Sections 119 and 120 of the United Provinces District Boards Act, 1922, are mandatory and not directory, and no tax can be imposed without a resolution under Section 119 and a notification under Section 120.

Headnote:
TAXATION - CIRCUMSTANCES AND PROPERTY TAX - IMPOSITION - RESOLUTION UNDER SECTION 119 AND NOTIFICATION UNDER SECTION 120 OF THE UNITED PROVINCES DISTRICT BOARDS ACT, 1922 - NECESSITY - SECTIONS 119 AND 120 ARE MANDATORY AND NOT DIRECTORY - NO TAX CAN BE IMPOSED WITHOUT A RESOLUTION UNDER SECTION 119 AND A NOTIFICATION UNDER SECTION 120.
Fact of the Case:

The District Board of Moradabad imposed a tax on circumstances and property in the rural areas of the district. The tax was initially set at a maximum of Rs. 200 per person, but was later increased to Rs. 500 and then to Rs. 2000. The respondent, Kundan Sugar Mills, challenged the imposition of the tax, arguing that the District Board had not passed a special resolution under Section 119 of the United Provinces District Boards Act, 1922, or issued a notification under Section 120 of the Act, as required by law.
Finding of the Court:

The Supreme Court held that Sections 119 and 120 of the Act are mandatory and not directory, and that no tax can be imposed without a resolution under Section 119 and a notification under Section 120. The Court found that the District Board had not complied with these requirements, and therefore the imposition of the tax was illegal.
Issues: Whether Sections 119 and 120 of the United Provinces District Boards Act, 1922, are mandatory or directory.
Ratio Decidendi: The Court held that Sections 119 and 120 of the Act are mandatory and not directory. The Court reasoned that the object of these sections is to fix the date from which the tax can be imposed, and that without a resolution under Section 119 and a notification under Section 120, no tax can be imposed.
Final Decision: The Court dismissed the appeal, holding that the imposition of the tax was illegal.

Judgement

SIKRI, J.:- This appeal by special leave is directed against the judgment of the High Court of Allahabad accepting a petition under Article 226 of the Constitution and directing the District Board, Moradabad, not to levy upon M/s. Kundan Sugar Mills, Amroha, respondent before us, circumstances and property tax for any one year exceeding the sum of Rs. 200. The High Court held that no special resolution of the Board had been passed, nor had a notification been made imposing the tax, under Section 119 and Section 120, respectively, of the United Provinces District Boards Act, 1922 (U. P. Act X of 1922) - hereinafter referred to as the Act.

2. The relevant facts out of which this appeal arises are these: On July 28, 1925, it was notified under sub-section (2) of Section 120 of the Act that the District Board of Moradabad, in exercise of the powers conferred by Section 108 sub-section (2), of the Act has imposed the following tax with effect from September l, 1925 :

"A tax on all persons ordinarily residing or carrying on business in the rural area of the Moradabad District according to their circumstances and property, at the rate of four pies per rupee on the total taxable income; provided that the total amount of tax imposed on any person shall not exceed Rs. 200. Provided also that no income once assessed shall be reassessed."

On May 28, 1927, the District Board took action upon a memorandum prepared by the Chairman of the District Board. The memorandum of the Chairman pointed out :

".....the maximum amount of tax recoverable from an assessee should be raised from Rs. 200 to Rs. 500 P. A. Hence proposal (c) framed under Section 115 sanctioned by G. O. No........ dated 28-7-25 be so modified as to read as under :

"That there shall be a rate of tax of 4 pies in the rupee ....provided that the total amount of tax imposed on any person shall not exceed Rs. 500/- ...."

3. The resolution of the Board was in these terms:

"The bye-laws be modified accordingly after necessary publication and sanction. The assessing officer to assess them at 2 pies (sic) in anticipation of final sanction."

4. On January 11, 1928, the Government of United Provinces issued a notification amending the rules for the assessment and collection of tax on circumstances and property in the rural areas of the Moradabad District. The following rule 16 was added :

"16. The total amount of tax imposed on any person shall not in any year exceed the sum of Rs. 500/-."

5. On August 31, 1931, the Board passed another resolution approving the following memorandum :

"..........The words and figures Rs. 500 be substituted by Rs. 2000 in rule 16 of the rules for the assessment and collection of a tax on circumstances and property in the rural area of the Moradabad district published with Government Notification No....... dated 11-l -1928."

6. The exact terms of the resolution were :

"Resolved unanimously that the memo be approved and necessary action be taken on it. If publication is required, it be done and Government be moved to accord sanction for the same."

On March 18, 1933, the Government of United Provinces issued a notification amending Rule 16. The amendment was in the following terms :

"Rule 16 published with notification No. 33/IX-185(14-24) dated January 19, 1928 Rs. 2000 shall be substituted for Rs. 500

7. It appears that no further action was taken by the District Board to enforce this amendment in rule 16 or the amendment dated January 11, 1928. Further action is contemplated by Sections 119 and 120, read with Section 121, of the Act. These Sections may be reproduced in full.

"119. Resolution of board directing imposition of tax.-

Upon receipt of the copy of the rules sent under the preceding Section, the board shall by special resolution direct the imposition of the tax with effect from a date (to be specified in the resolution) not less than six weeks from the date of such resolution."

"120. Imposition of tax.- (1) A copy of the resolution passed by the Board

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1967 Supreme(SC) 195

Sections 119 and 120 of the United Provinces District Boards Act, 1922, are mandatory and not directory, and no tax can be imposed without a resolution under Section 119 and a notification under Section 120.

Cases Referred (1)