Case: Mst. Jadao Bahuji Vs. Municipal Committee, Khandwa And Another

adopted the line of reasoning of minority view in the High Court. He pointed out that S. 142-A was enacted to achieve three purposes. The first was that it removed doubts whether the charge of tax on professions, etc., would be regarded as income-tax. The second was that it put a limit upon the powers of the Provincial Legislature to enact a law imposing a tax in excess of rupees fifty after March 31, 1939; and thirdly it preserved only existing valid laws already in force, which imposed a tax in excess of the amount indicated. He contended that the second sub-section and the proviso covered the entire filed, and a law passed after March 31, 1939, could not freshly impose a tax in excess of the limit and this was such a law. 13. Under the scheme of the Government of India Act, 1955, income-tax, though a Central levy, was, under S. 138(1), distributable among the Provinces and for which an elaborate scheme prepared by Sir Otto Niemyer was accepted and embodied in the Government of India (Distribution of Revenues) Order in Council, 1936. The Centre could levy a surcharge for federal purposes. Taxes on trades, professions and callings, which were taxes already leviable by the Provinces under Sch. II of the Rules made by the Governor-General in Council under S. 80A(3)(a) of the Government of India Act, were also included in the Provincial Legislative List as a source of revenue for the Provinces. It was, however, felt that these taxes might come into clash with tax on income in the Federal List and also if unlimited in amount, might become a second tax on income to be levied by the Provinces. It was to remove these contingencies that S. 142-A was enacted. Sub-section (1) provided that a tax on professions, etc., would not be invalid on the ground that it related to a tax on income. Sub-section (3) was a counterpart of sub-sec. (1), and provided that the generality of the Entry in the Federal Legislative List relating to taxes on income would not be construed as in any way limited by the power of the Provincial Legislature to levy a tax on professions, etc. The fields of the two taxes were thus demarcated. No other implication arises from these two sub-sections. 14. It was also apprehended that under the guise of taxes on professions, etc., the Provincial Legislatures might start their own scheme of a tax on income, thus subjecting incomes from professions, etc., to an additional tax of the nature of income-tax. A limit was, therefore, placed upon the amount which could be collected by way of tax on professions, etc., and that limit was Rs. 50 per annum per person. The second sub-section achieved this result. It was, however, realised that the tax being an old tax, there were laws under which the limit of Rs. 50/- was already exceeded in relation to a province, municipality, board or like authority, and the imposition of such a limit might displace their budgets after March 31, 1939. A proviso was, therefore, added to the second sub-section that if in the financial year ending with thirty-first day of March, nineteen hundred and thirty-nine there was in force in the case of any Province, etc., a tax on professions, trades, callings or employments the rate or the maximum rate of which exceeded Rs. 50/- per annum, the provisions of the second sub-section shall have effect (unless for the time being provision to the contrary was made by a law of the Federal Legislature) as if instead of Rs. 50/- per annum there was substituted a reference to the rate or maximum rate exceeding Rs. 50/-. Where no such law was passed by the Federal Legislature, the tax even in excess of Rs. 50/- continued to be valid. 15. There can be no doubt that if a law was passed after the amendment and sought to impose taxes on professions, etc., for any period after March 31, 1939, it had to conform to the limit prescribed by S. 142A (2).The prohibition in the second sub-section operated to circumscribe the legislative power by putting a date-line after which a tax in excess of Rs. 50/- per annum per person for a period after the date-line could not be collected unless it came within the proviso. But neither sub-sec. (2) nor the proviso speaks of a period prior to March 31, 1939.The sub-section speaks only of the total amount payable ............. after the thirty-first day of March, nineteen hundred and thirty-nine. These words are important. They create a limit on the amount leviable as tax for a period after that date. But if a law was passed validating another which imposed a tax for a period prior to the date indicated, it would be taxing professions, etc., in excess of Rs. 50/- not after March, 1939, but before it. Neither the Entry nor the section either directly or indirectly prohibited this, nor did they create any limit for the prior period. The Validating Act, though passed in 1941, can read only as affecting a period for which there was no limit. If the sub-section said that tax shall not be payable in excess of Rs. 50/- without indicating the period or date, the argument would have some support, but it puts in a date, and the operation of the prohibition is confined to a period after that date. 16. The Validating Act, being thus completely within the powers of the Governor, could remove retrospectively the defect in the earlier Act. Though it reimposed the tax from the date of the earlier Act, it took care to impose the tax for a period ending with March 31, 1938. The impugned Act did not need the support of the proviso, because it did not fall within the ban of the second sub-section. In our opinion, the Validating Act of 1941 was within the powers of the Governor, and was a valid piece of legislation.

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

Explanation:
0[ds]10. Retrospective legislation being thus open to the Provincial Legislatures, the Act of the Governor had the same force. Retrospective laws, it has been held, can validate an Act, which contains some defect in its enactment. Examples of Validating Acts which rendered inoperative, decrees or orders of the Court or alternatively made them valid and effective, are many. In Atiqa Begums case, 1940 FCR 110 : (AIR 1941 FC 16) the power of validating defective laws was held to be ancillary and subsidiary to the powers conferred by the Entries and to be included in those powers.Later, the Federal Court in Piare Dusadh v. Emperor, 1943 F LJ 187 : (AIR 1944 FC 1) considered the matter fully, and held that the powers of the Governor-General which were conterminous with those of the Central Legislature included the power of validation. The same can be said of the Provincial Legislatures and also of the Governor acting as a Legislature15. There can be no doubt that if a law was passed after the amendment and sought to impose taxes on professions, etc., for any period after March 31, 1939, it had to conform to the limit prescribed by S. 142A (2).The prohibition in the second sub-section operated to circumscribe the legislative power by putting a date-line after which a tax in excess of Rs. 50/- per annum per person for a period after the date-line could not be collected unless it came within the proviso. But neither sub-sec. (2) nor the proviso speaks of a period prior to March 31, 1939.The sub-section speaks only of the total amount payable ............. after the thirty-first day of March, nineteen hundred and thirty-nine. These words are important. They create a limit on the amount leviable as tax for a period after that date. But if a law was passed validating another which imposed a tax for a period prior to the date indicated, it would be taxing professions, etc., in excess of Rs. 50/- not after March, 1939, but before it. Neither the Entry nor the section either directly or indirectly prohibited this, nor did they create any limit for the prior period. The Validating Act, though passed in 1941, can read only as affecting a period for which there was no limit. If the sub-section said that tax shall not be payable in excess of Rs. 50/- without indicating the period or date, the argument would have some support, but it puts in a date, and the operation of the prohibition is confined to a period after that date16. The Validating Act, being thus completely within the powers of the Governor, could remove retrospectively the defect in the earlier Act. Though it reimposed the tax from the date of the earlier Act, it took care to impose the tax for a period ending with March 31, 1938. The impugned Act did not need the support of the proviso, because it did not fall within the ban of the second sub-section. In our opinion, the Validating Act of 1941 was within the powers of the Governor, and was a valid piece of legislation.