JANARDAN RAO Vs. MUNICIPAL COUNCIL SAUSAR

JUDGEMENT

(1.) THIS reference under section 113 of the Code of Civil Procedure, made by the Civil Judge, Class II, Sausar, refers to the High Court the following questions of law for its opinion, namely- (1) Whether the Haisiyat tax is a tax on income? (2) If so, whether the Municipal Council could enhance the amount of 'Haisiyat tax' from Rs. 7,000 to Rs. 12,000, after 26th January 1950?

(2.) FOR a proper understanding of the questions involved, it is necessary to set out the charging provision, section 35 (a) (ii) of the Central Provinces Municipal Act, 1903, under which the tax was initially levied. It reads as follows-

(3.) A few decisions dealing with the Haisiyat tax are here worth mentioning. In Muhammad Hamid v. Municipal Committee, Durg (23NLR162.) Kotval J., observed that according to rule 5 (b) of the Rules framed by the Municipality, which lay down the principles of assessment of the Haisiyat tax, the tax paying capacity of a Government servant in respect of his salary does not depend solely upon the gross amount thereof. Income-tax must be wholly deducted therefrom. Insurance premia and house rent cannot as a matter of principle be so deducted. Bind Basni Prasad J., in District Board of Farrukabad v. Prag Dutt and others (AIR 1948 All. 382 (FB).) stated that the tax on "circumstances and property" imposed under section 108, Uttar Pradesh District Boards Act, 1922, is a composite tax, consisting inter alia of the tax on professions, trades, callings and employments which falls under Entry 46, and on lands and buildings which falls under Entry 42 of the Provincial Legislative List of the Government of India Act, 1935, Schedule 7. To the extent that the tax on circumstances and property is from the income derived from trades, professions, callings and employments, it cannot, in view of section 2, Professions Tax Limitation Act, 1942, exceed fifty rupees per annum. But as this section places no limitation on "taxes on lands and buildings", leviable under Entry 42, the circumstances and property tax so far as it is referable to this heading is not subject to this restriction. D. N. Sinha J., (as he then was) in M/s Hiralal Ramkumar v. Sainthia Anchal Panchayat (A I R 1964 Cal. 590.) while dealing with section 57 of the West Bengal Panchayats Act, 1956, stated that the taxing provision was intra vires the State Legislature. He then stated-