Ayyangar, J. - (1.) Section 143 (2) of the Government of India Act, 1935, enacted: "143 (2). Any taxes, duties, cesses or fees which, immediately before the commencement of Part III of this Act, were being lawfully levied by any Provincial Government, municipality or other local authority or body for the purposes of the Province, municipality, district or other local area under a law in force on the first day of January, nineteen hundred and thirty-five, may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Federal Legislative List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by the Federal Legislature." The precise import, significance and effect of the words "continue to be levied and to be applied to the same purposes until provision to the contrary is made by the Federal Legislature" is the common question which arises in these four appeals which come before us by virtue of certificates under Art.132 of the Constitution granted by the High Court of Madhya Pradesh at Nagpur. (2) Section 51 of the Central Provinces and Berar Local Self-Government Act, 1920, enacted: "51 (1) Subject to the provisions of any law or enactment for the time being in force, a District Council may, by a resolution passed by a majority of not less than two-thirds of the members present at a special meeting convened for the purpose, impose any tax, toll or rate other than those specified in Ss. 24, 48, 49 and 50. (2) ********** (3) **********
(2.) By virtue of the power thus conferred the District Council of Bhandara which was "a local authority" constituted under this Act of 1920 imposed a tax on the export of bidis and bidi-leaves by rail out of the Bhandara district by a resolution dated May 14, 1925, as amended by another dated April 18, 1926. The tax was at the rate of 4 annas per maund on bidis and 2 annas per maund on bidi, leaves. The Local Government framed rules for the collection of the tax under S. 79 of the Act of 1920 and the said tax was being collected by this local authority on April 1, 1937, when Part III of the Government of India Act came into force. It is now common ground that the tax thus levied and collected was " a terminal tax on goods carried by railway" covered by entry 58 in the Federal Legislative List - List I- in the Seventh Schedule to the Government of India Act of 1935. The result of this tax being in the Federal Legislative List, it is manifest, is that the Provincial Legislature could not thereafter freshly impose such a tax under its legislative power. By reason of the provision however of S. 143 (2) of the Government of India Act,1935, extracted earlier, the local authority continued to retain the authority to levy and collect the said tax and the tax continued to be collected by the District Council even after April 1,1937, when Part III of the Government of India Act came into force. While so, the Central Provinces and Berar Local Self- Government Act, 1920, was repealed and was replaced by the Central Provinces and Berar Local Government Act, 1948, which came into force on June 11, 1948. District Councils which were the units of local government administration under the Act of 1920 were replaced by Janpads which comprised smaller areas and as a result the area which was under the jurisdiction of the District Council of Bhandara under the Local Self-Government Act of 1920 came to be constituted into three Janpads, viz,, those of Gondia, Bhandara and Sakoli-these being the three Tahsils comprised in the district and the three Janpads were administered by three Janpad Sabhas formed under the Act of 1948. There were provisions in the later enactment providing for continuity in the powers to be exercised by the District Councils whom the former replaced. But what is of relevance to the points arising in the present appeals are those contained in S. 192 of the Act of 1948 which, as originally enacted, ran: "On and from the date on which this Act comes into force, the Central Provinces and Berar Local Self-Government Act, 1920, shall be repealed: Provided that (a) all local authorities constituted under the said Act shall continue to function thereunder for such time till the con-stituation of the Sabhas as the Provincial Government may, by notification, specify; (b) all rules and bye-laws made, all notifications published, all orders issued and all licences and permissions granted under the said Act and in force immediately before the commencement of this Act shall, so far as they are consistent ,with this Act, be deemed to have been respectively made, published, issued and granted thereunder; (c) all rates, taxes and cesses due to the District Council or Local Board shall be deemed to be due to the Sabha to whose area they pertain; and (d) all references made in any Act of the Provincial Legislature to the said Act shall be read as if made to this Act or to the corresponding provision thereof." Pausing here, two matters which figured largely in the arguments require to be noticed in the provisions of this section. The first is that there was an express repeal of the Local Self-Government Act of l920 effected by the main part of the section. The second is that the repeal was not absolute and unconditional but was modified by a saving which continued the operation of certain of the provisions of the repealed Act. But the terms in which the right to collect the rates, taxes and cesses was continued in favour of the Janpad Sabhas which replaced the District Councils under cl. (c) was capable of being construed as not enabling the future imposition of the rate, cess etc., by the Janpad Sabhas. The scope and meaning of this clause which is one of the principal matters to be considered in these appeals we shall reserve for later consideration but at this stage it might be mentioned that the clause is certainly capable of being understood as transferring to the Sabhas only the right to collect the rates, taxes or cesses which had accrued due to the District Councils which had remained unpaid on the date when by virtue of the first part of S. 192 the Act of 1920 stood repealed and the District Councils ceased to exist. If this were the proper meaning of this clause it is obvious that the Janpad Sabhas could no longer levy the terminal tax on bidis and bidi-leaves where the export was effected on or after June 11, 1948, on which date by virtue of the Act of 1948 coming into force the earlier Act of 1920 stood repealed.
(3.) The Janpad Sabhas were, however, continuing the levy and the Provincial Legislature sought to put the matter beyond doubt by an amending Act of 1949 by which cl. (b) of the proviso to S. 192 was replaced by a new clause reading: "All rules and by laws and orders made, notifications and notices issued, licences and permits granted, taxes, imposed or assessed, cesses (other than additional cesses imposed in accordance with S. 49 of the said Act), fees, tolls or rates levied, contracts entered into and suits instituted and proceedings taken under the said Act and in force immediately before the commencement of this Act shall continue to be in force and in so far as they are not inconsistent with this Act, they shall be deemed to have been respectively made, issued, granted, imposed or assessed, levied, entered into, instituted and taken under this Act until new provisions are made under the appropriate provisions of this Act." and by S. 39 of the Amending Act this amendment was given retrospective effect from the commencement of the Local Government Act of 1948. It was not in dispute that if the terms of cl. (b) as amended by the Act of 1949 had found a place in the Local Government Act of 1948 when originally enacted, the levy of this tax by the Janpad Sabhas would have been valid. It is only necessary to add that if this tax had been lawfully levied by the Janpad Sabhas immediately before January 16, 1950, they could continue to be levied after the Constitution came into force notwithstanding the repeal of the Government of India Act by the Constitution and notwithstanding terminal taxes being a tax solely leviable by the Union (vide entry 89 of the Union List in Sch. VII) by reason of the provision contained in Art. 277 of the Constitution reading: "277. Any taxes, duties, cesses or fees which, immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, Municipality, District or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law." ;