1976 (12) TMI 175
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....18th March, 1976, to the effect that the Panchayat Samiti shall impose a tax on the sale of country liquor by the licensees operating in the area of Panchayat Samiti, Tanda. Even though no notice as required under section 67(2) of the Punjab Panchayat Samitis and Zila Parishads Act, 1961 (hereinafter called the Act), had been given to the petitioners, yet they by way of abundant caution lodged objections to the proposal of the Samiti to impose the tax. A copy of the objections raised by the petitioner-firm has been attached to the petition as annexure P. 2 and it has been stated therein that, since the price of the country liquor has been fixed by the State Government, no tax can be imposed by the Samiti unless and until the Government re-fixes the sale price of the bottled liquor. It is then alleged that the Samiti without considering the objections raised in a legal and judicious manner rejected the same. The State Government issued a notification on 3rd June, 1976, whereby it accepted the proposal of the Panchayat Samiti. A copy of this notification is attached as annexure P. 4, which reads as under: "Punjab Government Gazette (Extraordinary), 3rd June, 1976 JYST 13, 1898 Saka).....
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....th such powers and authority as may be necessary to enable them to function as units of self-government. To enable the State to carry out this laudable object, entry No. 5 has been included in List II of the Seventh Schedule to the Constitution, so that the State Legislature may in exercise of its jurisdiction under article 246 of the Constitution pass appropriate laws. This entry reads as under: "Local Government, that is to say, the constitution and powers of municipal corporations, improvement trusts, district boards, mining settlement authorities and other local authorities for the purpose of local selfgovernment or village administration." It is no doubt true that the function of the Lists is only to demarcate legislative field between the Parliament and the States instead of conferring any power on them, but these entries have to be interpreted in their plain, natural and grammatical meaning. They have to be read in their fullest and widest amplitude so as to extend their scope to all ancillary and subsidiary matters which can be reasonably and fairly comprehended in them. There is some authority for the proposition that taxation is to be considered as a distinct matter for....
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....ambit of such a law. It may be that the State Legislature in its wisdom does not choose to bestow full legislative powers on a unit of local self-government and makes its actions amenable to the overall supervision of the State Government, but where sufficient guidelines are given in an Act itself about the extent of powers to be exercised by a unit of the local self-Government and the control vested in the executive authority of the Government is hedged in by proper safeguards, the law cannot be declared as invalid simply because the State Government has also been introduced in the picture. In order to see whether the State Legislature has laid down proper guidelines for the conduct of the Samitis' action, the provisions of the Act deserve to be examined in some detail. Section 5 lays down that a Panchayat Samiti is to consist of primary members to be elected in the manner prescribed and co-opted members who are elected by a process of indirect election contained in section 16. Section 26 lays down that the decision of a Samiti will be made by a majority of votes of the members present and volting. Section 26 lays down that the minutes of each meeting of a Panchayat Samiti shall ....
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....ion 65, the Government may empower any Panchayat Samiti to impose without such permission any tax referred to in that section subject to such limitations as it may direct. 67.. (1) A Panchayat Samiti may at a special meeting pass a resolution to propose the imposition of any tax under section 65. (2) When a resolution referred to in sub-section (1) has been passed, the Panchayat Samiti shall publish a notice defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed and the manner of assessment to be adopted. (3) Any person likely to be affected by the proposed tax, and objecting to the same, may, within thirty days from the publication of the notice, send his objection in writing to the Panchayat Samiti, and the Samiti shall at a special meeting take his objection into consideration. (4) If no objection is received within the said period of thirty days, or the objection received is considered to be unacceptable, the Panchayat Samiti shall- (a) where the proposed tax is a tax in respect of which the Government has empowered the Panchayat Samiti under section 66 to impose it without the permission of the Zila Paris....
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....e alone, a superior authority, namely, the Government, has been vested with the power to have the final say in the matter. In the very nature of things, a Panchayat Samiti cannot initiate and successfully adopt measures of tax which may be regarded as unreasonable because a Zila Parishad which has more than one Samiti under its control exercises a check. The Government comes into the picture only when the Zila Parishad refuses to grant permission to a Panchayat Samiti to impose a particular tax. In such a situation, it is not necessary for the State Legislature to quantify the maximum or the minimum limit of a tax to be imposed by a Panchayat Samiti in the Act itself. Nor can it be said with any justification that the legislature by introducing the State Government in the picture in section 66 of the Act has conferred any authority for arbitrary powers on it. The measure regarding the imposition of a tax has to emanate from the Panchayat Samiti itself. The exercise of this power by the Panchayat Samiti is subject to the general direction and the control of the Government which implies that only such taxes would be allowed to be levied as are reasonable and proper and not unduly bur....
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....e the argument based on section 6 of the Punjab General Sales Tax Act, 1948, and entry No. 37 appearing in Schedule B of that Act. Section 6 of the Punjab General Sales Tax Act, 1948, lays down that no tax shall be payable on the sale of goods specified in, the first column of Schedule B subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof and no dealer shall charge sales tax on the sale of goods which are declared tax-free from time to time under this section. Entry No. 37, appearing in Schedule B of the Punjab General Sales Tax Act, 1948, reads as under: "37. All goods except Indian-made foreign liquor on which duty is or may be levied under the Punjab Excise Act, 1914, or the Opium Act, 1878." The submission made is that since country liquor is a tax-free item under section 6 of the Punjab General Sales Tax Act, the State Legislature has made a declaration that it shall be incumbent for the State itself to charge any tax on the sale of country liquor and since section 65 of the Act empowers a Panchayat Samiti to impose only those taxes which the State has the power to impose under the Constitution of India, it should....