# Rohtas Industries Ltd., Dalm/anagar v. State of Bihar (1965} Bihar

- **Citation:** [1967] 3 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 1967-02-28
- **Bench:** K. SUBBA RAo, J. C. Shah, S. M. Sikri, Ramaswami, C. A. Vaidialingam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/rohtas-industries-ltd-dalm-anagar-v-state-of-bihar-1965-bihar-4197
- **Pages:** 9

## Headnote

Bihar and Orissa Municipal
Act (8. & 0. Act 7 of
1922), Ss.
82(1)(1!), 1SOA·E, 388
and 389-Profession tax-If infringes fundamental rightJ-Constitution of /lldia, Arts. 14, 19 & 31.
The respondent-Notified Area Committee-imposed
profession tax
under the Bihar and Orissa Municipal Act,
1922 and issued demand
notices to the petitioner. The petitioner filed a petition under Art. 32
of the Constitution challenging the provisions of Act aJ infringing Arts.
14, 19 and 31 of the Constitution on the grounds that (i) Ss. 388 and
389 of the Act gave aJbitrary power to the Government to
constitute
either a municipality under s. 4 of the Act or a notified area committee
under s. 388; (ii) the rate of tax to be levied had been left to the discretion of the Commissioner and the Government without giving
any
guidance as to the amount of tax; (iii) proviso (iv) to s. 82(1) was
void as it did not give any indication
as to the circumstanc~ under
which the Government should direct the Commissioners to levy lax under
s. 82(1 )(ff); (iv) the Act did not lay down proper procedure for the
asse.iSment and determination of the tax; and (v) no appeals or reference&
were provided in the Act and the only remedy of an assessee who was
aggrieved by the assessment, was to file. a revieviT under s. 150E.
Held : The petition must be dismissed.
(i) Sections 4 and 388 of the Act give sufficient guidance to
the
Government. Section 4(i) contemplates a town containing not less than
five thousand inhabitants and a town of a particular density of population, and further that three-fourths of the adult male population should
be engaged in pursuits other than agriculture. These requirements show
that the area has reached such a stage of development that the Government should constitute a municipality in the area.
Section 388 would
come into picture only if the requirements of s. 4 are not satisfied but
yet the Government considers it necessary to make administrative provi~
sions for all or any of the purposes of this Act. (7 C-DJ
(ii) Schedule IV specified the maximum amount of tax that can be
levied and s. 150 D lays down the purposes for which the tax can be
utilised.
This gives sufficient guidance to the Commissioners or the
State Government to fix the rate of tax. [7 G]
The Corporation of Calcutta v. Liberty Cinema [1965] 2 S.C.R. 477.
relied upon.
(i'i) The Government will only direct the Commissioner to levy the
tax if the Commis.ioners do not carry out their duty properly. (8 C-DJ
H
(iv) Explanation (i) to S. 150-A of the Act clearly provides that if
a person is assessable to income tax under the Indian Income Tax Act,
1922 h;s taxable income would be determined according to the provisions
of the Income Tax Act. and if he is not assessable, his taxable income
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SUPREME COURT REPORTS
(1967] 3 S.C.R.
would be computed as far as may be in accordance with the procedure
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laid down in the said Act.
(v) In the circumstances, S. 150-E gives a reasonable remedy to an
aggrieved party. Sec•ion 150-E(2) drrect> that the applicatron has to be
heard and determined in accordance with the
procedure laid down in
Ss. 115, 117, 118 and 119. The subject-matter of Profession Tax is not
very complicated and the procedure provided for the assessment and roB
view is reasonable. (8 E-FJ
Rohtas Industries Ltd., Dalm/anagar v. State of Bihar (1965} Bihar
L.J.R. 886, referred to.
ORIGINAL J URISDICTJON : Writ Petition No. 194 of 1966.
Petition under Art. 32 of the Constitution of India for the
enforcement of fundamental rights.
B. Sen and K. K. Sinha, for !he petitioner.
B. P. Jha, for the respondents.

## Text

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RAM BACHAN LAL
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THE STATE OF BffiAR
February 28, 1967
[K. SUBBA RAo, C.J., J. C. SHAH, S. M. SIKRI, V, RAMASWAMI
AND C. A. VAIDIALINGAM, JJ.j
Bihar and Orissa Municipal
Act (8. & 0. Act 7 of
1922), Ss.
82(1)(1!), 1SOA·E, 388
and 389-Profession tax-If infringes fundamental rightJ-Constitution of /lldia, Arts. 14, 19 & 31.
