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SUPREME COURT OF INDIA
S.K.Das : J.C.Shah : J.L.Kapur : M.Hidayatullah : S.R.Dass : T.L.Venkatarama Ayyar
Jadao Bahuji
Versus
Municipal Committee Khandwa
Case No. : 180 of 1959
Date of Decision : 3/30/61
Advocates Appeared: Chatterjee N.C. : Maheshwari B.P. : Mathur G.C.
The powers of the Provincial Legislatures are as large and plenary as those of Parliament itself. The Legislature could give retrospective operation to measures passed by it. 1940 FCR 110 & 1958 SCR 1422 relied on. [Para 9]
Retrospective laws can validate an Act, which contains some defects in its enactment and render inoperative decrees or orders of Courts or alternatively may make them valid and effective. AIR 1944 FC 1 referred on. [Para 10]
(2) Government of India Act, 1935 - S. 142-A - scope of - prohibition in sub-section (2) when appeal able.
Before the Constitution, taxes on trades, professions and callings, which were taxes already leviable by the Provinces under Schedule II of the Rules made by the Governor, General in Council under section 80-A (3) (a) of the Government of India Act, were also included in the Provincial Legislative List as a source of revenue for the Provinces. It was, however, felt that these taxes might come into clash with tax on income in the Federal List, and also if unlimited in amount, might become a second tax on income to be levied by the Provinces. It was to remove these contingencies that section 142-A was enacted. It was also apprehended that under the guise of taxes on professions, etc., the Provincial legislatures might stare their own scheme of a tax on income, thus subjecting incomes from professions etc. to an additional tax of the nature of income tax. A limit was, therefore, placed upon the amount which could be collected by way of tax on professions, etc.
If a law was passed after the amendment and sought to impose taxes on professions, etc., for any period AFTER March 31, 1939, it had to conform to the limit prescribed by section 142-A (2). The prohibition in the second sub-section operated to circumscribe the legislative power by putting a date line after which a tax in excess of the prescribed amount per person for a period after the date line could not be collected unless it came within the proviso. But neither sub-section (2) nor the proviso speaks of a period prior to March 31, 1939. If a law was passed validating another which imposed a tax for a period prior to the date indicated, it would be taxing professions, etc., in excess of Rs.50 not AFTEK March 1939, but BEFORE it. Neither the entry nor the section either directly or indirectly prohibited this, not did they create any limit for the prior period. The Validating Act, though passed in 1941, can be read only as affecting a period for which there was no limit. [Paras 13, 14 & 15]
(3) Khandwa Municipality (Validation of Tax) Act, 1941 - Act is valid and intra vires.
The Khandwa Municipality (Validation of Tax) Act was completely within the powers of the Governor and would remove retrospectively the defect in the earlier Act. It did not come in conflict with section 142-A of the Government of India Act, 1935. [Para 16]
M.HIDAYATULLAH, J.
(1) THIS appeal, by certificate under Arts. 132(l) and 133(l)(c) of the Constitution, has been filed against an order of the High court at Nagpur dated 30/06/1955.
(2) THOUGH the facts necessary to decide the appeal lie within a comparatively narrow compass, the case itself has had a long and somewhat unique history. In July, 1922, the Municipal Committee, Khandwa, resolved to impose a tax on the trade of ginning and pressing cotton by means of steam, or mechanical process, and after sundry procedure, a notification was published on 25/11/1922 in the central Provinces and Berar Gazette, imposing the tax. Certain traders including the appellant, affected by the tax, filed suits seeking injunction against the Municipal Committee on the ground that the tax was invalid and illegal. Meanwhile, the Municipal Committee had served notices on the present appellant, and demanded and recovered the tax for 1923-24. The appellant then filed a second suit for refund of the tax paid by her on the ground that the imposition of the tax was illegal and ultra vires. The suits had varying fortunes in the courts in India, till they reached the Privy council. The Judicial Committee by its first decision remitted the cases for additional evidence, while the appeals were kept pending. The decision of the Judicial Committee is reported in Radhakrishan Jaikishan v. Khandwa Municipal Committee (1). After the additional evidence was received, the Judicial Committee pronounced its decision, which is reported in Badhakishan Jaikishan v. Municipal Committee, Khandwa (9). The Judicial Committee held that the tax was not validly imposed by the Municipal Committee, and reversing the decree of the Judicial Commissioner, decreed the suits.
(3) THE Provincial Legislature then passed the Khandwa Ginning and Pressing Cotton Tax Validating Act 8 of 1938, validating, the tax. The Act contained only one operative section, which read as follows: `2. Notwithstanding anything contained in the central Provinces Municipal Act, 1903, or the central Province Municipalities Act, 1922, or any decree or order of a civil court, the tax on the trade of ginning and pressing cotton by means of steam or mechanical process within the limits of the Khandwa municipality which was imposed by Notification No. 2639-1298- VIII, dated the 21/11/1922, shall be deemed to have been legally imposed from the date of its imposition to the date on which this Act comes into force. Explanation.-All decrees or orders of a civil court directing a refund of the tax already recovered by the committee of the said municipality or restraining the committee from recovering the tax shall be deemed to have no legal effect.` The appellant had, in the meanwhile, applied for the execution of the decrees, and the Validating Act was pleaded in bar. This plea was upheld by the executing court, but the High court at Nagpur, on appeal, rejected it and ordered the executions to proceed. The decision of the High court is reported in Firm Radhakishan v. Municipal Committee, Khandwa (1). The reason given by the High court was that the Explanation, though not the operative part of the Validating Act, conflicted with 0. 45 R. 15 of the Code of Civil Procedure, and that the assent of the governor-General had not been obtained, as required by is. 107(2) of the government of India Act, 1935.
(4) MEANTIME, the Provincial Legislature had been dissolved, and the governor had assumed all the powers of the Provincial Legislature under s. 93 of the government of India Act,. 1935. The governor,- with the assent of the governor- General enacted the second Validating Act entitled the Khandwa Municipality (Validation of Tax) Act, 1941,(16 of 1941), which received the assent of the governor-Genera I on 30/06/1941, and was published in the C. P. and Berar Gazette on 11/07/1941. That Act, omitting parts not relevant here, read as follows: `2. The tax the imposition of which purported to be sa
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