Kerala High Court
District Registrar And Anr. vs Popular Automobiles Trichur Through ... on 11 August, 1966
Equivalent citations: AIR 1967 KERALA 240, 1968 LAB. I. C. 1159, (1969) 1 LABLJ 475, ILR (1967) 1 KER 58, 1968 KER L J 45, 1968 KER LT 268, 1967 KER LT 39
JUDGMENT
1. The question is whether a duty at 4 per cent should be levied on a transfer of immovable property effected by the first respondent on 23 5-1903 in the area of the Malom Panchayat by virtue of Section 66(4) read with Section 71 of the Kerala Panchayats Act 1960 (hereinafter called 'the Act')
2. The first respondent moved a writ application O.P. No 1509 of 1963 challenging such a levy and the writ application has been allowed by a learned Judge of this Court holding that such a levy is not warranted and that the authorisation of such a levy would infringe Article 14 of the Constitution of India. This appeal is by the State of Kerala and the District Registrar against that decision.
3. The levy was sought to be supported before the learned Judge by reason of Rule 9 of Schedule V to the Kerala Panchayats Act, 1960. That rule reads thus:
"Continuance of existing taxes.--Any tax, cess or fee which was being lawfully levied by any Panchayat at the commencement of this Act shall continue to be levied by the Panchayat for the year in which this Act is brought into force and unless and until the Director by general or special order otherwise directs for subsequent years also."
This schedule refers to Section 146 of the Act which runs thus:--
"First reconstitution of Panchayats.--(1) In regard to the first reconstitution in accordance with the provisions of this Act of Panchayats in existence at the commencement thereof and otherwise in first giving effect to the said provisions they shall be read subject to the rules in Schedule V."
We have left out Sub-section (2) of Section 140 as it is not material
4. The Panchayat in question, (he Malom Panchayat, was reconstituted on 1-1-1962, and as indicated earlier the transfer in question was mi 23-5-1963. In view of this we do not consider that reliance can be placed on the 6th Schedule to the Act in support of the levy and the learned Advocate-General who appeared for the appellants did not contend before us that notwithstanding the reconstitution of the Panchayat on 1-1-1962 the provisions in Schedule 5 of the Act which is a transitory provision to apply till the Panchayat is reconstituted will be available for sustaining the levy.
5. He however urged relying on Section 18 of the Madras General Clauses Act, 1891, that the notification issued under Section 67 of the Madras Village Panchayats Act, 1950, on 28-5-1952, must be deemed to he a notification issued under the corresponding provisions of the Act, i.e., Section 66(4) read with Section 71 of the Act and contended that the levy is sustainable
6. The Madras Village Panchayats Act, 1950, contained provisions very similar if not identical to, those embodied in Section 66(4) and Section 71 of the Act in Section 63(2) and Section 67 respectively The notification dated 23-5-1962 was issued under Section 67 of the Madras Village Panchayats Act which is similar to Section 71 and fixed a rate of 4 per rent as the duty
7. Before we proceed further we must read Section 66(4) and Section 71 of the Act which we extract below:
"66(4) A duty shall also be levied in every Panchayat area on certain transfers of property in accordance with the provisions of Section 71".
"71 Duty on transfer of property.--(1) The duty on transfer of property shall be levied-
(a) In the form of a surcharge on the duty imposed by the Kerala Stamp Act, 1959. On every instrument of the description specified below, which relates to the immovable property situated in the area under the jurisdiction of a Panchayat:
(b) at such rate as may be fixed by the Government not exceeding four per centum on the amount specified below against such instruments.
Description of instrument:
(i) Sale of immovable property.
(ii) Exchange of immovable property.
(iii) Gift of immovable properly.
(iv) Mortgage with possession of immovable properly
(v) Lease in perpetuity of immovable property.
(2) On the introduction of the duty afore said-
(a) Section 28 of the Kerala Stamp Act, 1960, shall be read as if it specifically required the particulars to be set forth separately in respect of property situated in the area under the jurisdiction of a Panchayat and in respect of properly situated outside such area; and
(b) Section 62 of the Kerala Stamp Act, 1959, shall be read as if it referred to the Panchayat as well as Government (3) The Government may make rules not inconsistent with this Act for regulating the collection of the duty, the payment thereof to the Panchayat and the deduction of any expenses incurred by the Government in the collection thereof (4) The amounts collected in the Panchayats in a taluk as surcharge on the duty on transfers of property under this section shall be pooled every year for the entire taluk and distributed among all the Panchayats in the taluk in accordance with the rules prescribed in this behalf."
