BHARAT KALA BHANDAR LTD versus MUNICIPAL COMMITTEE, DHAMANGAON

c lK. BHARAT KALA BHANDAR LTD. MUNICIPAL COMMITTEE, DHAMANGAON March 26, 1965 SlJBBA RAO RAGHUBAR DAYAL, J. R. MuoHOLKAR, BACHAWAT AND V. RAMASWAMI. JJ.] R. S. Central Provinces and Berar Mi;nicipa!ities Act (2 of 1922), ss. 48 and 84(3)-Scope of-Suit for refund of excess tax prd-If barred. The appellant was paying a tax at the rate of one anna per weight of cotton, under s. 66(l)(b) of the Central Prcvmces Mumc1- palities Act, 1922, from 1936. In 1941 the rate of tax was ;ncreased te: 4 as. In 1952, the appellant filed a suit for recovery of the excess tax paid within 3 years cf the date of suit. It was contended that after the coming into force of s. 142A of the Governme.nt of India Act, 1935, on 1st April 1939, till 25th January 1950, a tax m excess of Rs. 50 per annum could not be ·imposed by the respondent, and, after the commg into force of the Constitution the upper limit of the tax was raised to Rs. 250 per annum under Art. 276 of the Constitution; and that as the appellant was already paying more than this amount per year even at the rate of one anna, the enhanced rate of 4 annas was illegal. The trial court decreed the suit for recovery from the Municipal Com- mittee of excess tax paid by the appellant within 3 years of the date of suit but on appeal, the High Court held that the suit was bad for non- corrn::liance with the requirements of s. 48 of the Act. according to which, a suit for anything done or purported to be done under the Act shall b2 instituted only after the exp'.rat:cn of 2 months aft0r serving a written notice 2nd \vithin

months from the date of the accrual of the alleged cause of action. In its appeal to th's Court, the appellant contended that it was a case of recovery of e.n illegal tax and therefore, a· clalm for its refund fell outside the provisions of s. 48. The respondent contended that (i) since the ban was not upon the rale of tax but upon the excess collection thereof, the collection of a tax above the constitu- tional limit was not without jurisdiction but only illegal or irregular and therefore, the suit would be in respect of a matter "purported to be done under the Act" and the provision of s. 48 would apply, and (ii) on the basis of Raleigh Investment Company Ltd. v. Governor- General in Council, (74 I.A. 50) the suit was barred by s. 84(3) of the Act, which enacts that no objection shall be taken to any assessment l!i any other manner than is provided in the Act.

HELD. (Per K. Subba Rao, J. R. Mudholkar and V. Ramaswami JJ.): (i) Smee the respondent had no authority to levy a tax beyond what .s. 142A of the Government of India Act, 1935, or what Art. 276 permitted, the assessment proceedings were void in so far as they pur- ported to levy a tax m excess of the permissible limit and authorise its. collection, and the assessment order would be no answer- to Sult for the

of the excess amount, and therefore. the suit was maintainable. t522-G-HJ The Constitution is the fundamental law of the land and it is un- necessary. to pro':'ide in. a:iy law that anything done in disregard of the Constitut10n 1s prohibited. Such a prohibition has to be read into (1965] 3 s.o.a.

every enactment, and where such prohibition exists or can. be implied, anything done or purported. t? be .done by. an auth_ority must be regarded as wholly without iunsdiction, and is not entitled to a tection of the law under colour of which that act was done. r512A-B, 516B-C]

Poona City Municipal Corporation v. Dabtatraya Nagesh Deodhar, [1964] 8 S.C.R. 178, followed. (ii) A tax .can be recovered only. if it is and it would be payable only after it is assessed. It is therefore futile to contend that the ban placed bys. 142A of the Government .of India Act and Art. 276 of the Constitution, extends only to recoveries and not to an earlier stag.e. [513G]

It is true that the respondent had jurisdiction to recover an amount up to the constitutional limit, But it cannot be contended that merely because of this, the recovery by the respondent of an amount in excess of the constitutional limit was only irregular or at the worst illegal. Where power evists to assess and recover a ta><: up to a parti- cular limit and

assessment or recovery of anythmg above that amount is prohibited, the assessment or recovery of an amount in excess is wholly without jurisdiction. To sach a case, the statute under wh;ch action was purported to be taken can afford no, protec- tion. Indeed, to the extent that it affords protection it would be bad. But it is the duty of the court to so construe it as to avoid rendering the provision

that is, to construe s. 48 as affording protection only if what was done was something which could legally have been done by the respondent but was wrongly done by it, and reject <. construction which will invalidate the provision. [515B; 516B-H]

