TMI Blog1964 (3) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinue to be levied " and to be applied to the same purposes ". By reason of this collocation between the concept of the levy and of application of the proceeds of the tax, the Constitution makers obviously intended the word " levy " to be understood as including the collection of the tax, for it is only when a tax is collected that any question of its application to a particular purpose would arise. It is apparent that if the word " levied " were understood in the sense which Mr. Setalvad contends, there could be no " application " of the proceeds of the tax to the same purposes as at the commencement of the Constitution. For ex concessis at that date there were no proceeds to be applied. The decision of the High Court is, therefore, correct and the appeal fails. - Civil Appeal No. 598 of 1962 - - - Dated:- 3-3-1964 - Judge(s) : P. B. GAJENDRAGADKAR., K. N. WANCHOO., K. C. DAS GUPTA., J. C. SHAH., N. RAJAGOPALA AYYANGAR JUDGMENT The judgment of the court was delivered by AYYANGAR J.-- These three appeals which are on certificates of granted by the High Courts the first by the High Court of Bombay at Nagpur and the two others by the High Court of Madhya Pradesh co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedure for the imposition of taxes and it provides : "67 (1) A committee may, at a special meeting, pass a resolution to purpose the imposition of any tax under section 66. (2) When such a resolution has been passed, the committee shall publish in accordance with rules made under this Act, 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 system of assessment to be adopted ......... (5)The State-Government, on receiving such proposals may sanction or refuse to sanction the same, or sanction them subject to such modifications as it may think fit, or return them to the committee for consideration. (6) No modification affecting the substance shall be made undse sub-section (5), unless and until the modification has been accepted by the committee at a special meeting ...... (8) A notification of the imposition of tax under this section shall be conclusive evidence that the tax has been imposed in accordance with the provisions of this Act." The Procedure for the variation of the taxes is to be found in section 688 and it reads : " 68. (1) A committee may, at a special meeting, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule VII, but the validity of the levy and collection of the terminal; tax in force, before the 1st April, 1937, was continued by section 143 of the Government of India Act, 1935, and it was by virtue of this Continance that these taxes were continued to be levied after April 1, 1937, their continuance after January 26, 1950, when after the repeal of the Government of India Act, 1935, the Constitution came into force with the same scheme of distribution of taxing power on the relevant item indentical with that under the Government of India Act, was by reason of article 277 which was practically in the same terms as section 143 of the government of India Act, 1935. The taxes imposed by the pre-Constitution notification could, therefore, be legally levied and collected even after the Constitution came into force. Subsequent to January 26, 1950, there was a notification of December 1, 1959, under which to the list of goods liable to terminal, tax imported into or exported out of the municipal area, not merely by rail, but also by road were tadded three new items--silver and silver jewellery, gold and gold jewellery, and precious stones, and these three specified items were sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of the validity of the imposition is that the same is saved by article 277, which runs : "277. Any taxes,duties,cessesorfees which, immediately before the this Constitution, were being lawfully levied by the commencement of Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, notwithstanding that those taxes, duties cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law. If learned counsel for the appellant is right in his contention that the impugned tax, which he is now seeking to sustain, was the tax which " was being lawfully levied " by the municipality before the commencement of the Constitution he would certainly be well-founded in the submission that the fact that the terminal taxes are under the distribution of taxing powers under the Constitution assigned to the Union would make no difference for the valid continuance of the levy. The question, therefore, is whether this was the tax which was being levied by the municipal authority befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n may be expanded thus : The expression " taxes, duties, cesses ", which the article 277 opens, has to be read in the context of Part XII in which occurs article occurs and so read has to be understood as referring to the class category of taxes which were levied and collected by the State, municipality, etc before the commencement of the Constitution. In other words, the reference here is to the entries in the legislative lists which permit such taxes to be levied, and so read and taken in conjunction with the circumstances that the article is one designed to prevent the dislocation of the finance of the State or other local authorities, the terms of the article would be satisfied and the legislative power to continue to levy the tax would be conferred " notwithstanding that the tax, etc., are mentioned in the Union. List ". This argument, in our opinion, proceeds on ignoring the terms of article 277. If, as is admitted, the sole object sought to be achieved by this provision for " continuance is to avoid dislocation of the finances of the State and local authorities, by depriving them, of the revenues, which they were deriving at the commencement of the Constitution it would mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is indicated by or is implicit in the use of the expression ' may' in the clause 'may be continued until provision to the contrary is made by the Federal Legislature.' This would therefore posit a limited legislative power in the Province to indicate or express a desire to continue or not to continue the levy. If in the exercise of this limited power the Province desires to discontinue the tax and effects a repeal of the relevant statute the repeal would be effective. Of course, in the absence of legislation indicating a de sire to discontinue the tax, the effect of the provision of the Constitution; would be to enable the continuance of the power to levy the tax but this does not alter the fact that the provision by its implication confers a limited legislative power to desire or not to desire the continuance of the levy subject to the overriding power of the Central Legislature to put an end to its continuance and it is on the basis of the existence of this limited legislative power that the right of the Provincial Legislature to repeal the taxation provision under the Act of 1920 could be rested. Suppose, for instance, a Provincial Legislature desires the continuance of the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd " levied prior to the Constitution. Admittedly, there was no imposition of the charge now sought to be recovered prior to the Constitution, i.e., the Act did not impose the charge by section 66 but merely enabled the Municipal Committee by appropriate procedure to impose the tax. If, of course, this power had been availed of and a charge had been imposed it would be a different matter. So long as the Municipal Committee did not pass the necessary resolutions and impose the tax there was no charge levied on the commodity, so that it could not be said that the tax " was being lawfully levied " before the commencement of the Constitution. The words " was being lawfully levied " obviously mean was actually levied " and it would not be sufficient to satisfy those words that the municipal authority could lawfully levy the tax, but had not availed itself of that power. There is another circumstance to which also reference may be made. The last portion of article 277 uses the words " continue to be levied " and to be applied to the same purposes ". By reason of this collocation between the concept of the levy and of application of the proceeds of the tax, the Constitution makers obvi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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