Case: Prakash Chand Maheshwari &amp; Anr Vs. Zila Parishad, Muzaffarnagar &amp; Ors

2. The petitioners carry on the business of manufacture and sale of "khandsari" and "gur" in the District of Muzaffarnagar. U. P. They own a crusher in village Morna in the said District where the manufacture of khandsari as sugar is carried on. They challenge the imposition of "Circumstances and Property" tax of Rupees 2,000/- imposed on their business under the order of assessment passed by respondent No. 2. Kar Adhikari. Zila Parishad Muzaffarnagar for the year 1967-68. As they did not produce their accounts for their business in Khandsari the Kar Adhikari, an officer appointed by the Zila Parishad of Muzaffarnagar assessed them to Rs. 2,000/- as "Circumstances and Property" tax on the estimated income of Rs. 96,000/- from their property and business for the year.3. To appreciate how the Zila Parishad (a district authority) came to have the power to levy the tax, it is necessary to take an account of some past legislation. The Local body to administer the district of Muzaffarnagar in U. P. until the year 1958 was the District Board of Muzaffarnagar constituted under the U. P. District Boards Act, 1922 (U. P. Act X of 1922). Chapter VI of the Act containing sections 108 to 132 gave the Board certain powers of taxation, local rates etc. and prescribed the procedure for imposition and recovery of the levy. Under S. 114 the Board had the power to impose a tax on "circumstances and property" subject to certain conditions, inter alia, that the tax could be imposed only on persons residing or carrying on business in the rural area with an income above a certain minimum limit. The rate of tax was not to exceed Re. 0-0-4 in the rupee on the total income and the total amount of tax was not to exceed the maximum which might be prescribed by rule.By S. 115 a Board deciding to impose a tax had to frame proposals by special resolution, specifying the particular tax out of those prescribed in S. 108 which it desired to impose, the persons or classes of persons to be made liable and the description of the property or other taxable thing or circumstance in respect of which they were to be made liable, the amount of rate leviable from such persons or classes of persons and any other matter which the State Government required by rule to be specified. Section l16 enabled any person ordinarily residing or carrying on business in the district to raise objections to the proposal which had to be considered by the Board. Under Section 117 the Board had to submit the finally settled proposals to the State Government which could either sanction the same or return them to the Board for further consideration. When the State Government had sanctioned the proposals of the Board, it had to frame rules under Section 172 in respect of the tax as for the time being it considered necessary after taking into consideration the draft rules submitted by the Board. Following on the above, the Board was required to direct the imposition of the tax with effect from a date to be specified by special resolution. Under Section 120 (1) a copy of the resolution passed by the Board was to be submitted by it to the State Government. Government was required to notify in the official gazette the imposition of the tax from the appointed day upon receipt of the copy of the boards resolution and the imposition of a tax was in all cases to be subject to the condition that it had been so notified. Under sub-s. (3) of S. 120 a notification of the imposition at a tax under sub-s. (2) was to be conclusive proof that the tax had been imposed in accordance with the provisions of the Act. Matters mentioned in clauses (a) to (f) including inter alia the assessment and collection of taxes was under S. 123 to be governed by rules except in so far as the provision therefor was made by the Act, Section 172 empowered the State Government to make rules consistent with the Act m respect inter alia of matters mentioned in S. 123.On the 1st of March 1928 the U. P. Local Self Government issued a notification prescribing ruler for the assessment and collection of a tax on circumstances and property in the rural area of the Muzaffaranagar District under S. 172 of the Act after the previous publication thereof as required by S. 176. Rule 3 provided that "the tax shall be assessed by an assessing officer appointed by the District Board with the help of the members of the circle concerned". Rules 4 and 5 laid down a time schedule for the work of the assessing officer and the submission of the list of persons within the district who appeared to be liable to pay the tax to the board. He was first required to prepare a list on or before 15th December of each year of all persons who appeared to him to be so liable. He was then to consider the circumstances and property of every person entered in the list and to determine the amount of the tax to which such person should be assessed. The name of every person assessed and the amount of tax to which he was assessed was to be entered in an assessment list in the form attached to the rules and was to be completed on or before the 20th of January next. After the preparation of the list and the submission thereof to the Board the latter could take action to revise the list by a resolution and the Board was to return the list to the assessing officer by the 15th February.In terms of the U. P. District Boards Act, 1922 rules were framed on the 1st March 1928 and the State Government issued a notification on the 20th April, 1928 under S. 120 (2) of the Act to the effect that the District Board Muzaffarnagar had in exercise of powers conferred by S. 108 (2) imposed with effect from May 15, 1928 a tax on all persons ordinarily reading or carrying on business in the rural area of Muzaffarnagar District according to their circumstances and property at the rate of Re. 0-0-3 in the rupee on incomes of Rs. 300/- but not exceeding Rs. 1200 per annum and Rs, 0-0-4 in the rupee on incomes of over Rs. 1200/- per year provided that in the case of persons residing in notified and town areas and paying tax on circumstances and property to their respective committees, the rate of tax was to be Re. 0-0-3 on the income of Rs. 300 but not exceeding Rs. 1200 and Re. 0-0-3 on the income of over Rupees 1200/- per annum.

