# Utlar l'radtth v. La~sf.mi !cl F•clory

- **Citation:** [1962] Supp. 3 S.C.R. 70
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** B. P. 81'.l'HA, K. Sr:BBA R..i.o, ~. RA.JAGOPAT.A An'ANGAP, J. R. :Dholkar, T. L. Venkatarama Ayyar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/utlar-l-radtth-v-la-sf-mi-cl-f-clory-2488
- **Pages:** 19

## Headnote

!Jegi~lative /)nu·er-'1
1errninal Tax-[n1pru1ition by Dist.rirt
Counr.il under Proi:i11cirzl Strif?t!r:-Con.'ltitution .4ct Placing ta:r
in
}'etl".ral
Legis{afit'e
List-i'Jciring 7)rrn:ision-Po1l'er of
l)ro1·;ncin.l
legislatur~ to continue ta:r-C.l'. and lferar local
Self Uot'unw:nt Act, 1920 (C. P. 4 of 1920)-C.P. aud llerar
J.oco! IJ01,ernm.ent Act, 1948 (C.P . .18 of l.?48). s. /!12-C.l'.
and Bmn· f,oca.l G'o;·mzment (Amendmwr) Act, 1.?49 (':.P. 32
nf /!149)--G'overnment of India Act, 104J (.1G <Im. 5 CJ" 2. ),
8. J.13 (2).
Cnder the C. P. and Berar Local Self Government Act
1920, the District Council of Bhandara. in 1925, imposed a
te<minal tax on the export of bidis and birli lea\-cs by rail
out of Rhandara district. By the Govrrnrnent of India Act,
1q35, ter1ninal tax '"'as included in the Federal Legislati\•e
List but s. 143 (2) of the Act prO\·idecl that such a tax which
was being la\vfully levied under a la\\' in force on January I,
1935, n1ay continue to he levied
until
provision to the
c0ntrary was macic hy the Federal l.c~gi~lature.. 1~he District
Council continued to leavy and collect thr: tax. In 1948 the
C P. an<l Berar Local Government Act, 1948, can1e into force
which repealed the 1920 Act.
It replaced
the District
Council, Bhandara, with three Janapada Sabhas. Clause (c}
of the proviso ti> the saving section s. 192 provided that aH
rates, taxes an<l cessr.s due to the District Council
sh~II be
de~u1ed lo be due to the Sabha to whose ar<a they pert'ltl\Cq.
3 S.C.R.
SUPREME COURT REPORTS
71
By an amending Act of 1949 the Provincial Legislature
replaced cl. (b) of the proviso to s. 192 by a new cl. (b) which,
inter alia, continued in force all taxes which were in force
immediately before the commencement of the 1948 Act, this
amendment
was
given
retrospective
effect
from
the
commencement of 1948 Act. The appellant contended that
the 1948 Act which repealed the 1920 Act did not save the
terminal tax, and once the tax was discontinued the Provincial
Legislature had no power left to impose it afresh and that
the amendment was accordingly beyond its legislative competence.
The respondent contended that s. 143 (2) of the
Government of India Act, 1935, vested in the Provincial
Legislature plenary power to legislate in respect of every
tax which was being lawfully levied in the province, that cl.
(c) of the proviso to s. 192 of the 1948 Act saved the tax and
that the amendment was validly made and it saved the tax
with retrospective effect from the
date of the repeal of
the 1920 Act.
Held, that the terminal tax was validly continued by the
retrospective amendment of cl. (b) to the proviso of s. 192 of
1948 Act. Section 143 (2) of the Government of India Act,
1935, did not confer upon the Provincial Legislature any
plenary power of legislation in respect of taxes which were
being validly imposed. But it did confer upon the Provincial
Legislature a limited
le~islative power to enact a law with
reference to the tax levy so as to continue it. The power of
the Provincial Legislature to repeal the 1920 Act which
imposed the tax was co-extensive with its power to enact
such a law.
In exercise of this limited legislative power the
Provincial I ... egislature wa~ competent to enact the Amending
Act of 1949.
Attorney-General for Ontario v. Attorney-General for the
Bominion, [1896] A.C. 348, referred to.
.
Clause (c) of the proviso to s. 192 of the 1948 Act did not
save ·the future imposition of the tax; it merely provided
for the collection of taxes already accrued in favour of the
District Councils by the successor Sabhas. The words in this
clause "due to the District Council'' referred only to taxes
which had accrued on the date of the repeal of the 1920 Act
and did not include taxes which accrued later and became
payable subsequent to that date. The subsequent amendment
of 1949 could not be taken into account in construing cl. (c)
and for determining the intention of the legislature.
Crvrr. APPELLATE JuRISDIC'l'ION: Civil Ap

## Text

1962
Shtenf
Utlar l'radtth
v.
La~sf.mi !cl F•clory
Sark•r J,
I9Ct
Feirlmr;• i'.
70 SUPREME COURT REPORTS [1962] SUPP.
its award.
A rule duly framed
under the Act
requiring the Tribunal to pronounce its decision in
open court is therefore not in conflict with s. H.
The result is that these appeals fail and are
dismissed with costs.
Appeals di.smis.~ed.
RA:IIA KRISHNA RAMANA'J'H
v.
