Judgment

SHAH, J.:- The Municipality of Malkapur recovered from the appellants Rs. 6,980/2/- as "Bale and Boja tax" for three years 1950-51, 1951-52 and 1952-53 in respect of cotton ginned in their factory. The appellants filed a suit in the Court of Civil Judge, Class I, Khamgaon, for an order permanently restraining the Municipality from recovering the "Bale and Boja" tax for the season 1953-54 and for subsequent seasons and for a decree refunding the amount paid and interest thereon.

2. The appellants contended that the levy of the "Bale and Boja" tax was ultra vires the Municipality. The Trial Court decreed the claim for injunction and also awarded the amount claimed less Rupees 750/-. In appeal, the District Court held that the levy of tax at the rate prevailing on March 31, 1939, was saved by the provisions of Section 142-A (2) of the Government of India Act, 1935, and the Municipality was competent to levy tax at that rate. The District Court on that view modified the decree and held that the Municipality was entitled to retain Rupees 1,867/4/-. In second appeal to the High Court of Bombay at Nagpur, the following question was referred to a Full Bench:

"Whether in respect of the recoveries, which are in contravention of the prohibitions contained in sub-section (2) of Section 142-A of the Government of India Act, 1935, and clause (2) of Article 276 of the Constitution, the provisions of Section 48 (2) of the C. P. and Berar Municipalities Act, 1922 apply?"

The High Court, following the judgment of this Court in Bharat Kala Bhandar v. Municipal Committee of Dhamangaon, 1965-3 SCR 499 answered the question in the negative. The appeal was thereafter placed for hearing on questions not decided by the Full Bench. The Court at that stage entertained and upheld an objection that the suit against the Municipality for refund of tax paid by the appellants was not maintainable. The High Court observed:

"We are bound to follow the decision in Bharat Kala Bhandar v. Dhamangaon Municipality, 1965-3 SCR 499 but in view of the fact that the relevant provisions were not brought to the notice of the Court and in view of the fact that the decision in Firm Radha Kishan s case, (AIR 1963 SC 1547) holds that the remedy provided by similar provisions is adequate and a suit does not lie, we are constrained to hold that under the Act the suit is incompetent."

The High Court accordingly set aside the decree in favour of the appellants for refund of tax and confirmed the injunction restraining the Municipality from recovering the tax. With certificate granted by the High Court under Article 133 (1) (c) of the Constitution this appeal has been preferred.

3. Two questions fall to be determined in this appeal - (1) whether a suit for refund of tax paid to the Municipality is maintainable; and (2) if the suit is maintainable, whether the levy of tax by the Municipality was valid in law.

4. The first question is concluded by the judgment of this Court in Bharat Kala Bhandar s case, 1965-3 SCR 499 . That case arose under the C. P. & Berar Municipalities Act, 1922. The right of a Municipality governed by that Act to levy under Section 66 (1) (b) a tax on bales of cotton ginned at the prescribed rate was challenged by a taxpayer. This Court held that levy of tax on cotton ginned by the taxpayer in excess of the amount prescribed by Article 276 of the Constitution was invalid, and since the Municipality had no authority to levy the tax in excess of the rate permitted by the Constitution, the assessment proceedings levying tax in excess of the permissible limit were invalid, and a suit for refund of tax in excess of the amount permitted by Article 276 was maintainable. The decision was binding on the High Court and the High Court could not ignore it because they thought that "relevant provisions were not brought to the notice of the Court".

5. We may also observe that the judgment in Firm Seth Radha Kishan v. Administrator Municipal Committee, Ludhiana, 1964-2 SCR