MOHANLAL HARGOVIND Vs. GRAM PANCHAYAT

JUDGEMENT

(1.) THIS order will also govern Misc. Petitions Nos. 185 to 190, all of 1961.

(2.) THESE are seven applications under Article 226 of the Constitution by persons who manufacture bidis within the limits of Gram Panchayat, Nagod. On 20th october, 1959, the Gram panchayat passed a resolution imposing a tax on bidi manufacturers at the rate of one naya paisa per thousand of bidis manufactured. The resolution was published on 24th December, 1959, for inviting objections to the taxation proposals, The petitioners unsuccessfully objected to the imposition. The imposition of the tax was ultimately approved by the Collector on 21st May, 1960, and it came into force from 1st June, 1960. The petitioners question the validity of the tax on the ground that the Gram Panchayat had no authority whatsoever to levy such a tax and pray that the imposition be declared illegal and the notices of demand for the payment of tax issued to each of the petitioners be quashed.

(3.) THE Gram Panchayat is constituted under Section 12 (1) of the Vindhya Pradesh gram panchayat Ordinance, 1949 and is the Executive Committee of the Nagod gram Sabha established under Section 3 of the Ordinance. By Section 31 all the duties, powers and functions of the Gram Sabha except those specified in Chapter iii and Sections 14 and 30 are exercised, performed and discharged by the Gram panchayat. Section 37 enumerates the taxes which a Gram Sabha may impose. It says that the Gram Sabha may impose any of the enumerated taxes "subject to the prescribed rules and any orders made by the Vindhya Pradesh Government in this behalf". Under Section 37 (d) the Gram Sabha has the power to impose ''a tax on trade, calling and profession not exceeding such rate as may be prescribed". Rule 221 of the Rules made under the Ordinance deals with the manner of imposition of the tax. Sub-rule (1) of Rule 221 provides that a Panchayat may, by resolution, require that no person shall carry on the trade of a weighman, a palledar, a sugar refiner and merchant etc. , without obtaining a licence for the same on payment of the fee indicated in the sub-rule. The other sub-rule lays down that merchants dealing in grain, cloth and sugar, refiners and persons carrying on any other prescribed trade may be required by a resolution of the Panchayat to pay a tax "on the annual income of their trade" according to the scale and limits specified in the sub-rule. Shri Shrivastava, learned counsel appearing for the petitioners, contended that the gram Panchayat's power under Section 37 was limited by Rule 221 as Section 37 itself stated that subject to the prescribed rules a Gram Sabha could impose the tax stated in that provision; that consequently under the head of "tax on trade, calling and profession" the Gram Panchayat could impose only those taxes which fell within Rule 221; that the impugned tax in its nature was neither a tax on the annual income of the petitioners' trade falling under Sub-rule (2) of Rule 221 nor a licence fee falling under Sub-rule (1); and that it was not even a tax on trade, calling or profession but simply a tax on production and manufacture of bidis.