(iii) The appellant's suit could not be ·barred even if s. 84(3) of the Act is interpreted in the same way as the Privy Council interpret- ed s. 67 of the Income-tax Act, in the Raleigh Investment Co.'s case. Unlike the Income-tax Act the Act does not provide a machinery for making a claim for refund or repayment on the ground of the un- constitutionality of the levy, and the jurisdiction of the civil court .in cases of refund is not taken away. Even in the class of cases to which the provisions of ss. 83 and 85 of the Act, which are the only pro• visions providing a machinery under the Act for challenging an assessment, apply, they cannot be said to provide a sufficiently effective remedy to an assessee. A reference to the High Court is only at the discretion of the appellate or revisional authority and the person aggrieved has no right to move the High Court. Besides, in the Raleigh Investment Co.'s case, the expression "assessment made under this Act vvas given too wide a construction. because, it is difficq.lt to appreciate how taking into account an ultra vires provi- sion. vvhich in law must be regarded as not being a part of the Act at all, will make the assessment as one under the Ac'.. [517G; 518B, F, H; 519A-B; 520D-F; 521H]

The exclUBion of the jurisdiction of the civil court is not to be readily inferred but such exclusion must either be explicitly expressed or clearly implied. One of the corollaries flowing from the principle that the Constitution is the fundamental law is that the normal remedy of a suit will be available for obtaining redress against the violation of a constitutional provision. Moreover the provisions of Art. 265 of the Constitution preclude the levy or collection of a tax except by authority of law, which means only a valid law. There was no provision in the. va!ious Acts for the governance of

India which preceded the Constitution and the decision in the Raleigh Investment Co.'s case was given in that context. Further under Art. c c BHANDAR v. MUNC. COMMl'l'TE>: (Mwllwlk11r, .I.)

iiO I the Constitution has provided a remedy to a citizen to obtain redress in respect of a tax levied or collected under an invalid law. and this remedy will not be affected by any provis'on like <. 67 of the Income-tax Act, or s. 84(3) of the Act. [520G-H; 521C-E]

Thus, when the question merely is whether' the assessment had been made according to la\v, the respondent having jurisdiction over the subject matter and the assessee, the provisions of s. 84(3) may be a bar to a suit. But, where the question raised is as to the jurisdiction of the respondent to procei;d against the assessee, and levy on or collect from him an amount in excess of that permitted by the Consti- tution, the n1atter \\·ould be entirely out of the b:ir of that provision. Per Raghubar Dayal and Bachawat, JJ. (dissenting): The appel- lant's suit for the recovery of the tax r&alized in excess of Rs. 250 a year was rightly dismissed, as the correctness of the assessment of the tax could not be challenged by a suit in a civil court in view of s. 84(3) and as the provisions of s. 48, requiring the giving of notice to the respondent and the institution of the suit within a certain per'od, had not been complied w:th. [534H: 535A-B]

The suit was in essence a suit for, first, modifying the amount assessed and then to decree the payment of the amount held to have been paid in excess of the tax as modified by the court. But the act of aSiessing the tax or the consequential act of collecting the amount cannot be broken up into two acts, one, upto the legal limit and the other in excess of it. The act of assessment or of collection therefore was an act done by the respondent under the provisions of the Act, though it acted \\'rongly in assessing the tax at an excessive figure, and consequently in collecting an amount in e:Xcess of that whicl:i could have been legally collected. The suit was therefore fully cover- ed by s. 48 and had to be dismissed. [526E-HJ

In vie\v of s. 84(3), exclusive jurisdiction 1.o determine the correct- ness of the amount assessed is g'.ven to the authorities mentioned in s. 83. The result is that no other authority can enter into the question of the correctness of the assess?nent on grounds of law or fact, and therefore the appellant's suit v.1as barred from the

of the civil court. [527GJ Raleigh Investment Co. Ltd. v. Governor-General in Council, L.R. 74 I A. 50 and Firm of Illuri Subbayya Chetty & Sons v. State of A ndhra Pradesh. [1964] 1 S.C.R. 752, followed.

Pdo,ia City lvlunicipal Corporation v. Dattatraya Nagesh Deodhar, (1964] 8 S.C.R. 178. dist'nguished. Ci1'iL APPELLATL .lURISD!CTION: Civil Appeals Nos. 600 and 679 of 1964. Appeals from the judgment and decree dated February :o,

1962 of'thc Bombay High Court (Nagpur Bench) at Nagpur in Appeals Nos. 196 and 195 cf 1956 from original decree. S. G. PatwardJzan, S. Murthv an-J B. P. Maheshwari, for ihe· appellant (in CA. No. 600/64). ·

S. N. Kherdekar and A.G. R.atnaparkhi, for the appellant (in CA. No. 679/64i. A. V. Viswanat/ia Sastri and M. S. Gupta, for the respondent <in CA. No. 600 / 64). A. fl. Viswanatha Sastri and M. S. Gupta for U. P. Singh, for the respondent (in C.A. No. 679 I 641.

