# PRAKASH CHAND MAHESHWARI & ANR v. ZILA PARISHAD, MUZAFFARNAGAR & ORS

- **Citation:** [1971] Supp. 1 S.C.R. 761
- **Court:** Supreme Court of India
- **Decided:** 1971
- **Case number:** Writ Petition No. 435 of 1968
- **Bench:** S. M. Sikri, G. K. Mitter, C. A. Vaidialingam, A. N. Ray B, P. Jaganmohan Reddy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/prakash-chand-maheshwari-anr-v-zila-parishad-muzaffarnagar-ors-5415
- **Pages:** 16

## Headnote

Professions Tax Limitation (Amendment and Validation) Act 1949Retrospective validation of levy under U. P. District Boards Act, 1922 contnJYening limit of R•. 50 laid down in Profession Tax Limitation Act XX
of 1941-Validity-Procedure under r. 3 of Rules made under U.P. Distril:I Boards Act, 1922 whether unworkable under U.P. Kshetra Samithis
0
<llld 'Lila Parishads Adhiniyam 33 of 1961-Time limit for assessment pro-
-Wre under rr. 4 and S of Rules under 1922 Act whether mandatoryRulu whether not properly framed-Kar Adhikari appointed without cen·
llllling Public Service Commission as required by s. 43 of U.P. Kshetra
Samithi and Zila Parishads Adhiniyam Act 1961-Mere sending of papers
to Commission after making of appointment not sufficient compliance with
s. 43-Appointment is temporary and good only for two years-Assessment
made after two years invalid.
D
Tax on circumstances and property we levied in 1928 on persons residing in or carrying on business in the rural areas of District Muzaffarnagar
under the provisions of !he U.P. District Boards Ac~ 1922. In 1942, the
Central Legislature passed the Professions Tax Limitation Act which laid
down that no tax on circumstances and property levied by a local authority
should exceed Rs. 50 except in cases where it was already being levied.
The Act -was passed in accordance with the provisions of s. 142-A of the
Government of India Act, l935.
Jn 1948 s. 108 of the U.P. District
Boards Act was amended to provide that a board may continue a tax already imposed on persons assessed according to their circumstances and
pioperty, and that the tax so imposed shall not be abolished or altered
without the previous sanctjon of the State Government. In order to get
over the d<Cision of the High Court of Allahabad in District Board of
Farrukhabad v. Prag Dutt, (I.L.R. 1949 All. 26) the Central Legislature
passed the Professions Tax Limitation (Amendment and Validation) Act 61
of 1949. This Act retrospectively exempted the circumstances and property
tu levieci by local bodies in U.P. from the upper limit of Rs. 50 laid down
by the 1941 Act On August 22, 1958 the U.P. Antarim Zila Parishad Act
22 of 1958 was passed by the U.P. Legislature. The said Act was extended
to December 31, 1962 by successive legislation. The U.P. Kshetra Samithis
and Zila Parishads Adhiniyam 33 of 1961 repealed the United Provinces
District Board Act 1922 in relation to a district as from the date on which
tho establishment of Kshetra Samithis under the new Act was completed
and as from the date on which the U.P. Antarim Zila Parisbild Act was
to stand repealed in relation to that district.
Kshetra Samithis and Zila
Parishad were constituted in the District of Muzaffarnagar -under the Act.
The circumstances and property tax levied under the repealed Acts was
continued under the new Acl The taxing officer called Kar Adhikari was
to be appointed according to the procedure laid down in s. 43 of the new
Act. The appellants who carried on 'khandsari' and 'gur' bnsiness in the
rural area of Muz.atfarnagar District were, for the year 1967-68, assessed
to ~y a sum of Rs. 2,000 as circumstances and property tax. They filed
a writ petition under Art. 32 of the Constitution challenging the levy on
E
G
H
762
B
c
D
E
p
G
SUPRBMB CO)JRT REPORTS
[1971] SUPP. s.c.R.
1he following grounds; (i) Central Act LXI of 1949 w&s beyond the legislative competence of the Federal Legislature because the power o{ tile
Federal Legislature having been once exercised to reduce the imposts over
Rs. SO per annum to tbat sum it was exhausted and could not be exerci9ed
a second time; (ii) Even assuming the said Act was within the competenceof the legislature, as a result of tbe amendment of s.
108 of the U.P.
Districts Boards Act in 1948 tbe board could only continue to levy tb•
tax which was lawfully being imposed in 1948 on persons assessed accordina to their circumstances and properties in accordance with s. 114 and
inasmuch as the tax bad been reduced

## Text

_Characters 0–39,849 of 44,665. This is a partial read: ask again with offset=39849 for what follows._

761
PRAKASH CHAND MAHESHWARI & ANR.
A
v.
ZILA PARISHAD, MUZAFFARNAGAR & ORS.
