GAJADHAR HIRALAL Vs. MUNICIPAL COMMITTEE BASIM

JUDGEMENT

(1.) THIS is a reference made by the learned Second Civil Judge. Washim, under Section 113 of the Code of Civil Procedure, in Civil Suit No. 77-B of 1955 pending in the court of the learned Judge. The learned Judge has framed a question and submitted it for decision by this court. The question submitted to us by the learned Judge is: "whether the enhanced' rate of bales-tax since 1-4-1941 at the rate of Re. 0-4-0 per bale under Section 66 (1) (b) of the Central Provinces Municipalities Act as applied to Berar is ultra vires of Article 276 of the Constitution of. India?"

(2.) THIS reference arises in the following circumstances: The Plaintiff in Civil Suit No. 77-B of 1955 is a registered partnership firm, doing work as a cotton pressing factory at Washim. The Defendant in the suit is the Municipal Committee of Washim. The Plaintiffs case is that till 1-4-1941, the Defendant, Municipal Committee, hart been recovering tax at the rate of Re. 0-2-3 per bale of 14 maunds weight pressed in the factory from persons carrying on the trade of pressing cotton by mechanical means. By a resolution passed by the Municipal Committee on 24-3-1940, the said Committee purported to enhance the above-mentioned rate of Re. 0-2-3 pa1 bale of 14 maunds weight pressed in the factory to Re. 0-4-0 per bale of the same weight, and the enhancement was purported to be given effect to from 1-4-1941. The Plaintiff; contends that in pursuance of the above-mentioned resolution the Municipal Committee has been recovering from it a bales tax at the rate of Re. 0-4-0 per bale. According to the Plaintiff, the enhancement of the rate of tax from Re. 0-2-3 to Re. 0-4-0 per bale is, illegal as it offends against the provisions of Clause (2) of Section 142-A of the Government of India Act, 1935 and is not saved by the provisions of Clause (2) of Article 276 08 the Constitution. The Plaintiff, says that as the number oft bales likely to be pressed in its factory during any year when the factory is working would1 exceed 2,000, the enhanced rate of the tax, namely, the rate of Re. 0-4-0 per bale, would result in a burden heavier than Rs. 50 per annum on the Plaintiff's firm. This, says the Plaintiff, was an unlawful burden to impose upon it. In these circumstances, the Plaintiff says that the resolution dated 24-3-1940, passed by the Defendant, Municipal Committee and the notice enhancing the rate of the tax from Re. 0-2-3 to He. 0-4-0 per bale are illegal and ultra vires the powers of the Municipal Committee- It is in the aforesaid circumstances that the present reference under Section 113 of the Code of Civil Procedure is made by the learned Judge.

(3.) AS I have mentioned above, the question referred to Us is whether the enhancement of the rate of tax from Re. 0-2-3 to RE. 0-4-0 per bale of; 14 maunds weight of cotton pressed in the factory is ultra vires the Article 276 of the Constitution of India. The answer to this question has to be in the affirmative. Having heard the learned Advocate Mr. Bobde appearing for the Municipal Committee at considerable length, we have, come to the conclusion that this is the only answer which is consistent with the intention expressed by the language of Clause (2) of article 276 of the Constitution. Mr. Bobde says that in the financial year immediately preceding the commencement of the Constitution, there was actually being levied a tax on the trade of pressing cotton by mechanical means, the rate of which exceeded Rs. 250 per year (at the rate of Re. 0-4-0 per bale, the rate of tax recoverable upon 2,000 bales or more, annually pressed in the Plaintiff's factory, would be much more than Rs. 250 per year ). Such a tax, says Mr. Bobde, could be continued to be levied until a provision to the contrary was made by Parliament by law- For making this submission Mr. Bobdc relies upon the proviso to Clause (2) of Article 276 of the Constitution. Mr. Bobde says that the word "tax" in Clause (2) of Article 276 means the tax which was being actually levied on the trade, irrespective of, the legality or otherwise of the tax. Mr-Bobde concedes that the rate of the tax exceeding Rs. 50 per year, in the year immediately preceding the commencement of the Constitution, was not being lawfully levied. It was an illegal levy, because it offended against the provisions of sub-section (2) of Section 142-A of the Government of India Act, 1935. All the same, says Mr. Bobde. if the rate at which the tax was actually levied exceeded Rs. 250 per year in the year preceding the commencement of the Constitution, it could be continued to be levied under the proviso to clause (2) of Article 276 unless a provision to the contrary was made by Parliament by law. On the other hand, Mr. Mudholkar for the Plaintiff says that since in the year immediately prior to the commencement of the Constitution, a tax, the rate whereof exceeded Rs. 50 per year, was not lawfully leviable, it could not be continued' to be levied after the commencement of the Constitution. Mr. Mudholkar says that such a tax is not saved by the proviso to Clause (2) of Article 276 of the Constitution. What is saved1 by the proviso to Clause (2) of Article 276, say Mr. Mudholkar, is a tax whose rate exceeded Rs. 250 per annum, if such a tax was being lawfully levied in the year immediately preceding the coming; into force of the Constitution.