Hariprasad vs Gram Panchayat Khirkiya

Bhutt, J.—This petition under Art. 226 of the Constitution is directed against the imposition of a tax on the petitioners by the Gram Panchayat, Khirkiya.

Petitioners occupy structures of their own in Khirkiya, in which they carry on their business or profession. On 9th September 1953 the Gram Panchayat of the area prepared a statement purporting to be a list of defaulters in the payment of tax of the daily market, showing the petitioners liable to pay amounts of tax, of a total of Rs. 9,011-4-0 for the year 1950-51, 1951-52 and 1952-1953. The demand was purported to be made u/s 42 (1) (b) of the C.P. and Berar Panchayat Act, 1946 (1 of 1947), hereinafter called the Act, and the rate at which the tax was charged ranged from over 2 annas to 10 annas per day per head. On the basis of the list, the Revenue Officers commenced recovery proceedings against the petitioners u/s 46 of the Act, Thereupon the petitioners filed an appeal before the Deputy Commissioner, Hosbangabad, which was heard and decided by the Sub-Divisional Officer, Harda, who dismissed the appeal. The petitioners have accordingly moved this Court for intervention on the ground that the levy of the tax Is invalid.

The history of the tax begins from 1-9-1948 when the Gram Panchayat passed a resolution for levy thereof on persons using sites on land under its control. The rate of tax was as below:�

(1) Permanent�Eight annas per month for each foot of land on persons who have raised sheds on the sites.

(2) Temporary�One anna per day or one rupee per month on persons who remove the sheds in the nights.

On 20th September 1048 the Gram Panchayat passed a revised resolution to the effect that from persons who temporarily keep goods on lands belonging to the Panchayat, the tax should be levied immediately with effect from 22nd September 1948 at the rate of one rupee per month according to the previous resolution, and from persons who occupy more than 4 feet upto 8 feet of land, the tax should be levied at the rate of 2 annas per day or Rs. 2 per month.

After the resolution was passed the Sarpanch of the Gram Panchayat received a letter dated 24th November 1948 from the Chief Executive Officer of the Janapada Sabha, Hardi, asking him to submit a list of the following taxes-included in the items on the credit side of the budget, namely:�

(1) House tax,

(2) Conservancy tax.

(3) Shop (shed) tax.

On 6th March 1949 the Gram Panchayat passed a resolution approving of the tax list that was prepared and directed that two copies of the list be hung outside of the office for the information of general public. On 1st May 1949 it passed a resolution that its needs could not be met only from the taxes u/s 41 of the Act and it should be authorised to levy at least one tax u/s 42 on sheds raised within its area. In its meeting held on 2nd December 1949 the Gram Panchayat passed the budget for the year 1949-56 from 1st January 1950 to 31st March, 1950, in which the income was shown as below:�

Table missing in file no. MP560171

The budget was approved of by the Janapada Sabha, Harda, in its meeting held on 2nd December 1949. A meeting of the Gram Panchayat was subsequently convened on 21st December 1949 to consider the question of the tax list but it was suspended for want of quorum However, one Panch and the Surpanch who alone were present, directed the list to be hung in the office as it was previously proclaimed to the public that the list would be hung on that date.

It appears that on 2nd January 1950 the petitioners put in an objection addressed to the Sarpanch of the Gram Panchayat, challenging the levy of the tax. This objection was dismissed by the Sarpanch on 9th January 1950 on the short ground that a joint application was not competent. The Sub-Divisional Officer, who heard the petitioner''s appeal, held that as they knew of the imposition of the tax as early as 2nd January 1950, their appeal was barred by limitation.

The Gram Panchayat has purported to act under Sec. 42 (1) (b) of the Act, which is reproduced below:�

42 (1) With the approval of the District Council (now Janapada Sabha), and subject to rules made under this Act, a Gram Panchayat may, by a majority of two thirds of its members, impose any of the following taxes, tolls, fees or rates:�

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(b) fees on persons exposing goods for sale in any market or place belonging to or under the control of the Gram Panchayat or for the use of any building or structure therein;

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The learned counsel appearing for the Gram Panchayat explained that the tax in question is for the sites covered by the petitioners'' structures, and is levied at the rate prescribed in the second part of the resolution passed in its meeting of 20th September 1948.

Sec. 49 (1) of the Act empowers the District Council (now Janapada Sabha) to require the Gram Panchayat to take steps, within a period of 6 months of a date to be specified in the order, to increase its income to such extent as it considers necessary, and provides that if the Gram Panchayat fails to comply with the order, it may, by a further order in writing, require it to levy or increase any tax, toll, fee or rate specified in Sec. 42, subject to such maximum as may be prescribed, The maximum limit of the tax with which we are concerned is prescribed in clause XXXII of the rules framed u/s 49 (1) of the Act, under the heading "According to space". The enquiry that was made by the Janapada Sabha in its letter of 24th November 1948, however, was only in respect of the taxes that were included in the budget that was then submitted. Probably the year of the budget was 1948-49 as the budget of the year 1949-50 was submitted as late as 2nd December 1949. That communication has, therefore, no connection with the tax in question which is said to have been included for the first time in the budget of 1949-50 commencing from 1st January 1950. It is, therefore, evident that no action as contemplated by Section 4) (1) of the Act was taken.