(1965} 3 S.C.R. The Judgment of Subba Rao, Mudholkar and Ramaswami, JJ. w:!s delivered by Mudholkar J. The dissenting Opinion of Raghu- bar Dayal and Bachawat, JJ. was delivered by Dayal, J.

Mudholkar, J. This judgment will also govern Civ;I Appeal N,1. 679 of 1964 since common questions of law arise in both the appeals. For illustrating the points which arise for consideration in these appeals we will set out briefly the facts pertaining to C.A. 600 of 1964.

The appellant (hereinafter referred to as the Company) is a private limited comp2ny having its registered office at Calcutta and a branch office at Dhamangaon which was formerly in the Province of Central Provinces & Berar but is now in the State of Maha- rashtra. The company owns a ginning factory at Dhamangaon. The Notified Area Committee of that place imposed, under s. 66(1)(b) of the Central Provinces Municipalities Act, 1922 (hereinafter referred to as the Act) as applied to Berar, a tax at the rate of one anna per bajha of ginned cotton and one anna per bale of pressed cotton as from Dec. 22, 1936 en which date a notification sanctioning the Imposition under s. 241 (!) of the Act was published in the official Gazette by order of the Government of the Province. The Notifi- .cation in question runs as follows: –

"No. 7911-3242-M-VIII :-In exercise of the powers con- ferred by clause (a) of sub-sec. (!) of sec. 241 of the Central Provinces Municipalities Act. 1922 (C.P. Act II of 1922) asap- plied to Berar, the Local Government is pleased to confirm the following rule made by the Notified Area Committee,

Dhamangaon, in the Amravati district, under clause (b) of sub-s. (!) of sec. 66 of the said Act, for imposing a tax on persons carrying on the trade of ginning and pressing cotton by means of steam or mechanical process within its limits: – Rule

1be committee shall levy from all persons cartying on within its limits the trade of ginning or pressing cotton into bales by means of steam or mechanical process a tax at the following rates from the date of the publication of this notifi- cation in the Central Provinces Gazette: –

(a) For each bojha of 392 lbs. ginned-I anna. (bl For each bale of 392 lbs. pressed-I ·anna. By order of the Government, (Ministry of Local Self-Government), Sd / – R. N. Bannerjee,

Si:cretary to Government, Central ·Provinces, c l!' c !\'.ALA nRANDAR t'. MUKC. COMMITTEE (Mud/wtkar, J.) The Notified Area Committee of Dhamangaon decided to raise the rate from I anna per bojha and I anna per hale 10 four annas per bojha and four annas per bale. Soon after this decision it caused the following notification to be published in tl1e ofticictl Ga7e1te on April IO. 1941. The Notification runs thus: —

"The following amendment to the rule for imn•.1'ition of the tax by the Municipal Committee, in the Amraoti district, under cl. (b) of sub-sec. (!) of sec. 66 of the Central Provinces Municipalities Act, 1922 (II of 19221 <:s '•P· "lied to Berar, on persons carrying on the trade of ginning <ind pressing cotton hy means of steam or mechanical process with- in its limits, published in the Central Provinces and Bcrar Gazette Notification No. 7911-3242-M/VllI, dated the 22nd

Dec. 1936, is published for the information of the public, the same having hceri p"evionsly published as required by sub- section (3) of sec. 68 of that Act, and in exercise of the powers conferred by s.ub-sec. (7) of sec. 68 of that Act. the municipal C<lmmittee directs that the said amendments shall come into operation on the !st August, 1941 :-

Amendment For the figure and the word 'I anna' occurrmg in clauses (a) and (b) of the rule, the figure and word '4 annas' shall be substituted. Sd/- B. S. Mundhada, President, Municipal Committee

No. 2418-M-XIIL" Certain rules were framed by the Government for the assess- rneut and collection of tax which were also published on Dec. 22, 1936. These rules were, however, amended by the Local Govern- ment and the amended rules were published in the Gazette on July 30. 1941. It is these latter rules which are now in force. Consequent upon the amendment of the rules the appellants in the two appeals and the proprietors of the ginning factory in Dhamangaon have been paying these taxes at the new rate of 4 annas per bojha and 4 annas per bale.

