# Pandit Ram Narain v. The State of Uttar Pradesh and others

- **Citation:** [1956] 1 S.C.R. 664
- **Court:** Supreme Court of India
- **Decided:** 1954-05-07
- **Case number:** Civil Miscellaneous Writ No. 133 of 1952
- **Bench:** Bhagwati, Jafer Imam, S. K. Das, GovrnDA MENON
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/pandit-ram-narain-v-the-state-of-uttar-pradesh-and-others-1255
- **Pages:** 11

## Headnote

Tax im circumstances and property-UP. Town Areas Act,
1914 (U.P. Act II of 1914)-S. 14(1)(f}-Nexus-Wluther resi·
dence within Town Area necessary condition for imposition of tax
-Tax imposed under clause (f) of s. 14(1) whether can be justi·
fled under clause ( d)-Rule a whetluir invalid.
The appellant was carrying on business, but WM not resid·
ing within. the Town Area of Karhal. The Town Area Committee
imposed a tax of Rs. 25 on him under clause (f) of s. 14(1) of
the U.P. Town Areas Act, 1914, being a tax on 'circumstances and
property'. The appellant filed a writ application in the High Court
on the ground that there could be no assessment under clause (f)
because he resided outside the jurisdiction of the Town Area Com·
mittee. The High Court dismissed the application taking the view
that it was unnecessary to consider "'·hether the tax could be
legally imposed under clause. (f) as the tax imposed could clearly
be justified under clause (d) of s. 14(1) which authorised the im·
position of a tax on trades, callings or professions.
Held, that residence was not a. sine qua non for the imposition
of the tax i.nder clause (f), that the carrying on of business within
the TOwn Area was a sufficient nexu,s for the imposition of the tax
under clause (f) and that the assessment of the tax on the appellant
under clause (f) .was legally valid.
The legality of the tax imposed must be considered with ref·
erence to the clause under which the assessment was actually made
and a different clause under which the assessment might have fallen
cannot be called in aid of the assessment.
Rule 3 of the 'Rules regarding the Limitations, Restrictions and
Rate subject to which the Circumstances and Property Tax shall be
levied· by the Town Area Committees' framed under s. 39(2) of the
Act does not go beyond s. 14(1)(!) and is not invalid.

## Text

1956
September 20
664
SUPREME COURT REPORTS
PANDIT RAM NARAIN
v.
(1956]
THE STATE OF UTTAR PRADESH AND
OTHERS.
[BHAGWATI, JAFER IMAM, S. K. DAS and
GovrnDA MENON JJ.]
Tax im circumstances and property-UP. Town Areas Act,
1914 (U.P. Act II of 1914)-S. 14(1)(f}-Nexus-Wluther resi·
dence within Town Area necessary condition for imposition of tax
-Tax imposed under clause (f) of s. 14(1) whether can be justi·
fled under clause ( d)-Rule a whetluir invalid.
The appellant was carrying on business, but WM not resid·
ing within. the Town Area of Karhal. The Town Area Committee
imposed a tax of Rs. 25 on him under clause (f) of s. 14(1) of
the U.P. Town Areas Act, 1914, being a tax on 'circumstances and
property'. The appellant filed a writ application in the High Court
on the ground that there could be no assessment under clause (f)
because he resided outside the jurisdiction of the Town Area Com·
mittee. The High Court dismissed the application taking the view
that it was unnecessary to consider "'·hether the tax could be
legally imposed under clause. (f) as the tax imposed could clearly
be justified under clause (d) of s. 14(1) which authorised the im·
position of a tax on trades, callings or professions.
Held, that residence was not a. sine qua non for the imposition
of the tax i.nder clause (f), that the carrying on of business within
the TOwn Area was a sufficient nexu,s for the imposition of the tax
under clause (f) and that the assessment of the tax on the appellant
under clause (f) .was legally valid.
The legality of the tax imposed must be considered with ref·
erence to the clause under which the assessment was actually made
and a different clause under which the assessment might have fallen
cannot be called in aid of the assessment.
Rule 3 of the 'Rules regarding the Limitations, Restrictions and
Rate subject to which the Circumstances and Property Tax shall be
levied· by the Town Area Committees' framed under s. 39(2) of the
Act does not go beyond s. 14(1)(!) and is not invalid.
CIVIL APPELLATE JURISDICTION:
Civil Appeal
No. 224 of 1955.
S.C.R.