May 7, 19n:
[S. M. SIKRI, C. J., G. K. MITTER, C. A. VAIDIALINGAM, A. N. RAY
B
AND P. JAGANMOHAN REDDY, JJ.J
Professions Tax Limitation (Amendment and Validation) Act 1949Retrospective validation of levy under U. P. District Boards Act, 1922 contnJYening limit of R•. 50 laid down in Profession Tax Limitation Act XX
of 1941-Validity-Procedure under r. 3 of Rules made under U.P. Distril:I Boards Act, 1922 whether unworkable under U.P. Kshetra Samithis
0
<llld 'Lila Parishads Adhiniyam 33 of 1961-Time limit for assessment pro-
-Wre under rr. 4 and S of Rules under 1922 Act whether mandatoryRulu whether not properly framed-Kar Adhikari appointed without cen·
llllling Public Service Commission as required by s. 43 of U.P. Kshetra
Samithi and Zila Parishads Adhiniyam Act 1961-Mere sending of papers
to Commission after making of appointment not sufficient compliance with
s. 43-Appointment is temporary and good only for two years-Assessment
made after two years invalid.
D
Tax on circumstances and property we levied in 1928 on persons residing in or carrying on business in the rural areas of District Muzaffarnagar
under the provisions of !he U.P. District Boards Ac~ 1922. In 1942, the
Central Legislature passed the Professions Tax Limitation Act which laid
down that no tax on circumstances and property levied by a local authority
should exceed Rs. 50 except in cases where it was already being levied.
The Act -was passed in accordance with the provisions of s. 142-A of the
Government of India Act, l935.
Jn 1948 s. 108 of the U.P. District
Boards Act was amended to provide that a board may continue a tax already imposed on persons assessed according to their circumstances and
pioperty, and that the tax so imposed shall not be abolished or altered
without the previous sanctjon of the State Government. In order to get
over the d<Cision of the High Court of Allahabad in District Board of
Farrukhabad v. Prag Dutt, (I.L.R. 1949 All. 26) the Central Legislature
passed the Professions Tax Limitation (Amendment and Validation) Act 61
of 1949. This Act retrospectively exempted the circumstances and property
tu levieci by local bodies in U.P. from the upper limit of Rs. 50 laid down
by the 1941 Act On August 22, 1958 the U.P. Antarim Zila Parishad Act
22 of 1958 was passed by the U.P. Legislature. The said Act was extended
to December 31, 1962 by successive legislation. The U.P. Kshetra Samithis
and Zila Parishads Adhiniyam 33 of 1961 repealed the United Provinces
District Board Act 1922 in relation to a district as from the date on which
tho establishment of Kshetra Samithis under the new Act was completed
and as from the date on which the U.P. Antarim Zila Parisbild Act was
to stand repealed in relation to that district.
Kshetra Samithis and Zila
Parishad were constituted in the District of Muzaffarnagar -under the Act.
The circumstances and property tax levied under the repealed Acts was
continued under the new Acl The taxing officer called Kar Adhikari was
to be appointed according to the procedure laid down in s. 43 of the new
Act. The appellants who carried on 'khandsari' and 'gur' bnsiness in the
rural area of Muz.atfarnagar District were, for the year 1967-68, assessed
to ~y a sum of Rs. 2,000 as circumstances and property tax. They filed
a writ petition under Art. 32 of the Constitution challenging the levy on
E
G
H
762
B
c
D
E
p
G
SUPRBMB CO)JRT REPORTS
[1971] SUPP. s.c.R.
1he following grounds; (i) Central Act LXI of 1949 w&s beyond the legislative competence of the Federal Legislature because the power o{ tile
Federal Legislature having been once exercised to reduce the imposts over
Rs. SO per annum to tbat sum it was exhausted and could not be exerci9ed
a second time; (ii) Even assuming the said Act was within the competenceof the legislature, as a result of tbe amendment of s.
108 of the U.P.
Districts Boards Act in 1948 tbe board could only continue to levy tb•
tax which was lawfully being imposed in 1948 on persons assessed accordina to their circumstances and properties in accordance with s. 114 and
inasmuch as the tax bad been reduced to Rs. 50 by the Central Act of
1941 tbe validation under tbe Professions Tax Limitation (Amendment and
Validation) Act, 1949 would not serve to raise the limit of the tax to beyond Rs. 50 per annum, (iii) under r. ·3 framed by the local self government of the U.P. under s. 172 of tbe Act of 1922 the tax was to be assessed by an assessing officer appointed by tbe District Board with the help
of the members\ of the circle but since under the Zila Parishad Act there
was no circle or members, the old rule bad become unworkable; (iv) the
prescribed time schedule mentioned in rr. 4 and 5 in the relevant notifica~
tion not having been adhered to the assessment was illegal. (v) the rules
of 1928 were not properly framed inasmuch as the procedure laid down
in tbe relevant Chapter of the Act of 1922 was not followed strictly; (vi)
the appointment of the Kar Adhikari was not made in accordance with
tbe provisions of s. 43 of the U.P. Act XXXlll of 1961 and therefore t~e
assessment made by him was illegal.
HELD: (i) The proviso to s. 142-A(2) of the Government of India
Act, 1935 could not be read to give the legislature power to alter tbe
quantum of ass .. sment once for all. Clearly it gave power to the fede!'!'l
Ieaislature to fix a rate of such tax in substitution for the one which was
already prevailing on the 31st March, 1939 and it could do so not only
once but from time to time. The use of the words 'unless for the tinJC
being' indicates tbat the legislature could at any point of time substitute a
fresh rate of tax for the one prevailing.