It may be mentioned that in Dec. 1951 the Municipal Com- mittee. Dhamangaon, which by then had replaced the Notified Area Committee proposed to raise the tax from four annas to one rupee per bojha and per bale but eventually dropped the proposal. Apparently being alarmed at the abortive attempt of the Municipal Committee to raise the tax further, the appellant and other factory owners in Dhamangaon instituted suits for recovery from the Municipal Committee of excess tax paid by them within 3 years of the dates of the respective suits. The Company claimed refund of Rs. 12,511-6-6 on the ground that it was recovered from it illegally SUPREME COURT REPOHTS

(l 91i5] 3 S,C,R. by the Municipal Committee and paid by it under a mistake. The amount has been computed by them thus: Rs. 6,905-14-6 recovered from them in respect of ginned cotton between 29-3-49 and some date in the year 1952 plus Rs. 8,048-8-0 in respect of pressed cotton recov?red from them during the same period less Rs. 3,738-9-6 which was legally due from them thus totalling to Rs. 11 ,215-13-0. To this they added Rs. 1,295-9-6 as interest by way of damages on the aforesaid said amount at the rate of 9 per cent. p.a. In the plaint it was contended by the Company that after the coming into force of s. 142A of the Government of India Act, 1935 (which came into effect ·from 1-4-1939) till January 25, 1950 a tax on trade, profession or calling in excess of Rs. 50 /- per annum could not be imposed either by a Provincial Government br by a Local Body. Nor again, could an existing tax on trade, profession or caLLing be raised further so as to exceed Rs. 50 /- per annum. T))e Company further pointed out that after the coming into force of the Constitution the upper limit of the tax was raised to Rs. 250 I – per annum and that as the Company was already paying more

than this amount per year even at the rate of one anna per bbjha · D and one anna per bale recovery from tllem at the enhanced rate of 4 annas was illegal with effect from April 1, 1939. The Muni- cipal Committee contended in its written statement that the provi- sion of s. 142A of the Government of India Act and Art. 276 of the Constitution which limit the tax on professions. ·trades or callings or employments to Rs. 50 and Rs. 250 per annum respec- tively do not apply to a case such as the present where therti is no imposition of a new tax but only an enhancement of the rate of an existing tax. It further contended that the tax in question at the rate of 4 annas per bojha and 4 annas per bale was in existence when Art. 276 came into force and is saved by thut Article. Ac- cording to the Committee. the Company is not ent;tled to claim back the amount paid by it under s. 72 of the J ndian Contract Act or the general law; This contention, however, was negatived by the trial court and does not appear to have been reiterated before the High Court. Nor again was it pressed before us by Mr.

Viswanatha Sastri who appears for the Municipal Committee. The principal contention which was. pressed before the trial court and raised before the High Court was that the Company's suit was bad for non-compliance with the requirements of s. 48 of the Act and that is the point which we have to consider in this appeal. Sec. 48 of the Act reads thus:

"(!) No suit shall be instituted against any Committee or any member, officer or servant thereof or any person under the direction of any such committee, member, officer 0; servant for anything done or purporting to be done under this Act, until the expiration of two months next after notice in writing statin¥ the .cause ?f .action, the name and place of abode of the mtending plamttff and the relief which he claims, c

l!' KAI.A BHA"DAR I!. """('.· CO>!>!l1'TEE (,llwllwlkm, J.) 50G has been, in the case of a committee, delivered or left at ils office, and, in the case of any such member, officer or servant or person as aforesaid, delivered to him or. left at his office or usual place of abode, and the plaint shall contain a state· ment that such notice has been w delivered or left.

(2) Every such suit shall be dismissed unless it is instituted within six months from the date of the accrual of the alleged cause of action." Mr. Patwardhan for the appellant contends that this was a case of recovery of an illegal tax and. therefore a claim for its refund tdl outside the provisions of s. 48 of the Act. In support of his contention he relied upon a number of decisions and we will proceed to examine them.

The first of these cases is Municipal Committee, Karanja v. New East India Press Co. Ltd., Bombay('). That was also a case where enhancement of a tax was made by the Municipal Committee of Karanja after March 31, 1939 in excess of Rs. 50 per year pay- able by one person. There, a Division Bench of the High Court held, that the enhancement was in contravention of s. l 42A of the Government of India Act, 1935 and was illegal, that a suit for refund of the tax is maintainable by the person who has paid the tax and that such a suit is not barred by the provisions of ss. 148, 83 or 84 of the Act. The relevant observations of Bose A.C.J. (as he then was) who delivered the judgment are as follows: "It was then argued that the Civil Courts have no jurisdic- tion because of sections 83 and 84 of the Central Provinces Municipalities Act as applied to Berar. It was said that that Act provides for remedies in cases of wrongful recovery of taxes. Therefore, the jurisdiction of the civil courts is barred. A large number of cases have dealt with this question but