SUPREME COURT REPORTS
665
Appeal by special leave from the judgment and
order dated the 7th May 1954 of the Allahabad High
Court in Civil Miscellaneous Writ No. 133 of 1952.
Naunit Lal for the appellant.
G. 0. Mathur and 0. P. Lal for respondents Nos.
1 & 2.
1956. September 20. The Judgment of the Cour~
was delivered by
S. K. DAS J.-This is an appeal by special leave
from the judgment and order of the High Court of
Judicature at Allahabad dated the 7th of May 1954
by whfoh the High Court dismissed an application of
the appellant for the issue of a writ of certiorari under
the provisions of article 226 of the Constitution.
The appeal raises the question of the validity of the
assessment of a tax on the appellant for the year
1950-51 by the Town Area Committee ofKarhal under
the provisions of clause (f) of sub-section (1) of section 14 of the United Provinces Town Areas Act, 1914
(U. P. Act·II of 1914), hereinafter referred to as the
Act.
The appellant resides in the town of Mainpuri and
carries on the business of plying a motor bus on hire.
The appellant's bus plies on alternat.e days between
Etawah and Mainpuri, and the town of Karhal falls
on the route between Etawah and Mainpuri.
It is
not now disputed that passengers travelling in the
appellant's bus used to get down or get in at a bus
stand within the town area of Karhal; the appellant
had a booking office situate within the Town Area
and tickets were issued to passengers and an account
of the business was maintained in the said booking
office.
The Town Area Committee of Karhal
imposed a tax of Rs. 25 on the appellant for the year
1950-51 under the provisions of clause (f) of sub-section (1) of section 14 of the Act, being a tax on
'circumstances and property' and assessing the income of the appellant from his business within the
86
1956
Pandit Ram
Narain
v.
The State of
Uttar Pradesh
and others
1956
Paftdit Ratn
Narain
v.
Tlie State of
Uttar Pradesh
and others
S. K. Das}.
666
SUPREME COURT REPORTS
[1956)
Town Area of Karhal at a sum of Rs. 800 for the
year. The appellant preferred an appeal against the
assessment of the tax under section 18 of the Act,
and the grounds taken by the appellant were (1) that
he did not reside within the limits of the Town Area
and (2) that he did not carry on any trade or business within that Area.
By his order dated the
20th October 1951, the Appeal Officer held that the
appellant carried on his trade or business within
the limits of the Town Area and was therefore rightly
assessed to tax under clause (f) of sub-section (1) of
section 14 of the Act. He accordingly dismissed the
appeal.
It may be stated here that the appellant
was asked to subll)it an account of his income,
but no such account was submitted and the assessing
officer worked out the income of the appellant at
about·Rs. 67 a month, that is, about Rs. 800 a year.
No question about the amount of the tax has been
raised before us, and it is not necessary to say anything further with regard to the quantum of assessment.
The appellant then filed a writ application in the
High Court of Judicature at Allahabad and the
ground taken by him was that there could be no assessment under clause (f) of sub-section (1) of section 14
of the Act, because he resided outside the jurisdiction
of the Town Area. The learned Judge, who dealt with
the application of the appellant, took the view that
the tax imposed on the appellant could clearly be
imposed under clause (d) of sub-section (1) of section
14 of the Act; therefore it was unnecessary to consider
whether the tax could be legally imposed under clause
(f) of sub-section (1) of section 14. ·The learned Judge
also expressed the view that residence within the
Town Area was not a pre-requisite condition for the
imposition of the tax under clause (d), and it was
enough if the appellant carried on a trade or business
within the Town Area. On these views, the learned
Judge dismissed the writ application.
The main point which has been urged before us bf
I
\
S.C.R.
SUPREME COURT REPORTS
667
learned counsel for the appellant is that the assessment of a tax under clause (f) of sub-section (1) of
section 14 on the appellant was not valid, because
r~sidence within the Town Area was a necessary condition for the assessment of a tax under clause (f).
Learned counsel also argued before us that the assessing authority having assessed a tax on the appellant under clause (f), it was not open to the High
Court to say that the tax was legally valid under a
different clause, namely clause (d) of sub-section (1)
of section 14.
