exemptions either by the
Zila Parishad or the State Government.
The main plank of the argument on behalf of the petitioners
was that the Central Act LXI of 1949 was beyond the legisla-
tive competence of the Federal Legislature, but even
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assuming the said Act was within the competence of the
legislature as a result of the amendment of s. 108 of the U.
P. District Boards Act in 1948 the board could only continue
to levy the tax which was lawfully being imposed in 1948 on
persons assessed according to their circumstances and
properties in accordance with s. 114 and inasmuch as the tax
had been reduced to Rs. 50 by the Central Act of 1941 the
validation under the Professions Tax Limitation (Amendment
and Validation) Act, 1949 would not serve to raise the limit
of tax to beyond Rs. 50 per annum. In our view, none of
these contentions have any force.
On the first branch of his submission, counsel relied on a
passage in Craies on Statute Law (sixth edition, page 283)
reading:
"If a power is given to the Crown by statute
for the purpose of enabling something to be
done which is beyond the scope of the royal
prerogative, it is said to be an important
constitutional principle that such a power,
having been once exercised, is exhausted and
cannot be exercised again."
It was said that the effect of sub-s. (2) read with the
proviso to s. 142-A of the Government of India Act was that
although a tax in respect of professions, trades and
callings might have been leviable after the 31st March 1939
if it was being levied before, the power of the Federal
Legislature having been once exercised to reduce the imposts
over Rs. 501- per annum to that sum, it was exhausted and
could not be exercised a second time. The argument is
patently fallacious. Here there is no question of any
prerogative and the proviso cannot be read to give the
legislature power to alter the quantum of assessment once
for all. Clearly it gave power to the Federal Legislature
to fix a rate of such tax in substitution for the one which
was already prevailing on the 31st March 1939 and it could
do so not only once but from time to time as is apparent
from the use of the expression :
"unless for the time being provision to the
contrary is made by a law of the Federal
Legislature."
772
The words "unless for the time being" indicate that the
Legislature could at any point of time substitute a fresh
rate of tax for the one prevailing. It follows that it was
open to the Federal Legislature to make such substitution
more than once. Having reduced the rate of Rs. 50 by the
Professional Tax Limitation Act the Legislature took power
again to substitute the old rate to tax for the sum of Rs.
50. This substitution became effective as from the date of
the Professions Tax Limitation Act, 1941 by the insertion of
items 3-A and 3-B to the Schedule to the said Act. S. 3 of
the Act of 1949 validated imposts for the period intervening
between 1941 and 1949.
Counsel sought to rely on a decision of this Court in B. M.
Lakhani v. Malkapur Municipality (1) in aid of his
contention that a fresh Act had to be re-enacted after 1949.
In that case the appellants had filed a suit to restrain the
municipality from recovery of "Bale and Bhoja" tax for the
season 1953-54 and for the subsequent seasons and for a
decree for refund of the amount paid contending that the tax
was ultra vires the municipality. One of the points there
canvassed was, whether the levy of the tax by the
municipality was valid in law. The municipality was
constituted in 1905 under S. 41(1) cls.(a) and (b) of The
Berar Municipal Act, 1886. It purported to levy, with
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effect from October 1, 1912, a tax known as the Bale and
Boja tax on cotton ginned and pressed in Ginning and
Pressing factories at certain rates. On the 2nd October
1939 the municipality resolved to revise the rates and by
notification dated January 2, 1940 under S. 67(5) of the C.
P. and Berar Municipalities Act, 1922 tax was permitted to
be levied at the rate of four annas per, ’bale with effect
from October 1, 1939. The Court observed that the
notification of 1940 was not saved by the proviso to, S.
142-A but the municipality collected tax at the rates set
out in the said notification. Accordingly the Court held
that if the notification of 1940 was ineffective under the
Government of India Act, 1935 it could not be revived under
the Constitution by virtue of Art. 276(2) proviso.
Clearly, that case is distinguishable from the facts of the
case before us. In this case the impost remained the same
between the passing of the Government of India Act, 1935 and
the commencement of the Constitution. The amendment of S.
108 of the U. P. District Boards Act of 1922 in 1948 only
allowed the continuance of the tax already imposed on
persons assessed according to their circumstances and
property. We cannot accept the argument that validation of
the imposition of a tax by the Professions Tax Limitation
(Validation and Amendment) Act.
(1) A. I. R. 1970 S. C. 1002.
773
1949 with retrospective effect was not possible. An
argument similar to that raised by the counsel for the
petitioners was raised and negatived in M. P. V.