The respondent-Notified Area Committee-imposed
profession tax
under the Bihar and Orissa Municipal Act,
1922 and issued demand
notices to the petitioner. The petitioner filed a petition under Art. 32
of the Constitution challenging the provisions of Act aJ infringing Arts.
14, 19 and 31 of the Constitution on the grounds that (i) Ss. 388 and
389 of the Act gave aJbitrary power to the Government to
constitute
either a municipality under s. 4 of the Act or a notified area committee
under s. 388; (ii) the rate of tax to be levied had been left to the discretion of the Commissioner and the Government without giving
any
guidance as to the amount of tax; (iii) proviso (iv) to s. 82(1) was
void as it did not give any indication
as to the circumstanc~ under
which the Government should direct the Commissioners to levy lax under
s. 82(1 )(ff); (iv) the Act did not lay down proper procedure for the
asse.iSment and determination of the tax; and (v) no appeals or reference&
were provided in the Act and the only remedy of an assessee who was
aggrieved by the assessment, was to file. a revieviT under s. 150E.
Held : The petition must be dismissed.
(i) Sections 4 and 388 of the Act give sufficient guidance to
the
Government. Section 4(i) contemplates a town containing not less than
five thousand inhabitants and a town of a particular density of population, and further that three-fourths of the adult male population should
be engaged in pursuits other than agriculture. These requirements show
that the area has reached such a stage of development that the Government should constitute a municipality in the area.
Section 388 would
come into picture only if the requirements of s. 4 are not satisfied but
yet the Government considers it necessary to make administrative provi~
sions for all or any of the purposes of this Act. (7 C-DJ
(ii) Schedule IV specified the maximum amount of tax that can be
levied and s. 150 D lays down the purposes for which the tax can be
utilised.
This gives sufficient guidance to the Commissioners or the
State Government to fix the rate of tax. [7 G]
The Corporation of Calcutta v. Liberty Cinema [1965] 2 S.C.R. 477.
relied upon.
(i'i) The Government will only direct the Commissioner to levy the
tax if the Commis.ioners do not carry out their duty properly. (8 C-DJ
H
(iv) Explanation (i) to S. 150-A of the Act clearly provides that if
a person is assessable to income tax under the Indian Income Tax Act,
1922 h;s taxable income would be determined according to the provisions
of the Income Tax Act. and if he is not assessable, his taxable income
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SUPREME COURT REPORTS
(1967] 3 S.C.R.
would be computed as far as may be in accordance with the procedure
A
laid down in the said Act.
(v) In the circumstances, S. 150-E gives a reasonable remedy to an
aggrieved party. Sec•ion 150-E(2) drrect> that the applicatron has to be
heard and determined in accordance with the
procedure laid down in
Ss. 115, 117, 118 and 119. The subject-matter of Profession Tax is not
very complicated and the procedure provided for the assessment and roB
view is reasonable. (8 E-FJ
Rohtas Industries Ltd., Dalm/anagar v. State of Bihar (1965} Bihar
L.J.R. 886, referred to.
ORIGINAL J URISDICTJON : Writ Petition No. 194 of 1966.
Petition under Art. 32 of the Constitution of India for the
enforcement of fundamental rights.
B. Sen and K. K. Sinha, for !he petitioner.
B. P. Jha, for the respondents.
The Judgment of the Court was delivered by
Sikri, J. In this petition under art. 32 of the Constimtion a
notice of demand issued by the Dehri-Dalmianagar Notified Area
Committee demanding Rs. 100/ • on account of Profession Tax
levied under the Bihar and Orissa Municipal Act, 1922 (B. & 0.
Act VII of 1922 )-hereinafter referred to as the Act-for the
period 1963-64 to 1965-66 from the petitioner, Shri Ram Bachan
Lal, Land Officer, who is in the employment of Roh!as Industries
Ltd., Dalmianagar, is sought to be quashed on the ground that
!he provisions of the Act under which it has been issued infringe
the fundamental rights of the petitioner under arts. 14, 19 and
31 of the Constitution.
The Dehri-Dalmianagar Notified Area Committee was constituted by notification dated May 23, 1942, issued in exercise of
the powers conferred by sub-s. ( 1) of s. 388 of the Act. Section
388 reads as follows :
"388. Constitution of notified area-
( 1) The State Government may by notification
declare that it is necessary to make administrative provision for all or any of the purposes of this Act in any
area specified in the notification, other than a municipality or a cantonment.
(2) An area in respect of which such a notification
has issued is hereinafter called a notified area."
