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Judgment
C.S. Dharmadhikari, J.—Petitioner Manganese Ore (India) Limited has challenged in this petition the bill of demand issued by Gram Panchayat, Khairi dated 21st April 1965 and the order passed by the Zilla Parishad dated 27th November 1968. By the bill of demand dated 21st April 1965, Gram Panchayat, Khairi, has demanded an amount of Rs. 882 from the petitioner Company as a tax on machinery for the years 1963-64 and 1964-65. It is this imposition and demand of tax which is challenged in this writ petition.
Shri Natu, the learned counsel for the petitioner, contended before us that under the Maharashtra Village Panchayat Taxes and Fees Rules, a Panchayat is entitled to levy a tax on the trade or calling other than an agriculture which is carried on with the help of machinery run by steam, oil, electric power or manual labour etc. The tax can be imposed not below the minimum and not exceeding the maximum rate specified in the Schedule annexed to the Rules. Schedule to rule 66 lays down the minimum and maximum rates of tax. The Schedule reads as under :
"SCHEDULE
(Rule (56)
(1)
Trade or calling (other than agriculture) carried on by machinery run by steam or oil.
Minimum
Maximum
(i)
Machinery of 5 H.P. or less.
Rs. 5 per annum
Rs. 8 per annum
(ii)
Machinery of 15 H.P. or less but of more than 5 H.P.
Rs. 10 per annum
Rs. 15 per annum
(iii)
Machinery of more than 15 H.P.
Rs. 20 per annum
Rs. 20 per annum
(2)
Trade or calling (other than Agriculture) carried on by machinery run by electric power-
(i)
Machinery of 5 H.P. or less.
Rs. 10 per annum
Rs.16 per annum
(ii)
Machinery of 15 H.P. or less but of more than 5 H.P
Rs. 20 per annum
Rs. 30 per annum
(iii)
Machinery of more than 15 H.P.
Rs. 40 per annum
Rs. 50 per annum
(3)
Trade or calling (other than agriculture) carried on by machinery run by manual labour-
(i)
Trade or calling employing not more than five persons.
Rs. 3 per annum
Rs. 5 per annum
(ii)
Trade or calling employing more tha five persons
Rs. 6 per annum
Rs. 10 per annum
If this schedule is read with rule 66 itself, it is clear that a Panchayat can levy a tax on a trade or calling which is carried on with the help of machinery run by steam, oil, electric power etc. The tax is on the trade or calling and not on the machinery as such. The Schedule provides the minimum and maximum rates of tax which could be levied on such a trade or calling. If the trade or calling is carried on by machinery runs by electric power and the machinery is of more than 15 H. P., then the maximum rate permissible is Rs. 50 per annum.
According to the learned counsel for the petitioner, the petitioner is liable to pay this maximum amount of Rs. 50 per annum and the petitioner is prepared to pay the said amount. However, it is contended by the learned counsel that it is not open to the Panchayat to levy and recover the tax on machines under the garb of levying a tax on trade or calling. He further contended that in substance this is what has been done by the village Panchayat Khairi.
No appearance has been put up before us on behalf of the village Panchayat to support the levy of the tax or its recovery. Therefore, we had not the advantage of hearing any argument on its behalf.
In our opinion, there is much substance in the contentions raised by Shri Natu. A tax can be levied under rule 56 on a trade or calling and not on machines as such. When a trade or calling is carried on by machinery run by electric power, then the maximum rate specified in the Schedule is Rs. 50 per annum. From the bill produced before us as well as from the contention of the Zilla Parishad it seems that the Panchayat is recovering tax on each machine owned by the petitioner Company. In our opinion, this is obviously not permissible. The levy of tax contemplated by rule 56 read with the Schedule is on the trade and calling and not on the machinery as such.