THE .JANPAD SABHA, GONDIA
(B. P. 81'.l'HA, C .. T., K. Sr:BBA R..i.o, ~. RA.JAGOPAT.A
An'ANGAP., .J. R. Mr:DHOLKAR and T. L.
VENKATARAMA AYYAR, J.J.)
!Jegi~lative /)nu·er-'1
1errninal Tax-[n1pru1ition by Dist.rirt
Counr.il under Proi:i11cirzl Strif?t!r:-Con.'ltitution .4ct Placing ta:r
in
}'etl".ral
Legis{afit'e
List-i'Jciring 7)rrn:ision-Po1l'er of
l)ro1·;ncin.l
legislatur~ to continue ta:r-C.l'. and lferar local
Self Uot'unw:nt Act, 1920 (C. P. 4 of 1920)-C.P. aud llerar
J.oco! IJ01,ernm.ent Act, 1948 (C.P . .18 of l.?48). s. /!12-C.l'.
and Bmn· f,oca.l G'o;·mzment (Amendmwr) Act, 1.?49 (':.P. 32
nf /!149)--G'overnment of India Act, 104J (.1G <Im. 5 CJ" 2. ),
8. J.13 (2).
Cnder the C. P. and Berar Local Self Government Act
1920, the District Council of Bhandara. in 1925, imposed a
te<minal tax on the export of bidis and birli lea\-cs by rail
out of Rhandara district. By the Govrrnrnent of India Act,
1q35, ter1ninal tax '"'as included in the Federal Legislati\•e
List but s. 143 (2) of the Act prO\·idecl that such a tax which
was being la\vfully levied under a la\\' in force on January I,
1935, n1ay continue to he levied
until
provision to the
c0ntrary was macic hy the Federal l.c~gi~lature.. 1~he District
Council continued to leavy and collect thr: tax. In 1948 the
C P. an<l Berar Local Government Act, 1948, can1e into force
which repealed the 1920 Act.
It replaced
the District
Council, Bhandara, with three Janapada Sabhas. Clause (c}
of the proviso ti> the saving section s. 192 provided that aH
rates, taxes an<l cessr.s due to the District Council
sh~II be
de~u1ed lo be due to the Sabha to whose ar<a they pert'ltl\Cq.
3 S.C.R.
SUPREME COURT REPORTS
71
By an amending Act of 1949 the Provincial Legislature
replaced cl. (b) of the proviso to s. 192 by a new cl. (b) which,
inter alia, continued in force all taxes which were in force
immediately before the commencement of the 1948 Act, this
amendment
was
given
retrospective
effect
from
the
commencement of 1948 Act. The appellant contended that
the 1948 Act which repealed the 1920 Act did not save the
terminal tax, and once the tax was discontinued the Provincial
Legislature had no power left to impose it afresh and that
the amendment was accordingly beyond its legislative competence.
The respondent contended that s. 143 (2) of the
Government of India Act, 1935, vested in the Provincial
Legislature plenary power to legislate in respect of every
tax which was being lawfully levied in the province, that cl.
(c) of the proviso to s. 192 of the 1948 Act saved the tax and
that the amendment was validly made and it saved the tax
with retrospective effect from the
date of the repeal of
the 1920 Act.
Held, that the terminal tax was validly continued by the
retrospective amendment of cl. (b) to the proviso of s. 192 of
1948 Act. Section 143 (2) of the Government of India Act,
1935, did not confer upon the Provincial Legislature any
plenary power of legislation in respect of taxes which were
being validly imposed. But it did confer upon the Provincial
Legislature a limited
le~islative power to enact a law with
reference to the tax levy so as to continue it. The power of
the Provincial Legislature to repeal the 1920 Act which
imposed the tax was co-extensive with its power to enact
such a law.
In exercise of this limited legislative power the
Provincial I ... egislature wa~ competent to enact the Amending
Act of 1949.
Attorney-General for Ontario v. Attorney-General for the
Bominion, [1896] A.C. 348, referred to.
.
Clause (c) of the proviso to s. 192 of the 1948 Act did not
save ·the future imposition of the tax; it merely provided
for the collection of taxes already accrued in favour of the
District Councils by the successor Sabhas. The words in this
clause "due to the District Council'' referred only to taxes
which had accrued on the date of the repeal of the 1920 Act
and did not include taxes which accrued later and became
payable subsequent to that date. The subsequent amendment
of 1949 could not be taken into account in construing cl. (c)
and for determining the intention of the legislature.
Crvrr. APPELLATE JuRISDIC'l'ION: Civil Appeal~
Nos. 188 to 191of1956,
•
f
'
•
'
1962
Rama Krishna
Ramanath
v.
The J anpad Sabha,
Gondid
1962
Ra:na Krishna
Rama,,oth
\"
Tilt Janp~d Sabha,
Gor.dia
~1)a:itgar ./.
72 SUPREM.E COURT REPC1RTS [1962] SUPP.
Appeals from that judgment and decree dated
April 13, l!l5!i, of th" former "Xagpur High Court in
Civil Suits Nos. :i, ·1, fl and 10 of l!J:i5 (Original Nos.
:u.c.c. 194, 195, 2no and 202 of I9!il).·
Al. C, Sehl1.'£td,
Atwrney·General for India,
A. V.
Vis1i~1nathri Sastri, .J. V. ,fokatdar and /. N.