Sundararamier & Co. v. The State of Andhra Pradesh (1).
There it was contended on behalf of the assessees that s. 2
of the Sales Tax Laws Validation Act, 1956 which provided
that no law of a State imposing or authorising the
imposition of tax on inter-State sales during the period
between April 1, 1951 and September 6, 1955 shall be deemed
to be invalid or ever to have been invalid merely by reason
of the fact that sales took place in the course of inter-
State trade, did not authorise the initiation of fresh
proceedings for the imposition but only validated levies
already made. Rejecting this contention it was observed
(see p. 1460):
"What is material to observe is that the power
conferred on Parliament under Art. 286(2) is a
legislative. power, and such a power conferred
on a Sovereign Legislature carries with it
authority to enact a law either prospectively
or restrospectively, unless there can be found
in the Constitution itself a limitation on
that power."
and at p. 1461
"While a law prohibiting transfers (the
subject matter of the appeal before the Privy
Council in Punjab Province v. Daulat Singh-73
I. A. 59) must be prospective’ a law
authorising imposition of tax need not be. It
can be both prospective and retrospective.",
It necessarily follows that if the Act of 1949 was valid the
imposition was saved even after 1950 under the proviso to
cl. (2) of Art. 276 of the Constitution.
It was next argued that the rules framed under the District
Boards Act became inconsistent with and unworkable under the
U.P. Zila Parishads Act. It was said that under rule 3
framed by the Local Self Government of the U. P. under s.
172 of the Act of 1922 the tax was to be assessed by an
assessing officer appointed by the District Board with the
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help of the members of the circle. As under the Zila
Parishad Act there were no circle or members, the old rule
was said to have become unworkable. In our view this
argument has no force. The assessment was to be done by the
assessing officer appointed by the District Board. Even if
there was a circle but the members of the circle refused to
cooperate with him, the assessment would not be invalid.
After all the help which they could render would only be
limited to
(i) [1958] S. C. R. 1422.
774
giving information about the assessees. It was quite
competent for the assessing officer to proceed with the
assessment even if the members refused to help him. The
situation was not altered by reason of the fact that the
circle and the members had disappeared.
The next argument of counsel that the time schedule men-
tioned in rules 4 and 5 in the notification of January 28
not having been adhered to, the assessment was illegal, must
be rejected on the face of it. These rules laying down
certain dates by which the work was directed to be taken in
hand and completed were merely directory and not mandatory.
There was nothing in these rules to suggest that if the
dates were not strictly observed any prejudice would be
caused to the assessee. We find ourselves unable to accept
the observations to the contrary in a judgment of the
Allahabad High Court dated 8th January 1963 rendered in
Civil Miscellaneous Writ Petition No. 3160 of 1962 to which
reference was made in this connection.
In paragraph 21 of the petition, a complaint is made that
the Zila Parishad had changed the rate of tax to 3 paise per
rupee which is equivalent to 6 pies (old) per rupee being
the rate which was in force under the District Boards Act
and the minimum amount on income for levy of tax had also
been raised under the Zila Parishad Act to Rs. 600 from Rs.
300 under the District Boards Act. It is pointed out in the
counter affidavit of respondent No. 2 that the above
statement is not correct and that the rate of 3 paise per
rupee provided under S. 121 of the Zila Parishad Act was not
applicable by virtue of s. 120 of the Act. The respondent
further pointed out that the maximum amount on which the tax
was leviable had been raised from Rs. 300 to Rs. 600 before
the commencement of the Zila Parishad Act the change working
in favour of the assessee. We are therefore not satisfied
about the genuineness of the petitioners’ complaint.
A faint attempt was made to argue that the rules of 1928
were not properly framed inasmuch as the procedure laid down
in the relevant chapter of the Act of 1922 was not followed
strictly and the rules were not sent to Government for
approval. In our view, even if there was any such
irregularity in the framing of the rules, the same were
cured by the publication of the notification under s. 120(3)
of the Act of 1922.
