Case: Bharat Kala Bhandar Ltd Vs. Municipal Committee, Dhamangaon

failure of the Municipal Committee to consider the objections to the proposed taxes:"Now there can be no question that the municipal committee, in imposing and collecting tax at four annas per animal, was acting exactly in accordance with S. 68. It must be observed that there is a difference between a case when a corporate body exercises a power which is wholly absent and a case where it has power but it exercises it illegally or with material irregularity. In the former case the municipal committees act from beginning to end is illegal; whereas in the latter case the act is quite legal in the beginning but becomes illegal in the end." again he said:"In enhancing the tax and collecting it the municipal committee was certainly exercising although irregularly, the power conferred on it by S. 68 and to that extent it appears to me that the contention that they were not acting under the statute is untenable." 66. The views expressed by Niyogi, J., we may say with respect, find full support from Raleighs case, 74 Ind App 50: (AIR 1947 PC 78 ) and Subbayya Chettys case, (1964) 1 SCR 752 : (AIR 1964 SC 322 ). Amraoti Municipal Committees case, ILR (1939) Nag 216: (AIR 1938 Nag 455), was in a way on all fours with the present case. In that case the Municipal Committee over looked the provision of law about considering the objections to the proposed enhancement in tax. In the present case the Committee overlooked the constitutional requirement that the maximum limit of the tax payable by a single individual is Rs. 250. 67. The next case is ILR 1949 Nag 87: (AIR 1949 Nag 190). In this case the question before Bose, J., was whether a suit for the recovery of an amount recovered in excess of what could be legally taxed came within the mischief of S. 71 and S. 73 (1) of the Central Provinces Local Self-Government Act, 1920 (C. P. IV of 1920). Bose, J., said at p. 92 (of ILR Nag): (at p. 192 of AIR):"It will be observed that both S. 79 and the rule are confined to orders and decisions given under the Act. It is impossible to say that an order which contravenes the law or is made in the face of an express statutory prohibition can be said to be under the Act. The words purporting to be given or made under the Act are not present in this section and so the difficulty which arises regarding the other point is not present here." We do not see why an ordinary decision given under the Act be not considered to be an order made under the Act. Neither of the expressions refer to the order or decision being correct or not. 68. Section 73 of the Central Provinces Local Self-Government Act prescribed that no suit shall be instituted, etc........for anything done or purporting to be done under that Act, unless the prescribed notice be first given. Bose, J., presumably in view of what he had said earlier in connection with orders and decisions given under the Act, said:"I am clear that what was done here was not done under the Act, so the only question is whether it purported to be done under the Act". In these observations he seems to have equated the expression given under the Act with done under the Act. His view, as we have already pointed out with reference to something done under the Act, does not find support from Raleighs case, 74 Ind App 50: (AIR 1947 PC 78 ) and Subbayya Chettys case (1964) 1 SCR 752 : (AIR 1964 SC 322 ). Bose, J., then considered the content of the expression purported to be done. We need not discuss what he says on this point as we have held that the assessment made on the appellant was an assessment made under the Act and that the act of illegal collection with respect to the amount in excess was an act done under the Act. 69. The appellant mainly relied on the Nagpur case reported as ILR (1948) Nag 971: (AIR 1949 Nag 215). It was held in that case that a suit for refund of a tax illegally imposed by the Municipal Committee was not barred by reason of Ss. 48, 83 and 84 of the Central Provinces Municipalities Act as the Municipal Committee did not act or purport to act under the Act in imposing the illegal tax. Bose, Acting C. J., delivering the judgment, relied on his earlier decision in District Council, Bhandara case, ILR 1949 Nag 87: (AIR 1949 Nag 190), and held that the claim for the recovery of the tax illegally realised in excess of the permissible limit were not barred by reason of Ss. 83 and 84. He then referred to S. 48 and, after stating that the act of the Municipality when prohibited by law was wholly beyond its jurisdiction and, therefore, S. 48 did not apply, said:"The distinction between a case where S. 48 applies and a case where it does not is clearly shown in ILR 1939 Nag 216: (AIR 1938 Nag 455)." We have referred to this case and expressed full agreement with the views expressed by Niyogi, J. there. It appears to us that the full significance of that judgment has been overlooked in Municipal Committee, Karanja case, ILR (1948) Nag 971: (AIR 1949 Nag 215). 70. We hold that the appellants suit for the recovery of the tax realised in excess of Rs. 250 a year has been rightly dismissed as the correctness of the assessment of the tax could not be challenged by a suit in a civil Court in view of S. 84 (3) and as the provisions of S. 48 requiring the giving of notice to the Municipality and the institution of the suit within a certain period had not been complied with. We would, therefore, dismiss the appeal with costs. ORDER

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]As we have said, that is not the case here because its action is something which is prohibited by law, and so wholly beyond its jurisdiction, and, therefore, S. 48 does not apply18. The levy of a tax on professions, trades, callings, etc., was within the power of the Provincial Legislature and is now within the power of the State Legislature. It could in the past and can even now levy such a tax at the rate of four annas per bojha and four annas per bale, that both under S. 142-A of the Government of India Act and Art. 276 of the Constitution the Municipal Committee could collect such a tax up to the constitutional limit (which was formerly Rs. 50 p.a. and is after the coming into force of the Constitution Rs. 250 p.a.). The mischief, according to him, is not in the levy but in the realisation of an excess over the limit. To put it differently, the ban is not upon the rate of tax but upon excess collection thereof. Therefore, the collection of a tax above the constitutional limit was not without jurisdiction but only illegal or irregular. A suit by an assessee to recover the amount paid by him in excess of the constitutional limit would, therefore, be in respect of a matter "purported to be done" under the Act and the provisions of S. 48 of the Act would apply to it. Further according to him every suit against a Committee for anything done or purported to be done under the Act must comply with the conditions