Shroff, for the appellant (in C. A. No. 188 of 56).
H. N. S11nynl, .Additional Solicitm General of
lnditJ, and G. C. Afrithur, for tho respondent(in C. A. ·
No. 188 of 56) .
.! . .V. .Takritd'1r ancl l. N. Shroff, for the
appellants (in C. As. ~ os. 189 to 191 of :i6).
S. T. Desai and G. C. Mathur, for the respondent (in C. A. No. 190 of liG).
G. C. Mathur, for the respondent (in C. As.
l\ os. 180 and 191 of :jG).
19G2. February 7. The .Judgment of the Court
was delivered by
A YYANGAR, J. -Section 143(2) of the Government of India Act, IH35 enacted.
"143(2). Any taxes, duties, cesses or fees
which,
immc,diately before the commencement of Part HI of this Act, were being
lawfully }o\'icd by any Provincinl Governmenf, municipality or other !or.al authority
or body for the purposes of tho Province,
municipality, dialrict. or 0thcr local area
under a law i11 force on th!' first <lay of .January, 11inetee11 hundrerl rincl thirt.y-five, may,
notwithstanding that. those
taxes, duties,
cesHes or fee~ a~e mcntionecl in the Federal
Legislative List, continue to be levied and
to be applied to the same purposes until
provision to the contrary is maclo by the
Federal Legi:-l:iture."
The precise import, significance ai1<l effect of tq~
.
•
3 S.C.R.
SUPREME COURT REPORTS
73
words "continue to be levied and 'to be applied to
the same purposes until provision to the contrary
is made by the Federal Legislature" is the common
question which arises in these four appeals which
come before us by virtue of certificates under
Art. 132 of the Constitution granted by the High
Court of Madhya Pradesh at Nagpur.
Section 51 of the Central Provinces and Bcrar
Local Self Government Act, 1920 enacted :
"51. (l)· Subject to the provisions of any
law or enactment for the time being i'n force
a District Council may, by a resolution passed
by a majority of not less than two. thirds of
the members present at a special meeting
convened for the purpose, impose any tax,
toll or rate other than those specified in sections 24, 48, 49, and 50.
(2) ................................................... .
(3) ................................................ "
By virtue of the power thus conferred the District
Council of Bhandara which was "a local authority"
constituted under this Act of 1920 imposed a tax
on the export of bidis and bidi-leaves by rail out
of the Bhandara district by a resolution dated May
14, 1925, as amended by another dated April 18,
1926.
The tax was at the rate of 4 annas per
maund on bidis and 2 annas per maund on bidi·
leaves. The Local Government framed rules for
the collection of the tax under s. 79 of the Act of
1920, and the said tax was being collected by this
local authority on April l, 19:!7, when Part III of
the Government of India Act came into force. It
is now common ground that the tax thus levied
and collected was "a terminal tax on goods carried
by railway" covered by entry 58 in the Federal
Legislative List-List I-in the Seventh Schedule to
the Government of India Act of 1935. The result
of this tax being in the Federal Legislative List,
jt js ~anifest~ is that tqe ]>rovincial
Le~islatur(J
1962
Rama Kri.shna
Ramanath
v.
The J anpad Sabha,
Gandia
Ayyangar J.
1962
Rama Krishna
Rama11ath
Y.
?'he Ja11paJ Sabf.a,
Gondi:J
74
SUPREME COURT REPORTS (1962] SUPP.
could not thereafter freshly impose such a tax
under its legislativo power.
By reason of the pro·
vision however of s. 143 (2) of the Government of
India Act, 1935, extracted Parlier, the local authority continued to retain the authority to levy and
collect the 8aid tax and tho tax continued to be
collected by the District Council even after April I,
HJ37 when Part III of the Government of India
Act came into force.
While so, the Central Provinces :ind Berar Local Self Government Act, 1920,
was repealed and was replaced by tho Central
Provinces and Berar Local Government Act, 1948,
which came into force on June 11, 1948. District
CouncilH which were the units of local government
a<lminiHtration under the Act of I 920 were replaeecl
by .Janpr1ds which comprised smaller areas and as
a result the an•a which was under the jurisdiction
of the District Council of Bhandara under the
Local Self Government A<·t of 1920, came to be
constituted into
three .Janpads, viz.,
those of
Gondia, Bhandara and S;Lkoli-these being the three
Tahsils comprised in the district and tho thrco
Janpa<ls were adminiRtered
h~· three
.Janpad
~abhas former! under the Ad of .1 !)48.
There were
provisions in the later cna<·tment providing for
continuity in the powers to be exercised by the
Di.~trict Couneils whom the former replaced. But
what is of relevance to the points arisin~ in thn
present appeals arc those containl'd ins. 192 of the
Act of l!l48 which, as originally enacted, ran :
"On and from
d~te on which this Act comes
into force, the Centrnl ProYinceH and Rerar
Local Self GoYcinmP11t. Act, 1920, shall be
rt'pealcd :
Provided that--
(a) all local authorities constituted under
the said Act shall continue to function there·
4nder for such ti!lle till the constitution of
.
.
.
. .