It follows that it was open lo
tbe federal legislature to make such substitution more tban once.
[771F·
772B]
(ii) The amendment of s. 108 of the U.P. District Boards Act of 192~
in 1948 only allowed tbe continuance of tbe tax already imposed on persons
assessed according to their circumstances and property. The argument that
validation of tbe imposition of a tax .by tbe Professions Tax Limitation
(Validation and Amendment) Act, 1949 with retrospective. effect was .not
possible could not be accepted. In tbe case of M. P. Sundararamier & Co.
this Court clearly laid down that a law authorising imposition of tax could
be both retrospective and prospective. It necessarily followed tbat if the
Act of 1949 was valid tbe imposition was saved even after 1950 under tile
proviso to cl. (2) of Art, 276 of tbe Constitution. [772H-773F]
B. M. Lakhani v. Malkapur Municipality, A.I.R. 1970 S.C. 1002 distinguished.
M.P. V. Sundararamier & Co. v. State of A11dhra Pradesh, [1958)
S.C.R. 1422, relied on.
(iii) The argument that tbe rules framed under the Distric! Boar~s Act
became inconsistent with and unworkable under the U. P. Zila Par!Shads
H
Act could not be accepted. The ass~ssment was to be done by the asse&S·
ing officer appointed by the District Board. Even if there was a circle
but the members of the circle refused to co.operate with him, the asse.!S·
meot would not be invalid. The help which Ibey could render would only
•
PRAKASH CHAND\', ZILA PARISHAD (Mitter, J.)
7~3
be limited to giving information about the assesses. It was quite competent
A
for the assessing officer to proceed with the assessment even if the members
refused to help him. The situation was not altered by reason of the fact
that the circle and the members had disappeared. [773G-774A]
(iv) Rules 4 and 5 which laid down certain dates by which the work
was directed to be taken in hand and completed were merely directory and
not mandatory. There was nothing in these rules to suggest that if the
dates were not strictly observed any prejudice would be caused to the assesB
see. [77411-q
Judgment of Allahabad High Court dated January 8 1963 in Civil Misc.
Writ Petition No. 3160 of 1962, disapproved.
(v) Even if there was any irregularity in the framing of the rules under
the 1922 Act the same was cured by the publication of the notification under
s. 120(3) of thQ Act of 1922.
[7740]
C
(Vl} The appointment of Kar Adhikari (respondent no. 2 in this case)
took place on 8th August 1965, the impugned assessment was made on 6th
March 1968 i.e. more than two years after the date of appointment. Under
s. 43 the appointment of this officer to the post which carried an initial
salary of more than Rs. 200 p.m. could be made by the Parishad in consultation with the Public Service Commission or other Commission or
selection Body as might be constituted by the State Government and if there
was a difference of opinion between the Commissi()n and the Parishad
the matter was to be referred to the State Government whose decision was
to be final.
In the present case the State Public Service Commission had
been notified of the appointment and they had not expressed any disapproval of the same. Appointing respondent no. 2 as Kar Adhikari and merely &eJlding the papers relating to such appointment to the Public Service
Commission would not be con1pliance with s. 43 of the Act.
Even if it be
regarded as a temporary appointment, it could only be effective for two
yean, and as the assessments in the present case was made beyond that
date it must be held that the assessment was made by a person not com·
petcnt to make it. [774H-775H]
·
Cloandramouleshwar Prasad v. Patna High Court, [1970] 2 S.C.R. 666,
applied
The position was not improved by the inclusion of the name of respondent no. 2 in List 'C' under paragraph 9(4) of the U.P. Zila Parishad
Central Transferable Cadre Rules, 1966 which came into force with effect
from December 20, 1966. Jn terms of s. 47 of U.P. Act of 1961 the appointment ceased to be valid after two years, the period having expired
long before the hearing of this matter.
The ordex: of assessment of Rs.
2,000 on the petitioners dated 25th March 1968 must therefore be quashed.
[776E-H]
ORIGINAL JURISDICTION : Writ Petition No. 435 of 1968.
Petition under Art. 32 of the Constitution of India for the
enforcement of fundamental rights.
E. C. Agarwala, for the petitioners.
D
.,
G
C. B. Agarwala, Uma Mehta, S. K. Bagga and S. Bagga, for
JI
respondents Nos. 1 and 2.
0. P. Rana, for respondent No. 3.
A
B
G
D
E
F
G
H
SUPRE~fE COURT REPORTS
[1971] SUPP. S.C.lt.
The Judgment of the Court was delivered by
Mitter, J.-By this petition the petitioners challenge the
validity of (!) the Professions Tax Limitation (Amendment and
Validation) Act, 1949, (2) s. 131 of the U. P. Zi\a Parishad Act.
(3) an order of assessment of Rs. 2,000/- dated 25th March, 1968
made by the Kar Adhikari, Zila Parishad Muzaffarnagar and
pray for incidental reliefs.
