HIRALAL RAM KUMAR Vs. SAINTHIA ANCHAL PANCHAYAT

JUDGEMENT

(1.) THIS application has been made by a partnership firm of the name of Hiralal ramkumar, which has three partners, Ramkumar Anchlia, Suganchand Anchlia and Jitmal Anchlia. The application, is in respect of a. tax imposed by the Sainthia Anchal Panchayat, in exercise of powers conferred upon it by section 57 of the West Bengal Panchayat Act, 1956 (hereinafter referred to as the "said Act" ). The relevant provisions in the said section run as follows:-"57 (1 ). Subject to such rules and such maximum rates or scales as may be prescribed by the State Government in this behalf, an Anchal Panchayat- (a) shall impose yearly a tax upon persons who are the owners or occupiers or owners and occupiers of lands or buildings or both within the local limits of the jurisdiction of the Anchal Panchayat according to the circumstances of such persons within the limits of the Anchal Panchayat and according to the value of the property within such limits of the said persons ;"

(2.) RULES have been prescribed under the said Act, known as the 'west Bengal Panchayat Rules, 1958, (hereinafter referred to as the "said rules" ). The rates and scale mentioned in sub-section (1) of section 57 have been prescribed by rule 110. The maximum rates of tax on persons who are owners or occupiers or owners and occupiers of lands or buildings or both, have been prescribed. It is stated that the scale is according to the estimated total annual income of the persons concerned. In explanation (1), the term 'annual income' has been explained. Clause (a) deals with agricultural lands, clause (b) with tanks, fisheries, forests, etc, clause (c) with non-agricultural lands and clause (d) with buildings. With regard to non-agricultural lands, if such lands are not let out to tenants, the annual income is calculated upon the estimated income from such lands during the year of assessment, after making certain deductions. Where such lands are let out to tenants, it means the gross rental at which such lands have been let out during the year of assessment. With regard to buildings, if it is let out to tenants, 'annual income' means the gross rental at which such buildings have been let out during the year of assessment. If it is not let out to tenants, it means an amount which shall not exceed seven and a half per cent, of the value of the lands and buildings, at the time of the assessment, excluding the value of any furniture which may be in the buildings. Rule 111 of the said Rules, deals with the 'assessment list'. It provides that by the third quarter of each year, the total assessable income of a person shall be determined, on which he shall be liable to pay tax during the following year. Explanation (1) provides that the expression 'total assessable income' means the income which a person derived from lands and buildings, trade or business or any other occupation held within the limits of the Anchal Panchayat. Explanation (2) provides that no person shall be assessed who does not own or occupy lands or buildings within the limits of the Anchal panchayat. Coming back to section. 57, we find that the tax that is to be imposed is primarily a tax upon the person of the assessee. The first requisite is that such a person shall be the owner or occupier of lands or building or both within the local limits of the jurisdiction of the particular Anchal Panchayat which is imposing the tax. The tax, however, is to be imposed by taking into consideration two factors. The first is the 'circumstances' of the assessee and the second is the value of the property within the limits of the said anchal Panchayat, belonging to the assessee. In that sense, it becomes a composite tax. What is the meaning of 'circumstances', has been the subject-matter of a number of decisions, because similar provisions are to be found in the Bengal Municipal Act, 1932, the Village Self-Government Act and other statutes. It is unnecessary to deal with cither decisions, because the word has now been explained in a decision of the Supreme Court- Ram Narain v. The State of Uttar Pradesh, (1) A. I. R. (1957) S. C. 18. That case dealt with the provisions of the U. P. Town Areas Act (Act 2 of 1914 ). Section 14 of that Act, was couched in similar language. There also, the tax to be assessed by the Municipality was based on two things, namely, the 'circumstances' and the 'property', if any, owned by the person to be taxed, within the jurisdiction of the Municipality. S. K. Das, J. said as follows :

(3.) THERE is however a restriction which has been imposed by the Constitution itself, and a ceiling has been put, of Rs. 250/- per annum which cannot be exceeded in any one year, but subject to certain relaxations stated in the proviso: The position, therefore, is as follows: An assessment by the Anchal Panchayat is authorised by the State Legislature under section 57. So far as property is concerned, there is no difficulty, but so far as it is based on 'circumstances' of the assessee, it includes an assessment based on income derived from trade or business or other occupation carried on within the jurisdiction of the municipality. In a sense, therefore, it is a tax on income. But the vires of the section as well as the rules made to carry out its provisions, is saved by article 276 of the Constitution. It is accepted on all hands that municipalities and other Public Bodies cannot continue to exist unless they have some source from which they can gather funds for the purpose of meeting their requirements. The imposition of rates and taxes by such Bodies is a practice which has existed for a very long time, in all parts of the world. The yard-stick for the computation of such rates and taxes is primarily based upon the value of property which the assessee has within the jurisdiction of the Public body concerned, but to an extent it is also based on the 'status' of a person, under which heading it is customary to include the income that a person has in his trade, business or other occupation carried on within the territorial limits of the Public body concerned, This practice has been recognised by the Constitution, which has made provision for it. While it has purported to save legislation in this behalf made by the State Legislatures, it has also imposed restrictions. If the State Legislature could once again tax incomes without a ceiling, as is permissible for the Central Legislature, then the assessee would be in a very precarious position. That is why a ceiling has been laid down. In the present case, however, it is the vires of the Act and the rules that have been challenged but the quantum has not been challenged. In my opinion, the provisions of section 57 of the said Act and the relative rules mentioned above are intra vires but while the State Legislature has got the power to make such legislation, the ceiling laid down under article 276 must be observed and cannot be exceeded. Whether the rules made for the purposes of carrying out the provision of section 57 violate the ceiling imposed or not, is a point which unfortunately cannot be gone into in this case because the quantum of tax imposed has not been challenged. The learned Government Pleader says that the ceiling has not been violated. Mr. Sarkar does not admit this, but unfortunately I cannot hear him in this application on the question of quantum. That matter will have to be considered on an appropriate occasion.