Case: Pandit Ram Narain Vs. The State Of Uttar Pradesh Andothers

S.K. Das J.1. This is an appeal by special leave from the judgement and order of the High Court of Judicature at Allahabad dated 7-5-1954 by which the H. C. dismissed an application of the appellant for the issue of a writ of certiorari under the provisions of Art. 226 of the constitution. The appeal raises the question of the validity of the assessment of a tax on the appellant for the year 1950-51 by the Town Area Committee of Karhal under the provisions of cl.(f) of sub.s.(1) of S.14, U. P. Town Area Act, 1914 (U.P. Act 2 of 1914), hereinafter referred to as the Act.2. The appellant resides in the town of Mainpuri and carries on the business of plying a motor bus on hire. The appellants bus plies on alternate days between Etawah and Mainpuri, and the town of Karhal falls on the route between Etawah and Mainpuri. It is not now disputed that passengers travelling in the appellants bus used to get down or get in at a bus stand within the town area of Karhal; the appellant had a booking office situate within the Town Area and tickets were issued to passengers and an account of the business was maintained in the said booking office. The Town Area Committee of Karhal imposed a tax of Rs. 25 on the appellant for the year 1950-51 under the provisions of cl. (f) of sub.s. (1) of S.14 of the Act, being a tax on his business within the Town Area of Karhal at a sum of Rs. 800 for the year. The-appellant preferred an appeal against the assessment of the tax under S.18 of the Act, and the grounds taken by the appellant were (1) that he did not reside within the limits of the Town Area and (2) that he did not carry on any trade or business within that Area. By his order dated 20-10-1951, the Appeal Officer held that the appellant carried on his trade or business within the limits of the Town Area and was therefore rightly assessed to tax under cl.(f) of sub.s.(1) of S.14 of the Act. He accordingly dismissed the appeal. It may be stated here that the appellant was asked to submit an account of his income, but no such account was submitted and the assessing officer worked out the income of the appellant at about Rs. 67 a month, that is, about Rs. 800 a year. No question about the amount of the tax has been raised before us, and it is not necessary to say anything further with regard to the quantum of assessment.3. The appellant then filed a writ application in the H. C. of Judicature at Allahabad and the ground taken by him was that, there could be no assessment under cl.(f) of sub.s.(1) of S.14 of the Act, because he resided outside the jurisdiction of the Town Area. The learned Judge, who dealt with the application of the appellant, took the view that the tax imposed on the appellant could clearly be imposed under cl.(d) of sub.s.(1) of S.14 of the Act; therefore it was unnecessary to consider whether the tax could be legally imposed under cl.(f) of sub.s(l) of S.14. The learned Judge also expressed the view that residence within the Town Area was not a prerequisite condition for the imposition of the tax under cl.(d), and it was enough if the appellant carried on a trade or business within the Town Area. On these views, the learned Judge dismissed the writ application.4. The main point which has been urged before us by learned counsel for the appellant is that the assessments of a tax under cl.(f) sub.s.(1) of S.14 on the appellant was not valid, because residence within the Town Area was a necessary condition for the assessment of a tax under cl.(f). Learned Counsel also argued before us that the assessing authority having assessed a tax on the appellant under cl.(f), it was not open to the H.C. to say that the tax was legally valid under a different clause, namely cl.(d) of sub.s.(1) of S.14.5. With regard to his second point, learned counsel has drawn our attention to Ss. 15 to 17 of the Act. He has pointed out that under S.15 of the Act a list of persons liable to pay the tax imposed under S. 14 and of the amounts to be paid respectively by such persons, has to be prepared; the list may be revised by the District Magistrate and has to be submitted to him for confirmation. When so confirmed, the list can only be altered under sub.s.(2) of 15 by the District Magistrate or in pursuance of an order passed in appeal under the provisions of S.18. We think that learned counsel has rightly submitted that, so far as the present appellant is concerned,the list prepared under S.15 must have shown him as assessed to a certain amount of tax under cl.(f) of sub.s.(1) of S.14 and the assessment must have been confirmed on that basis by the District Magistrate. Therefore, the legality of the tax imposed on the appellant must be considered with reference to the clause under which the assessment was actually made, and a different clause under which the assessment might have fallen cannot be called in aid of the assessment.6. We proceed therefore to consider the legality of the tax imposed on the appellant with reference to cl.(f) of sub.s.(1) of S.14 of the Act. The short point for consideration in that context is whether residence within the Town Area is a necessary condition for the imposition of the tax under cl.