Section 389 enables the State Government to impose taxation in,
apply enactments to and constitute committee in the Notified area.
This section reads thus :
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"389. Power to impose taxation in,
apply enactments to and constitute committees in, notified area.-
Th! State Government niay by notification :-
(a) apply or adapt to a notified area or to any part
of a notified area any provision of this Act which may
be applied to a municipality, or any rule or by-law in
force or which can be made in any municipality under
this or any other Act;
(b) impose in a notified area or in any part of a
notified area any tax which could be imposed by the
Commissioners if the notified area were a municipality;
and
( c) appoint or make rules for appointment or
election of a committee to carry out the purpose of this
Act in the notified area."
In exercise of the powers under s. 389 by notification dated May
23, 1941, the Governor of Bihar applied to the notified area the
following provisions of the Act :
"Chapter I Section 3.
Chapter II Sections 21-27, 29-48, 51-52 dauses (b),
(c) and (d).
Chapter III Sections 58-78 and 81.
Chapter IV Sections 82(1)(b), (c), (f), (il, (j)
and Sections 82(2), 84, 86-88, 98-150, 154-163.
The whole of Chapters V, VI, VII, VIII and X.
Chapter XI section 340, 341 and 342-343.
The whole of Chapters X!I and XIII."
The Act was amended by the Bihar Municipal (Amendment) Act,
1953 (Bihar Act XXXII of 1953 ).
It inserted cl. (ff) in sub-s.
(I) of s. 82, which reads as follows :
''82. Power to impose taxes.-
( I J The Commissioners may, from time to time, at
a meeting convened expressly for the purpose, of which
due notice shall have been given, subject to the provisions of this Act and with the sanction of the State
Government, impose within the limits of the municipality
the following taxes and fees, or any of them :-
(ff) a tax on the trades, professions, callings and
employments specified in the Fourth Sc;hedule at such
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[1967] 3 S.C.R.
rates i!Ot ex~ng the rate~ specified therein as may
from time to time be determined by the Commissioners
at a meeting;
Provided that the rates determined by the Commissioners at a meeting shall be subject to the approval of
the State Government and subject to such modification
in the rates of taxes and exemption of classes of profes-
'ion, trades and callings to be taxed as the State Gov·
ernment may direct."
Proviso (iv) was added to sub-s. (1) of s. 82 of the Act by
Bihar Act III of 1959, and reads as follows :
"Provided that the Commissioners-
(iv) shall, if so directed by the State Government
by notification, impose within limits of a municipality
the taxes mentioned in clauses (c), (b), (f) or (ff) at
such rates, subject to the maxima specified in sections
84 and 85 and the First and the Fourth Schedules, and
from such dates, notwithstanding anything contained in
this Act, as may be specified in the notification."
The Bihar Municipal (Amendment) Act, 1953, also inserted
Chapter IV-A, which deals with the tax on profession, trades,
callings and employments.
Chapter IV ·A consists of s. 150A
to s. 1 SOE.
Section 150A provides that the person liable to pay
such a tax shall take out a half-yearly licence and pay the tax
assessed on him in pursuance of clause (ff) of sub-section (1)
of section 82, provided that such tax shall be imposed on the
income accrued within the municipality during the year next preceding the year for which the tax is imposed. The second proviso
exempts persons whose taxable income does not exceed Rs. 1,500
per annum or the value of whose place of business does not exceed
Rs. 10 per mensem or whose income from employment does not
exceed Rs. 2,400 per annum. The explanations to s. lSOA may
be set out:
"Explanation ( 1 )-The taxable income of any
person liable to pay the tax under this section shall be
deemed to be the amount computed in accordance with
the provisions of the Indian Income Tax Act, 1922, and
where any such person is not subject to assessment of
income-tax under the said Act, his taxable income shall
be the amount which shall be computed, so far as may
be. in accordance with the procedure laid down in the
said Act.
Explanation (2).-The onus of providing
~e
amounts of tile taxable income computed under the said
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Act shall lie on the person liable to pay the tax under
this section.,.
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Section I SOB enables the Commissioners to call for information.
Section I SOC renders statements and returns furnished
under
s. !SOB confidential.
