Punjab-Haryana High Court
Naranjan Dass Doomta Rice And General ... vs The State Of Punjab Through The ... on 19 August, 1991
Equivalent citations: (1992)101PLR173
Author: Ashok Bhan
Bench: Ashok Bhan
JUDGMENT Naresh Chander Jain, J.
1. In this bunch of Civil Writ Petition Nos. 713 to 715, 838 to 840, 901 to 904, 983, 986, 1031, 2578, 3456 of 1991, 16764, 16924 of 1990 and 2981 of 1991, the precise questions of law involved are (i) whether it is obligatory for the State Government within the meaning of section 62-A(1) of the Punjab Municipal Act to require a Municipal Committee to impose a particular tax mentioned in section 61 of the Punjab Municipal Act within such period as may be specified in the notification; (ii) whether it is only on the failure of the Municipal Committee to follow the directions that the State Government has got the powers to impose tax under Section 62-A (3) of the Punjab Municipal Act ; and (iii) whether the State Government has got independent powers under section 62-A (1) of the Act to direct a Municipal Committee to impose tax directly without first requiring the Municipal Committee to issue directions or orders.
2. In order to appreciate the aforementioned questions, it is necessary to have a look at the admitted facts of the case, which the partirs' counsel agree, can be picked up from Civil Writ Petition No- 838 of 1991, M/s Niranjan Dass and Ors. v. State of Punjab etc.
3. The petitioners, it is averred in the petition, run cotton ginning factory and oil mill and purchase kapas (raw cotton) narma and oil seeds from the market yards by participating in the open auction and process the same in the factory and extract oil from the oil seeds and sell the same. At the time of purchase of the abovementioned items, the petitioners have to make payment of market fee at the rate of 2% under the Punjab Agricultural Produce Markets Act, 1961 (hereinafter referred to as' Markets Act'). It is the case of the petitioners that uptil 2-12-1990, the agriculturists and farmers were required to pay octroi tax to the Municipal Committee at the rate of 1.25 p. per quintal on the abovementioned commodities. The agriculturists and the farmers, it has been averred, approached the Punjab Governor for the abolition of octroi tax which was exempted by the Punjab Government vide notification dated 30-11-1990 published in the Punjab Government Gazette (Extraordinary), dated 3-12-1990 with immediate effect. It is the admitted position before us that on the same day, the Government of Punjab issued another order dated 30-11-1990, which has been so notified (Annexure P. 2) in the Punjab Government Gazette dated 3-12-1990 under section 62-A of the Act by which all the Municipal Committees in the State of Punjab were directed to impose Urban Development Cess on the sales/purchases of raw cotton, narma and oil seeds made within their respective jurisdiction at the rate of Rs. 0.25 P. percent advalorem with immediate effect. It is further the admitted position before us that two days later i.e. on 5th December, 1990, the Government issued another letter (Annexure P. 3) to all the Commissioners of Municipal Corporations of Amritsar, Ludhiana and Jullundur and further to all the Executive Officers of the Municipal Committees in the State of Punjab ordering the recovery of Urban Development Cess by laying down guidelines for effecting recovery of the cess. Consequent upon the receipt of the letter (Annexure P. 3), the Executive Officers issued a letter (Annexure P. 4) directing the petitioners to pay the cess. It is the legality and the validity of the action of the respondents which has been challenged by way of present writ petition. In order to appreciate the questions raised in the writ petition and the arguments advanced at the bar, it is necessary in the first instance, to have a look at the bare provisions of section 62-A of the Punjab Municipal Act, 1911 (for short 'the Act') which reads as under :-
"Section 62-A. Power of Government in Taxation.-(1) The State Government may by special or general order notified in the official Gazette, require a Committee to impose any tax mentioned in section 61, not already imposed at such rate and within such a period as may be specified in the notification and the Committee shall thereupon act accordingly.
(2) The State Government may require a Committee to modify the rate of any tax already imposed and thereupon the Committee shall modify the tax as required within such period as the State Government may direct.
(3) If the Committee fails to carry out any order passed under sub-section (1) or (2) the State Government may by a suitable order notified in the Official Gazette impose or modify the tax. The order so passed shall operate as if it were a resolution duly passed by the Committee as if the proposal was sanctioned is accordance with the procedure contained in section 62."