With regard to his second point, learned counsel
has drawn our attention to sections 15 to 17 of the
Act. He has pointed out that under section 15 of the
Act a list of persons liable to pay the tax imposed
under section 14 and of the amounts to be paid respectively by such persons, has to be prepared; the list
may be revised by the District Magistrate and has to
be submitted to him for confirmation. When so confirmed, the list can only be altered under sub-section
(2) of section 15 by the District Magistrate or in
pursuance of an order passed in appeal under the provisions of section 18.
We think that learned counsel
has rightly submitted that, so far as the present
appellant is concerned, the list prepared under section
15 must qave shown him as assessed to a certain
amount of tax under clause (f) of sub-section (1) of
section 14 and the assessment must have been confirmed on that basis by the District Magistrate. Therefore, the legality of the tax imposed on the appellant
must be considered with reference to the clause under
which the assessment was actually made, and a
different clause under which the assessment might
have fallen cannot be called in aid of the assessment.
We proceed therefore to consider the legality of the
tax imposed on the appellant with reference to clause
(f) of sub-section (l) of section 14 of the Act. The
short point for consideration in that context is whether residence within the Town Area is a necessary
condition for the imposition of the tax under clause
1956
PaKditRam
Nat'aiff
v.
The State of
Uttat' Pradesh
lmd others
S. K. Das].
1956
Pandit Ram
Narain
v.
The State of
Uttar Pradesh
and others
I
668
SUPREME COURT REPORTS
[1956]
(f). It is necessary to read here section 14 of the Act
so far as it is relevant to the point in question.
"14 (1) Subject to any general rules or special
orders of the State Government in this behalf, the
taxes which a Committee may impose are the following:
s. K. DasJ.
(d) A tax on trades, callings or professions not
exceeding such rates as may be prescribed.
(f) A tax on persons assessed according to their
circumstances and property not exceeding such rate
and subject to such limitations and restrictions as
may be prescribed:
Provided that such a person is not already assessed under clauses (a) to (e) above".
It will be noticed that the power of the Town Area
Committee to impose a tax under clause (f) is subject
to, first, 'any general rules or special orders of the
State Government in this behalf' and, secondly, to
'such limitations and restrictions as may be prescribed'. These restrictions and limitations are to be
found in the Rules made by the State Government
under section 39(2) of the Act, which are called Rules
regarding the Limitations, Restrictions and Rate subject to which the Circumstances and Property Tax
shall be levied by the Town Area Committee. These
rules were notified by Notification No. 681-T/IX-79•
T-50 dated July 20, 1950.
Two of the rules are important for our purpose, viz., rules 2 and 3.
They
are in these terms:
"2. The tax shall be assessed on every person
on whom it is imposed, in two separate parts, namely
(1) on his circumstances and (2) on the ,property, if
any, owned by him, and the aggregate of the sums
so determined on both the counts shaH constitute the
total composite amount payable by him as circumstances and property tax:
Provided that nothing shall render it irregular
-
-
>
S.C.R.
SUPREME COURT REPORTS
669
to assess a person on only one of the two counts
aforementioned if he does not fulfil the conditions for
liability in respect of that count on which he is not
assessed.
3.
(1) The tax assessed on the circumst{l.nces of
an asseseee may be imposed on any person residing
or carrying on business within the limits of the town
area:
Provided that such person has so resided or carried on business for a total period of at least six
months in the year of assessment.
(2) N'o tax shall be imposed on any person whose
total taxable income is less than Rs. 200 per annum.
(3) The rate of the tax shall not exceed one anna
in a rupee on total taxable income.
( 4) The total amount of tax assessed on any person shall not, in any year, exceed a sum of Rs. 250.
Explanation.-(i) For purposes of this rule 'taxable income' means gross income accruing within the
limits of the town area.
(ii) The words 'carrying on business' mean the
carrying on of any trade, profession, calling or other
pra.ctice or activity which yields or is capable of
yielding income but do not include service under
Government or a local body".
The important point which emerges out of these
Rules is that under Rule 3 the tax assessed on the
circumstances of an assessee may be imposed on any
person residing or carrying on business within the
limits of the town area; in other words, two conditions in the alternative are laid down in Rule 3, either
the person must reside within the limits of the town
area or he must be carrying on business within the
limits of the said area. There is a third condition
that the residence or carrying on of business must be
for a total period of at least six months in the year
of assessment. No question regarding the third condition has been rairied in this case and it is not necessary to consider that condition here. Therefore, it is
1956
Pandit RGni
Narain
v.
The State of
Uttar Pradesh
and others
S. K. Das/,
1956
Pandit Ram
Narain
v.