The procedure for the heavy of a tax u/s 42 (1) of the Act on the imitative of the Gram Panchayat is prescribed in clause XXVII of the rules. It contemplates first a resolution of the Gram Panchayat to impose a tax, and then a proclamation of the purport of the resolution for the information of the persons affected by such proposal, inviting their objections before a date to be proclaimed by beat of drum or by written notices affixed at some conspicuous place in the Gram Panchayat area or by both. Within a fortnight from the proclaimed date, the Gram Panchayat is required to reconsider the resolution along with the objections, if any. If it decides to impose the tax, it has to forward the proposal together with the objections if any, to the Janapada Sabha for approval (Rule 1). If the Janapada Sabha materially modifies the proposal, the purport of the modified proposal has again to be proclaimed for objections in the manner specified above (Rule 2), The Janapada authority if it approves of the proposal, is required to specify a date from which the tax shall come into force (Rule 3). It is only after this procedure is gone into that the levy of the tax becomes affective.

After the tax is lawfully imposed as above, the Gram Panchayat has to prepare every year in the first fortnight of the month of October a Schedule of rates or list of assesses with actual amount of assessment, as the case may be. The Schedule of rates fixed and assessment made has then to be publicly announced in the Gram Panchayat area and the assessment list shown to any person affected by it who desires to see it (Rule 4). The Gram Panchayat has to hear any objection that may be put forward against the assessment within 15 days from the date of the announcement of the assessment (Rule 5). After the objections are disposed of, the assessment list has, if necessary, to be amended and signed by the Sarpanch and two Panchas before the 15th November and a copy of the list with amendments, if any, has then to be republished locally (Rule 6.). Any person dissatisfied with the assessment is empowered to appeal to the Deputy Commissioner with in thirty days from the date of the republication of the list of assessment (Rule 7). The assessment has to be revised in accordance with the decision of the appeal, and the revised assessment has to be publicly announced by beat of drum in the Gram Panchayat area and published by affixing a copy of the assessment list on the notice board of the Gram Panchayat not later than the 15th February preceding the year for which the assessment is made (Rule 8). Rule 9 prescribes that the tolls and fees under clauses (a) and (b) of sub-sec. (1) of Sec. 42 shall be recovered as soon as goods are brought in the Gram Panchayat area. We are concerned with clause (b) as already stated.

It is evident from the facts of the case detailed above that the procedure prescribed for the imposition of the tax has not been followed by the Gram Panchayat. The resolution of 1st September 1948 was revised in its meeting held on 20th September 1948. It is, therefore, the latter resolution that is material for purposes of the instant case. There is nothing to show that the proposal contained in it was proclaimed for the information of the persons affected thereby and their objections invited before a specified date. There is also nothing to show that the proposal was forwarded to the Janapada Sabha for its approval. It is evident from the rules that the approval of the Janapada Sabha is necessary to entitle the Gram Panchayat to levy a tax, toll, fee or rate under Sec. 42 (1) of the Act. The rules further enjoin on the Janapada Sabha to fix a date from which the tax is to be effective. Without this approval and the fixation of the date, therefore, no subsequent action of the Gram Panchayat or the Janapada Sabha can validate the imposition of the tax. The approval or the Janapada Sahba to the budget submitted to it by the Gram Panchayat for the year 1949-50 cannot be construed as its approval of the tax. The budget contains no particular of the tax, and, therefore, the attention of the Janapada Sabha cannot be said to have been directed to the consideration of the particulars on which the validity of the tax depended. Its approval of the budget in these circumstances, only signified an assent to the proposed expenditure on the basis of the expected income, and not to the validity of the tax from which the income to meet the expenditure was expected. In Chairman, Dhanbad Municipality Vs. Janeswar Bhakat and Others, it was held that where the legislature has empowered an authority to impose taxes after doing a certain act it cannot impose the taxes unless that act is done and the authority must show, if challenged, that the act was done. See also Azimulla vs. Chairman-Municipal Board 1955 A.L.J. 773. In the instant case the validity of the tax is not established and, therefore, it cannot also be realised.

The result is that the petition is allowed and the proceedings for realisation of the tax from the petitioners are quashed. In the circumstances of the case, however, there shall be no order as to costs. The outstanding amount of the security shall be refunded to the petitioners.