8. If the notification issued under the Madras Village Panchayats Act, 1950, on 23-5-1952 can be deemed to be a notification issued under the corresponding provision, viz.. Section 71 of the Act, the levy seems to be justifiable.
9. But it is urged in the first instance that the notification of 23-5-1952 issued under the Madras Village Panchayats Act cannot be so deemed by virtue of Section 18 the Madras General Clauses Act. That section is in these terms: -
"18. Where an Act repeals and re-enacts, with or without modification, all or any of the provisions of a former Act, references in any other Act to the provisions so repealed shall be construed as references to the provisions so re-enacted and if notifications have been published proclamations or certificates issued, powers conferred forms prescribed, local limits defined offices established orders, rules and appointments made, engagements entered into, licences or permits granted, and other things duly done, under the provisions so repealed, the same shall be deemed, so far as the same are consistent with the provisions so re enacted to have been respectively published, issued, conferred, prescribed, defined, established, made, entered into, granted or Amount on which duty should be levied:
The amount or value of the consideration for the sale set forth in the instrument.
The value of the property of the greatest value as set forth in the instrument.
The value of the property as set forth in the instrument The amount secured by the mortgage at set forth in the instrument.
An amount equal to one-sixth of the whole amount or value of the rents which would be paid or delivered in respect of the first fifty years of the lease as set forth in the instrument one under the provisions so re-enacted."
The contention is that the notification can not he so considered because the notification would be inconsistent with the provisions of the Act The reasoning is that Section 66(4) of the Act which we have already read envisages the issue of a notification for every Panchayat in the Kerala State and the notification dated the 25th May 1952, can at best apply only to the Malabar area of the State and cannot therefore be considered to be one issued under the Act as it would he inconsistent with the provisions of the Act. We do not think that this reasoning is sound. The power to issue a notification under Section 71 will include a power to issue a notification for a part of the area of the Kerala State. This is so notwithstanding the wording of Section 66(4) of the Act Such a notification cannot he said to be inconsistent with the provisions of Section 66(4) or Section 71 for it seems to us to he well established that the Stale can choose to levy a tax or duty with reference to a particular area or with reference to a particular class of people. Whether such a levy would be valid or not would depend on the question whether Article 14 of the Constitution has been complied with or not. The notification of 23-5-1952 issued under the Madras Panchayat Act may apply only to the Malabar area for there were two General Clauses Acts in force in the Stale one for the Madras Area (The Madras General Clauses Act) and the other (The Travancore Cochin General Clauses Act, 1125), for the Travancore Cochin area and the two con tinned in force in the respective areas till the latter was extended to the Malabar area a well by Act II of 1957 Even after the Act was extended to the Malabar area, it could not have application to the Madras Village Panchayat Act, 1950, because of the definition of the term 'the Act' in Section 2(3) of that Act reading as under:
"a Proclamation or Act of Travancore-Cochin an Act or Ordinance of Travancore Cochin an Act passed by the Legislature of Kerala, an Ordinance Promulgated by the Governor under Article 213 of the Constitution, or where with respect to the State of Travancore Cochin or Kerala the power to make laws is vested with the President or other authority under Sub-clause (9) of clause (1) of Article 367 of the Constitution, any law made in exercise of such power."
10. The section corresponding to Section 18 in the Interpretation and General Clauses Act, 1125, i.e., Section 23 cannot therefore have any application with reference to the Madras Village Panchayats Act or the notification issued thereunder. The continuance of that notification, if at all, can only be by virtue of Section 18 of the Madras General Clauses Act. And that Act can have application only in the Malabar area of the Kerala State For these reasons the notification may apply only to the Malabar area. Even so, we think it should stand if for other reasons it is not found to he unsustainable
11. Before proceeding to deal with the argument that such a notification will be violative of Article 14 we may refer to a further argument advanced by counsel on behalf of the respondent based on Section 18 of the Madras General Clauses Act. 1891. This has reference to the meaning of the words 'the Act' in Section 18 Referring to Chapter II, Section 12 and the definition of the term 'the Act' in Section 3 (17a) it is contended that Section 18 can apply only to a Madras Act as defined in Section 17(a) and in Chapter HI in which Section 18 occurs, and that therefore Section 18 cannot apply to the Act. Section 3 (17a) is in these terms:
" 'Madras Act' shall mean an Act made by the Governor of Fort St George in Council under the Indian Councils Act. 1861, to 1909 or any of those Acts, or the Government of India Act, 1916, or by the Local Legislature or the Governor of the Presidency of Madras under the Government of India Act or by the Provincial Legislature of Madras under the Government of India Act, 1936, or by the Legislature of the State of Madras under the Constitution."