(f). It is necessary to read here S.14 of the Act so far as it is relevant to the point in question."14 (1) Subject to any general rules or special orders of the State Government in this behalf, the taxes which a Committee may impose are the following: ...........................................................................(d) A tax on trades, callings or professions not exceeding such rates as may be prescribed..............................................................................(f) A tax on persons assessed according to their circumstances and property not exceeding such rate and subject to such limitations and restrictions as may be prescribed:Provided that such a person is not already assessed under cl.(a) to (e) above."It will be noticed that the power of the Town Area Committee to impose a tax under cl.(f) is subject to, first, any general rules or special orders of the State Government in this behalf and, secondly, to such limitations and restrictions as may be prescribed. These restrictions and limitations are to be found in the Rules made by the State Government under S.39(2) of the Act, which are called Rules regarding the Limitations, Restrictions and Rate subject to which the Circumstances and Property Tax shall be levied by the Town Area Committee. These Rules were notified by Notification, No. 681-T/IX-79-T-50 dated 20-7-1950. Two of the Rules are important, for our purpose, viz, Rules 2 and 3.They are in these terms :"2. The tax shall be assessed on every person on whom it is imposed, in two separate parts, namely (1) on his circumstances and (2) on the property, if any, owned by him, and the aggregate of the sums so determined on both the counts stall constitute the total composite amount payable by him as circumstances and property tax:Provided that nothing shall render it irregular to assess a person on only one of the two counts aforementioned if he does not fulfil the conditions for liability in respect of that count on which he is not assessed.3. (1) The tax assessed on the circumstances of an assessee may be imposed on any person residing or carrying on business within the limits of the town area:Provided that such person has so resided or carried on business for a total period of at least six months in the year of assessment.(2) No tax shall be imposed on any person whose total taxable income is less than Rs.200 per annum(3) The rate of the tax shall not exceed one anna in a rupee on total taxable income.(4) The total amount of tax assessed on any person shall not, in any year, exceed a sum of Rs. 2.0Explanation - (i) For purposes of this rule taxable income means gross income accruing within the limits of the town area.(ii) The words carrying on business, mean the carrying on of any trade, profession calling or other practice or activity which yields or is capable of yielding income but do not include service under Government or a local body".7. The important point which emerges out of these Rules is that under R. 3 the tax assessed on the circumstances of an assessee may be imposed on any person residing or carrying on business within the limits of the town area; in other words, two conditions in the alternative are laid down in R. 3, either the person must reside within the limits of the town area or he must be carrying on business within the limits of the said area. There is a third condition that the residence or carrying on of business must be for a total period of at least six months in the year of assessment. No question regarding the third condition has been raised in this case and it is not necessary to consider that condition here. Therefore, it is clear that if R. 3 is valid, then the imposition of the tax on the appellant under cl.(f) is also valid, because on the finding not now in dispute the appellant carried on a trade or business within the limits of the Town Area of Karhal. It has been argued before us that Rule 3 is invalid because, under cl. (t) of sub.s. (1) of S. 14, residence within the Town Area of the person to be taxed under that clause is a necessary condition.We are unable to accept this argument. Clause (f) of sub. s. (1) of S.14 does not say in express terms that residence within the Town Area is a necessary condition for the imposition of the tax.. The Rules make it quite cleat that for each of the clauses of sub.s. (1) of S. 14 there is a nexus between the territorial jurisdiction of the Town Area Committee and the imposition of the tax. So for as cl.(d) is concerned, the nexus is that the trade, calling or profession must be carried on within the limits of the Town Area. So for as cl. (f) is concerned, R. 3 makes it quite clear that the nexus is either residence within the limits of the Town Area of carrying on business within the same limits.It is to be remembered that cl. (f) was inserted by an Amending Act, namely, the Uttar Pradesh Town Areas (Validation and Amendment) Act, 1950. Section 1 (2) of the Amending Act gave retrospective effect to the amendments. The proviso to cl. (f) makes it quite clear that a person who is already assessed under cl. (a) to (e) cannot be assessed again under cl. (f). The proviso is intended to avoid multiple taxation, but it is manifest from the proviso that there may be overlapping of the different clauses in sub.s.