Case: Western India Theatres Limited Vs. Municipal Corporation of the City of Poona

1. The appellant is a public limited company registered under the Indian Companies Act, 1913. It is a lessee of four cinema houses situate within the municipal limits of Poona City known respectively as "Minverva", "The Globe", "Sri Krishna" and "The Nishat". It exhibits cinematography films, both foreign and Indian, in the said four houses. The respondent, a body corporate, was governed by the Bombay District Municipal Act, 1901 (Bom. III of . 1901) up to June 8, 1926, and from then by the Bombay Municipal Boroughs Act, 1925 (Bom. XVIII of 1925) up to December 29, 1949, and, thereafter, by the Bombay Provincial Municipal Corporation Act, 1949 (Bom. LlX of 1949). With effect from October 1, 1920, the respondent, with the sanction of the Government of Bombay levied on the owners and lessees of cinema houses within the limits of the erstwhile province of Bombay a tax of Rs. 2 per day as license fee. Rules for the levy and collection of the said tax were framed by the respondent. Those rules were amended on or about June 3, 1941, enhancing the tax from Rs. 2 per day to, Re. 1 per show. The rules were again revised on or about June 9 1948, under which the tax was enhanced from Re. 1 per show to Rs. 5 per show. At all material times the tax was being collected at the last mentioned late.2. Section 59 of the Bombay District Municipal Act 1901 provided that subject to any general or special orders which the State Government might make in that behalf any municipality (a) after observing the preliminary procedure required by S. 60, and (b) with the sanction of the authority therein mentioned, might impose for the purposes of that Act any of the taxes mentioned in that section. After enumerating ten specific heads of taxes, which a municipality could levy, a residuary category was set forth in cl. (xi) in the wordsother tax to the nature and object of which the approval of the Governor in Council shall have been obtained prior to the selection contemplated in sub-clause (i) of cl. (a) of section 60."Ever since the appellant became a lessee of the,said cinema houses, the appellant has been making payments of the said tax under protest.3. After giving the necessary statutory notice to the respondent, the appellant, an or about March 31, 1950, filed a suit in the Court of the Civil Judge, Senior Division, Poona, being Suit No. 76 of l950, against the respondent for a declaration that the levy and imposition of the said tax with effect from October 1, 1920, were invalid and illegal; that the enhancement in the rates of the tax with effect first from June 3, l94l, and then June 9, 1948, was invalid and illegal and that the resolutions passed and rules framed in connection with the levy, imposition, enhancement and collection of the said impugned tax were invalid, illegal and ultra vires, for a permanent injunction restraining the defendants from levying or recovering and or increasing and enhancing the said tax and for refund to the appellant of the amounts of the tax collected from it and for costs of the suit and interest. By its judgment dated November 30, 1951, the trial Court held that the said tax was validly levied and imposed, but that the increase and enhancement thereof in 1941 and 1948 were illegal and ultra vires and that the suit was not barred under the Acts governing the respondent. The trial court decreed the suit in part by issuing an injunction restraing the respondent from levying, recovering or collecting the tax at the enhanced rate and passing a decree against the respondent for refund of a sum of Rs. 27,072 with interest and costs. The respondent preferred an appeal and the appellant filed cross objections. But the High Court by its judgment and decree dated February 10, 1948, reversed the judgment of the trial court and dismissed the suit of the appellant with costs throughout. The appellants cross objections were also dismissed. On December 10, 1953, the High Court granted leave to the appellant to appeal to this Court from the said judgment. Hence this final appeal questioning the validity of the impugned tax.

Reasoning:
ut is really a tax on the appellants, trade or calling referred to in entry 46 and that, therefore, the amount of tax cannot under S. 142-A of the Government of India Act., 1935 exceed Rs. 100 per annum. This point need not detain us long, for it is covered by us in the appellants other appeal No. 145 of 1955) Western India Theatres Ltd., Cantonment Board, Poona, AIR 1959 SCfind ourselves in agreement with the High Court in rejecting thisthe first place, the marginal note cannot affect the construction of the Janguage used in the body of the section if it is otherwise clear and unambiguous(see Commissioner of Income Tax, Bombay v. Ahmedbhai Umarbhai and Co., Bombay, 1950 SCR 335   at page 353: (AIR 1950 SC134 at p. 140). In the next place, it should be borne in mind that S. 67 of the Bombay District Municipal Act (Bom. III of 1901) which was formerly applicable to municipalities used the word reduce" in between the words "suspend and "abolish" and that that section had been reproduced in S. 60 of the Bombay Municipal Boroughs Act, 1925, but that in the process of such reproduction the word reduce" was dropped and the word "modify" was introduced. In the marginal note, however, the word "reduce" was not substituted by the word "modify", apparently through76 of this very Act also refers to "modification not involving an increase in the amount to be imposed" which makes the sense in which the word "modify" has been used in this Act perfectly clear, namely, that there may be a modification involving an increase.Reference may also be made to the decision of the Court of Appeal in England in the case of Stevens v. General Steam Navigation Co., Ltd., 1903-1 KB 890. "Modification", according to Collins M. R. in his judgment at p. 893, implied an alteration and the word was equally applicable whether the effect of the alteration was to narrow or to enlarge the provisions.In our opinion the dropping of the word "reduce" and the introduction of the word "modify" in the body of S. 60 of the Act under consideration clearly indicate an intention on the part of legislature to widen the scope of this section and the High Court was right in so construing the same.In the first place, the power of the municipality cannot exceed the power of the provincial legislature itself and the municipality cannot impose any tax, e.g., income-tax which the provincial legislature could not itself impose. In the next place, S. 59 authorises the municipality to impose the taxes therein mentioned "for the purposes of this Act". The obligations and functions cast upon the municipalities are set forth in Ch. VII of the Act. Taxes, therefore, can be levied by the municipality only for implementing those purposes and for no other purpose. In other words it will be open to the municipality to levy a tax for giving any of the amenities thereinanother example: It is the duty of the Municipality to arrange for supply of drinking water and it may legitimately charge water rate which, again, is item (viii) in S. 59(1). We do not for a moment suggest that the municipalities may only impose a tax directly in connection with the heads of duties cast upon it.What we say is that the tax to be imposed must have some reasonable relation to the duties cast on it by the Act. In the third place, although the rule of construction based on the principle of ejusdem generis cannot be invoked in this case, for items (i) to (x) do not, strictly speaking, belong to the same genus, but they do indicate, to our mind the kind and nature of tax which the municipalities are authorised to impose, Finally, the provincial legislature had certainly not a dictated in favour of the municipality, for the taxing power of the municipality was quite definitely made subject to the approval of the Governor-inthe Indian Council Act, 1861 (24 and 25 Vic. c. 67) the Governor-in-Council might mean the Governor in Executive Council or the Governor in Legislative Council. If the reference in S. 59(1)(xi) is to the Governors Legislative Council, then there was no improper delegation at all, for it was subject to the Legislative control of the Governor in Legislative Council. The Governors Legislative Council was composed of all the members of the Governors Executive Council besides a few other persons. Therefore if the reference was to the Governor in his Executive Council even them from a practical point of view, the ultimate control was left with the Governors Legislative Council. We need not labour this point any further, for on the first three grounds the delegation of legislative authority, if any, is not excessive so as to make the exercise of it unconstitutional. In our opinion the impugned section did lay down a principle and fix a standard which the municipalities had to follow in imposing a tax and the legislature cannot, in the circumstances, be said to have had abdicated itself and, therefore, the delegation of power to impose any other tax cannot be struck down as being in excess of the permissible limits of delegation of legislative functions.