The petitioners carry on the business of manufacture and
sale of "khandsari" amd "gur" in the District of Muzaffarnagar,
U. P. They own a crusher in village Morna in the sa.id district
where the manufacture of khandsari as sugar is =ied on. They
challenge the imposition of "Circumstances and Property" tax
of Rs. 2,000 /- imposed on their business under. the order of
assessment passed by respondent No. 2, Kar Adhikari, Zita
Parishad Muzaffarnagar for the year 1967-68. As they did not
produce their accounts for their business in khandsari the Kar
Adhikari, an officer appointed by the Zila Parishad of Muzalfarnagar assessed them to Rs. 2,000 / - as "Circumstances and Property" tax on the estimated income of Rs. 96,000 /- from their
property and business for the year.
To appreciate how the Zila Parishad (a district authority)
came to have the power to levy the tax, it is necessary to take an account of some past le_gislation. The Local body to administer the district of Muza.Jiarnagar in U. P. until the year 1958 was the District
Board of Muzaffamagar constituted under the U. P. District
Boards Act, 1922 (U. P. Act X of 1922).
Chapter VI of the
Act containing sections 108 to 132 gave the Board certain powers
of taxation. local rates etc. and prescribed the procedure ~r
imposition and recovery of the levy.
Under s. 114 the Boord
had the power to impose a tax on "circumstances and property"
subject to certain conditions, inter a/ia, that the tax could be
imposed only on persons residing or carrying on business in the
rural a.rea with an income above a certain minimum limit. The
rate of tax was not to exceed Rs. 0-0-4 In the rupee on the
total income and the total amount of tax was not to exceed the
maximum which might be prescribed by rule. By s. 115 a Board
deciding to impose ai tax had to frame proposals by special resolution, specifying the particular tax out of those prescribed in s.
I 08 which it desired to impose, the persons or classes of persons
to be made liable and the description of the property or other
taxab1e thing or circumstance in respect of which they were to be
made liable, the amount of ra.te leviable from such persons or
classes of persons and a,ny other matter which the State Government required by rule to be specified. S. 116 enabled any person
PRAKASH CHAND v. ZILA PARISHAD (Mitter. J.)
765
ordinarily residing or carrying on business in the district to raise
objections to the proposal which had to. be considered by the
Board. Under s. 117 the Board had to submit the finally settled
proposaJs to the State Government which could either sanction
the same or return them to the Board for further consideration.
When the State Gov~ment had sanctioned the jproposal8 of
the Board, it had to frame rules under s. 172 in respect of the
tax as for the time being it considered necessary after taking into
consideration the draft rules submitted by the Board.
Following . on the above, the Board was required to direct the imposition of the tax with effect from a date to be specified by specia.I
resolution. Under s. 120(1) a copy of the resolution passed by
the Board was to be submitted by it to the State Government.
Government was required to notify in the official gazette the
imposition of the tax from the a,ppointed day upon receipt of
the copy of the board's resolution and the imposition of a tax
was in all cases. to be subject to the condition that it had been
so notified. Under sub-s. (3) of s. 120 a notification of the imposition of a tax under sub-s. (2) was to be conclusive proof that
the tax had been imposed in accordance with the provisions of
the Act. Matters mentioned in clauses (a) to (f) including inter
alia the assessment anu collection of taxes was under s. 123 to
be governed by rules except in so far as the provision therefor
was made by the Act. S. !.72 empowered the State Governme.nt
to make rules consistant with the Act in respect inter alia of
matters mentioned in s. 123.
On the !st of March 1928, the U. P. Local Self Government
· rssued a notification prescribing rules for the assessment and
collection of a tax on circumstances a.nd property in the rural
area of the Muzaffarnagar District under s. 172 of the Act after
the previous publication thereof as required by s. 176. Rule 3
provided tha.t "the tax shall be assessed by an assessing officer
appointed by the District Board with the help of the members
of the circle concerned". Rules 4 and 5 laid down a time schedule for the work of the assessing officer and the submission of
the list of persons within the district who appeared to be liable
to pay the tax to the boa.rd. He was first required to prepare a
list on or before 15th December of each year of all persons who
appeared to him to be so liable. He was then to consider the
circumstances and property of every person entered in the list
and to determine the amount of the tax to which such person
should be assessed. The name of every person assessed and the
amount of tax to which he was assessed was to be entered in an
assessment list in the form attached to the rules and was to be
completed on or before the 20th of January next.
After the
preparation of the list and the submission thereof to the Boartl
'the fatter could take action to revise the list by a resolution and
A /
B
c
D
E
F
G
H
766
A
B
c
D
E
F
G
ff
SUPREME COURT REPORTS
[1971] SUPP. s.c.R.
the Board was to return the list to the assessing officer by the
15th February.
In terms of the U. P. District Boards Act, 1922 rules were
framed on the lst March 1928 and the Smte Government issued
a notification on the 20th April, 1928 under s. 120(2) of the Act
to the effect that the District Board Muzaffarnagar had in exercise
of powers conferred by s. 108(2) imposed with effect from May
15, 1928 a ta'x. on all persons ordinarily residing or carrying on
business in the rural area of Muzaffarnagar District according
to their circumstances and property at the rate of Rs. 0-0-3 in
the rupee on incomes of Rs. 300 /- but not ex<;ceding Rs.1200
per annum a'1ld Rs. ()..()..4 in the rupee on incomes of over Rs.
