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IN THE HIGH COURT OF ALLAHABAD
Desai and Beg, JJ.
DISTRICT BOARD - Appellant
Versus
UPPER INDIA SUGAR MILLS LTD. - Respondents
First Appeal 508 Of 1946
Decided On : 01/25/1957
DISTRICT BOARDS ACT - Section 114, 142 - PROFESSIONS TAX LIMITATION ACT (20 OF 1941) - Section 2 - PROFESSIONS TAX LIMITATION (AMENDMENT AND VALIDATION) ACT (49 OF 1949) - Section 3-A, 3-B - U. P. MUNICIPALITIES ACT (2 OF 1916) - Section 128 (1) (ix) - U. P. DISTRICT BOARDS ACT (10 OF 1922) - Section 108 (b) - Held, that the Professions Tax Limitation (Amendment and Validation) Act, 1949, which came into force on 28th December, 1949, was retrospective in effect and validated the imposition of a tax on circumstances and property under the District Boards Act, 1922, even though such tax exceeded the limit of Rs. 50/- per annum prescribed by the Professions Tax Limitation Act, 1941. The amendment was applicable to pending proceedings and could be given effect to by the appellate court, notwithstanding that the judgment of the trial court was correct on the date when it was pronounced.
Fact of the Case:
The plaintiff, a limited concern carrying on the business of manufacturing sugar, filed a suit for declaration and injunction against the defendant, the District Board of Muzaffarnagar, challenging the imposition of a tax on circumstances and property exceeding Rs. 50/- per annum, which was the limit prescribed by the Professions Tax Limitation Act, 1941. The trial court held that the tax on circumstances and property was virtually a tax on trade and occupation and was, therefore, hit by the limitation imposed by Section 2 of the Professions Tax Limitation Act, 1941, and decreed the plaintiff's suit. On appeal, the defendant argued that the Professions Tax Limitation (Amendment and Validation) Act, 1949, which came into force after the judgment of the trial court, had validated the imposition of the tax on circumstances and property and should be given effect to by the appellate court.
Finding of the Court:
The appellate court held that the Professions Tax Limitation (Amendment and Validation) Act, 1949, was retrospective in effect and validated the imposition of a tax on circumstances and property under the District Boards Act, 1922, even though such tax exceeded the limit of Rs. 50/- per annum prescribed by the Professions Tax Limitation Act, 1941. The amendment was applicable to pending proceedings and could be given effect to by the appellate court, notwithstanding that the judgment of the trial court was correct on the date when it was pronounced. The court allowed the appeal, set aside the judgment of the trial court, and dismissed the plaintiff's suit.
Issues: 1. Whether the Professions Tax Limitation (Amendment and Validation) Act, 1949, was retrospective in effect and validated the imposition of a tax on circumstances and property under the District Boards Act, 1922, even though such tax exceeded the limit of Rs. 50/- per annum prescribed by the Professions Tax Limitation Act, 1941? 2. Whether the amendment was applicable to pending proceedings and could be given effect to by the appellate court, notwithstanding that the judgment of the trial court was correct on the date when it was pronounced?
Ratio Decidendi: 1. The Professions Tax Limitation (Amendment and Validation) Act, 1949, was retrospective in effect and validated the imposition of a tax on circumstances and property under the District Boards Act, 1922, even though such tax exceeded the limit of Rs. 50/- per annum prescribed by the Professions Tax Limitation Act, 1941. This was evident from the fact that Section 2 of the amending Act provided that the amendments incorporated in Sections 3-A and 3-B of the said Act "shall be inserted and shall be deemed always to have been inserted" in the Schedule relating to exemptions to Section 2 appended to the original Act. The effect of this deeming provision was to engraft the amendments in the original Act itself and to make them a part and parcel of the same. 2. The amendment was applicable to pending proceedings and could be given effect to by the appellate court, notwithstanding that the judgment of the trial court was correct on the date when it was pronounced. This was because the object of the amending Act was to get over the interpretation which had been placed on Section 2 of the main Act by courts of law in cases decided by them. The preamble to the amending Act clearly stated that its purpose was to validate the imposition of taxes on circumstances and property imposed in the United Provinces by municipal or district boards from the operation of Section 2 of the Professions Tax Limitation Act, 1941, and to make them retrospective.
