Case: Munshi Ram and Ors Vs. Municipal Committee, Chheharta

The facts leading to this appeal are that the appellants are partners of a firm, Bharat Industries, Chheharta.By a Notification, dated May 15, 1946, the Chheharta Municipal Committee levied a profession tax under Section 61(1)(b) of the Punjab Municipal Act, 1911. Initially, the tax was Rs. 15/- per annum and was levied on all the partners of the said firm.By a Notification, dated July 4, 1958, the annual tax for trade, profession or calling for the owner of a factory registered under the Indian Factories Act, was raised to Rs. 200/- per annum and each of the six partners of the said firm were assessed to annual tax of Rs. 200/- by the Municipal Committee.On October 30, 1960, the appellants filed a suit for permanent injunction restraining the defendant-Committee from realising the profession tax demanded by it per letters Nos. 15 to 20, dated May 31, 1960, amounting to Rs.appellants challenged the validity of the assessment contending that construed in the light of the definition given in section 2(40) of the Punjab General Clauses Act, the term "person" occurring in section 6(1)(b) of the Punjab Municipal Act, 1911, includes a firm and since the trade carried on by the firm is one, the tax could be levied only on the firm, and not on the partners individually. On these premises, it was pleaded that the Municipal Committee in levying the tax on the individual partners had exceeded its statutory powers under Section 61(1)(b) of the Municipaltrial court dismissed the suit. On appeal by the plaintiffs, the Additional District Judge, Amritsar, reversed the judgment of the trial court and decreed the suit.The Municipal Committee carried a further appeal to the High Court. The learned Single Judge, who heard the appeal, affirmed the judgment and decree of the first appellate court, on the reasoning which may be summed up as under: The term "person" in Section 61(1)(b) of the Municipal Act, interpreted in the light of the definition given in Section 2(40) of the Punjab General Clauses Act, includes a partnership. Under clause (b) of Section 61(1) of the Municipal Act, the basis on which the liability to pay tax arises, is the trade, profession or business; and if the trade and business is one carried on by several persons collectively in partnership, then the partnership alone, and not the individual partners, are liable to pay the tax; that the liability on the partners will fall twice which is not contemplated by the scheme and language of the Municipal Act, even though all the partners are jointly and severally liable to any tax for the partnershipsupport of his conclusion that the tax was on trade and not on persons, the l earned Judge by way of analogy, referred to clauses (a), (c), (d), (e) and (f) of sub-Section (1). He also referred to two Madras decisions in The Municipal Commissioners of Nagapatam v. Sadaya Pillay(1) and Davies v. President of the Madras Municipal Commission(2): and found himself in entire agreement with the reasoning of the learned Judges in thosethe Municipal Committee preferred a Letters Patent Appeal. The Appellate Bench of the High Court held that to import the definition of the term "person" occurring in Section 2(40) of the Punjab General Clauses Act into Section 61(1) (b) of the Municipal Act, will be repugnant to the subject. In the opinion of the Bench, under the scheme of the statute in question , the tax cannot be levied on a firm or factory as such, but only on the individual owners of the factory or of the firm. On this reasoning, the Bench reached the conclusion"that under Section 61(1) (b) of the Act, it is the individual who is to be assessed and is liable to pay the tax mentioned therein and so the assessment as well as the demand of the tax from each of the plaintiffs does not suffer from any legal infirmity."The Bench further held that since the Committee in imposing the tax on the appellants herein, has not acted outside the provisions of the statute, "it would, on the basis of the judgment of the Supreme Court in Firm Seth Radha Kishan (Deceased) represented by Hari Kishan &Ors. v. Administrator Municipal Committee, Ludhiana, (3) which also dealt with the provisions of the Municipal Act, follow that the impugned assessment could only be questioned under the provisions of Sections 84 and 86 of the Act, and the jurisdiction of the Civil Court in respect of tax levied or the assessment made is excluded". In the result, the appeal was allowed and the trial courts decision dismissing the suit was restored.

Reasoning:
From a plain reading of the extracted provision, it is clear that a tax leviable under clause (b) is, in terms, a tax on "persons". The expression " persons" undoubtedly includes natural persons. The class of such taxable persons has been indicated by the Legislature with reference to their occupationalin order to be authorised, a tax under clause (b) of Section 61(1) must satisfy twoit must be a tax on "persons". Second such persons must be practising any profession or art or carrying on any trade or calling in thethe entire effort to import the definition of person given in the General Clauses Act, into Section 61(1)(b) of the Municipal Act, is directed to find a foundation for the argument, that the construction adopted by the High Court could lead to double taxation and even unconstitutional results. But in the instant case, nothing of this kind has happened. The firm has not been assessed. No question of double taxation or exceeding the Constitutional ceiling of Rs. 250/- fixed by Article 276(2) of the Constitution, arise s on the facts of the present case. The arguments advanced on behalf of the appellants on this aspect of the matter are merely hypothetical, anda conjoint reading of sections 84 and 86, it is plain that the Municipal Act, gives a special and particular remedy for the person aggrieved by an assessment of tax under this Act, irrespective of whether the grievance relates to the rate or quantum of tax or the principle of assessment. The Act further provides a particular forum and a specific mode of having this remedy which analogous to that provided in Section 66 (2) of the Indian Income-tax Act, 1922. Section 86 forbids in clear terms the person aggrieved by an assessment from seeking his remedy in any other forum or in any other manner than that provided in the Municipal Act.It is well recognised that where a Revenue Statute provides for a person aggrieved by an assessment thereunder, a particular remedy to be sought in a particular forum, in a particular way, it must be sought in that forum and in that manner, and all other forums and modes of seeking it are excluded. Construed in the light of this principle, it is clear that sections 84 and 86 of the Municipal Act bar, by inevitable implication" the jurisdiction of the Civil Court where the grievance of the party relates to an assessment or the principle of assessment under thisanswer to this question must be in the negative. By no stretch of imagination, can it be said in the facts and circumstances of the case, that in assessing the appellants, individually, and not collectively , to the tax in question, the Municipal Committee abused its powers under the Act. We have already discussed and held that in levying this tax, the Municipal Committee did not travel beyond or act contrary to the provisions of Section 61(1)(b ) of the Act. In short, the present case is one where the Municipal Committee acted "under the Act". It follows, therefore, that the Civil Courts jurisdiction to entertain and decide the suit was barred, even if the dispute raised therein relate d to the principle of assessment to be followed.