Section !SOD, which deals with the application of money received from tax on professions, trades, callings
and emplo)Qllents, reads thus :
"!SOD. All moneys collected by the Commissioners,
on account of a tax on professions, trades, callings and
employments imposed under clau~ (ff) of sub-section
(1) of section 82, shall-
( 1) in any municipality in which there is a provision
for the supply of piped water, in accordance with a
scheme for water-supply sanctioned under section 292,
be applied notwithstanding anything contained in this
Act and after deduction of such proportionate share of
the cost of collection and supervision as the Commissioner at a meeting may fix, in whole or in part and
subject to such conditions and exceptions, if any, as the
State Government may direct, in defraying the expenses
on account of extending or maintaining the water supply
and in repaying or paying interest on debts incurred in
connection with the scheme of the said water-supply and
where only a part of the proce.eds of the tax is so
applied, the balance shall form part of the municipal
fund;
( 2) in any other municipality in which there is no
such provision for the supply of piped water form part
of the municipal fund."
Section I SOE provides for review in the following
terms:
"!SOE. Application for review.-(1) Any person
who is dissatisfied with the assessment of the total income or taxable income or the determination of the
amount of tax payable by him or who disputes his liability
to be assessed may apply to th.e Commissioner to review
the assessment of his total income or taxable income or
the amount of tax assessed upon him or to exempt him
from the liability to be assessed.
(2) Every application presented under sub-section
( 1) shall, as nearly as may be, be heard and determined
in accordance with the procedure laid down in sections
11 S, 117, 118 and 119, as if such applications were
applications presented under section 116."
On March 1, 1957, the Governor of Bihar applied the provisions of cl. (ff) of sub-s. (1) of s. 82, and sections lSOA to
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[1967] 3 S.C.R.
lSOE, of the Act to the Dehri-Dalmianagar Notified area. It
appears that the petitioner was not aware that these provisions
had been applied to the Dehri-Dalmianagar Notified area.
On
March 4, 1957, the Governor of Bihar sanctioned the unposition
by the Dehri-Dalmianagar Notified area Committee of the tax on
trades, professions, callings and employments.
The notification
provided that the tax shall be levied at the maximum rates specified
in the Fourth Schedule of the Act.
On March 23, l 959, the
Governor of Bihar, in exercise of the powers conferred by proviso (iv) to sub-s. (1) of s. 82 directed the Commissioners of
the Municipalities as well as the Notified Areas Conunittees
specified in the Schedule, which i:icluded Dehri-Dalmianagar
Notified Area Committee, to levy tax mentioned in cl. (ff) of
sub-s. ( 1) of s. 82 at the maximum rates specified in the Fourth
Schedule to the said Act with effect from April 1. 1959. Thereupon the Dehri-Dalmianagar Notified Area Committee imposed
the profession tax and sent separate demand notices to the petitioner for the years 1963-64. 1964-65 and 1965-66, and later sent
the impugned demand notice covering all these three years.
Number of points had been raised in the petition but Mr.
B. Sen, the learned counsel who appeared for the petitioner, has
raised only two points before us.
He urged ( 1) that ss. 388 and
389 of the Act violate art 14 of the Constitution, and (2) that
s. 82{1) (ff), ss. lSOA to lSOE. and the Fourth Schedule offend
arts. 14, 19(g) and 31 of the Constitution.
Regarding the first point, the ground of attack was that ss. 388
and 389 give arbitrary power to the Government either to constitute a municipality under s. 4 of the Act or to constitute a notified
area committee under s. 388.
It would be noticed
that the
Notified Area Committee was constituted as long ago as 1942.
Without deciding the point, we a>wme that Mr. B. Sen is entitled
to challenge the validity of ss. 388 and 389.
It seems to us
that there is no substance in this point.
Section 4(1) (a) and
(b) provide as under :
"4. Declaration of intention to constitute or alter
limits of municipality.-
( 1) (a) When the State Goverrunent is satisfied that
three-fourths of the adult male population of any town
are engaged on pursuits
o~er than agriculture
and
that
such
town
contams
not
less
than
five thousand inhabitants, and an average number of not
less than one thousand inhabitants to the square mile of
the area of such town, the State Government may
declare its intention to constitute such town, together
with or exclusive of any railway station, village, land or
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building in the vicinity of such town, municipality, ll!ld
to extend to it all or any of the provisions of this Act.
(b) When the State Government is satisfied that
any municipality, or any area in a municipality, does
not fullil the conditions specified in clause (a), or when
the Commissioners at a meeting have made a recommendation in this behalf, the State Government may
declare ;ts inten 10n to withdraw such municipality from
the operation of this Act, or to exclude such area from
such municipality."
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It would be noticed that s. 4( 1) contemplates a town containing
not less than five thousand inhabitants and a town of a particular
density of population, and further that three-fourths of the adult
male population should be engaged in pursuits other than agriculture.
