1. Challenge to the validity of a municipal tax and its subsequent enhancements levied on cinema houses under the Bombay District Municipal Act and subsequent municipal legislation. (Para 1 , 2 , 3 )
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1959 Supreme(SC) 5
SUPREME COURT OF INDIA
16th January, 1959.
S.R. DAS, C.J.I., S.K. DAS, P.B. GAJENDRAGADKAR, K.N. WANCHOO AND M. HIDAYATULLAH, JJ.
Western India Theatres Ltd., Appellant
Versus
Municipal Corporation of the City of Poona; Respondent.
Civil Appeal No. 146 of 1955.
Advocates Appeared
Mr. H, D. Banaji, Senior Advocate, (M/s. R. A. Gagrat and G. Gopalakrishnan, Advocates of M/s. Gagrat an Co. with him), for Appellant; Mr. .M. C. Setalvad, Attorney General for India, (M/s. S. N. Andley and J. B. Dadachanji, Advocates of M/s. Rajinder Narain and Co. with him), for Respondent.
Advocates:
G.GOPALAKRISHNAN, GAGRAT JANEDRA LAL, H.D.Banaji, J.B.DADACHAN, M.C.SETALVAD, R.A. GAGRAT JANEDRA LAL AND CO., RAJINDAR NARAIN, S.N.ANDLEY
G.GOPALAKRISHNAN, GAGRAT JANEDRA LAL, H.D.Banaji, J.B.DADACHAN, M.C.SETALVAD, R.A. GAGRAT JANEDRA LAL AND CO., RAJINDAR NARAIN, S.N.ANDLEY
The power to "modify" a tax includes the power to enhance its rate. Additionally, delegating the power to a municipality to impose taxes for the purposes of the Act, subject to government approval, does not constitute an unconstitutional abdication of legislative function.
Headnote:(A) Bombay District Municipal Act, 1901 - Section 59(1)(xi) - Bombay Municipal Boroughs Act, 1925 - Section 60 - Delegation of legislative power - Validity of tax - Power to modify tax - Delegation of power to a municipality to impose "any other tax" for the purposes of the Act is not an abdication of legislative function if it is guided by the purposes of the Act and subject to approval. (Para 6)
(B) Statutory Interpretation - Meaning of "modify" - The word "modify" in the context of altering a tax implies an alteration that can be either a reduction or an increase - A marginal note cannot control the plain and unambiguous language of the section - The substitution of the word "reduce" with "modify" indicates an intention to widen the scope of the power. (Para 7)
Facts of the case:
A lessee of cinema houses challenged the validity of a license fee and its subsequent enhancements. The trial court upheld the initial tax but struck down the enhancements. The appellate court reversed this, upholding both. The matter was appealed on the grounds of unconstitutional delegation of power and the interpretation of the power to "modify" taxes.
Findings of Court:
The delegation of power to the municipality was not excessive as it was limited by the purposes of the Act and subject to approval. The power to "modify" a tax includes the power to increase the rate.
Issues: Whether the delegation of power to impose "any other tax" under the municipal act was unconstitutional and whether the power to "modify" an existing tax included the power to enhance the tax rate.
Ratio Decidendi: Delegation is permissible if it provides a standard (e.g., "for the purposes of the Act") and is subject to oversight. The term "modify" denotes alteration, which encompasses both increasing and decreasing the quantum of a tax, particularly when the legislature replaces a narrower term like "reduce" with "modify".
Result: Appeal dismissed.
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Table of Contents
2. Whether the residuary taxing power constituted unconstitutional delegation of legislative authority and whether the statutory power to modify taxes included the power to enhance rates. (Para 4 , 5 , 7 )
3. Delegation was limited by the Act's purposes and Governor's approval; the term modify in the statute is of wider connotation, including both reduction and enhancement. (Para 6 , 7 )
4. Legislative delegation is constitutional if it fixes a standard; the term modify in a taxing statute includes the power to increase the tax amount. (Para 6 , 7 )
5. Appeal dismissed with costs. (Para 8 )
6. Does a residuary power to impose taxes subject to government approval and the purposes of the Act constitute an unconstitutional delegation of legislative power?
