MUNICIPAL PROSECUTOR PALGHAT MUNICIPALITY Vs. R S MANI

JUDGEMENT

(1.) THE Municipal Prosecutor, Palghat Municipality, the complainant in S. C. No. 465 of 1966 in the Honorary Special First Class magistrate's Court, Palghat is the appellant. THE complaint was that the accused committed an offence under S. 284 of the Kerala Municipalities Act, 1960, Act XIV of 1961, read with S. 355 thereof, hereinafter referred to as the act, in that he did not take out a licence from the Commissioner of the municipality for running a stall in the Railway Platform, Olavakkot, for the year 1965-66. THE licence fee due to the Municipality was Rs. 6. 25. THE accused was storing in the stall fruits, confectionery, biscuits, matches, beedies and cigarettes etc. and selling them. A notice was sent to him requiring him to take out the licence. He omitted to comply with the terms of the notice.

(2.) THE learned Magistrate found that the accused was not bound to take out a licence under the Section for two reasons: (1) that S. 279 of the Act exempts the premises in the occupation or under the control of or any property belonging to the Central or State Government from the licensing provisions of the Act and (2) that since there was no quid pro quo, no licence fee could be levied, and therefore, the accused was not bound to take a licence after paying the licence fee.

(3.) AS regards the second point, it was conceded by Mr. Narayanan Potti appearing for the appellant that in view of the decision of the supreme Court in Corporation of Calcutta v. Liberty Cinema AIR. 1965 SC. 1107, holding that inspection is not a service rendered by the Municipality, it has to be held that the Municipality was not rendering any services to the respondent. From the evidence of pw. 1, it is clear that the Municipal Officers are allowed to enter the premises of the railways only with the permission of the railway authorities and that no services were being rendered by the municipality to the respondent in his business. AS there was no quid pro quo for the exaction of a licence fee, it has to be held that the respondent was not bound to take out a licence after paying the licence fee. Mr. Potti, however, contended that although the levy is in the form of a licence fee, it is really a tax and that the State Legislature was competent to authorise the municipality to levy the tax under Entry 49 or 60 or 62 in List II of the seventh Schedule of the Constitution. Mr. Potti said that the fee is really a tax on land under Entry 49, List II. The entry reads: "49. Taxes on lands and buildings". We are not satisfied that the fee sought to be levied is a tax on land. Reliance was placed upon the ruling in Ajoy v. Local Board (AIR, 1965 SC. 1561) to support the contention. The question that arose for consideration in that case was whether the tax imposed under the ASsam Local self-Government Act, Act 25 of 1953, was a tax on land. The provision of the act which came up for consideration in that case was sub-section (2) of S. 62 of the Act, which provides: "on the issue of an order as in sub-section (1) the board at a meeting may grant within the local limits of its jurisdiction a licence for the use of any land as a market and impose an annual tax thereon and such conditions as prescribed by rules. " Sub-section (3) of the Section provides that when it has been determined that a tax shall be imposed under the preceding sub-section, the Local Board shall make an order that the owner of any land used as a market specified in the order shall take out a licence for the purpose and that such order shall specify the tax not exceeding such amount as may be prescribed by rule, which shall be charged for the financial year. The Supreme Court inferred from the wording of these provisions that the Legislature intended to impose a tax on land for its use as a market. The expression 'impose an annual tax thereon' in sub-section (2) of S. 62 was considered by the Supreme Court as an indication of the intention of the Legislature that the tax is a tax on land. We cannot find any such indication in S. 284 of the Act. The levy here is upon an activity. That is emphasized by the Madras High Court in the rulings referred to above. If the fee for the licence under the Section is really a tax on land, the levy must bear some proportion either to income derived from the land or the fertility of the same. Otherwise, the tax will be discriminatory. A uniform levy not geared to the income or fertility of the land will certainly fly in the face of Art. 14 if the levy is treated as a tax on land. We therefore think that the fee cannot be considered as a tax on land under Entry 49 in List ii. Mr. Potti then submitted that the licence fee is really a tax on luxuries under Entry 62 in List II, and the State Legislature was competent to authorise the levy by the Municipality. ' Mr. Potti said that the licence was to be taken by the petitioner under S. 284 for using the premises for storing biscuits, confectionery and cigarettes etc. and these are luxury articles and so the levy is tax on luxuries. Apart from other objections to this argument, we think that the activity for which licence has to be taken under S. 284 is not for storing or selling luxury articles alone. Schedule III mentions the storing not only of luxury articles but of other articles as well. If Mr. Potti's argument is upheld, then, a levy for a licence under S. 284 for any of the activities specified under Schedule III, must be a tax on luxuries. This, we think, is impossible, as the activities specified in Schedule III are not confined to storing or dealing in luxury articles. We do not see how the levy of the fee can be justified as tax on luxuries. Mr. Potti did not put forward any argument on the basis of Entry 60 in List II and we do not therefore think it necessary to consider the scope of that Entry.