Now, these requirements show that the area has reached
such a stage of development that the government should constitute
a municipality in the area.
Section 388 would come into the
picture only if the requirements of s. 4 are not satisfied but yet
the Government considers it necessary to make
administrative
provisions for all or any of the purposes of this Act.
In our
opinion, this gives sufficient guidance to the Government and
thus no arbitrary power has been conferred on the Government.
Coming to the second point, s. 82 is challenged on various
grounds. First, it is said that the proviso to s. 82 ( 1 )(ff) enables
the Government to exempt any class.es of profession, trades or
callings from the tax, without giving any guidance as to which
classes should be exempted.
We do not find it necessary to deal
with this academic point because, first, the Government has not
exercised this power and, secondly, even if we were to hold this
proviso to be violative of art. 14, it would be severable and would
not give any relief to the petitioner. The second ground of
attack is that the rate of tax to be levied has been left to the
discretion of the Commissioners under s. 82 ( 1 )(ff) and of the
Government under proviso (iv) to s. 82(1) without giving any
guidance as to the amount of tax.
We see no force in this
contention.
Schedule IV specifies the maximum amount of tax
that can be levied and s. 1500 lays down the purposes for which
the tax can be utilised.
This, in our view, gives sufficient guidance to the Commissioners or the State Government to fix the
rate of tax. In The Corporation of Calcutta v. Liberty Cinema(')
this Court, by majority, upheld the validity of s.
548 of the
Calcutta Municipal Act.
Speaking for the majority, Sarkar J.,
as he then was, observed :
"It seems to us that there are various decisions of
this Court which support the proposition that for a
(I) /1965J 2 S. C.R. 477.
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[1967) 3 s.c.R.
Statutory provision for raising revenue for the purposes
of the delegate, as the section now under consideration
is, ~ needs of the taxing body for carrying out its
functions under the statute for which alone the taxing
power was conferred on it, may afford sufficient guiducc
to make the power to fix the rate of tax valid."
Ia view of these observations it is clear that s. 1500 gives sufficient guidance to the Commissioners and the State Government
to fix the rate of taxation.
Mr. Sen then urged that proviso (iv) to s. 82(1) is void
becailse it does not give any indication as to the circumstances
under which the Government should direct the Commissioners to
levy the tax under s. 82( 1) (fl). lt seems to us that the Govern·
ment will only direct the Commissioners to levy the tax if the
Commissioners do not carry out their duty properly.
C'hapter
XIII of the Act, which has been applied to the Notified Areas,
confers powers of control on the State Govenunent over the Notified Areas and the Government would only act under proviso
(iv) to s. 82 ( 1) if it is necessary in view of the circumstances
of the case.
Mr. B. Sen then argued that the Act does not lay down proper
procedure for the assessment and the determination of the ta"t.
We see no force in this contention.
We have already set out
the explanations to s. 150A. Explanation (1) clearly provides
that if a person is assessable to income tax under the Indian
Income-tax Act, 1922, .his taxable income would be· determined
according to the provisions of the Indian Income-tax Act, and
if hc:is not assessable, his taxable income would be computed as
far as may be in accordance with the procedure laid down in the
said Act.
Some complaint was made about Explanation (2) that unnecessary burden was being placed on the person liable to tax,
but we are unable to appreciate this point.
The :issessec has only
to produce the order from the a:isessing authorities to establish the
amount of his taxable income.
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The last complaint was that no appeals or references .ire · G
provided in the Act and the. only remedy of an assessee who
was aggrieved by the assessment is to file a review under s. 150F.
In the circumstances we consider that s. 150E gives a reasonable
remedy to an aggrieved person.
Sub-section (2) of s.
!SOE
directs that the application has to be heard and determined in
accordance with the procedure laid down in ss. 115, 117, 118, and
119. These sections have been applied to the Notified Area ComH
mittees. Under s. 117 a review would be heard by a Committee
consisting of not less than three Commissioners 'and the Committee
is further entitled to take evidence and to make such enquiries as
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it deems necessary. The subject-matter of Profossion Tax is not
very complicated and, in our view, the procedure provided for the
assessment and review is reasonable.
We may mention that similar points were raised before the
Patna High Court and the High Court . rejected them in Rohtas
Industries Ltd. Dalmianagar v. State of Bihar(').
In the result the petition fails and is dismissed with costs.
Y.P.
Petition dismissed.
(I) [1965] Bihar L.J.R. 886.
USupCI/67-2