Case: Shree Vallabh Glass Works Limited Vs. State of Maharashtra and Others

it is necessary to examine the pith and substance of the Act and if the matter comes substantially within an item in the Central List, it is not deemed to come within an entry in the Provincial List even though the classes of subjects looked at singly overlap in many respects. 10. In a later judgment, namely, (Sudhir Chandra v. Wealth-tax Officer, Calcutta)2, A.I.R. 1969 Supreme Court 59, the Supreme Court examined the same question in a different context. It held that levy of tax on capital value of non-agricultural lands and buildings was constitutional and was referable to Entry 86 in List I of the Seventh Schedule. The Supreme Court also held that legislation under the said Entry did not conflict with any legislation under Entry 49 of List II, Assuming that there is a conflict which was not capable of reconciliation, it was held that the power of the Parliament to legislate in respect of a matter which is exclusively entrusted to it must supersede pro tanto exercise of power of the State Legislature. 11. The overriding nature of the provisions contained in Clause (1) of Article 246 of the Constitution has been underlined again in (Kerala State Electricity Board v. Indian Aluminium Co.)3, A.I.R. 1976 Supreme Court 1031. The following to be found in paragraph 5 of the judgment ought to be noticed :---"The State Legislature has exclusive power to legislate with respect to matters in List II. But this is subject to the provisions of clause (1) (leaving out for the moment the reference to clause (2) ). The power of Parliament to legislate with respect to matters included in List I is supreme notwithstanding anything contained in clause (3) (again leaving out of consideration the provisions of clause (2) ). Now what is the meaning of the words not withstanding in clause (i) and "subject to" in clause (3) They mean that where an entry is in general terms in List II and part of that entry is in specific terms in list I, the entry in List I takes effect notwithstanding the entry in List II. This in also on the principle that the special exclude the general and the general entry in List II is subject to the special entry in List I."12. It is not disputed, and indeed it cannot be disputed, that the present Act has been passed by the Parliament in exercise of its legislative power contained in List I of the Seventh Schedule. If this is so, naturally the provisions in the Act cannot be controlled by any other Act that might have been passed by the State Legislature in exercise of its legislative power under List II of the Seventh Schedule of the Constitution. We have already held that the Act does not touch upon the powers of the Gram Panchayat to levy property tax. It only puts a restriction on the recovery proceedings that may be adopted for recovering the taxes when the Gram Panchayat may legally levy. Such a provision must be regarded as incidental to the main provision contained in the Act, namely the provision to nurse and bring back to health the sick industrial units. Even if it is held that such a provision interferes to some extent with the power of the Gram Panchayat as conferred by a valid piece of legislation enacted by the State, it must override the provisions of the State Act.13. It has then been argued by Mr. Gangal that what has been prohibited under sub-section (1) of section 22 is only the months that become due as a result of working out contracts and other transactions mentioned in sub-section (3) of section 22. According to him, it could not be the intention of the Parliament to stop the recovery of taxes which are imposed pursuant to the sovereign powers of the State. In the instant case, those powers have been delegated to the Gram Panchayat. The recovery of taxes is not, according to him, prohibited or restricted under sub-section (1) of section 22. 14. We have read, with his assistance, the provisions contained in sub-section (3) of section 22 along with sub-section (1). In our opinion what is mentioned in sub-section (3) or even its broad language does not control the provisions contained in sub-section (1) of section 22. Properly analysed, the provisions of section 22 show that in sub-section (1) recovery of claim which have become crystallised as due is arrested, while under sub-section (3), crystallisation of claims under instruments or transactions referred to therein is stopped. Even when there are settlements or awards, the Board has been given power to suspend the same, so that amounts payable under them do not become due. The contexts of the provisions in the two sub-section are different ; the stages at which they come into operation are also different. We disagree with Mr. Gangal when he says that the language of sub-section (3) of section 22 must be referred to in order to understand the nature of the recovery proceedings that are stopped or arrested under sub-section (1).15. In the affidavit of the Sarpanch, it has been mentioned that almost 80 per cent of the income of the Gram Panchayat in the instant case comes from the amount paid by the company by way of taxes. As a result of the embargo placed upon the recovery of the taxes due from the company by section 22(1) of the Act, all the activities of the Gram Panchayat will grind to a halt. If this is so, it is an unfortunate situation, but we cannot interpret the provisions of an Act with reference to hardship in a particular case. We may, however point out that it is open to the Gram Panchayat to obtain the consent of the Board to proceed with the recovery of the property taxes and other dues from the company. If such consent is obtained, then the embargo imposed by section 22(1) of the Act is lifted.

