BHIKAMCHAND Vs. MUNICIPAL COMMITTEE, CHHOTA CHHINDWARA

JUDGEMENT

(1.) THE petitioners in this case carry on business at Gotegaon which is within the limits of the Municipal Committee, Chhota -Chhindwara. By a notification dated the 17th March 1926 the Government sanctioned the imposition by the said Municipal Committee under Section 66 (1) (o) of the C. P. and Berar Municipalities Act, 1922, of a terminal tax at the rates and on the Articles specified in the Schedule to the notification, exported from and imported in to the said Municipality by rail. The terminal tax came into force from 1st April 1926. In 1960 the Municipal Committee amended the Schedule specifying the rates of tax and the articles taxed. This amendment was confirmed by the Government under Section 67 (5) of the Act by a notification dated the 23rd September 1960 published in the Gazette of the 4th November 1960. The notification ran as follows: -

(2.) IN the return filed by the opponents opposing the petition, it is not disputed that on certain articles a terminal tax was imposed for the first time in 1960 and that the rate in respect of some others has been enhanced. It is, however, averred that despite item No. 89 in List -1 of the seventh Schedule of the Constitution the State and the Municipal Committee have the power to impose the tax under Article 277 of the Constitution which saves the levy of terminal tax in the case of a Municipal Committee which has been imposing one prior to the commencement of the Constitution. It is further submitted by the respondents that in 1926 the Municipal Committee could under Section 66 (1) (o) of the Act, with the sanction of the local Government, impose the terminal tax it did; that as on the date of the commencement of the Constitution it was a tax which was being lawfully levied by the Municpal Committee, the Municipal Committee could continue to levy it under Article 277; and that the inclusion of certain Articles in the list of taxable articles or the enhancement of rates on some other articles did not amount to a fresh imposition of the tax The Municipal Committee has further Stated in the return that the tax is boing collected only from 8th November 1960 after the publication of the notification dated the 23rd September 1960 on 4th November 1960. It is not disputed that after the coming into force of the Constitution a new terminal tax could not be imposed by the Municipal authority as the imposition of such a tax was not within the legislative competence of a State Legislature. There is also no dispute that the tax notified on 4th November 1960 was a terminal tax within the meaning of item No. 89. It is evident from the notifications issued in 1926 and 1960 that the impugned tax is a terminal tax confined to certain articles carried and imported within the municipal limits or exported outside them by rail; It is not a tax falling under item No. 52 of the State List, that is, a tax on the entry of goods into a local area for consumption, use or sale therein. The main question which arises for decision, and which was debated before us, is whether by substituting a new Schedule subjecting certain articles to the terminal tax for the first time and enhancing the rate of tax on others for the Schedule issued in 1926 the Municipal Committee was imposing a new terminal tax or was merely continuing to levy the terminal tax lawfully imposed by it from 1926 onwards. The respondents contend that this is no fresh imposition but merely a continuation of the old one, and that the Municipal Committee has the power to include new articles in the Schedule and enhance the original rate of tax on others under Article 277 of the Constitution.

(3.) BEFORE considering the contention whether the terminal tax imposed by the notification published on 4th November 1960 is in substance a continuation of the old tax, it is necessary to examine the provisions of Article 277. That article runs as follows -