Cantonment Authority vs Bimalanand Goswami and Others

Raj Kishore Prasad, J.—This appeal involves the interpretation of Section 60(1) of the Cantonments Act, 1924 (Act II of 1924), hereinafter mentioned as the "Act".

The sole question of law for determination in the present appeal is : Is the tax, imposed u/s 60(1) of the Act, by the Canton, merit Board, hereinafter referred to as the "Board", constituted under Chapter III of the Act, ultra vires?

The plaintiffs-respondents brought a suit under Order 1, Rule 8 of the Cole of Civil Procedure for a declaration that the tax imposed by the Cantonment Board, of Ramgarh was ultra vires, and, therefore, the defendant-Board was not entitled to realise the tax in respect of any area notified in the Cantonment Board, and, as such, from the plaintiffs. The leraned Additional Munsif, Hazaribagh, who heard the suit, in the first instance, held that the provisions of Sections 60 to 63 had been complied with and therefore, the tax imposed by the Board was valid, and, the assessment list was properly prepared, and, the plaintiffs'' suit was barred u/s 273(3) of the Act. On these findings, he dismissed the plaintiffs'' suit.

An appeal was carried by the plaintiffs from the aforesaid dsecision to the appellate Court, which was heard by the Second Additional Subordinate Judge, Hazaribagh, who disagreed with the findings of the first Court. He held that the provisions of Sections 60 to 63 had not been properly followed, and, as such, the imposition of the tax by the Board was illegal, and, therefore, it had no right to realise it from the plaintiffs, and, other inhabitants within the local limits of the Board. He also held that Section 273 did not apply to the facts of the case, and as such, the suit was not barred u/s 273(3) of the Act as held by the learned Munsif. On these findings, he decreed the suit of the plaintiffs-respondents,

The present second appeal has been presented from the above decision by the defendants-Cantonment Authority of Ramgarh.

The learned Advocate General, who appeared in support of the appeal, argued that the interpretation put by the Court of appeal below on Sections 60 to 63 of the Act was wrong, and, therefore, it had been wrongly held that Sections 60 to 63 of the Act had n.ot been complied with, and accordingly, on this erroneous interpretation, the plaintiff''s'' suit had wrongly been decreed.

Mr. G.C. Mukherjee, who appeared for the plaintiffs-respondents, supported the decision of the Court of appeal below and contended that it had taken the correct view of the law and had rightly construed Sections 60 to 63 of the Act, and, as such, the plaintiffs'' suit had been rightly decreed.

In order to decide the correctness or otherwise of the respective submissions of the learned Counsel for the parties, it is necessary to read, at this very stage, Sections 60 to 63 of the Act. Sections 60 to 63 are in these terms :

"60(1) The Board may, with the previous sanction of the Central Government, impose in any cantonment any tax which under any enactment for the time being in force, may -be imposed in any municipality in the State wherein such cantonment is situated :

(2) Any tax imposed under this section shall take effect from the date of its notification in the Official Gazette.

"(61) When a resolution has been passed by the Board proposing to impose a tax u/s 60, the Board shall in the manner prescribed in Section 255 publish a notice specifying-

(a) the tax which it is proposed to impose;

(b) the persons or classes of persons to be made liable and the description of the property or other taxable thing or circumstance in respect of which they are to be made habile; and

(c) the rate at which the tax is to be levied.

"62(1) Any inhabitant of the cantonment may, within thirty days from the publication of the notice u/s 61, submit tc the Board an objection in writing to all or any of the proposals contained therein and the Board shall take any objection into consideration and pass orders thereon by special resolution.

(2) if the Board decides to modify its proposals or any of them, it shall republish the modified proposals in the manner provided by Section 61 indicating that the proposals are in modification of the proposals previously published; and the provisions of Sub-section (1) of this section shall apply to such modified proposals.

(3) When the Board has finally settled the proposals, it shall submit them along with the objections, if any, made in connection therewith to the Central Government through the Officer Commanding-in-Chief, the Command.

"63 The Central Government may authorise the Board to impose the tax either in the original form or, if any objection has been submitted, in that form or any such modified form as it thinks fit."

For a correct interpretation of the above sections of the Act, it is necessary to know briefly the scheme of the Act. Chapter II deals with definition and delimitation of cantonments. Section 3 empowers the Central Government, by notification in the Official Gazette, to declare any place or places to be a cantonment for the purposes of the Act, if the conditions laid down In Section 3(1) are complied with. Chapter III deals with constitution of Cantonment Boards. Section 10 provides that for every cantonment there shall be a Cantonment Board and an Executive Officer. Section 12(1) provides for the appointment of Executive Officer of every cantonment by the Central Government, or by such person as the Central Government may authorise in this behalf, in accordance with the procedure laid down in Section 12. Section 13 deals with constitution of Cantonment Boards, and, Sub-section (7) of Section 13 provides that every election or nomination of a member of a Board and every vacancy in the membership thereof shall be notified by the Central Government in the official gazette. Section 14 gives power to the Central Government to vary constitution of Boards in special circumstances.