Tlic Slal• of
Uttar Pradtsh
and others
S. I{. D11s J.
670
SUPREME COURT REPORTS
[1956]
clear that if Rule 3 is valid, then the imposition of
the tax on the appellant under clause (f) is also valid,
because on the finding not now in dispute the appellant carried on a trade or business within the limits
of the Town Area ofKarhal. lt has been argued before us that Rule 3 is invalid because, under clause (f)
of sub-section (1) of section 14, residence' within the
Town Area of the person to be taxed under that
clause is a necessary condition. We ~re unable to
accept this argument. Clause (f) of sub-section (1)
of section 14 does not say in express terms that residence within the Town Area is a necessary condition
for the imposition of the tax. The Rules make it
quite clear that for each of the clauses of sub-section (1) of section 14 there is a 'nexus' between the
territorial jurisdiction of the Town Area Committee
and the imposition of the tax. So far as clause (d)
is concerned, the 'nexus' is- that the trade, calling or
profession must be carried on within the limits of the
Town Area. So far as clause (f) is concerned, Rule 3
makes it quite clear that the 'nexus' is either residence within the limits of the Town Area or carrying
on business within the same limits. It is to be remembered that clause (f) was inserted by an Amending Act, namely, the Uttar Pradesh Town Areas
(Validation and Amendment) Act, 1950. Section 1(2)
of the Amending Act gave retrospective effect to the
amendments. The proviso to clause (f) makes it
quite clear that a person who is already assessed under
clauses (a) to ( e) cannot be assessed again under
clause (f). The proviso is intended to avoid multiple
taxation, but it is manifest from the proviso that
there may be overlapping of the different clauses in
sub-section (1) of section 14; for example, a person
may come under clause (d) as well as clause (f) if he
carries on a trade within the limits of the Town Area.
Therefore, the proviso was necessary to prevent the
same person being taxed more than onre under the
different clauses of sub-section (1) of section 14. If
residence within the limits of the Town Area were a
11
-
S.C.R.
SUPREME COURT REPORTS
671
8ine qua non for the imposition of a tax under clause
(f), no question of overlapping between clauses (d)
and (f) would arise unless the person to be taxed
resided as weJl as carried on a trade within the limits
of the Town Area. If the argument of ]earned counsel
for the appellant is correct, then the proviso to clause
(f) is meaningless in so far as it pnvisages an overlapping between clause ( d) and clause (f) in other
cases. On a proper construction of clause (f), read
with the limitations and restrictions embodied in the
Rules made under section 39 of the Act, it cannot be
held that residence within the Town Area of Karhal
was a necessary condition for the imposition of the
tax on the appellant.
A reference was made to sub-section (4) of section
15-A of the Act. Section 15-A provides for preliminary proposals for the imposition of taxes under sec·
tion 14, publication of such proposals and the submission of draft rules. Sub-section (4) states:
"(4) Any inhabitant of the Town Area may, in
the prescribed m~nner, file an objection in writing on
such proposals and the committee shall take into
consideration the objections so filed and finally settle
its proposals."
Under sub-section (4) any inhabitant of the Town
Area may file an objection to the preliminary prpposals for the imposition of taxes under section 14. The
argument before us was that if an inhabitant of the
Town Area alone was entitled to file an objection to
preliminary proposals for taxation, then in all the
clauses of sub-section (1) of section 14 residence within the Town Area must be read as a necessary condition for the imposition of the taxes under section 14.
This contention appears to us to be unsound. Firstly,
the objection as to preliminary proposals for taxation
is not the same thing as objection to an assessment,
and it may well be that the legislature jn their wisdom
thought fit to confine the filing of objections to preliminary proposals for taxation to the inhabitants of
the Town Area. Secondly, there are several other
1956
Pandit Ram
Narai"
v.
The State of
Uttar Prrrd~sh
and others
S. K. Das}.
1956
Pandit Ram
Narain
v.
The Slate of
Uttar Pradesh
and otheta
S. K. Das}.
672
SUPREME COURT REPORTS
[1956)
sections of the Act, such as section 20 and section
21, which show that the imposition of a tax on persons not resident within the Town Area but having
some other nexus within that Area, was permissible.
Thirdly, the question of the validity of sub-section
(4) of section 15-A does not arise in this case. The
appellant was assessed to a tax and he had a right to
file an appeal which right he exercised. No grievance
was made of the failure to exe·:cise the right under
sub-section (4) of section 15-A. It is therefore unnecessary for·us to make any pronouncement on the
validity or otherwise of sub-section ( 4) of section 15-A.
