1965 Supreme(SC) 102

SUPREME COURT OF INDIA
K. SUBBA RAO, RAGHUBAR DAYAL, J.R. MUDHOLKAR, R.S. BACHAWAT AND V. RAMASWAMI, JJ.
1. Bharat Kala Bhandar Ltd. (Private) (In C. A. No. 600 of 1964); 2. Hirabai (In C. A. No. 679 of 1964); Appellants
Versus
Municipal Committee, Dhamangaon; (In both the Appeals), Respondent.
Civil Appeals Nos. 600 and 679 of 1964.
Advocates appeared
In C. A. No. 600 of 1964, Mr. S. G. Patwardhan, Senior Advocate, (M/s. S. Murthy and B. P. Maheshwari, Advocates, with him), for Appellants; In C. A. No. 679 of 1964: M/s. S. N. Kherdekar and A. G. Ratnaparkhi, Advocates, for Appellant: In C. A. No. 600 of 1964: Mr. A. V. Viswanatha Sastri, Senior Advocate, (Mr. M. S. Gupta, Advocate, with him), for Respondent; In C. A. No. 679 of 1964: Mr. A. V. Viswanatha Sastri, Senior Advocate, (Mr. M. S. Gupta, Advocate for Mr. U. P. Singh, Advocate with him), for Respondent.

Headnote:

Whether the respondent committee could collect tax at the enhanced rate and whether a suit for its refund beyond the time prescribed by rules was barred by limitation.

Fact of the Case:

The appellant (hereinafter referred to as the Company) is a private limited company having its registered office at Calcutta and a branch office at Dhamangaon which was formerly in the Province of Central Provinces and Berar but is now in the State of Maharashtra. The Company owns a ginning factory at Dhamangaon. The Notified Area Committee of that place imposed, under S. 66(1) (b) of the Central Provinces Municipalities Act, 1922 (hereinafter referred to as the Act) as applied to Berar a tax at the rate of one anna per Boja of ginned cotton and one anna per bale of pressed cotton as from December 22, 1936, on which date a notification sanctioning the imposition under S. 241(1) of the Act was published in the official Gazette by order of the Government of the Province. The Notification in question runs as follows:- "No. 7911-3242-M-VIII.- In exercise of the powers conferred by clause (a) of Sub-section (1) of section 241 of the Central Provinces Municipalities Act, 1922 (C. P. Act II of 1922) as applied to Berar, the Local Government is pleased to confirm the following rule made by the Notified Area Committee, Dhamangaon, in the Amravati district, under clause (b) of sub-s. (1) of section 66 of the said Act, for imposing a tax on persons carrying on the trade of ginning and pressing cotton by means of steam or mechanical process within its limits:- RULE The committee shall levy from all persons carrying on within its limits the trade of ginning or pressing cotton into bales by means of steam or mechanical process a tax at the following rates from the date of the publication of this notification in the Central Provinces Gazette:- (a) For each bojha of 392 lbs. ginned- 1 anna. (b) For each bale of 392 lbs. pressed- 1 anna. By order of the Government, (Ministry of Local Self-Government). Sd/- R. N. Banerjee, Secretary to Government, Central Provinces." Certain rules were framed by the Government for the assessment and collection of tax which were also published on December 22, 1936. These rules were, however, amended by the Local Government and the amended rules were published in the Gazette on July 30, 1941. It is these latter rules which are now in force. Consequent upon the amendment of the rules the appellant in the two appeals and the proprietors of the ginning factory in Dhamangaon have been paying these taxes at the new rate of 4 annas per bojha and 4 annas per bale. In the plaint it was contended by the Company that after the coming into force of S. 142A of the Government of India Act, 1935 (which came into effect from 1st April, 1939) till January 25, 1950 a tax on trade, profession or calling in excess of Rs. 50 per annum could not be imposed either by a Provincial Government or by a Local Body. Nor again, could an existing tax on trade, profession or calling be raised further so as to exceed Rs. 50 per annum. The Company further pointed out that after the coming into force of the Constitution the upper limit of the tax was raised to Rs. 250 per annum and that as the Company was already paying more than this amount per year even at the rate of one anna per bojha and one anna per bale recovery from them at the enhanced rate of 4 annas was illegal with effect from April 1, 1939. The Municipal Committee contended in its written statement that the provision of S. 142A of the Government of India Act and Art. 276 of the Constitution which limit the tax on professions, trades or callings or employments to Rs. 50 and Rs. 250 per annum, respectively do not apply to a case such as the present where there is no imposition of a new tax but only an enhancement of the rate of an existing tax. It further contended that the tax in question at the rate of 4 annas per bojha and 4 annas per bale was in existence when Art. 276 came into force and is saved by that Article. According to the Committee, the Company s suit was bad for non-compliance with the requirements of S. 48 of the Act and that is the point which we have to consider in this appeal.

Finding of the Court:

The appellant's suit for the recovery of the tax realised in excess of Rs. 250 a year has been rightly dismissed as the correctness of the assessment of the tax could not be challenged by a suit in a civil Court in view of S. 84 (3) and as the provisions of S. 48 requiring the giving of notice to the Municipality and the institution of the suit within a certain period had not been complied with.

Issues: Whether the respondent committee could collect tax at the enhanced rate and whether a suit for its refund beyond the time prescribed by rules was barred by limitation.

Ratio Decidendi: The expression 'assessment made under the Act' in sub-s. (1) of S. 83 is equivalent in its content to the expression 'assessment made under the Act'. It follows that when the Committee made the assessment of the tax on the appellant the assessment was founded on the activity of the Committee acting as the assessing authority and the fact that it overlooked the constitutional requirement is immaterial in determining whether the assessment is made under the Act. The expression 'made under the Act' has no relation to the accuracy of the assessment in point of law. The expression 'assessment of any tax under the Act' in S. 83 is equivalent in its content to the expression 'assessment made under the Act'.

Final Decision: Appeal allowed.