The last point raised by the petitioners relates to the
appointment of the Kar Adhikari on the ground that it was
not done in consultation with either the Public Service
Commission of the State or any other Commission or body
appointed in that behalf by the State Government Under s. 43
of the, U. P. Kshettra Samithis and Zila Parishads
Adhiniyam, 1961 i.e. U.P. Act XXXIII of 1961. The
appointment of respondent No. 2 in this case took place on
8th August 1965; the impugned assessment
775
was made on 6th March 1968 i.e. more than two years after
the date of appointment. Under s. 43 the appointment of
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this officer to the p t which carried an initial salary of
more than Rs. 200 p.m’ could be made by the Parishad in
consultation with the .Public Service Commission or other
Commission or Selection ’Body as might be constituted by the
State Government and if there was a difference of opinion
between the Commission and the Parishad the matter was to be
referred to the State Government,.-’ whose decision was to
be final. Counsel for the respondents on the materials
before this Court was only in a position to in-. form us
that the State Public Service Commission had been notified
of the appointment and they had not expressed any dis-
approval of the same. We do not think that this was
sufficient compliance with s. 43. In Chandramouleshwar
Prasad v. Patna High Court (1) this Court had to consider
the question of "appointment of persons to be and the
posting and promotion of District Judges" in the State of
Bihar which under Art. 233(1) of the Constitution were to be
made by the Governor of the State in consultation with the
High Court. It appeared that there was some difference of
opinion between the High Court and the Government of Bihar
with regard to certain appointments and promotions of
District Judges in the State of Bihar and the Government
issued a notification on 17th October 1968 appointing the
petitioner as temporary District and Sessions Judge Singh bhum
until the appointment of a permanent officer in the
vacancy caused by the retirement of an incumbent to that
office. This Court found that before issuing the said
notification the Government never attempted to ascertain the
views of the High Court with regard to the petitioner’s
claim or gave the High Court any indication of its views
with regard thereto. It was. observed that (p. 674) :
"The Governor cannot discharge his functions
under Art. 233 if he makes an appointment of a
person without ascertaining the High Court’s
views in regard thereto............
Consultation or deliberation is not complete
or effective before the parties thereto make
their respective points of view known to the
other or others and discuss and examine the
relative merits of their views."
Appointing respondent No. 2 as Kar Adhikari and merely
sending the papers relating to such appointment to the
Public Service Commission would not therefore be in
compliance with s. 43 of the Act. Even if it be regarded as
a temporary appointment, it could only be effective for two
years and as the assessment in this case was made beyond
that date it must be held that the assessment was by a
person not competent to make it.
(1)[1970] 2 S. C. R. 666.]
776
After the conclusion of the arguments of both parties, the
respondents had an affidavit affirmed by one K. D. Banerjee,
an Assistant in Panchayat Raj 11 Department, Government of
U. P. to the effect that the State Government had created a
Central transferable cadre of the class of officers, acting
under s. 44 of Act XY-XIII of 1961 and that the Government
had also framed rules known as U. P. Zila Parishad Central
Transferable Cadre Rules, 1966 which came into force with
effect from December 20, 1966. According to paragraph 8 of
the rules, appointments for the first time to the cadre were
to be made from amongst the officers who on the 26th April
1966 were holding the posts, inter alia, Kar Adhikari.
Further, according to paragraph 9(4) of the rules, a list
known as List ’C’ was to be prepared containing the names of
officers who as on 26th April 1966 are holding the posts of
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Secretary or Kar Adhikari etc. in a temporary or officiating
capacity and the list was to be arranged in order of
seniority. According to the affidavit the respondent No. 2
having been appointed in a temporary officiating capacity
continued to be on that post under sub-r. (4) of rule 9 and
his name was included in list ’C’ and was being considered
by the Government for permanent appointment in consultation
with the State Public Service Commission.
In our view the matters relied on in the affidavit do not
alter the situation or improve the position of respondent
No. 2 in any way. The non-obstante clause in s. 44 of Act
XXXIII of 1961 only relates to sections 41, 42 and 43 and
not to s. 47 which deals with officiating and temporary
appointments to certain posts. It would therefore appear
that by the inclusion of the name of respondent No. 2 in
list ’C’ he still continued to be in his officiating and
temporary capacity. In terms of s. 47 therefore the
appointment ceased to be valid after two years, the period
having expired long before the hearing of this matter.
No argument was advanced to us on the question of the
validity of s. 131 of the U. P. Zila Parishad Act and we do
not express any opinion thereon.
Although the major points raised by the petitioners are of
no substance, we find ourselves unable to uphold the
validity of the levy as it has not been shown to us that Kar
Adhikari’s appointment was valid in law. The order of
assessment of Rs. 2,000/- on the petitioners dated 25th
March, 1968 will therefore be quashed. In view of the
divided success in the writ petition, we make no order as to
costs.
G. C. Assessment order quashed.
777