(FIRM) RADHA KISHAN JAIKISHAN Vs. MUNICIPAL COMMITTEE, KHANDWA

JUDGEMENT

(1.) The appellants in these consolidated appeals are the plaintiffs in two suits in January 1924, and August 1925, respectively, in which they challenge the validity of a tax imposed on the trade of ginning and pressing cotton by means of a steam or mechanical process by the respondent, the Municipal Committee of Khandwa, in November 1922. In the first suit the appellants seek an injunction to restrain the respondent from recovering from them the amount of the tax assessed upon the appellants for the year 1922-1923. In the second suit the appellants seek repayment of the amount of the tax paid by them in respect of the year 1923- 1924. These consolidated appeals are from one judgment and two decrees of the Court of the Judicial Commissioner, Central Provinces, dated 20 November 1928. The decree in the first suit confirmed in second appeal a decree of the District Judge of Nimar, dated 15 July 1924, which had confirmed a decree of the Subordinate Judge of Khandwa, dated 11 April 1924, dismissing the suit. In the second suit the Court of the Judicial Commissioner reversed a decree of the Additional District Judge of Khandwa, dated 6 February 1926, directing the Municipal Committee of Khandwa to refund to each of the present appellants the amount of the tax paid by them.

(2.) At the material time the respondent derived its power to impose taxation from the Central Provinces Municipal Act (Act 16 of 1903). That Act was repealed by the Central Provinces Municipalities Act (Act 2 of 1922 C. P.), which came into force on 1 July 1923, and to which it will be necessary to refer later in relation to a contention by the respondent.

(3.) The following are the material sections of the Act of 1903: "35. Subject to any general rules or special orders which the Governor-General in Council may make in this behalf, a committee may, for the purposes of this Act, impose, with the sanction hereinafter specified in each case and in the manner required by S. 39, any of the following taxes, namely: (a) with the previous sanction of the Local Government (iii) a tax on any person exercising any profession or art, or carrying on any trade or calling, within the limits of the municipality." "39 -(1) A committee may resolve at a special meeting to propose the imposition of any tax for the purposes of this Act. (2) Where a resolution has been passed under sub S.1, the committee shall publish, in the prescribed manner, a notice defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed, and the system of assessment to be adopted, (3) Any inhabitant of the municipality objecting to the proposed tax-may, within one month from the publication of the notice, submit his objection in writing to the committee, and the committee shall, at a special meeting, take his objection into consideration. (4) Where no objection is submitted as aforesaid, or where the objections so submitted, having been considered by the committee, are deemed insufficient, the committee may forward its proposals to the Local Government with the objections (if any) so submitted. (5) The Local Government may, on receiving the proposals of the committee, sanction the same, or refuse to sanction them, or sanction them subject to such modifications as it may think fit, or return them to the committee for further consideration. (8) Where any proposals for taxation have been sanctioned under sub-S. 5 or sub-S. 6 by the Local Government . . . the Local Government may, by notification in the local official Gazette, direct the imposition of the tax as sanctioned from such date as may be specified in the notification, and thereupon the tax shall come into effect as from the date so specified." At a special meeting held on 16 July 1922, the respondent committee, acting on a suggestion received from the Local Government, resolved to propose the imposition of a tax on the trade of ginning and pressing cotton by means of steam or mechanical process. This resolution was in intended compliance with sub-S. 1, S. 39. On or about 20 July 1922, notices of the proposed resolution, requiring objections to be submitted within one month, were placed on the notice board at the Town Hall, and were proclaimed locally by beat of drum. Later on similar notices were inserted in two issues of the Central Provinces Gazette, dated 23 and 30 September 1922. These notices were issued in view of sub-S. 2, S. 39. The terms of the resolution and the contents of the notices will he referred to later. On 3 August, 1922 a number of factory owners, including most of the appellants, submitted objections, requesting the cancellation of the proposed tax. At a special meeting held on 23 October 1922, the committee considered the objections and rejected them, and resolved to submit their proposals to the Local Government for its sanction. They were so submitted by letter from the Secretary of the committee on 28th October, 1922. These steps were taken under sub-Ss. 3 and 4, S. 39. On 25 November, 1922, the Local Government published in the Central Provinces Gazette a notification sanctioning the imposition of the tax with effect from the date of the notification. By a subsequent notification dated 3 January, 1923, and published in the Central Provinces Gazette of 6 January 1923, the tax was declared to be payable on the 1 August of each year. These notifications were issued under sub-S. 8, S. 39.