(1) of S.14; for example, a person may come under cl.(d) as well as cl. (f) if he carries on a trade within the limits of the Town area. Therefore, the proviso was necessary to prevent the same person being taxed more than once under the different clauses of sub.s. (1) of S.14. If residence within the limits of the Town Area were a sine qua non for the imposition of a tax under cl.(f), no question of overlapping between cls. (d) and (f) would arise unless the person to be taxed resided as well as carried on a trade within the limits of the Town area. If the argument of learned counsel for the appellant is correct, then the proviso to cl. (f) is meaningless in so far as it envisages an overlapping between cl.(d) and cl.(f) in other cases.On a proper construction of cl.(f), read with the limitations and restrictions embodied in the Rules made under S.39 of the Act, it cannot be held that residence within the Town Area of Karhal was a necessary condition for the imposition of the tax on the appellant.8. A reference was made to sub.s.(4) of S.15-A of the Act. Section 15-A provides for preliminary proposals for the imposition of taxes under S.14, publication of such proposals and the submission of draft rules. Sub-s. (4) states:(4) Any inhabitant of the Town Area may, in the prescribed manner, file an objection in writing on such proposals and the committee shall take into consideration the objections so filed and finally settle its proposals.Under sub.s. (4) any inhabitant of the Town Area may file an objection to the preliminary proposals for the imposition of taxes under S.14. The argument before us was that if an inhabitant of the Town Area alone was entitled to file an objection to preliminary proposals for taxation, then in all the clauses of sub.s.(1) of S. 14 residence within the Town Area must be read as a necessary condition for the imposition of the taxes under S.14. This condition appears to us to be unsound. Firstly, the objection as to preliminary proposals for taxation is not the same thing as objection to an assessment, and it may well be that the legislature in their wisdom thought fit to confine the filing of objections to preliminary proposals for taxation to the inhabitants of the Town Area. Secondly, there are several other sections of the Act such as S. 20 and S. 21, which show that the imposition of a tax on persons not resident within the Town Area but having some other nexus within the Area, was permissible. Thirdly, the question of the validity of sub.s.(4) of S. 15-A does not arise in this case. The appellant was assessed to a tax and had a right to file an appeal which right he exercised. No grievance was made of the failure to exercise the right under sub.s.(4) of S.15-A. It is, therefore, unnecessary for us to make any pronouncement on the validity or otherwise of sub.s.(4) of 15-A.All that is necessary for us to state is that by reason of sub.s (4) of S.15-A, it cannot be held that residence within the Town Area is a necessary condition for the imposition of a tax in all the clauses of sub.s.(1) of S.14 of the Act.9. Learned counsel for the appellant referred us to two decisions of the Allahabad High Court:District Board Farrukhabad v. Prag DuttA I R 1948 All 382 (FB) (A) andDistrict Board Dehra Dun v. Damodar Dutt,I L R (1944) ALL 611: (AIR 1944 All 223 (2)) (B). The second decision, which was earlier in point of time, arose out of a suit for recovery of circumstances and property tax under the U. P. District Boards Act (Local Act 10 of 1922). The question there was whether District Board of Dehradun could impose a tax on the defendants who were not residents within the area of the District Board. It is worthy of note that under S.114, U.P. District Boards Act, the power of a Board to impose a tax on circumstances and property is subject to the condition that the tax may be imposed on any person residing or carrying on business in the rural area within the District Board. The only question in that Allahabad case was whether the defendants resided within the rural area of the District Board so as to make them liable for the tax. The finding was that they did not reside within the rural area and therefore the imposition of the tax was illegal, and S.131, U.P. District Boards Act did not bar the suit. This decision does not help the appellant. If it shows anything, it shows that it was open to the District Board to impose a circumstances and property tax on any person residing or carrying on business in the rural area.10. In the 1948 Allahabad decision, the main question was whether the provisions of S. 2, Professions Tax Limitation Act (20 of 1941) affected the powers conferred upon the District Board by S.108, U.P. District Boards Act, to levy a tax on Circumstances and property. A subsidiary question was also raised, whether S.131, U.P. District Boards Act, barred the suit. With regards to the main question, it was pointed out that the name given to a tax did not matter; what had to he considered was the pith and substance of it. It was held that in