Reasoning: Clearly, that case is distinguishable from the facts of the case before us. In this case the impost remained the same between the passing of the Government of India Act, 1935 and the commencement of the Constitution. The amendment of Section 108 of the U. P. District Boards Act of 1922 in 1948 only allowed the continuance of the tax already imposed on persons assessed according to their circumstances and property. We cannot accept the argument that validation of the imposition of a tax by the Professions Tax Limitation (Validation and Amendment) Act 1949 with retrospective effect was notour view this argument has no force. The assessment was to be done by the assessing officer appointed by the District Board. Even if there was a circle but the members of the circle refused to co-operate with him, the assessment would not be invalid. After all the help which they could render would only be limited to giving information about the assessees. It was quite competent for the assessing officer to proceed with the assessment even if the members refused to help him. The situation was not altered by reason of the fact that the circle and the members hadrules laying down certain dates by which the work was directed to be taken in hand and completed were merely directory and not mandatory. There was nothing in these rules to suggest that if the dates were not strictly observed any prejudice would be caused to the assessee. We find ourselves unable to accept the observations to the contrary in a judgment of the Allahabad High Court D/- 8-1-1963 rendered in Civil Misc. Writ Petn. No. 3160 of 1962 to which reference was made in thisour view, even if there was any such irregularity in the framing of the rules, the same were cured by the publication of the notification under Section 120 (3) of the Act ofappointment of respondent No. 2 in this case took place on 8th August 1965: the impugned assessment was made on 8th March 1968 i. e. more than two years after the date of appointment. Under Section 43 the appointment of this officer to the post which carried an initial salary of more than Rs. 200 p. m. could be made by the Parishad in consultation with the Public Service Commission or other Commission or selection Body as might be constituted by the State Government and if there was a difference of opinion between the Commission and the Parishad the matter was to be referred to the State Government whose decision was to be final. Counsel for the respondents on the materials before this Court was only in a position to inform us that the State Public Service Commission had been notified of the appointment and they had not expressed my disapproval of the same. We do not think that this was sufficient compliance with Section 43.In our view the matters relied on it the affidavit do not alter the situation or improve the position of respondent No. 2 in any way. The nonobstante clause in Section 44 of Act XXXIII of 1961 only relates to Sections 41, 42 and 43 and not to Section 47 which deals with officiating and temporary appointments to certain posts. It would therefore appear that by the inclusion of the name of respondent No. 2 in list C he still continued to be in his officiating and temporary capacity. In terms of Section 47 therefore the appointment ceased to be valid after two years, the period having expired long before the hearing of this matter.No argument was advanced to us on the question of the validity of Section 131 of the U. P. Zila Parishad Act and we do not express any opinion thereon.Although the major points raised by the petitioners are of no substance, we find ourselves unable to uphold the validity of the levy as it has not been shown to us that Kar Adhikaris appointment was valid in law.