•
3 S.C.R.
SUPREME COURT REPORTS
75.
the Sabhas as the Provincial Government
may, by notification, specify;
(b) all rules and byelaws made, all notifications published, all orders issued and all
licences and permissions granted under the
said Act and in force immediately before the
commencement . of this Act shall, so far as
they are consistent with this Act, be deemed
to have been respectively made, published,
issued and granted thereunder;
( c) all rates, taxes and cesses due to the
district Council or Local Board shall be deemed to be due to the Sabha to whose area
they pertain; and
(d) all references made in any Act of the
Provincial Legislature to the said Act shall be
read as if made to this Act or to the corresponding provision thereof."
Pausing here, two matters which figured largely in
the arguments require to be notieed in the provi·
sions of this section. The first is that there was
an exprcs,; repeal of the Loc11l Self Government
Act of 1920 effected by the main part of the section.
Th~ second is that the repeal was not absolute and
unconditional but was modified by a saving which
continued the operation of certain of the provisions
of the repealed Act. But the terms in which the
1ight to collect the rates, taxes and cesses was
continued in favour of the Janpad Sabhas which
replaced ·the District Councils under cl. (c) was
capable of being construed as not enabling the
future imposition of the rate, cess etc, by the
,Janpad i'abhas. The scope and mPaning of this
clause which is one of the principal matters to be
considered in these appeals we shall reserve for
later consideration but at this stage it might be
mentioned that the clause is certainly capable of
bein$ understoocj as tranaferrin~ to the Sabhas onlr
1962 -
Rama Kria/ma
Ramanath
v.
The Janpad Sabha,
Gondia
Ayyangar J.
•
1~62
Rama Krishna
Ramonatll
v.
· Tiu Janpad Sabha,
Gmidi4
AyyangarJ.
76
SUPREME COURT REPORTS [1962] SOPP.
J_
the right to collect the rntes, tiixes or ceases which
had accrued due to the District Councils which had
remained unpaid on the date when by virtue of the
first part of s. 192 the Act of 1920 stood repealed
and the District Councils ceased to exist. If this
were the propPr meaning of this clause it is obvious
that the .Tanparl Sa bhas could no longer levy the
terminal tax on bidis and bidi-lcaves where the
export was effected on or after June 11, 1948, on
which date by virtue of the Act of 1948, coming into
force tho earlier Act of 1920, stood repealed.
The Janpad Sabbas wert>, however, continuing
the levy and the Provincial Legislature sought to
put the matter beyond doubt by an amending Act
of 1949 by which cl. (b) of the proviso to s. Hl2 was
replaced by a new clause reading :
"All rules and byclaws and orders made,
notifications and notices issued, licences and
pcrmiti:i granted, taxes imposed or assessed,
cc88cs (other than additional cesses imposed in
accordance with section 49 of the said Act),
fees, tolls or rates levied, contracts entered
int-0 and suits instituted and proceedings taken
under the said Act and in force immediately
before the commencement of this Act shall
continue to be in force and in so for as they
n.re not inconsistent with thiR Act, they shall
ho deome<l to have bee11 respectively made,
issued, granted, imposed or aHscose<l, levied,
entered into, instituted and taken under this
Act until new provisions are made under the
appropriate provisions of this Act."
and bys. 39 cf the Amending Act this amendment
was given retrospective effect from I.he commencement of the LoP-al Government Act of 19l8. It was
not in dispute that if the terms of cl. (bl as amended
•
by the Act of I94!l bad found n. place in the Local
Government Act of 1948 when originally enacted,
~he levr of this tax: br the J&npad Sabh¥ woul<l
-
38.d.R.
siJPR:EM:E coti:kr RE:Po:Rifs
77
have been valid. It is only necessary to add that
if this tax had been lawfully levied by the Janpad ·
Sabhas immediately before January '.l6, 1950, they
could continue to be levied after
Constitution
came into force nothwithstanding the repeal of the
Government of India Act by the Constitution and
notwithstanding
terminal
taxes being a tax
solely leviable by the Union List in Sch. VII)
by reason of the provision containrd in Art. 277 of
the Constitution reading :
"277. Any taxes, duties, · cesses or fees
which, immediately before the commencement
of this Constitution, were
being lawfully
levied by the Government of ?UY State or by
any municipality or ,other local authority or
body for the purposes of the State, municipality, district or other local area may, notwithstanding that those taxes, duties, ceases or
fees are mentioned in the Union List, continue
to be levied and to be appliecl to the same
purposes until provision to the contrary is
made by Parliament by law."
It would thus be seen that in order to sustain
the claim of the respective Janpad Sabhas who are
the respondents in these four appeals to continue to
lawfully levy the terminal tax it should be established either that cl. (c) to the proviso to s. 192
enabled them to do so or that the amendment
effected to proviso (b) to s. 192 of the Act of 1948
was validly enacted.
·
Before considering this question it would be
of advantage if we set out the facts of the cases
under appeal. It is sufficient to ref.Jr to the facts
in Civil Appeal 188 of J 956 because, except for the
identity of the appellants and the amounts involved,
the matter in controversy is exactly similar, Rama
Krishna Ramanath-appellant in Civil AppPal 188
is a proprietary concern carrying on business, inwr
alia., in manufacturing and selling bidis. In the
1962
Rama K1ishna
Ramaiiath
••
Tkt J anpad Sabha,
Gondia
A7yangarJ.