And Section 12 enacts thus:
"This Chapter shall apply to all Madras Acts made unless a contrary intention appears in any such Act, but it shall not affect any-thing done or commenced prior to the commencement of this Act under any enactment now in force ."
We think counsel is correct in his contention that unaided by any other provision Section 18 can apply only to such Acts as are mentioned in Chapter III and to 'Madras Acts' as defined in Section 3(17a). But before finally coming to the conclusion that it only applies to such Acts we think it is necessary to refer to the provisions of Section 121 of the States Reorganisation Act, 1956, as well. That section is in these terms:--
"Power to construe laws. Notwithstanding that no provision or insufficient provision has been made under Section 120 for the adaptation of a law made before the appointed day, any court, tribunal or authority required or empowered to enforce such law may, for the purpose of facilitating its application in relation to any Stale formed or territorially altered by the provisions of Part II, construe the law in such manner, without affecting the substance, as may be necessary or proper in regard to the matter before the court, tribunal or authority."
It is not contended before us that this section is not available for construing Section 18 of the Madras General Clauses Act which continued in operation by virtue of Section 119 of the Stales Reorganisation Act, 1956 and which could have been adapted under Section 120 of the same Act The argument is that if we propose to read 'the Act' in Section 18 to include an Act passed by the Kerala Legislature, i.e. the Kerala Panchayat Act, 1960 then we are not construing Section 18 but we are rewriting the section We think that Section 121 of the States, Reorganisation Act. 1956, is meant exactly to] cover circumstances such as the one that has arisen in this case There is no point in enacting Section 119 of the States Reorganisation Act 1956, and keeping in force the Madras General Clauses Act if the effect or that would be to make Section 18 of the Act non-available in regard to any statute passed by the Kerala Legislature after the appointed day This is a matter in regard to which provisions could easily have been made under Section 120 by altering the words or the meaning of the words 'the Act' in that section If inadequate provision: has been made in that regard under that section and even if no provision has been made in that section this Court has been given the power to construe Section 18 of the Madras General Clauses Act with a view to facilitate its application in relation to any State formed or territory altered by the provisions of Part II Kerala Slate is a State constituted under that Part cannot be doubted and in order to give effect to the provisions of Section 121, we cannot but read 'the Act' in Section 18 of the Madras General Clauses Act to include the Act in question, viz., the Kerala Panchayats Act, 1960 We propose to read the section in this manner
12. Our attention has been drawn to the decisions of the Andhra Pradesh High Court to the effect that if no adaptation has been made under Section 120 of the States Reorganisation Act, 1956, the provisions under Section 121 of the Act cannot be relied on for the purpose of making such adaptations as could have been made under Section 120 The ruling is in Satyanarayanamurti v. Income-tax Appellate Tribunal, Madras Bench, AIR 1957 Andh Pra 123. With great respect we are unable to agree with this view for it seems to us that such a view would defeat the very purpose for which Section 121 of the States Reorganisation Act has been enacted and such a conclusion cannot he supported on the wording of Section 121
13. This leads us to the question as to whether the continuance of such a levy for the Malabar area of the Kerala Stale alone and that after the coming into the force of the Act under which there can he a levy for the whole of the State is discriminatory and violative of Article 14 of the Constitution or not.