The cantonment Board of Ramgarh was constituted under Chapter in of the Act. On reading the provisions of Chapters II and III of the Act, there is no doubt that such a Board constituted under the Act is Under the control and supervision of the Central Government, and, its orders, directions or notifications are to be published in the official Gazette of the Central Government.

Chapter V deals with imposition of taxation. Section 60(1) deals with the general power of taxation. It provides that the Board may, with the previous sanction of the Central Government, impose in any cantonment any tax which under any enactment for the time being in force, may be imposed in any municipality in the State wherein such cantonment is situated. But how the Board is to impose such tax and the procedure for doing so is provided in Sections 61 to 63. Section 61 provides for framing of preliminary proposals by the Board. It provides that when a resolution has been passed by the Board proposing to impose a tax u/s 60, the Board shall, in the manner prescribed in Section 255, publish a notice specifying the tax which it is proposed to impose, and, the persons or classes of persons to be made liable and the description of the property or other taxable thing or circumstance in respect of which they are to be made liable; and, the rate at which the tax is to be levied. After this notification of the proposal of the Board to levy the tax, Section 62 provides for objections by any inhabitant of the cantonment with thirty days from the publication of the notice u/s 61 to the Board. Section 62(1) provides that the Board shall take such objection, if any, submitted to it, into consideration and pass orders thereon by special resolution. Section 62(2) provides that if the Board decides to modify its proposals or any of them, it shall republish the modified proposals in the manner provided by Section 61 indicating that the proposals are in modification of the proposals previously published; and the provisions of Sub-section (1) of Section 62 shall apply to such modified proposals. Section 62(3) provides that when the Board has finally settled the proposals, it shall submit them along with the objections, if any, made in connection therewith to the Central Government through the officer Commanding-in-Chief, the Command. Section 63 is important. It provides that the Central Government may authorise the Board to impose the tax either in the original form, or, if any objection has been submitted, in that form or any such modified form as it thinks fit. After the Central Government has authorised the imposition of the tax by the Board as provided and in the manner indicated in Section 63, it is then that this authorisation of imposition of the tax by the Central Government to the Board has to be notified in the official Gazette, and, thereafter, Section 60(2) provides that any tax imposed under this section shall take effect from the date of its notification in the ofiicial Gazette. It is only after compliance of Sections 61 to 63 that Section 60(1) comes into play, and, then and then alone the Board may impose the tax in any cantonment.

The authorisation of the imposition of the tax by the Board given by the central Govern-ment u/s 63 is the previous sanction of the Central Government envisaged by Section 60(1) of the Act.

On reading Sections 60 to 63, therefore, it is plain that the previous sanction of the Central Government has to be accorded to the Board in accordance with the provisions of Sections 61 to 63, and, when the previous sanction of the Central Government has been so accorded u/s 63 of the Act, then only the Board can impose the tax.

The contention of the respondents that there should have been a notification of the Central Government prior to the proposal by the Board to impose the tax is not borne out by Sections 60 to 63 of the Act. Section 61, in clear terms provides lor training of preliminary proposals and under this section the Board has to frame its proposals by a resolution, and for framing proposals, the Board has not to consult the Central Government, or to obtain its previous sanction, but the Board itself has to pass a resolution proposing to impose a tax by virtue of the general powers vested in the Board u/s 60(1) of the Act.

It is only after the proposal has been adopted by the Board u/s 61 of the Act and after it has been notified, objections are invited u/s 62 and disposed of and, when the Board has finally settled the proposals, that they are to be submitted to the Central Government. and, then u/s 63, it is open to the Central Government to authorise the Board to impose the tax either in the original form or in a modified form or even not to authorise it at all. The order of the Central Government authorising the Board to impose the tax u/s 63 of the Act is, therefore, the previous sanction of the Central Government which is contemplated by Section 60(1) of the Act.

On the true construction of Section 60(1), it is plain that it does not postulate the obtaining by the Board of the previous sanction of the Central Government before the Board frames its preliminary proposals; on the other hand, it, in clear terms, envisages the obtaining of the previous sanction of the Central Government by the Board only before the Board actually imposes the tax in any Cantonment.

In my judgment, therefore, the contention of the respondents that the previous sanction of the Central Government should have been obtained and notified prior to the framing of proposals to impose the tax by the Board, as required u/s 60(1) of the Act, is not valid and correct, as it is against the true meaing of Section 60(1) of the Act.

On this true construction of Sections 60 to 63 of the Act, let us now examine the position in the present case.

