Judgment

SHAH, J. :- In a group of petitions presented before the High Court of Kerala the appellants challenged the validity of the levy of "timber-tax"by the Corporation of Calicut on the grounds, inter alia, that the State Legislature is incompetent to impose that tax under the Kerala Act 30 of 1961. Govindan Nari, J., declared that the Legislature was incompetent to enact Section 126 of the Calicut City Municipal Act, 1961 (30 of 1961). The decision of Govindan Nair, J., was reversed in appeal by a Division Bench of the High Court and the petitions were dismissed.

2. By virtue of Article 246 read with Schedule VII, Item 52, List II of the Constitution, the State may legislate in the matter of "tax on the entry of goods into a local area for consumption, use or sale therein". The appellants content that Section 126 conferring authority to impose timber tax violetes the restrictions upon the legislative power imposed by the Constitution and on that account is void.

3. Section 98 of the Act enumerates the taxes and duties which the Municipality may levy and one of the taxes described in clause (e) is " tax on timber brought into the city". Section 126 declares a charge of tax on timber brought into the city: it provides, (insofar as it is material):

(1) If the Council by a resolution determine that a tax shall be levied on timber brought into the city, such tax shall be levied at such rates, not exceeding five rupees per ton, and in such manner as may be determine by the Council:

Provided that no tax shall be levied on any timber brought into the city in the course of transit to any place outside the city and directly removed out of the city by rail, road or water.

(2) No timber shall, except in the case referred to in the proviso to sub-sec. (1) be brought into the city unless the tax due thereon has been paid.

(3) The tax shall be levied on timber kept within the city for sale if the commissioner has reason to believe that the tax, if any, due thereon has not been paid:

* * * * *"

4. Power to make bye-laws for sale and seizure of timber in respect of which tax is not paid and for carrying out the provisions relating to the levy of tax is conferred by Section 126 (6) and Section 369 (1) of the Act. The Corporation of Calicut has framed bye-laws relating to the levy and collection of timber tax. It is provided by Clause 3 that the tax on timber shall be paid immediately on timber being brought into the City. Bye-law 7 provides:

" (1) If timber is brought into the city and it is claimed that it is in the course of transit to a place outside the city and not for consumption, use or sale within the city and if in the opinion of the authority or officer authorised to collect the tax on timber, such timber brought into the city is not for the purpose of transit but for the purpose of consumption, use or sale therein, such authority or officer may demand from the person claiming exemption an amount equal to the tax leviable for such timber as security.

(2) If the person, who has paid the security satisfies the Commissioner within 14 days from the date of payment that the timber in respect of which the amount was paid was brought into the city in the course of transit and not for consumption, use or sale therein the Commissioner shall refund the amount to such person. Otherwise the same shall be appropriated towards tax due on such timber.

(3) * * *

(4) * * *"

The High Court held that timber may be imported within the limits of the Corporation for four purposes - (1) for consumption in the city (2) for use in the city; (3) for sale in the city; and (4) for transit through the city, and since all the four purposes were within the enacting part of the section and the proviso to Section 126 (1) having eliminated the right of the Municipality to levy tax for transit through the city, "the taxing power conferred by Entry 52, List II of the Seventh Schedule was ensured and its constitutional strength and validity upheld" thereby.

5. Counsel for the a