No. Delegation is not excessive if the power is limited by the legislature's own authority, the purposes of the Act, and subject to approval by the Governor-in-Council, which establishes a sufficient principle and standard. (Para 6 )
7. Does the power to modify an existing tax under a municipal statute include the power to enhance the tax rate?
Yes. The term modify implies alteration and applies whether the effect is to narrow or enlarge provisions. Marginal notes cannot override clear, unambiguous statutory language, and the term is wider than reduce. (Para 7 )
Judgment
S. R. DAS, CJI. : The appellant is a public limited company registered under the Indian Companies Act, 1913. It is a lessee of four cinema houses situate within the municipal limits of Poona City known respectively as "Minverva", "The Globe", "Sri Krishna" and "The Nishat". It exhibits cinematography films, both foreign and Indian, in the said four houses. The respondent, a body corporate, was governed by the BOMBAY DISTRICT MUNICIPAL ACT , 1901 (Bom. III of . 1901) up to June 8, 1926, and from then by the BOMBAY MUNICIPAL BOROUGHS ACT , 1925 (Bom. XVIII of 1925) up to December 29, 1949, and, thereafter, by the Bombay Provincial Municipal Corporation Act, 1949 (Bom. LlX of 1949). With effect from October 1, 1920, the respondent, with the sanction of the Government of Bombay levied on the owners and lessees of cinema houses within the limits of the erstwhile province of Bombay a tax of Rs. 2 per day as license fee. Rules for the levy and collection of the said tax were framed by the respondent. Those rules were amended on or about June 3, 1941, enhancing the tax from Rs. 2 per day to, Re. 1 per show. The rules were again revised on or about June 9 1948, under which the tax was enhanced from Re. 1 per show to Rs. 5 per show. At all material times the tax was being collected at the last mentioned late.
2. Section 59 of the BOMBAY DISTRICT MUNICIPAL ACT 1901 provided that subject to any general or special orders which the State Government might make in that behalf any municipality (a) after observing the preliminary procedure required by S. 60, and (b) with the sanction of the authority therein mentioned, might impose for the purposes of that Act any of the taxes mentioned in that section. After enumerating ten specific heads of taxes, which a municipality could levy, a residuary category was set forth in cl. (xi) in the words following:-
"Any other tax to the nature and object of which the approval of the Governor in Council shall have been obtained prior to the selection contemplated in sub-clause (i) of cl. (a) of section 60."
Ever since the appellant became a lessee of the,said cinema houses, the appellant has been making payments of the said tax under protest.
3. After giving the necessary statutory notice to the respondent, the appellant, an or about March 31, 1950, filed a suit in the Court of the Civil Judge, Senior Division, Poona, being Suit No. 76 of l950, against the respondent for a declaration that the levy and imposition of the said tax with effect from October 1, 1920, were invalid and illegal; that the enhancement in the rates of the tax with effect first from June 3, l94l, and then June 9, 1948, was invalid and illegal and that the resolutions passed and rules framed in connection with the levy, imposition, enhancement and collection of the said impugned tax were invalid, illegal and ultra vires, for a permanent injunction restraining the defendants from levying or recovering and or increasing and enhancing the said tax and for refund to the appellant of the amounts of the tax collected from it and for costs of the suit and interest. By its judgment dated November 30, 1951, the trial Court held that the said tax was validly levied and imposed, but that the increase and enhancement thereof in 1941 and 1948 were illegal and ultra vires and that the suit was not barred under the Acts governing the respondent. The trial court decreed the suit in part by issuing an injunction restraing the respondent from levying, recovering or collecting the tax at the enhanced rate and passing a decree against the respondent for refund of a sum of Rs. 27,072 with interest and costs. The respondent preferred an appeal and the appellant filed cross objections. But the High Court by its judgment and decree dated February 10, 1948, reversed the judgment of the trial court and dismissed the suit of the appellant with costs throughout. The appellant s cross objections were also dismissed. On December 10, 1953, the High Court grante