J !Jli2
Uania K1iJhna
Ra111a11ath
v.
Tl;t .lm1pad Sabh1,
Gnndia
-1.>'1011gar J.
~~ SUPREME COVRT REPOR'l's [l!i62] SUPP.
course of that business they export bid is to various
places outside the territo1 ial limits of the ,Janpad
Sabha,
Gondia.
The .Jar1p:id
~abha, Gondia
demanded and collected taxes whrn th<' c'xport took
place' from railway stations within its territorial
jurisdirtion. Botwi:en January 2ti, 1950, and ,Juno
30, I 95:!, the respoudrnt 8abha had collected tax
totalling Rs. 3,81S!l5/3, the appellant concern
contending that from the date of the coming into
force of the Constitution the imposition and collection of the terminal tax by the respondent Sabha
was illegal, because the right to levy terminal taxes
was vested exclusively in the government. of the
Union under entrv 89 in the l?irst List to the 7th
Schedule to the Constitution and sought tho refund
of this sum of tax from the respondent Sabha and
also required that it should desist from continuing
the imposition and leTy of this tax, and when the
request was not needed, served not.ice on the Sabha.
In consequence of this notice though the Sabha
discontinued the collection of the tax, it refused to
refund the tax already collected.
Thereupon the
appellant instituti>d a civil suit in the court of the
Civil ,Judge at Gondia pr..aying for a decree for the
sum of l:ts.
:~.818; 15/3 and costs.
The suit was
resisted and thereafter this alongwith several similar
suits ineluding three by the appellants in the other
three appeals were all withdrawn to the High Court
undor Art. '228 of the Constitution for deciding the
substantial question of law as to the interpretation
of the Constitution and of tho Government of India
Act as to whether the levy of the tax by the
respondent Sabha was lawful or not.
These suits
were consolidated and were disposed of by a
common judgment dated April la, 1955, by which
all the suits were dismissed but a certific,1t.c was
granted under Art. 132 of the Constitution.
On
the strength of tho certificate four of the agi,;rieved ·
plaintiffs filed appeals to tho Courts and that is
how the matter is before us.
•
3s.c.:R.
SUPREME COURT REPORTS
Before considering the submissions made to
us by the learned Attorney-General for the appellant it would be convenient to state the exact
factual position relating to the levy of the
impugned tax :
(1) The tax being one on goods exported out
of the local area by rail would answer the description of a terminal tax falling within the exclusive
iurisdiction of the Central Legislature under the
Government of India Act, 1935. The position has
continued to be the same under the distribution of
legislative power in relation to taxes under the
Constitution. The result would, therefore, be that
but for the saving contained in s. 143(2) of the
Government of India Act, 1935 it would not have
been legally competent for the local authority
. to
continue
to
levy
the tax after the
Government of India Act came into force ; similarly
but for Art. 277 that levy could not have been
continued beyond January 26, 1950. On the facts
stated earlier it would be seen that the right of the
local authority to levy the tax would be ultimately
dependent on the same being authorised by
s. 149(2) of the Government of India Act.
(2) The tax that was sought to be levied by
the respondent-Sabhas and which was challenged as
unauthorised and illegal was identical in the incidence as the tax which the District Council of
Bhandara
lawfully
levied
just
prior
to the
commencement of Part III of the Go;vernment of
India Act, 1935. By incidence we mean the subjectmatter of the tax, the taxable event as well as the
rate of the duty. In other words, the tax now
sought to be levied and that which was lawfully
imposed 1md collected prior to April 1, 1937 were
exactly identical in their effect and operation.
Similarly there was no controversy as regards either
the identity of the area in aid of .whose local
administration the tax was now sought to be collected, nor as regards the purposes for which they
196Z
Ramo Kri•hna
Raman,th
v.
rhe J anpad s ablia,
Gondia
Ayya11gar J.
I9C2
Rama K,i1hna
Ramtlflath
••
The J anpad Sabha,
Gomlia
AyY1ngar J,
!
SO
SUPREME COURT REPORTS [1962) SUPP.
were utilised as compared with what prevailed on
April I, 1937.
The principal contention however, raised on
behalf of the appellant before the High Court was
based upon a denial of the identity of the authorities-three .Janpad Sabhas with the District
·Council, Bhandara which levied and collected the
tax\.prior to April l, 1937.
The learned Judges
of the High Court rejected I.his contention and
held that tho throe Jan pad Sa bhas which replaced
the District Council of Bhandara were in subHtance identical with the latter principally for the
reason that the aroa covered by the three newly
created Janpads was the same as that for which
the District Council functioned and that the purposes for which the tax collected would be utilized
which arc the criteria specified in s. 143(2)-werc
exactlv the same, Just as it could not be
disputed "that if there were any ehango in the composition of the District Council the identity of a.
local authority would not be altered for the purposes of s. 14:l(2}, tile mere splitting up of that
local area for being administered by a plurality
of Local Government Units would not effect any
change mau,rial for the purposes of the continued
exigibility of the tax under s. 143(2). The learned
Attorney-General therefore very properly did not
press before us this point based upon the disappearance of the District Council and its being
replaced by the respondent-Sabhas as any ground
for denying ·to tho respondent-Sabhas the right
to levy the ·tax.