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

Explanation:
1[ds]The validity of the Bombay Village Panchayats Act is not in question. It is an Act enacted by a competent Legislature and has received the assent of the President of India. Any Act of the Parliament which impinges upon the powers of the Gram Panchayat under a law which is valid will have to be read down so as to see that the powers of the Gram Panchayat to impose taxes on properties are not curtailed oris in exercise of this power that the Industries (Development and Regulation) Act has been passed and the industry being carried on by the company is an industry mentioned in the First Schedule to thatOne must proceed on the basis that the present Act has also been passed under this Item. After going through all the relevant provisions of this Act and in particular reading section 22 in its entirety, one must notice that section 22 or for that matter, any provision of the Act does not put any restriction on the power of the Gram Panchayat to impose taxes on properties under section 127 of the Bombay Village PanchayatsWhat is arrested under section 22 of the Act is the recovery by coercive procedure of any amount due by the company. The properties of the company shall not be proceeded against for satisfaction of any claim against the company. That is the provision in(1) of section 22 of theIt is therefore, clear that the power of the Gram Panchayat to impose taxes on properties under section 127 of the Bombay Village Panchayats Act remains totally unimpaired. It is only prohibited by the provisions of section 22(1) of the Act from proceeding against the properties of the Company while recovering the amounts due by way of property taxes.There is no question of examining the validity of the Bombay Village PanchayatsIt is a valid piece of legislation. The Bombay Village Panchayats Act has been passed by the then Bombay Legislature by exercising its powers in relation to Item 5 of list II of the Seventh Schedule of the Constitution of India. This item deals with the local Government, including authorities for the purpose of village administration. This should be sufficient for the purpose of holding that the Act passed by the Parliament does not impinge upon the powers conferred upon the Village Panchayats by an Act of the Legislature whose validity is not questioned.It is not disputed, and indeed it cannot be disputed, that the present Act has been passed by the Parliament in exercise of its legislative power contained in List I of the Seventh Schedule. If this is so, naturally the provisions in the Act cannot be controlled by any other Act that might have been passed by the State Legislature in exercise of its legislative power under List II of the Seventh Schedule of the Constitution. We have already held that the Act does not touch upon the powers of the Gram Panchayat to levy property tax. It only puts a restriction on the recovery proceedings that may be adopted for recovering the taxes when the Gram Panchayat may legally levy. Such a provision must be regarded as incidental to the main provision contained in the Act, namely the provision to nurse and bring back to health the sick industrial units. Even if it is held that such a provision interferes to some extent with the power of the Gram Panchayat as conferred by a valid piece of legislation enacted by the State, it must override the provisions of the Statethe instant case, those powers have been delegated to the Gram Panchayat. The recovery of taxes is not, according to him, prohibited or restricted under(1) of section 22.We have read, with his assistance, the provisions contained in(3) of section 22 along with(1). In our opinion what is mentioned in(3) or even its broad language does not control the provisions contained in(1) of section 22.Properly analysed, the provisions of section 22 show that in(1) recovery of claim which have become crystallised as due is arrested, while under(3), crystallisation of claims under instruments or transactions referred to therein is stopped. Even when there are settlements or awards, the Board has been given power to suspend the same, so that amounts payable under them do not become due. The contexts of the provisions in the twoare different ; the stages at which they come into operation are also different. We disagree with Mr. Gangal when he says that the language of(3) of section 22 must be referred to in order to understand the nature of the recovery proceedings that are stopped or arrested under(1).15. In the affidavit of the Sarpanch, it has been mentioned that almost 80 per cent of the income of the Gram Panchayat in the instant case comes from the amount paid by the company by way of taxes. As a result of the embargo placed upon the recovery of the taxes due from the company by section 22(1) of the Act, all the activities of the Gram Panchayat will grind to a halt. If this is so, it is an unfortunate situation, but we cannot interpret the provisions of an Act with reference to hardship in a particular case. We may, however point out that it is open to the Gram Panchayat to obtain the consent of the Board to proceed with the recovery of the property taxes and other dues from the company. If such consent is obtained, then the embargo imposed by section 22(1) of the Act is lifted.