Judgment

WANCHOO, J. (For self, Gajendragadkar, C.J.I. and Raghubar Dayal, J.):

This is an appeal on a certificate granted by the Allahabad High Court. The appellant is a public limited company and owns two sugar factories situate in the city of Rampur. The factories comprise a number of buildings including some for residential purposes also. The Municipal Board of Rampur (hereinafter referred to as the respondent) decided to impose water tax in Rampur as provided under S. 128 (1) (x) of the U. P. Municipalities Act, No. II of 1916 (hereinafter referred to as the Act). The procedure for the imposition of tax by the Municipal Board under the Act is provided in Ss. 131 to 135 of the Act. Section 131 provides that when a Board desires to impose a tax, it shall by special resolution frame proposals specifying the tax, persons or class of persons to be made liable, and the description of property or other taxable thing or circumstance in respect of which they are to be made liable, the amount or rate leviable from each such person or class of persons, and any other matter required by the Rules framed by the State Government. The Board has also to prepare a draft of the rules which it desires the State Government to make in respect of the tax, namely, for assessment, collection, exemption and other matters relating to tax, (S. 131 (2)). Section 131 (3) which is important for our purposes reads thus:

"The Board shall, thereupon publish in the manner prescribed in Section 94 the proposals framed under sub-section (1) and the draft rules framed under sub-section (2) along with a notice in the form set forth in Schedule III."

Section 132 provides for procedure subsequent to framing proposals and permits any inhabitant of the municipality within a fortnight from the publication of the notice, to submit to the Board an objection in writing to all or any of the proposals. The Board has to take these proposals into consideration and pass orders thereon by special resolution and if it thinks necessary it can modify the proposals. If the proposals and the rules (if any) are modified, the modified proposals and rules are again published. it is open to any inhabitant of the municipality again to object to the modified proposals, and if any such objection is made, it is dealt with in the same manner as objections to the original proposals. When the proposals have been finally settled, the Board has to submit them along with the objections to the prescribed authority or the State Government, as the case may be, under S. 133 of the Act. The prescribed authority or the State Government has the power thereunder to sanction the proposals or to return them to the Board for further consideration or sanction them without modification or with such modification not involving an increase of the amount to be imposed is it deems fit. Section 134 provides that when the proposals have been sanctioned, the State Government has to take into consideration the draft rules submitted by the Board and make such rules under S. 296 of the Act as it thinks fit. When the rules have been made the order of sanction and a copy of the rules has to be sent to the Board which thereupon by special resolution has to direct the imposition of the tax with effect from the date to be specified in the resolution. Section 135 then provides that a copy of the above resolution has to be submitted to the State Government or the prescribed authority, as the case may be. Upon receipt of such copy, the State Government or the prescribed authority, as the case may be, has to notify in the official gazette the imposition of the tax from the appointed day and the imposition of the tax is in all cases subject to the condition that it has been so notified under S. 135 (2). Then comes S. 135 (3) which reads as follows:

"A notification of the imposition of a tax under sub-section (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this Act.

" Section 94 (3)