DOMINION OF INDIA NOW KNOWN AS Vs. MOTIHARI MUNICIPALITY

JUDGEMENT

(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 Section 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.) REFERENCE in this connection has been to a decision in the case of -- 'Municipal Board of Kanpur v. Dominion of India', AIR 1954 All 56 (B), where Malik, C.J., and Bhargava, J. disallowed the claim of the defendant, the Municipal Board of Kanpur, to levy an enhanced tax in respect of the railway premises of the East Indian Railway. It appeals that in that case, Sri. F.N. Crofts, District Judge, Kanpur, gave an award as an officer empowered for adjudication by a notification issued under the Railways (Local Authorities' Taxation) Act, (Act No. 25 of 1941), for determining the amount payable in lieu of taxes by the Railway Administration. The award was given on 1-8-1943. The Municipal Board, however, revised and enhanced the amount payable by a resolution which evoked a protest from the railway administration and it was a point in dispute between the parties. Their Lordships of the Allahabad High Court took the view that the award once having been given under Act 25 of 1941 as well as under Section 135 of the Indian Railways Act, it could not be varied unless there was a notification to that effect by the Central Government approving of the enhancement or unless there was a fresh award by any person appointed by the Central Government. It is thus clear that the decision rested upon considerations which do not arise in the present case. All, therefore, that is to be seen is whether there was a notification under Section 135 of the Indian Railways Act in this case. The plaintiff filed Exts. 9 and 9 (a) which were notifications issued under Section 135 of the Indian Railways Act, 1890, which have neither been varied nor revoked by the Government of India. Exts. 9 and 9 (a) authorise the local authorities to levy taxes in the nature of house taxes and latrine taxes for railway properties within the jurisdiction of the competent local authorities. The present case, therefore, is governed by the clear provisions of Section 135 of the Indian Railways Act. That section is in these terms: "Notwithstanding anything to the contrary in any enactment or in any agreement or award based on any enactment, the following rules shall regulate the levy of taxes in respect of railways and from railway administrations in aid of the funds of local authorities, namely:-- (1) A railway administration shall not be liable to pay any tax in aid of the funds of any local authority unless the Central Government has by notification in the official gazette, declared the railway administration to be liable to pay the tax. (2) While a notification of the Central Government under Clause (1) of this section is in force, the railway administration shall be liable to pay to the local authority either the tax mentioned in the notification or, in lieu thereof, such sum, if any, as an officer appointed in this behalf by the Central Government may, having regard to all the circumstances of the case, from time to time, determine to be fair and reasonable. (3) The Central Government may at any time revoke or vary a notification under Clause (1) of this Section. (4) Nothing in this section is to be construed as debarring any railway administration from entering into a contract with any Local authority for the supply of water or light, or for the scaveging of railway premises, or for any other service which the local authority may be rendering or be prepared to render within any part of the local area under its control. (5) 'Local authority' in this section means a local authority as defined in the General Clauses Act, 1887 (I of 1837), and includes any authority legally entitled to or entrusted with the control or management of any fund for the maintenance of watchmen or for the conservancy of a river." It seems to me, therefore, that Section 135 of the Indian Railways Act, Section 4 of the Railways (Local Authorities' Taxation) Act, 1941, and Section 154 of the Government of India Act with its proviso as interpreted by the Calcutta High Court and Section 9 of the Government of India (Adaptation of Indian Laws) Order, 1937, which also lays down that the provisions of Section 154 shall not render invalid any notification or law duly made or issued before the commencement of this Adaptation Order which would be in operation from 1-4-1937, are all in consonance with each other and, as such, it must be held that the plaintiff-Municipality was within its rights in claiming the tax in respect of the holdings in suit.