STATE OF M.P. Vs. MAGANLAL NATHULAL

JUDGEMENT

(1.) BOTH these appeals arise out of the common judgment disposing of the Misc. Petition No. 200 of 1976 and Misc. Petition No. 199 of 1976 by the Division Bench of the High Court of Madhya Pradesh, Indore Bench. The respondents in these appeals filed applications under Article 226 of the Constitution of India before the Madhya Pradesh High Court challenging the imposition of tax by Anjad Municipality on cotton bales whereby the existing tax rate was increased w.e.f. November 24, 1973. It appears that Anjad Municipality which was initially within the erstwhile State of Barwani, had imposed tax at the rate of Re. 1 per cotton bale and that rate continued till November 24, 1973 when it was increased to Rs. 2 per bale by the Administrator of the Municipality who was also the Naib Tahsildar. After reconstitution of the Municipality, the Municipality also passed resolution for recovering tax at the said increased rate. In view of such increase in the rate of tax on cotton bales, writ petitions were filed before the Madhya Pradesh High Court. It was contended by the petitioner in the writ proceedings that imposition of such increased fate of tax was vitiated on account of excessive delegation but such contention was not accepted by the High Court. The High Court, however, upheld the second contention of the petitioners that in the absence of fixation of limit prescribing the maximum and minimum rate of tax by the State Government the imposition of tax by increasing the existing rate of tax under section 130 of the M.P, Municipal Act was illegal and could not be enforced.

(2.) IT is not disputed that the Slate Government has not prescribed the maximum and minimum limits of the rate of lax as required to be fixed by sub -section (2) of section 127 of the Municipalities Act. The High Court has held that if such limits are not prescribed by the State Government the Municipal Council has no power to increase the rate of tax. The High Court has held that there are two restrictions on the power of the Municipal Council before it embarks to increase the rate or tax. The first is that the maximum limit must be prescribed under the rules. Secondly, the increase must be confined within the limits so prescribed. Since no rule was framed for the said purpose by the State Government under clause (c) or sub -section (2) of section 127 of the Act, the increase of the rule of tax by the Anjad Municipality was held illegal and the demands were quashed by the High Court.