MUNICIPALITY OF CHOPDA Vs. MOTILAL MANEKCHAND

JUDGEMENT

(1.) In this appeal, the question as to the competence of the Municipality of Chopda in the district of East Khandesh to levy under the Bombay District Municipal Act a tax designated the "cotton manufacturing tax" at the rate of one rupee per bale of cotton full-pressed within the municipal limits of Chopda, falls to be determined.

(2.) The Chopda Municipality is declared to be a District Municipality under the Bombay District Municipal Act (Act 3 of 1901) by the Government of Bombay. By Section 59 of the Act, the Municipality is entitled, subject to the general or special orders which the State Government may pass in that behalf, to impose for the purposes of the Act the taxes specified in that section. In 1919 the Municipality imposed a 'cotton manufacturing tax', with the sanction of the Provincial Government, at the rate of one and for every bale of cotton pressed within the municipal limits, and the tax was made payable at the time when the bales were pressed by the owner (of the bale) to the tax collecting Karkun. Sanction to the levy of this tax was accorded by the Government of Bombay as from 7-4-1920. On 25-3-1924, the Commissioner, Central Division, sanctioned enhancement of the tax to eight annas on each pressed cotton bale, and the tax continued to remain payable by the owner. In 1946 the rules framed y the Municipality under Section 4(1 (1) of the Bombay District Municipal Act were modified, and the tax was made payable by the manager of the pressing factory within fifteen days from the presentation of the bill demanding payment of the tax. The tax, however, continued to be leviable at the rate of eight annas for every bale of cotton full-pressed or repressed within the municipal limits of Chopda. Under the bye-Jaws of the Municipality duty to furnish information about the pressing of bales was imposed upon the managers of the pressing factories. In 1949 the rules were again amended and the Municipality, with the sanction of the State, enhanced the tax to one rupee for every bale of cotton full-pressed within the municipal limits of Chopda. Certain other modifications were made in the rules, but the liability to pay the tax continued to remain imposed upon the managers of the pressing factories. The amendment of the rules came into operation as from 1st July, 1950.

(3.) For the period between 29-12-1950 and 29-5-1951 the Municipality of Chopda presented to the manager of "the Motilal Manekchand Press Factory" bills for payment of Rs. 6,580 as cotton manufacturing tax at the rate of one rupee for bales of cotton pressed or re-pressed within that period. The manager of the factory paid the amount under protest. The owner of the factory Motilal Manekchand and its manager Dattatraya Prabhakar Tare then served a notice upon the Municipality on 20-5-1952 challenging the validity of the tax and calling upon the Municipality to refund the tax already paid under protest and to remain from realising; the tax demanded. The Municipality having failed to carry out the requisition, the owner of the factory Motilal Manekchand and the Manager Dattatraya Prabhakar Tare filed Civil Suit No. 32 of 1952 in the Court of Civil Judge, Senior Division, at Jalgaon against the Municipality of Chopda for a decree for refund of Rs. 8,328 with interest of Rs. 676-3-0 as interest due thereon or, in the alternative, for refund of Rs. 7,828 and Rs. 631-3-0 as interest due thereon, and for an injunction restraining the municipality from levying and realising the cotton manufacturing tax. The plaintiffs pleaded that the levy of the tax was illegal and ultra vires', because (1) the plaintiffs-had no ownership or interest in the cotton, bales pressed in their factory, and (2) the levy of the-cotton manufacturing tax contravened Section 142-A of the Government of India Act 1935, and Article 276 of the Constitution in that the amount demanded as tax from the plaintiffs was in excess of the maximum permissible.