Final Decision: The appeal was allowed, the judgment of the trial court was set aside, and the plaintiff's suit was dismissed.
( 1 ) THIS is a defendants first appeal arising out of a suit for declaration and injunction. The appellant in this appeal is the District Board of Muzaffarnagar, The suit out of which the present appeal arises was filed on behalf of the Upper India Sugar Mills Limited Khatauli, district muzaffarnagar, as plaintiff. The plaintiff is limited concern carrying on the business of manufacturing sugar at Khatauli within the rural area of the district of Muzaffarnagar. It appears that the District Board Muzaffarnagar levies a tax on circumstances and properly of all persons residing or carrying on business within its rural area under the provisions of Sections 114 and H08 of the District Boards Act. By Notification No. 1509/ix-242, dated September 25, 1930, the Government have framed a rule authorising the imposition of a tax on circumstances and property by a District Board, provided that the total amount of this tax does not exceed a sum of Rs. 2,000/ -. Acting under the said rule, the District Board, Muzaffarnagar, assessed the plaintiff to a tax of rs. 2,000/- for the years 1942-43, 1943-44 and 1944-45. Rs. 2,000/ -. is the maximum amount of tax leviable under the said rule. The taxes for these years were paid by the plaintiff under protest. Subsequently, on the 18th of August, 1945, the plaintiff filed the present suit for declaration and injunction. The case of the plaintiff as set out in the plaint, was that in order to implement the provisions of section 142 of the Government of India Act, the Central Legislature had passed the Professions tax Limitation Act (Act No. 20 of 1941 ). By Section 2 of the said Act the District Board was prohibited from realising any tax on professions, trades, callings or employments exceeding a sum of Rs. 50/- per annum after the commencement of the said Act. The Professions Tax limitation Act, 1941 (Act No. 20 of 1941) came into force on the 26th November, 1941, The case of the plaintiff was that tax on circumstances and property was virtually a tax on trade and occupation, and was accordingly, hit by the Limitation imposed by Section 2 of the said Act. The plaintiff, accordingly sought a declaration in the present case to the effect that "the defendant is not entitled to charge plaintiff more than Rs. 50/-per annum as circumstances and property tax under Section 144 of the District Boards Act". The Plaintiff further prayed for injunction against the defendant--District Board, Muzaffarnagar--restraining it from realising more than Rs. 50/- as tax in future. The suit was resisted by the District Board, Muzaffarnagar, mainly on the ground that a tax on circumstances and property is not a tax in professions, trades or callings and the provisions of Section 2 of Act 20 of 1941 (The Professions Tax Limitation Act) are not applicable to it.
( 2 ) THE trial court repelled the plea raised on behalf of the defendant holding that a tax on circumstances and property is virtually a tax on trade and occupation. It, accordingly, held that section 3 of Act 20 of 1941 was applicable to the present case. In this view of the matter, the trial court decreed the plaintiffs suit for declaration and injunction with costs. Dissatisfied with the said judgment, this appeal was filed on behalf of the defendant in this Court
( 3 ) THE judgment in the present case was pronounced on the 5th September, 1946. The appeal against the judgment of the trial court was filed on the 10th December, 1946. It has come up for hearing before us in January, 1957. The learned counsel for the appellant before us has not challenged the correctness of the judgment of the, date when it was pronounced, that is, on the 5th of September, 1946. He has in fact conceded before us that the judgment, as it stood on the date when it was delivered, was quite correct and valid. He has, however, invited our attention to a subsequent amendment of the original Act made by the Professions Tax Limitation (Amendment and Validation) Act 1949 hereinafter
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