laid down in the section. He points out that the assessment of the tax was made by an authority competent to make an assessment, that in making it the authority proceeded in accordance with the provisions of the Act and assessed the tax as authorised by Rules which had been sanctioned by the former Government of Central Provinces and Berar. So, even if it is assumed that any of the Rules were ultra vires and, therefore, the assessment and recovery of the tax was illegal, what the authority had done was something purported to be done under the Act. Some of these arguments were advanced in cases discussed earlier and rejectedSection 85 empowers the State Govt. to make rules for regulating the refund of taxes, and such rules may impose limitations on such refunds. Sub-section (2) thereof provides that no refund of any tax shall be claimable by any person otherwise than in accordance with the provisions of this Act and the rules made thereunder. This sub-section can be availed only if the Act or the rules provided for making a claim for refund. The rules relating to refunds, if there are any, were, however, not placed before us. Nor was our attention drawn to any provision of the Act or to any rule which makes it obligatory upon a person to apply to the Municipal Committee for a refund of a tax. Even assuming that the Act contemplates obtaining a refund only upon compliance with rules made thereunder, does it contemplate cases where refund or repayment on the ground of the constitutionality of the levy? It will be noticed that sub-s. (1) of this section, empowers the State Govt. to impose by rules limitations on the refunds-presumably including limitation on the amount of refunds-and sub-s. (2) bars a claim for refund otherwise than in accordance with the rules made under sub-s. (1). These provisions cannot possibly apply to a case where the right to obtain a refund or repayment is based upon the ground that the action of the Committee was in violation of a constitutional provision. To hold otherwise would lead to the startling result that what was incompetent to the State Legislature to do or authorise a committee to do directly can be permitted to be done indirectly by empowering the State Govt. to make rules for refund whereunder the amount of refunds could be so limited as to permit retention by the committee of the tax recovered by it in excess of the constitutional limit. In our view, therefore, S. 85 of the Act cannot, in any event, be said to provide a machinery for obtaining refunds in cases of this kind. Since S. 85 is inapplicable, a fortiori S. 83 cannot apply either. We must therefore proceed on the footing that the Act does not provide a machinery for making a claim for refund or repayment in such casesIn the circumstances it must be held that even in the class of cases to which the provisions of Ss. 83 and 85 of the Municipalities Act apply they cannot be said to provide a sufficiently effective remedy to an assessee to challenge the assessment made against him or to a person who is aggrieved by the action of the Committee levying or refusing to refund a tax. It is true that Sub-s. (2) of S. 83 provides for a reference to the High Court but even that provision cannot be said to be a sufficiently efficacious remedy for challenging the assessment made on an assessee. For whether to make a reference or not is at the discretion of the appellate or revisional authority and the Act does not confer upon the person aggrieved a right to move the High Court, as does the Income-tax Act, to require a reference to be made in an appropriate case. We may again point out that there is a complete absence of a provision corresponding to S. 67 of the Indian Income Tax Act barring the institution of a suit in so far as refusal of refund of a tax is concernedThe Court must, therefore, lean in favour of construing a law in such a way as not to take away this right and render illusory the protection afforded by the Constitution. So, whatever be the position with respect to S. 67 of the Indian Income-tax Act, so far as S. 83 (3) of the Act is concerned, we find it reasonably possible to construe it as not depriving a person of his right to obtain redress from a civil court in respect of an amount recovered from him as a tax in violation of Art. 276 of the ConstitutionThe appellant has not sought to modify or set aside any order made by an authority acting or purporting to act under the Act. No doubt, the relief of repayment is claimed on the ground that the enhancement of the rate is unconstitutional. No doubt also that the appellant had sought a further relief of injunction. As regards the first, the position is that the High Court of Nagpur has held, in the petition under Art. 226 preferred by the appellant, the enhancement to be unlawful. This decision was rendered by the Court during the pendency of the suit and was binding on the civil Court in which the suit was pending and has been in fact followed by it. As regards the relief of injunction, that relief became unnecessary because of the order made by the High Court in the Writ petition. It is apparently for this reason that the civil Court did not award that relief to the appellant. In view of the High Courts decision it was not at all necessary for the trial Court to consider in the suit before it the question of the validity of the assessment by or collection of the tax but only to ascertain the amount which was payable to the appellant and whether the suit was barred under S. 48 or S. 85 (2) as contended by the respondent. In these circumstances, we are of opinion that the appellants suit cannot be said to be barred even if we interpret S. 84 (3) of the Municipalities Act in the same way as the Privy Council interpreted S. 67 of the Indian Income-tax ActThere is a real distinction between those cases where a suit was held to be incompetent and the kind of cases which we have before us. Thus where the question merely is, whether the assessment had been made according to law, the Assessing Officer of the Municipality having jurisdiction on the subject-matter and over the assessee the provisions of S. 84 (3) may be a bar to a suit. Where, however, the question raised is as to the jurisdiction of the Assessing Officer to proceed against the assessee and levy on or collect from him an amount in excess of that permitted by the Constitution, the matter would be entirely out of the bar of that provision. Here since the Assessing Officer had no authority to levy a tax beyond what S. 142-A ofthe Government of India Act, 1935 permitted or what Art. 276 permits his proceedings are void in so far as they purport to levy a tax in excess of the permissible amount and authorise its collection and the assessment order is no answer to the suit for the recovery of the excess amount. To this extent, even the order of assessment cannot obtain the protection of S. 84 (3) of the Act and, therefore, the appellants suit is maintainable.