14. Counsel on behalf of the respondent has mainly relied on two decisions of the Supreme Court in support of his contention that 11 is discriminatory apart from the general arguments advanced on the basis that there is no intelligible differentia for a classification which would perpetuate a levy in an area which according to counsel stands in the same footing as the other areas in the State. The decisions of the Supreme Court are those in Stale of Rajasthan v. Manohar Singhji, AIR 1954 SC 297 and Jia Lal v. Delhi Administration, AIR 1902 SC 1781. In the first of these cases it was held that the law in one part of Rajasthan State which prevented Jagirdars from collecting their dues while those in the other part of the State were allowed to do so was discriminatory and the law was held to be void. This decision came up for consideration before the Supreme Court again in Anant Prasad Lakshmmiwas v. State of Andhra Pradesh, AIR 1968 SC 863. In the meantime dealing with the different laws pertaining to sales tax in the Madhya Pradesh State another decision has also been rendered by the Supreme Court in Bhaiyalal Shukla v. State of Madhya Pradesh, AIR 1962 SC 981. In AIR 1963 SC 853, the decision in AIR 1964 SC 297, was distinguished thus:
"In the latter case, the Jagirdars of a particular area became singled out after the creation of the State of Rajasthan and management of their properties was taken away from them while the Jagirdars of the rest of Rajasthan retained the management of their properties. It was in those circumstances when there was a pre-existing law in one part of Rajasthan to which there was nothing corresponding in the rest of Rajasthan that this Court held that the patent discrimination arising in that case was violative of Article 14."
Their Lordships then chose to follow the principles laid down in the decision in Bhaiyalal Shukla's case, AIR 1962 SC 981
15. As late as 1964, the principle laid down in the Madhya Pradesh case reported in AIR 1962 SC 98) has been reiterated by the Supreme Court in State of Madhya Pradesh v. Bhopal Sugar Industries Ltd., AIR 1964 SC 1179. An earlier decision of the Supreme Court has also been referred to in this case. We do not think that the decision in AIR 1954 SC 297, relied on by the first respondent lays down any general principle which is applicable to cases such as this.
16. There has been a law in the Malabar area of the Kerala State, the Madras Village Panchayats Act, 1950. There was a levy also of a surcharge at the rate of 4 per cent from 23-5-1952. Though there was a similar Panchayat Act in the Travancore-Cochin area, there was no provision in that Act for the imposition of a levy similar to the one imposed under the Madras Village Panchayats Act. The levy under the Madras Act continued till 1-11-1956 during which period the Travancore-Cochin area have had no such levy. In fact the levy under that Act continued even after 1-11-1966 till 1-1-1962 when the Kerala Panchayat Act came into force. We cannot view the question without reference to these historical considerations. A geographical classification based on historical considerations can be had has been laid down by the Supreme Court in more than three cases to which we have already referred to. We see no reason why the same principle should not be applied to this case as well. We think that no distinction arises from the fact that the law relating to Panchayat has been codified for the whole of the Kerala State and brought into force from 1-1-1962 and that law contained a provision for the imposition of such a levy for the whole of the State. Even so, we think, that before a uniform policy can be decided upon by the State as regards the whole of the area of the State it is permissible to continue the system that has been obtaining for considerable length of time before the enactment of the Kerala Panchayats Act and before the States Reorganisation on 1-11-1966- In permitting such a levy to continue nothing worse or different has been done.
17. It is not as though that there is nothing to he investigated or considered before deciding on a levy at a uniform rate for the whole of State. Inequality can arise not only from treating people similarly situated in a different fashion but also from treating similarly those who are differently situated. Perhaps this is the reason why when in 1966 finally it was decided to impose levy on the whole of the Slate it was decided to have 3 per cent levy instead of 4 per cent levy which was in force in the Madras area. These are matters which must be left to the State and as has been pointed out by the Supreme Court in AIR 1964 SC 1179, it is not for this Court to lay down any period of time or to indicate when such a uniform principle must be applied.
18. The only other decision on this aspect of the case to which reference should be made is the decision of the Supreme Court in AIR 1962 SC 1781 We think the facts of the case are entirely different, and the situation that arose there was also quite different For the reasons which obtained as early as a century back and which had ceased to exist long before the matter came up for consideration a distinction has been made between those on the North of the Jumna and Ganga and those on the South The Supreme Court found that there is no basis for such a classification. This decision has not been applied in AIR 1964 SC 1179 and in AIR 1968 SC 868. We do not think that the decision can have any application in deciding this case
19. In the result we have to sustain the levy imposed on the transfer of immovable property effected by the first respondent on 28-5-1963 We therefore set aside the judgment under appeal and allow this Writ Appeal.
There will be no order as to costs in this Writ Appeal