1200 /- per year provided that in the case of persons residing
in notified and town areas and paying tax on circumstances and
property to their respective committees, the rate of tax Wll6 to
be Rs. 0-0-2 on the income of Rs. 300 but not exceeding Rs.
1200 and Rs. 0-0-3 on the income of over Rs. 1200/- per annum.
In 1935 the Government of India Act of that year was
enacted whereby the Legislative Lists were defined in the Seventli
Schedule to the Act in terms of ss. 99 to 107 in Chapter I of
Part V. Certain restrictions on legislative powers were also defined in Chapter II of the said Part containing ss. 108 to no.
Item 46 of the Provincial Legislative List was amended in 1940
to read : .
"Taxes on professions, trades, camngs and employments, subject, however, :to the provisions of section
142-A of this Act."
The said section which also came into force under the same
Amending Act ran a~ follows :-
"142-A. ()) Notwithstanding anything in section
one hundred of this Act, no Provincial law relating to
taxes for the benefit of ai Province or of a municipality,
district board. local board or other local authority
therein in respect of professions, trades, callings or
employments shall be invalid on the ground that it relates to a tax on income.
(2) The total amount payable in respect of any person to that Province or to any one municipality, district
board, local board, or other local authority in the Province by way of .. ta.xes on professions, trades, callings
and employments shall not, after the thirtyfirst day .of
·•
PRAKASH CHAND'" ZILA PARISJIAD \Mitter, J.)
March nineteen hundred and 'thirty-nine, exceed fifty
rupees per annum :
Provided that, if in the financial year ending with that
date there was in force in the case of any Province or
any such municipality, board or authority a tax on professions, trades, callings or employments the rate, or
the maximum rate, of which exceeded fifty rupees per
annum, the preceding provisions of this sub-section shall,
unless for the time being provision to the contra,ry is
made by a Jaw of the Federal Legislature, have effect
in relation to that Province, municipality, board or
authority as if for the reference to fifty rupees per annum
there were substituted a reference to that ra,te or maxi·
mum rate, or such lower rate, if any (being a rate greater
than fifty rupees per annum), as may for the time being
fixed by a Jaw of the Federal Legislaiture; and any law
of the Federal Legislature made .for any of the
purposes of this proviso may be made either generally or
in relation to any specified Provinces, municipalities,
boards or a.uthorities.
(3) The fact that the Provincial Legisla.ture has
power to make Jaws as aforesaid with respect to taxes
on professions, trades, calllings 1tnd emftoyrnents, the
generality of the entry in the Federal LeJ!Slative List
relating to taxes on income."
In exercise of the powers conferred by the above section the Central Legislature passed the Professions Ta-x Limitation Act, 1941
(Act XX of 1941) on 26th November 1941.
The preamble to
the Act shows that its object was to limit the total amount payable in respect of any person in respect of his profession, trade
or calling etc. by way of tax to fifty rupees per a.nnum notwithstanding the provision to the contrary in s. 142-A of the Government of India Act, 1935. The Act which contained only three
sections and a Schedule provided by section 2 that the amount
of tax payable in respect of any one person to ru Province, municipality, district board etc. was to cease to be levied to the extent
to which such taxes exceeded Rs. 50 per annum. The section
ran as follows :
"2. Notwithstanding the provisions of any law for
the time being in force, a·ny taxes payable in respect of
any one person to a Province, or to any one municipality, district board, local board or other local authority in any Province, by way of tax on professions, trades,
callings or employments, sh&ll from and after the commencement of this Act cease to be levied to the extent to
which such taxes exceed fifty rupees per annum."
767
A
B
c
D
E
F
G
H
768
A
B
c
D
E
F
G
H
SUPREME COURT REPOR 1 S
[1971] SUPP. s.c.R.
S.3 was a saving provision whereby the provisions of s. 2 were
not to apply to the taxes specified in the Schedule. All the five it.ems
in the Schedule related to taxes on professions, trades or callings
by certain municipalities.
S. 108 of the U. P. District Boards Act, 1922 was amended
in 1948 to read :
·
"A board-
(a) shall, by notification in the official Gazette,
impose a local rate under section 3 of the United Provin·
ces LocaJ Rates Act, 1914, as modified by this Act; and
(b) may continue a tax already imposed on persons assessed according to their circumstances and pro·
perty ............ in accordance with section 114 :
Provided that the tax on circumstances and property so imposed shaJI not be abolished or altered without the previous sanction of the State Government."
It will be noticed that after the Professions Tax Limitation
Act of 1941 the District boards in U. P. were not allowed to
collect a tax on circumstances and property of any person in
excess of Rs. 50. The situation was however altered in .1949
when the Professions Tax Limitation (Amendment and Valida·
tion) Act, 1949 was passed with the assent of the Govemor·
General on 26th December 1949 (Act LXI of 1949). This was
really to get over the decision of the Allaha.bad High Court in
Distri~t Board of Farrukhabad v. Prag Dutt (').
The Act was
passed to amen1 the Professions Tax Limitation Act, 1941 and to
valida.te the imposition in the United Provinces of certain taxes
on circumstances and property. Section 2 of the Act purported,
to add items 3-A and 3-B in the Schedule to the Professions Tax
Limitation Act, 1941 with retrospective effect.