4. It has been argued by Mr. S. C. Khunger, Advocate, learned counsel for the petitioners that the State Government is bound to follow the mandatory requirement of section 62-A(1) of the Act, which requires it either by way of special or general order notified in the Official Gazette asking a Municipal Committee to impose a tax mentioned in section 61 of the Act, provided such a tax has already not been imposed at such rate and within the specified period to be mentioned in the notification and thereafter the Committee would act accordingly. It has further been argued by the counsel that it is only after the compliance of section 62-A(1) of the Act that the State Government could have acted under section 62-A (3) of the Act. The issuance of notification under section 62-A (1) of the Act amounts to imposing a tax directly which could not be done. In support of the argument, the counsel has referred to Ram Niwas Gupta and Ors. v. The State of Haryana and Ors. (1970) 72 P. L. R 283, and Krishan Kumar Sanan and Ors. v. The Punjab State and Anr., (1972) 74 P. L. R.149.
5. While countering the aforementioned arguments, Mr. H. S. Mattewal, learned Advocate General, Punjab, assisted by Mr. G. S. Cheema, Assistant Advocate General has argued that the State Government has got independent powers to issue notification under section 62-A (1) of the Act. In the alternative, it has been argued that if there is any defect in the issuance of notification, the same stands cured under section 62 (12) of the Act.
6. Having given our thoughtful consideration to the respective arguments of the learned counsel advanced at the bar, we are of the view that the arguments of the learned counsel for the petitioners must prevail. A combined reading of sections 62-A (1) and 62-A (3) of the Act leaves no manner of doubt that section 62-A (1) of the Act empowers the State Government to issue notification requiring a Municipal Committee to impose a tax. Section 62-A (1) of the Act does not authorise the State Government to impose any tax at all. Such power is vested in the State Government under section 62-A (3) of the Act and that too only if the Committee fails to carry out the order of the State Government. The only interpretation, in our view, which can be placed upon the whole of section 62-A of the Act is that the State Government under sub-section (1) of section 62-A of the Act can by a special or general order only notify in the official gazette requiring a Municipal Committee to impose a tax so mentioned in section 61 of the Act, which tax, of course, has already not been imposed at a rate and within a particular period to be specified in the notification. Upon the issuance of the notification, the Committee is enjoined to Act accordingly. Sub-section (2) of section 62-A of the Act contemplates the vesting of the powers in the State Government to require a committee to modify the rate of tax which has already been imposed and the Municipal Committee again is under a legal obligation to modify the tax as required within such period as the State Government may direct. If the Municipal Committee fails to comply with the orders or directions issued by the State Government under sub-section (1) or sub-section (2) of section 62-A of the Act, the State Government has got all the powers to issue a suitable order notifying in the official gazettee the imposition or modification of the tax. If the State Government issues such an order as is contemplated under sub-section (3) of section 61-A of the Act, order those passed would operate as if it was resolution duly passed by a Municipal Committee and as if the proposal was sanctioned in accordance with the procedure contained in section 62 of the Act meaning thereby that the procedure contained in section 62 of the Act would also stand dispensed with. In other words, it is obligatory for the State Government within the meaning of section 62-A (1) of the Act in the first instance, requiring a Municipal Committee to impose a tax and that the State Government has got no powers under sub-sections (1) to (3) of section 62-A of the Act to issue a notification directly requiring a Municipal Committee to impose a tax. Even the notification Annexure P-2 does not make any reference that the same has been issued under the provisions of sub-section (1) of section 62-A of the Act exercising independent powers. Compliance of sub-section 62-A (1) of the Act is mandatory. This Court is - disinclined to agree with the argument of Mr. Mattewal, learned Advocate General, Punjab, that the State Government has got independent power to issue necessary orders under section 62-A (1) of the Act directing a Municipal Committee to impose a tax. On the other hand, notification (Annexure P-2) does not specify whether it has been issued under sub-section (1) or sub-section (3) of section 62-A of the Act. Neither the language nor the spirit of the entire section 62-A of the Act can throw even the slightest hint that the State Government has got independent powers to directly impose a tax, If the argument of Mr. Mattewal is to be accepted, this Court would be reading something more in the statute which is not there meaning thereby that the Court would be doing violence to the language of the whole of the section.
7. Coming to the case law cited at the bar, this Court must observe straightway that there is no direct ruling which can be said to be fully applicable to the facts of the instant case. However, the case law referred to during the course of arguments supports the view which we have taken in the aforementioned paragraph. In Ram Nieas Gupta's case (supra) the imposition of octroi under section 62-A of the Act was under challenge. The facts of the case though not very much relevant are that the Municipal Committee of Bahadurgarh on reconsideration of the earlier decisions decided to impose octroi, the approval of which was given by the State Government. The persons affected by the levy of octroi challenged the imposition of octroi and this court while commenting upon the provisions of section 62-A (1) to (3) of the Act observed as under :-
"Ever since the enactment of this section, the State Government can require a Committee to impose any tax mentioned in section 62, which includes octroi, not already imposed and if , the Municipal Committee does not carry out that direction, the State Government has the authority to impose that tax. The argument of the learned counsel for the petitioners is that recourse to section 62-A cannot be had by the State Government because octroi is already imposed within the limits of the Municipal Committee, Bahadurgarh. This argument is, however, devoid of force because in Fateh Mandi the octroi had not been imposed before the State Government approved resolution No. 6, dated July 21, 1965 on October 30, 1967 and, therefore, on that date the State Government could direct the Municipal Committee, Bahadurgarh. to impose that tax and if the Municipal Committee failed to impose such a tax, the State Government could have imposed itself. The result is that even if the writ petitions are accepted, the State Government can nullify the effect thereof by issuing an appropriate notification under section 62-A of the Act. It is axiomatic to say that this court does not issue in fructuous writ or writs which can be nullified by the respondents by a notification under a statute."