The learned Additional Subordinate Judge has mentioned in his judgment that it was not disputed here that a notice was published as provided by Section 61 u/s 255 of the Act. The learned Subordinate Judge has further observed that :

"It is not correct to say that sanction of the Central Government has to be obtained twice, once for passing a resolution to impose tax and then again at the time of imposing the tax. To me it appears that when a resolution has been passed by the Board to impose a tax all the provisions of Sections 61 and 62 have to be followed and then the Board has to obtain a sanction of the Central Government to impose the tax. Section 63 then comes in and the Central Government may authorise the Board to impose the tax."

After having correctly come to that conclusion, it has observed that there was no document on the record to show that the sanction of the Central Government was obtained to impose the tax.

Referring to the notification of the Central Government of the Defence Department dated the 16th August 1947 (Ext. A (I)), which was relied upon by the defendant Board for the previous sanction of the Central Government accorded u/s 63 as contemplated by Section 60(1) of the Act, the learned Subordinate Judge has observed that :

"No doubt, it is mentioned therein that the Ramgarh Cantonment Board with the previous sanction of the Central Government hereby imposes a house tax, but, that in my opinion, is in no way a compliance with the provisions of Section 60. There ought to have been something on the record to show that the previous sanction of the Central Government was obtained before the tax was imposed."

He, therefore, found that as provided u/s 63, the Central Government had not authorised the Board to impose the tax.

It is necessary here to reproduce the notification, Ext. A(1), relied upon by the defendant-Board as being the previous sanction of the Central Government as contemplated by Section 60(1) of the Act. Ext. A(1) is in the following terms :

DEFENCE DEPARTMENT NOTIFICATION CANTONMENT -- TAXATION.

New Delhi, the I6th August 1947.

No. 2146. -- In exercise of the powers conferred by Section 60 of the Cantonment Act. 1924 (II of 1924), the Cantonment Board, Ramgarh, with the previous sanction of the Central Government, hereby imposes a house tax leviable upon the owners, at the rate of 7,1/2 percent per annum on the annual value of all buildings and lands situated within the limits of the Ramgarh Cantonment.

Provided that the tax shall not be leviable on

(i) any hut, building or land the annual letting value of which does not exceed Rs. 10/- per annum.

(ii) any building used exclusively as a place ot public worship;

(iii) school buildings and dharanishalas.

(No. 123/26/G/C&L/47) Sd. G. S. Bhaija, Secy.''"

It should be remembered that whatever notification the Central Government is to publish, it has to be published in the official Gazette of the Central Government under the Act itself; and, the Gazette of India is the official Gazette of the Central Government and of its departments. This notification was in accordance with Section 60(2) conveying the decision of the Central Government to authorise the Board to impose the tax as required by Section 63 of the Act. The worcls "with the previous sanction of the Central Government" mentioned in this notification clearly indicate that, as required by Section 63 of the Act, the Central Government has considered the final proposals of the Board as contemplated by Section 62(3) of the Act, and, after a consideration of the finally settled proposals and the objections thereto the Central Government has thought fit to authorise the Board to impose the tax as contemplated. The decision of the Central Government taken u/s 63 of the Act is the previous sanction of the Central Government which has to be notified u/s 60(2) of the Act and then only the tax can take effect from the date of the notification.

In my judgment, therefore, on a correct reading of the above notification, there is no doubt whatsoever that this notification is the notification conveying the previous sanction of the Central Government accorded u/s 63 to the Board to impose the tax as required by Section 60(1) of the Act. This notification was evidence of the previous sanction of the Central Government, and, in face of it, it was not necessary for the Board to produce the original order of the Central Government passed u/s 63 of the Act. On this true construction of the above notification, therefore, it is manifest that the Board-defendant was perfectly wtithin its powers to impose the impugned tax on the plaintiffs and the other inhabitants of the Cantonment. In my. opinion, therefore, the Court of appeal below has taken a wrong view of the law, and, his erroneous construction of Section 60(1) of the Act has led to the wrong decision.

The two cases of the Calcutta High Court, namely, Ashanullah Khan Bahadur v. Trilochan Bagchi ILR 13 Cal 197 (A) and, Superintendent and Remembrancer of Legal Affairs Vs. Moazzem Hossain, , and, the decision of the Judicial Committee of the Privy Council in Gokulchand Dwarkadas Morarka v. The King 75 Ind App 30 : AIR 1943 PC 82) (C), strongly replied upon by Mr. Mukherjee, have absolutely no application here, because on the face of the notification, Ext. A(1), it is correct (sic) to say that there is no document on the record to show that the previous sanction o.f the Central Government u/s 63 of the Act was Recorded to and obtained by the Board, as is contemplated by Section 60(1) of the Act, before imposing the tax in question.

For the reasons given above, it follows, therefore, that the learned Munsif has taken the correct view of the law, and, the learned Subor- dinate Judge has put a wrong construction on Section 60(1) of the Act.

In the result, the appeal succeeds, the judgment and decree of the Court of appeal below are set aside, and, those of the trial Court are restored, and, the plaintiffs'' suit dismissed with costs throughout.

Ramaswami , C.J.

I agree.