Case: Raza Buland Sugar Co. Ltd Vs. Municlpal Board, Rampur

The appellant is a public limited company and owns two sugar factories situate in the city of Rampur. The factories comprise a number of buildings including some for residential purposes also. The Municipal Board of Rampur (hereinafter referred to as the respondent) decided to impose water tax in Rampur as provided under S. 128 (1) (x) of the U. P. Municipalities Act, No. II of 1916 (hereinafter referred to as the Act). The procedure for the imposition of tax by the Municipal Board under the Act is provided in Ss. 131 to 135 of the Act. Section 131 provides that when a Board desires to impose a tax, it shall by special resolution frame proposals specifying the tax, persons or class of persons to be made liable, and the description of property or other taxable thing or circumstance in respect of which they are to be made liable, the amount or rate leviable from each such person or class of persons, and any other matter required by the Rules framed by the State Government. The Board has also to prepare a draft of the rules which it desires the State Government to make in respect of the tax, namely, for assessment, collection, exemption and other matters relating to tax, (S. 131 (2)). Section 131 (3) which is important for our purposes readsBoard shall, thereupon publish in the manner prescribed in Section 94 the proposals framed under sub-section (1) and the draft rules framed under sub-section (2) along with a notice in the form set forth in Schedule132 provides for procedure subsequent to framing proposals and permits any inhabitant of the municipality within a fortnight from the publication of the notice, to submit to the Board an objection in writing to all or any of the proposals. The Board has to take these proposals into consideration and pass orders thereon by special resolution and if it thinks necessary it can modify the proposals. If the proposals and the rules (if any) are modified, the modified proposals and rules are again published. it is open to any inhabitant of the municipality again to object to the modified proposals, and if any such objection is made, it is dealt with in the same manner as objections to the original proposals. When the proposals have been finally settled, the Board has to submit them along with the objections to the prescribed authority or the State Government, as the case may be, under S. 133 of the Act. The prescribed authority or the State Government has the power thereunder to sanction the proposals or to return them to the Board for further consideration or sanction them without modification or with such modification not involving an increase of the amount to be imposed is it deems fit. Section 134 provides that when the proposals have been sanctioned, the State Government has to take into consideration the draft rules submitted by the Board and make such rules under S. 296 of the Act as it thinks fit. When the rules have been made the order of sanction and a copy of the rules has to be sent to the Board which thereupon by special resolution has to direct the imposition of the tax with effect from the date to be specified in the resolution. Section 135 then provides that a copy of the above resolution has to be submitted to the State Government or the prescribed authority, as the case may be. Upon receipt of such copy, the State Government or the prescribed authority, as the case may be, has to notify in the official gazette the imposition of the tax from the appointed day and the imposition of the tax is in all cases subject to the condition that it has been so notified under S. 135 (2). Then comes S. 135 (3) which reads asnotification of the imposition of a tax under sub-section (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this94 (3) which provides for the manner of publication reads thus:-"Every resolution passed by a Board at a matter shall, as soon thereafter as may be, be published in a local paper published in Hindi and where there is no such local paper, in such manner as the State Government may, by general or special order, direct.According to the respondent, it followed the procedure provided under the Act for the imposition of the tax and after following the procedure the tax came to be imposed from April 1, 1957 at the rate of 10 per centum of the annual value of lands and buildings. After the tax was thus imposed, the respondent sent notices of demand to the appellant requiring it to pay water tax for the years 1957-58 and 1958-59. This done on October 7, 1958. It may be added that under S. 129 of the Act there are certain restrictions subject to which water tax can be imposed and one of the restrictions is that the tax shall not be imposed, where the unit of assessment is a plot of land or a building, on any such plot or building of which no part is within a radius to be fixed by rule in this behalf for each municipality from the nearest standpipe or other waterworks where at water is made available to the public by the Board. In the present case this limit has been fixed by the rules at 600 feet.3. The appellant objected to the payment of water tax demanded from it, and one of its objections was that it was exempt under S. 129 (a), as there was no standpipe or other water-work whereat water was made available to the public by the respondent within 600 feet of the buildings of the factory, the Central Office of the Govan Colony, except that some buildings outside the main Raza Sugar Factory were within 600 feet.4. The respondent however rejected the objections, and threatened to recover the amount by coercive process. The appellant then filed a writ petition before the High Court in December 1958 and a large number of grounds were taken in the writ petition in support of its case that it was not liable to pay water tax, including certain constitutional objections to the vires of the Act itself. The appellant failed in the High Court on all points and has come up in appeal before us on a certificate granted by the High Court.