Items 3-A and
3-B read as follow. :-
"3-A. The tax on inhabitants assessed according
to their circumstances and property, imposed under
cli;use (ix) of sub-section (I) of section 128 of the United
Provinces Municipalities Act, 1916 (U. P. Act II of
1916).
3-B. The tax on persons Msessed according to their
circumstances and property, imposed under clause (b)
of section 108 of the United Provinces District Boards
Act, 1922 (U. P. Act X of 1922)."
(1) I. L. R.. [1949] Allahabad 26.
PRAKASH CHAND v. ZILA PAIUSHAD (Mitter, J.)
769
The usual clauses for ·validation with retrospective effect wete
A
contained in s. 3 of the Act.
Taxes on professions, trades, callings and employments
again came to be dealt with by Art. 276 of the Constitution in
1950. Clause (!) of the article laid down that
"Notwithstanding anything in article 246, no law
of the Legislature of a State rela.ting to taxes for the
benefit of the state or of a municipality, district board,
lo~al board or other local authority therein in respect of
professions, trades, callings or employments shall be in·
valid on the ground tha.t it relates to a tax on income."
Cl. (2) was aimed at limiting the maximum amount in respect of
sμch taxes subject to certain qualifications. It ran as follows :-
"The total amount paya.ble in respect of any one
person to the State or to any one municipality, district
board, local board or other local authority in the State
by way of 'taxes on professions, trades, ca.flings and em·
ployments shall not exceed two hundred and fifty rupees
per annum :
Provided that if in the financial year immediately
preceding the commencement of this Constitution there
was in force in the case of any State or a.ny such muni·
cipa!ity, board or authority a tax on professions, trades,
callings or employments the rate, or the maximum rate,
of which exceeded two hundred and fifty rupees per
a.nnum, such tax may continue to be levied until provi·
sion to the contrary is made by Parliament by law, and
any law so made by Parliament may be made either generally or in relation to a.ny specified States, municipalities,
boards or authorities."
On August 22. 1968 the U. P. Antarim Zila Parishad
Act (XXII of 1958) was passed by the U. P. Legislature.
Under section 1(3) of the Act it was to come into force on 29tlt
day of April 1959 and to expire on 3 lst December 1959. The
said Act was purported to be extended to 31st December 1962
by successive legislation. Under s. 3 (!) of the Act of 1958 al.I
district boards in U. P .......... and all committees of such boards
constituted under• the District Board3 Act of 1922 were to cease
to function and all members and the President of each board
and all members of each committee were to vacate and be deemed
to have vacated their respective offices.
The U. P. Kshettra Samithis and Zila Parishads Adhiniyam.
1961 repealed the United Provinces District Boards Act 19::.2
49-1 S.C. lndia/il
B
c
D
E
F
G
H
770
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS
(1971] SUPP. s.c.R.
in relation to a. district as from the date on which the establish·
ment of Kshettra Samithis under the new Act (XXXIII of 1961)
was completed and as from the date on which the U. P. Antarim
Zila Parishad Act was to stand repealed in relation to that district.
The Kshettra Samitis and Zila Parishad were constituted in the
District of Muzffarnaga.r under the Act. This Act was a comp·
rehensive Act which prescribed inter alia for dividing all the rural
areas of each district into khands, the establishment of Kshettra
Samithis for each khand, their composition aind establishment
and incorporation of Zila Parishads. Each Zila Parishad woo
to be a body corporate ha.ving perpetual succession and a.common
seal with power to acquire, hold and dispose of property and to
discharge its functions under tlie Act. The powers and functions
of Kshettra Samitis and Zila Parishads were specified in Chapter
III of the Act. Chapter IV of the Act containing ss. 39 to 55
laid down provisions for the appointment of officers and servants
of the Zila Parishads. Under s. 43()) aippointments to the posts
of Karya Adhikari, Abhiyanta and Kar Adhikari and the posts
created under sub-section (2) of s. 39 carrying an initia.l salary
of Rs. 200 dr more per month were to be made by the Parishad
in consultation with the State Public Service Commission or such
other Commission or Selection Board as might be constituted by
the State Government in this behalf in the manner prescribed
provided that if there was a, difference of opinion between the
Commission and the Parishad the matter was to be referred to the
State Government whose decision was to be final.
Under s. 47
"Notwithstanding anything contained in s. 43 ......
officiating and temporary appointments to posts men·
tioned in sub-section ()) of section 43, may be made by
·the appointing authority specified in section 43 or in the
rules made under section 44, without consulting the
Commission, but no such appointment shall, except as
provided in sub-section (2), continue beyond a period
of one year sav\, after consultation with the Commis·
sion."
Under sub·s.(2) the &ppointments made under su!J..s.(I) might in
special circumstances imd where the appointing authority was
the Parishad., with the approval of the State Government be
continued without consulting the Commission for a period not
exceeding two years. Chapter VII of the Act of 1961 contains
provisions for taxation and levy of fees and tolls in ss. 119 to
146. S. 120 sanctioned the continuance of imposition of circum·
stances and property tax which was imposed or continued under
the U. P. District Boards Act 1922 until abolished or altered and
all rules, regulations ·and bye-laws, orders, notific&tions were con·
tinue in force as if enacted under the Act of 1961.