In Shri Krishan Kumar Sanan's case (supra) the levy of tax upon owners of buildings and lands situate within the municipal limits of the town of Batala was challenged. The question of house tax was pending with the Municipal Committee since 1954 and the Municipal Committee kept on passing resolutions to the effect that it was not expedient to impose tax as the residents of the town of Batala were industrialists running small scale industries and the town being near the border of Pakistan, the imposition would make the residents to quit the town. The State Government inspite of the resistance of the Municipal Committee by a letter issued on September 20, 1955 directed the Municipal Committee to pass a resolution under Section 61 of the Act to impose the tax. In spite of the letter having been, written by the State Government the Municipal Committee passed a resolution stating therein that the conditions in the Batala as a result of Indo-Pak hostilities did not permit the imposition of the tax. Other grounds were also given in the resolution. In spite of the resolution, the Punjab Government vide gazette notification dated December 23, 1965 directed the Municipal Committee under section 62-A (1) of the Act to take steps for the imposition of tax on the buildings and the lands situated within the municipal limits of Batala. The Municipal Committee reiterated its earlier resolution and stated that considering the income and expenditure of the Municipal Committee, there was no justification for imposing the tax. On receipt of further communication from the State Government to take necessary steps under section 61, the Municipal Committee passed another resolution on March 17, 1967 asserting that the residents of the town were resentful. The State Government ultimately issued a notification under sub-section (3) of section 62-A of the Act imposing the tax. on buildings and lands situated within the municipal limits of Batala. It was provided in the notification that it would be operative as if it was a resolution duly passed by the Municipal Committee. While upholding the notification, the following observations were made by the Division Bench :-
"As the above reproduced sub-section (3) of section 62-A of the Act shows, respondent No. 1, on failure of the Committee to carry out the order or notification issued under sub-section (1) of that section, has power to notify the imposition of the tax. That notification or order of respondent No. 1 is to operate as if it were a resolution duly passed by the Committee. Thus, the notification of respondent No. 1 is nothing but a resolution passed by respondent No. 2. It is further provided in that subsection that the proposal so made by respondent No. 1 for imposition of fax upon the owners of the buildings and lands shall be treated as if the same had been sanctioned in accordance with the procedure contained in section 62 of the Act.
In case of failure of a Municipal Committee to impose tax upon its residents under section 61 of the Act, it is entirely in the discretion of the State Government, on the facts and circumstances of the case, to take action under sub-section (i) of section 62-A if it deems necessary to do so. Its judgment of the situation necessitating the taking of that action is binding and conclusive not only on a Municipal Committee but also upon those rendered liable to pay the tax proposed to be imposed. There is no doubt that if tax is to be imposed under section 6 of the Act by a Municipal Committee, the procedure pertaining to the issue of notices and inviting of objections from those who are to be made liable to pay tax, has to be gone through. By virtue of the above underlined portion of sub-section (3) of section 62-A of the Act there has been dispensed with the necessity of complying with the procedure devised by section 62 of the Act. That procedure is meant for a Municipal Committee and not for the Stale Government, when the latter exercised its power for imposition of tax by a notification issued under sub-section (3) of section 62-A of the Act. As the Legislature has done away with the necessity of pursuing the course of procedure in case the tax is sought to be imposed by the State Government, no exception could be taken to the notification on the ground that in case the tax is imposed by a resolution of a Municipal Committee that procedure has to be followed and that the same has been rendered unnecessary, when it is to be imposed by a State Government under sub-section (3) of section 62-A of the Act. It is in pursuance of the existence of power by virtue of sub-section (3) of section 6 -A of the Act. that the necessity for pursuing the course of procedure as enjoined for respondent No. 2 has been done away with."