Court's reasoning:
We are therefore of opinion that this part of S. 131 (3) is mandatory and it is necessary to comply with it strictly before any tax can be imposed. We shall consider the interpretation of S. 135 (3) later; but we have no doubt that in the present case, in spite of S. 135 (3), the legislature tended that there must be publication as provided in what we have called the first part of S. 131 (3). We therefore hold that this part of S. 131 (3) is mandatory considering its language, the purpose for which it has been enacted, the setting in which it appears and the intention of the legislature which obviously is that no tax should be imposed without hearing tax-payers. Lastly we see no serious general inconvenience or injustice to any one if this part of the provision is held to be mandatory; on the other hand it will be unjust to taxpayers if this part of the provision is held to be directory, inasmuch as the disregard of it would deprive their of the opportunity to make objections to the proposals, and the draft rules. We therefore hold that this part of S. 131 (3) isprinciple that case in our opinion applies to the manner of publication provided in S. 94 (3) in the present case. As we have said already the essence of S. 131 (3) is that there should be publication of the proposals and draft rules so that the tax-payers have an opportunity of objecting to them, and that is provided in what we have called the first part of S. 131 (3); that is mandatory. But the manner of publication provided by S. 9-1 (3) which we have called the second part of S. 131 (3), appears to be directory and so long as it is substantially complied with that would be enough for the purpose of providing the tax-payers a reasonable opportunity of making their objections. We are therefore of opinion that the manner of publication provided in S. 131(3) ismust however point out that if S. 94 (3) is interpreted literally all that it requires is that the publication must be in a local paper and that local paper must be published in Hindi, though the actual publication of the resolution may not be in Hindi. That does not seem to us to be the real meaning of S. 94 (3) and what it substantially requires is that the publication should be in Hindi in a local paper, and if that is done that would be compliance with S. 94 (3). Now what has happened in this case is that the publication has been made in a local paper which on the evidence seems to have good circulation in Rampur and the actual resolution has been published in Hindi, though the paper itself is published in Urdu. It seems to us therefore that there is substantial compliance with the provisions of S. 94(3) in this case, even though there is a technical defect inasmuch as the local paper in which the publication has been made is published in Urdu and not in Hindi. But what has happened in this case is in our opinion substantial compliance with S. 94(3) and as we have held that provision to be directory it must be held that S. 131 (3) has been complied with.The present case is in our opinion similar to that case. Here also the publication was made, as we have already pointed out in compliance with what we have called the first part of S. 131 (3). Further the manner of publication was in substantial compliance with S. 94 (3). Therefore as there was substantial compliance with the provisions of S. 94 (3), S. 135 (3) would in our opinion come to the help of the respondent and it must be held that all necessary steps had beenfar as that is concerned, it is enough to say that it is mainly a question of fact whether the buildings or any of them belonging to the appellant are within 600 feet of the standpipe. The restriction imposed in cl. (a) of S. 129 is that water-tax can be levied on a building where any part of it is within a radius fixed by rules which in the present case is 600 feet from the nearest standpipe or water-work whereat water is made available by the Board to the public. What is contended on behalf of the appellant is that these words mean that there should be a standpipe or water-work from which water is made available to the public by the respondent and that it is not enough if underground pipes carrying water are passing within 600 fect. It seems to us that this contention of the appellant is correct. The restriction in S. 129 (a) is that no water tax can be levied on a building which is more than a certain distance fixed by the rules from a standpipe or other water-work from which water is made available to the public. The restriction that water should be made available to the public within the specified distance does not mean that it prpes carrying water pass underground that would be enough. What is required is that water should be made available to the public from the nearest standpipe or other water work and that requires that there must be something above the ground from which the public can draw water. But even so, the question is one of fact and the High Court has pointed out that there was dispute on this question of fact and there was no sufficient material before it to enable it to come to a definite finding whether all the buildings of the appellant were beyond the radius of 600 feet from the nearest standpipe. In this state of the evidence the question must be left open and the appellant can pursue such remedies as he may be advised to take.