GURUSWAMI NADAR Vs. EZHUMALAI PANCHAYAT BOARD

JUDGEMENT

(1.) CAN the legality of a levy, which is in reality a tax, be upheld on he basis of a custom is the question for decision in this case. In the village of Elumalai in madurai Dt. , for over 30 years, it has been customary for the village community to make a collection called mahamai or tharagu in respect of certain articles brought into the village and certain other articles taken out of the village. The Panchayat board of Elumalai passed a resolution on 16-12-1958 and levied a tax in respect of seven items of goods and articles brought into the village and certain other articles which were taken out of the village for purposes of the trade. The plaintiffs filed the suit, out of which the present appeal arises, questioning the levy. The first dependent Panchayat Board and the other defendants who were the lessees for collection of this levy, contested the suit claiming that the levy in question was valid on the basis of custom which had been given legal effect to by S. 58 of the madras Village Panchayats Act 1950. The trial Court held that the mahamai fund is, in fact administered for the benefit of the villagers in common, that the lease of the mahamai collections had been going on for over 35 years and the collection has been going on for over 30 or 40 years and that the payment is not voluntary, but compulsory. Before the lower appellate Court, there was no dispute about the facts. The only question at issue was, whether the levy was valid?

(2.) AS already mentioned, the validity of the levy was sought to be supported on the basis of Sec. 58 of the Madras Village Panchayats Act 1950. Section 58 reads as follows:-

(3.) IT follows from the findings of the Courts below that this is an income which by custom belongs to or has been administered for the benefit of the villagers in common. But this levy being compulsory, there is very little doubt, that it is in effect a tax. under Art. 265 of the Constitution of India no tax shall be levied or collected except by authority of law. Now, is Sec. 58 of the Madras Village panchayats Act of 1950, the law, which authorises the levy and collection of the tax in question and if it does, is it valid?