All that is necessary for us to state is that by reason
of sub-section (4) of section 15-A, it cannot be held
that residence within the Town Area is a necessarv
condition for the imposition of a tax in all the olause·s
of sub-section (1) of section 14 of the Act.
Learned counsel for the appellant referred us to
two decisions of the Allahabad High Court: District Board, Farrukhabad v. Prag Dutt~') and Diatrict
Board, Dehra Dun v. Damodar Dutt(). The second
decision, which was earlier in point of time, arose out
of a suit for recovery of 'circumstances and property
tax' under the U. P. District Boards Act (Local Act
X of 1922). The question there was whether the District Board of Dehra Dun could impose a tax on the
defendants who were not residents within the area of
the District Board. It is worthy of note that under
section 114 of the U. P. District Boards Act, the
power of a Board to impose a tax.on circumstances
and property is subject to the 9ondition that the tax
may be imposed on any person residing or carrying
on business in the rural area within the District
Board. The only question in that Allahabad case was
whether the defendants resided within the rural area
of the District Board so as to make them liable for
the tax. The finding was that they did not reside
within the rural area and therefore the imposition of
(1) A.I.&. 19!18 All. 88~.
(~) I.L.R. [19H] All. 611.
-
..
S.C.R.
SUPREME COURT REPORTS
673
the tax was illegal, and section 131 of the U. P. District Boards Act did not bar the suit. This decision
does not help the appellant. If it shows anything, it
shows that it was open to the District Board to impose a 'circumstances and property' tax on any person resiqing or carrying on business in the rural area.
In the 1948 Allahabad decision, the main question
was whether the provisions of section 2, Professions
Tax Limitation Act (20 of 1941) affected the powers
conferred upon the District Board by section 108 of
the U.P. District Boards Act to levy a tax on 'circumstances and property'. A subsidiary question was also
raised, whether section 131 of the U. P. District
Boards Act barred the suit. With regard to the main
question, it was pointed out that the name given to
a tax did not matter; what had to be considered was
the pith and substance of it. It was held that in pith
and substance the tax was one which attracted the
provisions of section 2, Professions Tax Limitation
Act (20 of 1941). A tax on 'circumstances and property' is a composite tax and the word 'circumstances'
means a man's financial position, his status as a
whole depending, among other things, on his income
from trade or business. Far from militating against
the principle that in considering the circumstances
of a person his income from trade or business within
the Town Area may be taken into consideration, the
decision approves of the principle.
In the course of
his judgment, Bind Basni Prasad J. referred to section 128, U.P. Municipalities Act, 1916, where 'taxes
on circumstances and property' appear as a head
distinct from the 'taxes on trades, callings and vocations and employments' and the argument was t.hat
the taxes being under different heads should be treated
as being entirely different, one from the other. It was
rightly pointed out that it is no sound principle of
construction to interpret expressions used in one Act
with reference to their use in another Act. The
meanings of words and expressions used in an Act
must take their colour from the context in which
87
1956.
Pandit Ram
Narain
v.
The State of
Uttar Pradesh
afld others
S. K. Das],
1956
Pandit Ram
Narain
v.
Tlie State of
Vttar Pradesh
and others
S. !{,Das j.
674
SUPREME COURT REPORTS
(1956]
they appear. It is true that in the Act under our
consideration the taxes which the Town Area Committee may impose appear under different heads in
sub-section (1) of section 14.
We have already
stated that though the clauses are different, the words
used in the section show that there may be overlapping between the different clauses, and to prevent the
same person being subjected to multiple taxation, a
proviso was incorporated in clause (f). In view of
the words and expressions used in section 14 of the
Act, we cannot accept the argument that clause (f)
should be read as entirely independent of and unconnected with the other clauses and a different condition, namely residence within the Town Area, must
be read as a necessary part of clause (f).
To do so
will be to read in clause (f) words which do not occur
there. The limitations for the imposition of a tax
under clause (f) are given in Rule 3 and 'residence' is
only one of the alternative conditions for the imposition of the tax-not a aine qua non as is contended by
learned counsel for the appellant.
In the result, we hold that the assessment of the
tax on the appellant under clause (f) of sub-section
(l) of section 14 of the Act was legally valid. The
appeal fails and is dismissed with costs.
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