Mukesh Prasad vs Ramgarh Cantonment Board and Others

M.Y. Eqbal, J.—The question raised in this writ application is whether the Cantonment Board is entitled to levy entry tax on the motor vehicles and consequently whether the respondent-State is justified in issuing order directing the authority of Cantonment Board not to realise entry tax from the goods vehicles entered in the Cantonment Board.

The respondent No. 1 Ramgarh Cantonment Board published a notice in the newspaper inviting tender for collection of vehicles tax in Ramgarh Cantonment. Pursuant to that notice many persons including the petitioner submitted their tender and deposited the earnest money of Rs. 25,000/- The petitioner being the highest bidder was directed to realise the vehicles tax @ Rs. 10/-from each goods vehicle for the period of six months commencing from 12th March, 2001. An agreement to that effect was executed by and between the petitioner and the Cantonment Board. However, the respondent No. 2, Cantonment Executive Officer, Ramgarh Cantt. issued an office order dated 11.3.2001 restraining the petitioner from collecting tax from the vehicles in view of the order purported to have been passed by the Deputy Commissioner, Hazaribagh.

A counter affidavit has been filed by the Cantonment Board stating, inter alia, that the Cantonment Board is empowered under the Cantonment Act to realise or impose tax on the vehicle passes through the Cantonment Area. It is stated that in exercise of power the Board invited tender and contract was given to the petitioner, who was the highest bidder for the collection of tax from the goods vehicles entering into the Cantonment Area. It is stated that the impugned letter was issued by the Board at the behest of respondent No. 4, Deputy Commissioner. Hazaribagh, who directed the Board to stay realisation of tax. The stand of the Board is that it has followed the procedure prescribed u/s 60 of the Act and approval of the Central Government has already been taken and notification has been issued in the gazette.

In the counter affidavit filed by the respondent No. 4. Deputy Commissioner, Hazaribagh. it is stated that when the answering respondent knew about the decision taken by the Cantonment Board for collection of toll, he issued a letter to the Board to keep the contract in abeyance till dispute is resolved by the Chief Secretary. It is stated that the Cantonment Board has no power to collect tax from the vehicle passes through the area of Cantonment Area.

Before appreciating the submissions made by the learned counsel appearing for the parties. I would like to refer some of the relevant provisions of the Cantonment Act. 1924. Section 60 empowers the Cantonment Board to impose any tax in the Cantonment Area which may be imposed by the Municipality under any enactment for the time being in force. Section 60 reads as under :--

"60. General power of taxation.--(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, or where any later date is specified on this behalf in the notification from such later date."

Section 61 provides that after the resolution passed by the Board imposing tax u/s 60 of the Act, the Board shall publish a notice specifying the details of the tax which is imposed and the person who is liable to pay tax and also the property in respect of which tax would be payable. Section 62 of the Act provides that the Board shall entertain objection from any inhabitant of the cantonment and to pass orders by special resolution. Section 62 of the Act reads as under :--

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

(2) Unless the Board decides to abandon its proposals contained in the notice published u/s 61, shall submit to the Central Government through the Officer Commanding-in-Chief, the command, all such proposals alongwith the objections, if any, received in connection therewith together with its opinion thereon and any modifications proposed in accordance with such opinion and the notice published under the said section."

As noticed above. Section 60 empowers the Cantonment Board to impose tax in the goods vehicle passes through the Cantonment Area. But, any imposition of the tax shall take effect from the date of its publication in the official gazette. The respondent-Cantonment Board has annexed a copy of the notification published in the Gazette of India on 16.12.2000 as Annexure B to the counter affidavit. The notification provides, inter alia, that approval of the Central Government for imposition of such tax has been obtained by the Board.

Mr. A.K. Sinha, learned Sr. Counsel for the petitioner, put heavy reliance on a decision of the Apex Court in the case of Cantonment Board, Mhow and Another Vs. M.P. State Road Transport Corpn., and submitted that the validity of imposition of tax by the Cantonment Board has been up-held by the Apex Court. While considering the said question, their Lordships observed :--

"14. Thus, considered, the tax leviable on Motor Vehicles when used or kept for use u/s 3(2) of the Madhya Pradesh Motor Vehicles Taxation Act is different from the tax leviable on Motor Vehicles. Entering the limits of the Municipality u/s 127(1)(iii) of the Madhya Pradesh Municipalities Act. 1961 and there is no repugnancy between the two and both the provisions can therefore operate in its own field. Since u/s 127(1)(iii) of the Municipalities Act. Municipality could levy a tax on Motor Vehicles entering the limits of the Municipality, the same could be levied by the Cantonment Board in exercise of its power u/s 60 of the Cantonments Act with the previous sanction of the Central Government. Consequently, notifications issued by the Cantonment Boards of Mhow, Jabalpur and Saugar were valid notifications issued u/s 60 of the Cantonment Act and imposition of tax on the Motor Vehicles entering into the limits of the Cantonment Boards cannot be said to be invalid or inoperative. The High Court in our opinion committed error in striking down those notifications on the ground of repugnancy with this special legislation, namely, the Madhya Pradesh Motor Vehicles Taxation Act."

Learned JC to AAG is not able to satisfy this Court that the action of the respondent-State in issuing such order directing the Cantonment Board not to impose tax is justified. It is rather surprising that instead of justifying their action in the counter affidavit the respondent-Deputy Commissioner has stated that he sought guidelines/instructions with regard to the decision taken by the Cantonment Board from the Chief Secretary. The State counsel is not in a position to state as to what instruction/guideline has been given by the Chief Secretary to the Deputy Commissioner, Hazaribagh.

Having regard to the facts and circumstances of the case, I do not find any justification of the letter issued by the respondent-Deputy Commissioner, Hazaribagh restraining the Cantonment Board from imposition of tax on the goods vehicle passes through the Cantonment Area.

For the reason aforesaid, this writ application is allowed and the impugned restriction put by the Deputy Commissioner. Hazaribagh is quashed. It is held that the Cantonment Board is entitled to levy entry tax on the goods carrying vehicle passes through the Cantonment Area in accordance with law.

Petition allowed.