The Railways (Local Authorities Taxation) Act, 1941, and notifications issued under Section 135 of the Indian Railways Act, 1890, imposed liability for local taxes on railway properties, and the absence of a specific notification for a particular railway property did not exempt it from taxation.

Misra, J.

1. The plaintiff, Motihari Municipality, through the Vice-Chairman, brought a suit for arrears of municipal taxes in respect of holdings Nos. 91 (402 new), 73 (239 new) and 241 within the municipal limits of Motihari. The claim was for Rs. 1673-5-0 representing the accumulated arrears of taxes from April, 1942, to 31-3-1949. The plaint contains a detailed account of the dues and the payments made from time to time from 1942 onwards and it is shown that after making deductions of the payments made the total balance payable by the defendants would come to be the amount for which this suit was instituted.

The holdings referred to above represented the railway premises belonging to the O.T. Railway which has a station at Motihari. The Dominion of India through the Secretary, Railway Board, Central Government, New Delhi, and the General Manager, O.T. Railway, Gorakhpur, were impleaded as defendants being liable to pay up the municipal dues in respect of the above holdings owned by the railway at Motihari. It may be stated that according to the plaint the dues payable by the defendants represented the accumulation calculated at the original amount of taxes payable in respect of the railway property at Motihari prior to 1-4-1937, as well as the enhancements made by the municipality from time to time under the provisions of the Bihar Municipal Act.

The defendants made the payment at the old rate up to the end of the year, 1948, although there were arrears outstanding, but it was only in respect of the taxes for the quarter ending 31-3-1949, when demand was made by the plaintiff for payment that the railway authorities at Motihari showed their unwillingness to make the payment when notices under Section 80 of Civil P. C. were served on the defendants and the present suit was duly filed.

2. The case of the defendants inter alia was that they were liable to pay taxes at the rate of Rs. 592-3-0 as they had been paying taxes at that rate all along. The plaintiff had no right to claim any enhancement in respect of the holdings owned and possessed by the defendants. The entire property of the B.N.W. Railway, as the O.T. Railway was called before, vested in the Central Government on 1-1-1943. The defendants were, accordingly, liable to pay at the rate which held good on 31-3-1937, in view of the provisions of Sec.154 of the Government of India Act, 1935. They stressed the fact that the B. N. W. Railway might have paid over and above the rate of Rs. 592-3-0 per year as municipal taxes, but the payment should be held as not binding upon the railway. There was a general plea of exemption of the O. T. Railway after its ownership vested in the Government from payment of any kind of municipal taxes in the absence of a notification to that effect of the Central Government. Further, a plea of limitation was also set up.

3. The learned Munsif dismissed the suit in so far as it related to the dues after 1-1-1943, although he passed a decree for the period prior to that date. He also passed a decree in favour of the plaintiff for arrears for the last quarter of 1948-49 for a sum of Rs. 148-0-9. In the total, therefore, he passed a decree for a sum of Rs. 187-9-0 as payable by the defendants to the plaintiff. He held, however, that the plaintiff is not entitled to any taxes with respect to the suit holdings unless it is notified under Sec.3 of the Railways (Local Authorities Taxation) Act, 1941, in future. The plaintiff preferred an appeal against that decision which was heard by the learned Additional Subordinate Judge, Motihari. The lower appellate court dismissed the plaintiffs suit in respect of the dues for holding No. 241 but passed a decree for the dues in respect of the remaining two holdings Nos. 91 and 73 in the result making the calculation on the basis of the agreed account as evidenced by Ext. 5. He passed a decree for a sum of Rs. 1656-9-0 against the Union of India.

4. The defendants have preferred this appeal in this Cou