S. 131 (!)
PRAKASH CHAND v. ZILA PARISHAD (Mitter. J.)
enabled the Zila Parishad to exempt for a period not exceeding
one yea.r, from the payment of a tax or any portion of a tax
imposed under the Act, any person who was in its opinion, by
reason of poverty unable to pay the same and renew the exemption as often as it deemed necessary. Sub-ss. (2) and (3) allow
other such exemptions either by the Zila Parishad or the State
Government.
The main plank of the argument on behalf of the petitioners
was that the Central Act LXI of 1949 W&S beyond the legislative competence of the Federal Legislature, but even assuming
the said Act was within the competence of the legislature as a
result of the amendment of s. 108 of the U. P. District Boards
Act in 1948 the board could only continue to levy the tax which
W&S lawfully being imposed in 1948 on persons assessed according to their circumstances and properties in accordance with s.
114 and inasmuch as the tax had been reduced to Rs. 50 by
1he Central Act of 1941 the validation under the Professions Tax
Limitation (Amendment and Validation) Act, 1949 would not
serve to raise the limit of tax to beyond Rs.
50 per annum.
In our view, none of these contentions have any force.
On the first branch of his submission, counsel relied on a
passage in Craies on Statute Law (sixth edition, page 283) reading :
"If a power is given to the Crown by sta.tute for the
purpose of enabling something to be done which is
beyond the scope of the royal prerogative, it is said to
be an important constitutional principle that such a
power, having been once exercised, is exhausted a·nd
cannot be exercised again."
It was said that the effect of sub-s. (2) read with the proviso to
s. 142-A of the Government of India Act was that although a tax
in respect of professions, trades and callings might have been leviable after the 31st March 1939 if it was being levied before, the
power of the Federal Legislature having been once exercised to
reduce the imposts over Rs. 50 /- per annum to that sum, it wa,s
exhausted and could not be exercised a second· time. The argument is patently fallacious.
Here there is no qi:Jstion of any
prerogative and the proviso cannot be read to give the legislature
JlOWer to alter the quantum· of assessment once for all. Clearly it
. gave power to the Federal Legislature to fix a rate of such tax in
substitution for the one which was already prevailing on the 31st
March 1939 and it could do so not only once but from time to
:time as is apparent from the use of the expression :
"unless for the time being provision to the contrary
is made by a law of the Federal Legislature."
771
A
B
c
D
E
F
G
H
772
A
B
c
D
E
F
G
H
SUPREME COURT RBPOR TS
[1971] SUPP. S.C.R.
The words "unless for the time being" indicate that the Legislature could at any point of time substitute a fresh rate of tax for
the one prevailing. It follows that it was open to the Federal
Legislature to make such substitution more than once.
Having
reduced the r31te of Rs. 50 by the Professional Tax Limitation
Act the Legislature took power again to substitute the old rate
to tax for the sum of Rs. 50. · This substitution became effective
as from the date of the Professions Tax Limitation Act, 1941
by the insertion of items 3-A and 3-B to the Schedule to the
said Act.
S. 3 of the Act of 1949 validated imposts for the
period intervening between 1941 and 1949•
Counsel sought to rely on a decision of this Court in B. M.
Lakhani v. Mdlkapur Municipality (') in aid of his contention
that a fresh Act had to be re-enacted after 1949. In that case
the appellants had filed a suit to restrain the municipality from
recovery of "Bale and Bhoja" tax for the season 1953-54 and for
the subsequent seasons and for a decree for refund of the amount
paid contending that the tax was ultra vires the municipali!y.
One of the points there canva<5sed was, whether the levy of the tax
by the municipality was valid in law.
The municipality was
constituted in 1905 under s. 41(1) cls.(a) and (b) of The Berar
Municipal Act, 1886.
It purported to lev!)', with effect from
October l, 1912, 31 tax known as the Bale and Boja tax on
cotton ginned and pressed in Ginning and Pressing factories at
certain rates. On the 2nd October 1939 the municipality resolved
to revise the rates and by notification dated January 2, 1940
under s. 67(5) of the C. P. and Berar Municip311ities Act, 1922
tax was permitted to be levied at the rate of four annas per
bale with effect from October 1, 1939.
The \Court observed
that the notification of 1940 was not saved by the proviso to
s. J42-A but the municipality collected tax 31t the rates set out
in the said notification. Accordingly the Court held that if the
notification of 1940 was ineffective under the Government of India
Act, 1935 it could not be revived under the Constitution by
virtue of Art. 276(2) proviso.
Oearly, that case is distinguishable from the facts of the
case before us. In this case the impost rem31ined the same between
the passing of the Government of India Act, 1935 and the commence ent of the Constitution. The amendment of s. 108 of
the
. P. District Boards Act of 1922 in 1948 only allowed the
co muance of the tax already imposed on persons assessed ace. ding to their circumstances 31nd property. We cannot accept
the argument that validation of the imposition of a tax by the
Professions Tax Limitation (Validation and Amendment) Act
(•) A. I. R. 1970 S. C. 1002.
PRAKASH C>IAND v. ZILA P.ARISHAD (Mitter, J.)
1949 with retrospective effect was not possible.