The only point that was urged before UB in
challenge of the right of the respondent-Sabhas
to continue the levy of this terminal tax may be
formulatecl
thus: The Prov incia.l Legislature of
Central Provinces & Berar in exercise of it~ legislative power under item 13 of the Provincial Legislative List enacted the Local Government Act,
·-
3 S.C.R.
SUPREME COURT REPORTS
81
1948 and validly repealed the Act of 1920 under
which this tax was levied. As part of the same ·
legislation and taking effect at the same time it
was open to that Legislature to have continued the
provisions of the repealed Act of 1920 under
which the impugned tax was levied so as to enable
the newly created Janpad Sabhas to exercise the
fiscal powers of the District Councils which they
. replaced, thus so to speak modifying or qualifying
the repeal. Such a continuance could be provided
by a saving clause couched in appropriate phraseology to effectuate such an intention. If this
had been done the source of legal authority to
levy the tax would, even after the Act of 1948
came into force, have been the repealed Act of
1920 which to the extent of the saving would be
deemed to have continued in force.
But tl)is was
not done.
There was, no doubt, a saving under
the proviso to s. 192 )Jut the saving in respect of
the taxes which was contained in sub-cl. ( c) to the
proviso was confined to the recovery of taxes
which had accrued due on the date of the repeal
but which still remained uncollected and the
purpose of the sub-clause was to effect a distribution of those assets, viz., of the accrued arrears
among the several Jan pad Sabhas which replaced
each District Council, so that when on June 11,
1948, the Act of 1948 came into force, the effect
of it was that the repeal of the Act of 1!120 was
for all purposes relevant to the matter now in
controversy complete and with it the power to
levy the tax in future stood extinguished, save
only as regards the right to collect the arrears
which had accrued due to the District Councils
before
that date. No doubt, the
Provincial
Legislature effected an amendment to s. 192 in
1949 py which the saving was extended to include
the right of the Jan pad Sabhas to continue to levy
the impugned tax and this amendment was given
retrospective effect as from June 11, 1948, but
196!
Rama Krishna
Ramanath
v.
The Janpad Sabha,
Gondia
A11'1/on(Jar J.
1952
Rama K1ishna
Ramanalh
v.
The Janpad Sabha,
Gandia
A.yyanuar J.
8:! SUPREME COURT REPORTS [1962) SUPP.
this amendment was beyond the legislative com·
petence of the Provincial Lagislature since in pith
and substance it was virtually a legisla\ion ex·
pressly conferring upon the Jan pad Rabhns H~ right
to levy 11. t{lrminal tax-a right which thnv did not
possess b.,fore that date and unless the Lcgis·
lature was competent to enact a law in relation to
such a tax it could not vnlidly confer upon the
local. authority whnt in legal effect should he
considered to be a fresh right to levy the tax.
The
argument wa.s also
pre~onted in a slightly diff·
crcnt form by snying that on the terms of s.
143(2) of the Government of India Act thcro was
a provision only for tho r.ontimiance of the tax
and that when once that continuitv was broken
by
a v1ili1! piccr. of legislation finch
as took
place in this ci>se when the Local flelf Con>rnment
Act I !l20 wcs repealrd without a prnperly draftPd
saving clause enabling the continiH'd levy of the tax,
tho disccmtinnity created thereby crmld nrJt thereafter be repnired and the gap filled by further
legislation even though it purported to be with
rcstrospccti ,.e effect.
Mr.
811.nval-karned
Additionnl SolieitorGeneral who appeared for the respondent.-Sabhas
submitted several nnswors to suHWJ.in the valirlity
of the continued imposition of tho tnx. He first
urgod th:1t the effect of s. 14:l(2) of the Government. of India Act, I !l:-15 was in effect to vest in·
Provincial Legislat.urns IL plennry power to legis·
lat" in rospect of every tax which was being 111.w·
fully levied by locnl authorities etr:. in thn Provine!'
prior to the commencement of Part ITT of the
GoTernmont of India Act sn much so thctt even
if tho amendment cf!'ected to s. lv2 hy the Local
Government (Amendment) Act of 1949 be !rented
as itself a fresh imposition of tho tax its validity
could not be challenged.
We must express our
inability to
accept thiH
extreme conkntio11.
Section
143 (:!)
which
is a saving clause nnd
3 S.C.R.
SUPREME COURT REPORTS
83
obviously designed to prevent a dislocation of the
finances of Local Governments and of local authorities by reason of the coming in to force of the
provisions of the Government of India Act distributing heads of taxation on Jines different from
those which prevailed before that date, cannot be
construed as one conferring a. plenary power to
legislate on those topics till such time as the Central Legislature intervened. Such a -construction
would necessarily involve a power in the Provincial Legishture to enhance the rates of taxation-a result we Il\UBt say from which Mr. Sanyal
did not shrink, but having regard to the language
of the section providing for a mere continuity and
its manifest purpose this construction must bfl
rejected.
The next point urged by Mr. Sanyal was
based on the construction which he sought to put
on cl.( c) of the proviso to s. 192 of the Local
Government Act of J 948.