pith and substance the tax was one which attracted the provisions of S.2, Professions Tax Limitation Act (20 of 1941). A tax on circumstances and property is a composite tax and the word circumstances means a mans financial position, his status as a whole, depending among other things, on his income from trade or business.Far from militating against the principle that in considering the circumstances of a person his income from trade or business within the Town Area may be taken into consideration, the decision approves of the principle. In the course of his judgement, Bind Basni Prasad J. referred to S.128, U.P. Municipalities, Act, 1916, where taxes on circumstances and property appear as a head distinct from the taxes on trades, callings and vocations and employments and the argument was that the taxes being under different heads should be treated as being entirely different, one from the other. It was rightly pointed out that it is no sound principle of construction to interpret expressions used in one Act with reference to their use in another Act. The meanings of words and expressions used in an Act must take their colour from the context in which they appear. It is true that in the Act under our consideration the taxes which the Town Area Committee may impose appear under different heads in sub.s. (1) of S.14.We have already stated that though the clauses are different, the words used in the section show that there may be overlapping between the different clauses, and to prevent the same person being subjected to multiple taxation, a proviso was incorporated in cl.(f). In view of the words and expressions used in S.14 of the Act, we cannot accept the argument that cl.(f) should be read as entirely independent of and unconnected with the other clauses and a different condition, namely residence within the Town Area, must be read as a necessary part of cl.(f). To do so will be to read in cl.(f) words which do not occur there. The limitations for the imposition of a tax under cl.(f) are given in R. 3 and residence is only one of the alternative conditions for the imposition of the tax - not asine qua nonas is contended by learned counsel for the appellant.

Decision:
0[ds]We think that learned counsel has rightly submitted that, so far as the present appellant is concerned,the list prepared under S.15 must have shown him as assessed to a certain amount of tax under cl.(f) of sub.s.(1) of S.14 and the assessment must have been confirmed on that basis by the District Magistrate. Therefore, the legality of the tax imposed on the appellant must be considered with reference to the clause under which the assessment was actually made, and a different clause under which the assessment might have fallen cannot be called in aid of thecondition appears to us to be unsound. Firstly, the objection as to preliminary proposals for taxation is not the same thing as objection to an assessment, and it may well be that the legislature in their wisdom thought fit to confine the filing of objections to preliminary proposals for taxation to the inhabitants of the Town Area. Secondly, there are several other sections of the Act such as S. 20 and S. 21, which show that the imposition of a tax on persons not resident within the Town Area but having some other nexus within the Area, was permissible. Thirdly, the question of the validity of sub.s.(4) of S. 15-A does not arise in this case. The appellant was assessed to a tax and had a right to file an appeal which right hegrievance was made of the failure to exercise the right under sub.s.(4) of S.15-A. It is, therefore, unnecessary for us to make any pronouncement on the validity or otherwise of sub.s.(4) of 15-A.All that is necessary for us to state is that by reason of sub.s (4) of S.15-A, it cannot be held that residence within the Town Area is a necessary condition for the imposition of a tax in all the clauses of sub.s.(1) of S.14 of thewas rightly pointed out that it is no sound principle of construction to interpret expressions used in one Act with reference to their use in another Act. The meanings of words and expressions used in an Act must take their colour from the context in which they appear. It is true that in the Act under our consideration the taxes which the Town Area Committee may impose appear under different heads in sub.s. (1) of S.14.We have already stated that though the clauses are different, the words used in the section show that there may be overlapping between the different clauses, and to prevent the same person being subjected to multiple taxation, a proviso was incorporated inview of the words and expressions used in S.14 of the Act, we cannot accept the argument that cl.(f) should be read as entirely independent of and unconnected with the other clauses and a different condition, namely residence within the Town Area, must be read as a necessary part of cl.(f). To do so will be to read in cl.(f) words which do not occur there. The limitations for the imposition of a tax under cl.(f) are given in R. 3 and residence is only one of the alternative conditions for the imposition of the tax - not asine qua nonas is contended by learned counsel for the appellant.