An argument
-similar to tha.t raised by the counsel for the petitioners was raised
.and negatived in M. P. V. Sundararamier & Co. v. The State of
Andhra Pradesh (1). There it was contended oil. behalf of the assessees that s. 2 of the Sales Tax Laws Va.Jidation Act, 1956 which
provided that no law of a State imposing or authorising the ,
imposition of tax on inter.State sales during the period between
April 1, 1951 and September 6, 1955 shall be deemea to be
invalid or ever to haive been invalid merely by reason of the fact
that sales took place in the course of inter-State trade, did not
authorise the initiation of fresh proceedings for the imposition
but only validated levies already made. Rejecting this conten-
:tion it was obseryed (see p. 1460) :
"What is maiterial to observe is that the power conferred on Parliament under Art. 286(2) is a legislative
power, and such a : power conferred on a Sovereign
Legislature carries with it authority to enact a law either
prospectively or restrospectively, unless there can be
found in the Constitution itself ai limitation on that
power."
;and at p. 1461 :
"While a law prohibiting transfers (the subject matter of the appeal before the Privy Council in Punjab
A
B
c
D
Province v. "Dau/at Singh-13 I. A. 59) must be prosE
pective, a law autliorising imposition of tax need not be.
It c&n be both prospective and retrospective."·
Jt necessarily follows that if the Act of 1949 was valid the impoiition was saved even after 1950 under the proviso to cl. (2)
of Art. 276 of the Constitution.
It was next argued that the rules framed under the District
Boards Act became inconsistent with and unworkable under the
U.P. Zita Parishads Act. It was said that under rule 3 framed
by the Local Self Government of the U. P. under s. 172 of the
Act of 1922 the tax was to be assessed by an assessing officer
appointed by the District Board with the help of the members of
the cirde. As under the Zila Parishad Act there were no circle
or members, the old rule was said to have becoine unworkable.
In our view this argument has no force. The assessment was to
be done by the assessing officer appointed by the District Board.
Even if there was a circle but the members of the circle refused
to cooperate with him, the assessment would not be invalid. After
all the help which they could render would only be limited to
(1) [19S8] S. C.R. 1422.
F
G
H
774
A
B
c
D
E
F
G
SUPREME COURT REPORTS
(1971] SUPP.S.C.R.
giving information about the assessees. It was quite competent
for the assessing officer to proceed with the assessment even if the
members refused to help him. The situation was not altered by
reason of the fact that the circle and the members had disappeared.
The next argument of counsel that the time schedule mentioned in rules 4 and 5 in the notification of January 28 not
having been a<lhered to, the assessment was illegal, must be
rejected on the face of it. These rules laying down certain dates
by which the work was directed to be taken in hand and completed were merely directory and· not mandatory. There was
.nothing in these rules to suggest tha,t if the dates were not
strictly observed any prejudice would be caused to the assessee.
We find ourselves unable to accept the observations to the contrary in a judgment of the Allahabad High Court dated
8th
January 1963 rendered in Civil Miscellaneous Writ Petition No.
3160 of 1962 to which reference wa,s made in this connection.
In paragraph 21 of the petition, a complaint is made that
the Zila Parishad had changed the rate of tax to 3 paise per rupee
which is equivalent to 6 pies (old) per rupee being the rate which
was in force under the District Boards Act and the minimum
amount on income for levy of ta,x had also been raised under
the Zila Parishad Act to Rs. 600 from Rs. 300 under the District
Boards Act. It is pointed out in the counter affidavit of respondent No. 2 that the above statementis not correct and that the rate
of 3 paise per rupee provided under s. 121 of the Zila Parishad
Act wa6 not applicable by virtue of s.
120 of the Act. The
respondent further pointed out that the maximum amount on
which the tax was leviable had been raised from Rs. 300 to
Rs. 600 before the commencement of the Zila Parishad Act the
change working in favour of the assessee. We are therefore not
satisfied a,bout the genuineness of the petitioners' complaint.
A faint attempt was made to argue that the rules of 1928
were not properly framed inasmuch as the procedure laid down
in the relevant chapter of the Act of 1922 was not followed
strictly a·nd the rules were not sent to Government for approval.
In our view, even if there was any such irregularity in the framing
of the rules, the same were cured by the publication of the noti·
fication under s. 120(3) of the Act of 1922.
The last point raised by the petitioners relates to the appointment of the Kar Adhikari on the ground that it wa,s not done in
consultation with either the Public Service Commission of the
State or any other Commission or body appointed in that behalf
by the State Government Under s. 43 of the U. P. Kshettra
Samithis and Zila Parishads Adhiniyam, 1961 i.e. U. P. Act
XXXIII of 1961. The appointment of respondent No. 2 in this
case took place on 8'th August 1965; the impugned assessment
PRAKASH CHAND v. ZILA PARISHAD tMitter, J.)
was made on 6th March 1968 i.e. more than two years aifter the
daite of appointment. Under s. 43 the appointment of this officer
to the post which carried an initial salary of more ihan Rs. 200
p.m. could be made by the Parisbad in consultation with the
Public Service Commission or other Commission or Selection
Body as might be constituted by the State Government and if
there was a difference of opinion between the Commission a,nd
the Parishad the matter was to be referred to the State Government whose decision was to be final.