8. This leads us to deal with the only other argument of Mr. Mattewal, learned Advocate General, that the defect in the issuance of notification stood cured under section 62(12) of the Act. Mr. Mattewal has placed firm reliance on a Division Bench judgment reported as Kishan Chand and Ors. v. Municipal Committee, Sangat and Anr., 1986 (1) L. S. R. (Pb.) 635. in order to contend that once a notification was issued, it was conclusive evidence that the tax has been imposed in accordance with the provisions of the Act, In order to appreciate whether Kishan Chand and Ors. case (supra) is applicable to the facts of the instant case or not, it is necessary for us to deal with the factual background of the afore-referred case and the provisions of the law which were sought to be interpreted by the Bench. The facts of the case before the bench were that the Municipal Committee after passing a resolution that house-tax be imposed with effect from April, 1, 1976 sent the same to the State Government for publication in the Government Gazette. The notification under section 62(10) of the Punjab Municipal Act, 1911, was issued on 9th April, 1976 without specifying the date of imposition of house-tax. The omission of the non-mentioning of the date was rectified at a later stage by issuance of corrigendum on 20th October, 1976 providing that the house tax will come into effect from 1st July, 1976. It was contended before the Bench that the State Government was not only to notify regarding the imposition of tax but the date from which the tax would come into force. The argument was that the tax would come into effect from a date of not less than one month from the date of the notification which was mandatory and the imposition of house-tax on 20th October, 1976 with effect from 1st July, 1976 was contrary to law and, therefore, could not be enforced. The Division Bench after discussing the case law held that the infirmities in the procedure for the imposition of the house-tax stood cured by the provisions of section 62(12) of the Act as also section 37 of the Act and that the tax imposed warrants no interference in writ proceedings. Reliance was placed by the Division Bench upon another case M/s Jagir Singh Mohinder Singh v. State of Punjab A I. R. 1983 Punj. & Har. 315 wherein a notification pertaining to the enhancement of licence fee was questioned on the ground of violation of the provisions of sub-section (10) of section 62 of the Act as it did not specify a date of not less than one month from the date of the notification from which the tax was to come into force. The Single Bench held in M/s Jagir Singh Mohinder Singh's case (supra) that the notification was not invalid in view of the provisions of section 37 of the Act. In other words, in both the cases, i.e. one before the Division Bench Kishan Chand and others (supra) and Single Bench as well i.e. M/s Jagir Singh Mohinder Singh's case (supra) the basic infirmities in the notifications were that the precise date of not less than one month was not specified in the notifications from which the tax was to come into force. It was held in both the decided cases that such like infirmities stood cured in view of section 62(12) of the Act. In the present case, as has been seen above, the questions involved are altogether different and it could not be successfully maintained that infirmities regarding the dates etc. are such which can be said to be cured under section 62(12) of the Act. If there had been any infirmity in the notification about the specification of time etc. in the notification under section 62-A(1) of the Act, the position might have been different but herein the Municipal Committee was never given any opportunity to impose a tax within the meaning and ambit of section 62-A(1) of the Act. Section 62 does not vest in the State Government any power of direct taxation. It deals with the procedure which a Committee has to follow before imposing the tax and after dealing with the procedure it is laid down in sub-section (10) of section 62 of the Act that when a copy of the order under subsections (6) and (7) of section 62 of the Act has been received and when a proposal has been sanctioned under sub section (8) of the Act, the State Government will notify the imposition of tax in accordance with such order or proposal and shall in the notification specify a date not less than one month from the date of notification, on which the tax shall come into force. Sub-section (12) of section 62 of the Act envisages that a notification of the imposition of tax under the Act shall be the conclusive evidence that the tax has been imposed in accordance with the provisions of the Act. While interpreting subsections (10) and (12) of section 62 of the Act it was held in the aforementioned judicial pronouncements that if there was any defect in the notification, the same stood cured on account of sub-section (12) of section 62 of the Act. Section 62 of the Act does not deal with the power of taxation but only deals with the procedure whereas section 62-A of the Act deals with the power of the Government regarding imposition of tax and in exercising power conferred under section 62-A of the Act, the well defined procedure has to be followed which, in our view, is mandatory. In other words it can easily be held that whenever power of imposing tax within meaning of section 62-A is to be exercised by the State Government, the entire procedure laid down in section 62-A (1) has to be followed. If the procedure prescribed under section 62-A (1) is not followed, it cannot be held on the basis of anology of section 62(12) of the Act that defect in the notification stands cured. In view thereof, the judicial pronouncements quoted above by the learned Advocate General, Punjab, have got no application to the facts of the instant case.
9. For the reasons recorded above, writ petitions filed by the petitioners must succeed. The writ petitions are accordingly allowed and the notification Annexure P. 2 is set aside. Consequent thereto letters Annexures P. 3 and P. 4 are also quashed.
10. The respondents are directed to refund the amount of tax collected by them along with 12% interest with one month from today.