He submitted that the
words "due to the District Council" were wide
and apt enough to include not merely the taxes
that had accrued due on_ the date of the repeal of
the Act of 1920 but even the amounts which
accrued later and becanie payable subsequent to
that date-"Due" he said meant "payable" and as
the words of the sub-section did not specifically
limit the period when the cess became payable to
some time anterior to the repeal of the Act of 1920,
it ought to be read as including those amounts
which accrued due and became payable even thereafter. We find it difficult to accept this submiseion
either. The difficulty in accepting it is created only
in part by the use of the expression "due" but the
main hurdle in the way of the respondent is that
what is saved by the sub-clause (and is distributed
among the Janpad Sabhas which replaced the
District Councils), is specified as a cess, rate etc. du('
to a District Council.
The rate, cess or duty due to
a District Council could obviously be only that which
196!
Rama K'l'ishna
Ramanath
v.
The Janpad Sabha,
Gondia
Ayyangar J.
196Z
Rama K tishna
Rama11al-h
"
Tht J an}Md Sabha,
Urmdia
Ayyangar J.
84
SCPREl\IE CO"CRT REPORTS [I 06~] SUPP.
had accurcd due to a District Council while that
bodv waA in existeno<> and "it h the extinct i"n of
the ·Di~trict Councils by the rcpc;Ll of thP Act of
l!'l20 there could b,, no question ofony further sums
being clue to such a body. :\Ir. Sanyal howe>er
8ought to got over this situati:m by suggr,~ting that
the words "due to a District Council" were merelv
descriptivr' of the nature of the tax and did not pre·
dioatc that it was an amount due to a part.icular body
on the d1tte when it became due.
In our opinion
this is not an interpretation which the words could
reasornihl.v bear and we have, therefore, no hesitation in rejecting this argumrnt.
It waA then submitt.ed that e\·en if the words
of cl. (c) of the rwoviso would not or<linarily include
n saving as regards the right of the Ja11pad Sahhas
to levy the tax in tho future, still we should adopt
that constrnotion as hPing in conS('nance with and
for giving effect t.o th<' intention of the legislature
which made it clear that that wns so hv enacting the
am•mdment to s. I !l2 hv the Act ·of f\l4!) within a
year or so after the Act of 19-!8. 'Ve "onsider that
this submission also dcRen·es, in th!' circumstances
of the present ca~e. to he rejected. It is a cardinal
principlP of Ht'ltu tory construction t bat the i nt.ention
of the legislature should bo gathered from the WL'rdR
of the enactment. If, as we have held, those words
arc incapable of the construct ion that. thern was a
saving of the right of the .fonpad Snhhas to impose
and co lied thn tax- apart from the right. to collect the
arrPars of tax which accurcrl due while th(• District
Council was in cxistenoe,that eonstructio11 cannot be
morlific<l and the legiHlative int<-nl with whi<"h that
proviso was "nacted HUpplrmcntcrl by a reference to
what the l<•gislatnr<.> <lie! later.
Xo doubt, there is
authority for the position that when the mPaning
of tbB words used in a.n Pnactment is amhiguouH nr
obscure, subsequent statutes might sometim<>s l><•
n~ed as n·hat hA.s been tnrmcd "a parli:tmcntary
e:xpo~ition" of the obscure phra~eology. It.i~ hardly
.., -
8 SC.R.
SUPREME COURT REPORTS
85
necessary to discuss the permissible limits of this
mode of construction for the purpose of-the present
case, because the prime conditions for invoking
that rule are absent here-there is no obscurity or
am~iguity in the words of cl. (c) and secondly if the
learned Attorney-General is right, the Provincial
Legislature had no legislative capacity to enact the
Amending Act of 1949-and this must include legislation either by way of explanation or exposition,
and of course by positive enactment. If there is
incapacity to enact retrospective legislation on the
matter, the position is not rendered different by
viewing it as parliamentary exposition. The validity
of the amendment effected by the Act of 1949 must
be judged independently and on its own merits and
its terms cannot be used as a guide to the interpretation of what the legislature in enacting s. 192
of the Act 1948 intended by the words in cl. (c).
The next submission was that as the Act of 1949
amended the terms of s. 192 so as to save the power
of the Janpad Sabhas to levy the cess with retros·
pective effect from the date when the Act of 1920
stood repealed, there was in the eye of the law a
continuity in the levy of the cess or rate and so no
hiatus or period of discontinuity existed such as
had been suggested by the learned Attorney-General
and the existence of which was the entire foundation of his argument. It must, however, be mentioned
that the learned Attornev-General was not oblivious
of this feature of the legislation of 1949, viz., that
it purported to operate as it were to close the gap,
but his submission was that if, in fact, the gap
existed and there was factually a period of discontinuity, the legislature which had no authority to
enact positive leiislation with reference to the topic
in May 1949 was incompetent to pass an enactment
with retrospective effect.
In our opinion, this argument of Mr. Sanyal
requires serious consideration and the answer wouF
1962
Rar1.a Krishnrr
Ramanath
v.
The J anpad Sabha,
Gondia
Ayyangar J.