The power of the State to levy tax is derived from entry No. 60 of List II in the Seventh Schedule of the Constitution. The entry speaks of taxes on professions, trades, callings and employments. The State Legislature may by law confer same authority on a local authority, including the village Panchayat. u/s 124 of the Bombay Village Panchayats Act, 1958, the said power has been conferred on the village Panchayat. The relevant provisions of section 124 (1) (vi) read as under:
"124 (1) (vi) Subject to the provisions of Article 276 of the Constitution, a tax on the following professions, trades, callings or employments, that is to say:-
(a) shop-keeping and hotel-keeping;
(b) any trade or calling (other than agriculture) which is carried on with the help of machinery run by steam, oil or electric power or by manual labour;
(c) the profession or calling of brokers in cattle markets."
Under rule 66 of the Maharashtra Village Panchayats Taxes and Fees Rules, 1966, a procedure has been prescribed for levy of such a tax on trade or calling. Then the schedule provides minimum and maximum rates of such tax. Therefore, the tax is on a trade or calling which is carried on by machinery run by steam, oil or electric power. The words used, namely, "carried on by machinery run by electric power" are descriptive of the trade or calling and it is open for the village Panchayat to levy a tax on a trade or calling which is carried on by machinery run by electric power. If a trade or calling is carried out by machinery of more than 15 H. P., then the maximum tax payable is Rs. 50 per annum. Therefore, the tax is on the trade or calling and not on machinery. The word used is "machinery", which, according to the Webster New Twentieth Century dictionary means "machines collectively". Chambers''s Twentieth Century dictionary defines the word "machinery" meaning "machines in general". If this is so, in our opinion, it is not open to a village Panchayat to tax the machines as such under the garb of levying tax on trade or calling. This aspect of the matter was considered by the Supreme Court in New Manek Chowk Spinning and Weaving Mills Co. Ltd. and Others Vs. Municipal Corporation of The City of Ahmedabad and Others, . In that case the petitioner Textile Mills challenged the validity of the assessment book for the year 1966-67 relating to Special Property section prepared and published by the-Municipal Corporation of City of Ahmedabad. A contention was raised in the said case that the State Legislature has power to levy a tax only on land and buildings and the same could not be levied on the machinery contained in or situated on the buildings even though machinery was there for the use of the buildings for a particular purpose. Therefore, the provisions of rule 7 (2) of the Taxation Rules under Bombay Act 59 of 1949 were challenged by the petitioner on the ground that they were beyond the legislative competence of the State. While dealing with this contention, in para. 26 of the judgment, the Supreme Court observed as under:
''''The problem in our case is not quite the same. The hypothetical tenant would certainly take into consideration the machinery in the building if he was going to rent it for the purpose of running a textile factory. But if the State Legislature had power to levy a tax only on land and buildings, we do not see how the same could be levied on machinery contained in or situate on the building even though the machinery was there for the use of the building for a particular purpose "
In our opinion, these observations will aptly apply to the present case also. The village Panchayat had power to levy a tax on the trade or calling but under the garb of levying a tax on a trade or calling the village Panchayat cannot levy a tax on the machinery which is used by the petitioner Company for the purposes of carrying on its trade or calling. In this view of the matter, in our opinion the bill of demand issued by the Gram Panchayat Khairi dated 21st April 1965 demanding the tax on machines is obviously without jurisdiction.
In the result, therefore, the petition is allowed. The bill of demand dated 21st April 1965 incorporated in Annexure-B-1 demanding an amount of Rs. 898 from the petitioner is quashed being without jurisdiction. The order passed by the Block Development Officer dated 1-6-1966, Annexure-B, and the order passed by the Administrative Officer, Zilla Parishad, Nagpur dated 27-11-1968, Annexure-G, are also quashed. The village Panchayat, Khairi is only entitled to levy and recover the tax on trade and calling of the petitioner at the maximum rate prescribed by the Schedule to rule 66, that is, Rs. 50 per annum. The balance of the amount remaining with the village Panchayat after recovery of the tax at the said maximum rate, if any, will be refunded to the petitioner. However, in the circumstances of the case there will be no order as to costs.