HG2
Rnma K,ial~na
Rllfrlalud1'
The J anpi:u/ Sabha,
Ocmdia
A.yvangar J,
86
SUPRE~1E COUH.T REPOHTS [l!l62J SU!'P.
turn on the proper construction of the terms uf
. s. 143(2) of the Go\'erument uf India Act. The first
matter tu bo considered would be the source of tho
legislative power tu enact the Local Government
[Act of l!J4~. In so far as the constitution of local •
l authorities, their territorial di8tributiou, the endowl ing them with puwcrn, jW"isdictiun and authority in
general are concerned, the legislative power therefore is to be found in entrv 13 of the P10vincial
Legislative List II to Sch. V H uf th ti Gu.vemment
of India Act, l!l35 reading :
·'Luca! Government, that is to 8"Y' the
constitution and powers of municival co'rporations, improvement trusts, district boards,
minii1g settlement authorities illld other local
authorities for the purpose
of local self.
government on village administration".
It must howevn be observed that merely bt'cause
the legislature is empowered under this entry to
constitute local authorities and vest them with
powers and jurisdiction it would not follow that these
local bodies could be vested with authority to levy
any and every tax for tho purporn of raising re,...nuo
for the pi:rposes of local administration.
They
could be validly authorised to raisu only those taxes
which tho Province could raise under and by virtue
of the relevant. entries in the Provincial Legislative
List.
Thi~ is on the principle that the Province
cou Id not <mthorise local bodies created by it t.o.
impose taxes which it itself could nut directly levy
for the J.>lll'poscs of the Provincial Government.
Now come11 the question whether the Provincial
Legislature was competent, by legislation, tp discontinue the levy of the tax by effecting a ropeal of
the taxing provision contained in the Local Self
Government Act of 1920. There is no doubt that
the general principle is that the power of a legislative body to repeal a law is co-extensive with its
power to enact such a law, as would he seen from
3 S.C.R.
SUPREME COURT REPORTS
87
the following passage in the judgment by Lord
\Vatson in Attorney·General for Ont,ario v. AttorneyGeneral for the Dominion(1) :
"Neither the Parliament of Canada nor
the provincial legislatures have authority to
repeal statutes which they could not directly
enact."
But obviously its application in particular instances
would be controlled by express constitutional provision modifying the same. We have such ·provision in the case on hand in s. 14i1(2} of the Government of India Act, HJ35.
In the context the rele·
vant words of the sub-section could only mean
"May continue to be levied if so desired by the Pro·
vincial Legislature" which is indicated by or is
implicit in the use of the expression "May" in the
clause "may be continued until provision to the
contrary is made by the Federal Legislature."
This would therefore posit a limited legislative
power in the Province to indicate or express a
desire to continue or-not to continue the levy. If
in the exercise of this limited power the Province
desires to discontinue the tax and effects a repeal
of the relevant statute the repeal would be effective. Of course, in the absence of legislation indicating a desire to discontinue the tax, the effect of
the provision of the Constitution would be to enable
the continuance of the power to levy the tax but
. this does not alter the fact that the provision by
its implication confers a limited legislative power to
desire or not to desire the continuance of the levy
subject to the ·overriding power of the Central
Legislature to put an end to its continuance and it
is on the basis of the existence of this limited legislative power that the right of the Provincial Legislature to repeal the taxation provision under the
Act of 1920 could be rested. Suppose for instance,
a Provincial Legislature desires the continuance
of the tax but considers the rate too High and
(I) (1896] A. C. 348, 366.
1962
Rama Krishna
Ramauath
v.
The Janpad Sabha,
Gondia
AyyangarJ.
1962
llama KriF!rna
Rar'l'/auath
, ..
n .. J anp,d s ubha,
Oondia
A;Jllllf,O, J.
88
SUPREME COURT REPORTS [I 062] SUPP.
wishes it to le reduced and pnsses an enactmPnt
for that purpose, it cannot b" that the legislation
is incompetent and that the Statt> GovernmPnt
must permit the local authority to levy tax at the
same rate as prevailed on April I, J ll3i if the latter
dosircd the continuance of the tax. If surh a l~gisla
tiou were e:1acted to achieve a r<'duction of tlw rate
of the duty, its
l~gislath·e competence must
obviously be ·traceable to the power contained in
words "m:.y continue to be levied" in s. 14:l(2) of
the Goverrnnem of India Act. If we nm right so
far it woulc.l follow thnt in the cxercist' of this limited legislative power tho l'ro\•ineial Legislature
would also have a right to legislate for the eontinuanco of the tax provided, if of c:ourse, the other
conditions of s. ,4;Jp!) a.re satiefiecl, viz., (I) that
the tax was one which was lawfully
levi~d by a
local authority for the purposes of a local arl'a nt
the commencement. of Part III of the Govemml'nt
of India Act.., (2) that. the identity of the body that
collects the tax, the area for whose benefit the tax
is to be utilised and the purposes for which the
utilisation i:i to t;ike place continue to be the same
and (~1) the rate of tho tax is not enhanced nor it;i
incidence in any manneralterod, so that it continues
to be same tax. If as we have held earlier thero
is a limited legislative power in the Province to
enact a law with reference to the tax levy iiu as to
continue it, tho validity of th(' Act of I \J4\! which
manifested the legislative intent to Continue the tax
. without any break, the legal continuity hl,ing
established by the retrospective operation of tlw
provision, has to be upheld.
The appeals therefore fail and are dismissed
with costs-·one set of hearing fee~.
Appeals dismissed.