we need consider only two of the latest decisions. In District Council, Bhandara v. Kishorilal (Civil Revision No. 220 of of 1946 decided on the 25th June, 1948) one of us (Bose, J.) held that provisions corresponding to sections 83 and 84 come into play only when the Municipal Committee acts within the scope of its authority, that is to say, when it is acting or pur- porting to act under the Municipalities Act. It is pointed out there in respect of this very section of the Government of India Act, sec. 142-A, that when a Municipality is prohibited by law from imposing a tax in excess of a certain amount

then it cannot be said to be acting either under the Act or purporting to act uncler the Act if it exceeds that amount. and in such a case the jurisdiction of the Civil Courts is not barred. Here again we may refer to the fact that in the Privy Council case Radha Kishan Jaikishan (Firm) v.

Municipal Committee, Khandwa('), this objection does not appear to have (') l.L.R. [19481 Nag. 971. (') [l93n] 30 Nag. L.R. 12! \P.C.) [1 !JG5] :l s.o.R. been taken. It is hardly 1;kcly that it would have been omitted had there been any force in the contention.

In the present case, as in District Council. Blwndara v. Kishori/a/ the Municipality is seeking to recover sums which thl' hw has prohibited it from taking, in the shape of taxes. Accordingly, as it is acting wholly without jurisdiction, the claims lie and are not barred by reason of sections 83 and 84. Then it was stated that the claims are barred by sec. 48 of the Municipalities Act. There again the same considerations apply. Sec. 48 comes into play only when the act is done or is purported to be done under the Municipalities Act.

As we have said, that is not the case here because its action is something which is prohibited by law, and so wholly beyond its jurisdiction, and therefore section 48 does not apply. The distinction between a case where section 48 applies and a case where it does not is

clearly shown in The A mraoti Town Municipal Committee v. Shaikh Kishorilal's case to which reference is made in the above quota- tion is a decision of a Division Bench upon a reference made by Bose J. and which, though rendered earlier, has been reported in 1.L R. 1949 Nag. 87. In that case a tax imposed by the District Council, Bhandara under a similar provision of the Local Self- Government Act, 1920 at the rate of three pies per khandi on persons carrying on trade of husking, milling or grinding of grains was raised by it to one an11a as from April I. 1942 with the sanc- tion of the Provincial Government. ft was contended on behalf of the respondent that the recovery was illegal. Since the matter involved. the interpretation of s. I 42A of the Government of India Act, 1935 Bose J, acting under me of the rules of the High Court referred it to a Division Bench. This is what the Division Bench held:

"We are clear that the tax in question is a tax which can be so termed. This was in fact conceded in the Court below and the contention raised before us that the persons who gave grain to Kishorilal for grinding and not he were the trader'

ed was plainly devoid of force. He had a mill "nc! with it carried on the trade of milling grain. The tax in question was recovered from him because of this and it was one of the taxes hit by section 142-A of the Government of India Act, !935. and the Professions Tax Limitation Act, 1941 (XX of 1941)." When the matter went back before Bose J., it was contended on behalf of the District Council that the suit was barred altogether by the provisions of s. 71 and that the provisions of s. 73 make the issue of ;1 notice by the Distt. Council a pre-condition for the institu- tion of a suit of the kind before him. Reliance was placed on a (') I.L.R. [!939) Nag. 216, 219, 220.

c c KALA BHANDAR v. MUNC. COMMIITEE (M11dholka.r, J.) certain rule framed under s. 79(1) (xxix) of the Central Provinces Local Self-Government Act, 1920 After quoting s. 71 and the rule relied on the learned Judge observed :

"It will be observed that both section 79 and the rule are confined to orders and decisions given under the Act. It is impossible to say that an order which contravenes the law or is made in the face of an express statutory prohibition can be said to be under the Act. The words "purporting to be given" or "made under the Act" are not present in this section and so the difficulty which arises regarding the other point is not present here. I hold that the suit is not incompetent on this score."

Pointing out that the other question urged before him was more difiicult the learned Judge said that his conclusion was that what was done in the case was not "under the Act" and. therefore. what remained for consideration was whether it was "purported to be done" under the Act. He came to the conclusion that what was done was not "purported to be done under the Act" and express- ed himself thus:

"Now this expression has recently been interpreted by their Lordships of the Privy Council in H.H.8. Gill v. The King(') also in Hori Ram Singh v. The Crown(') of which their Lord- ships approved. The question is a difficult one and as Varada- chariar J. observed in the Federal Court decision at p. 187. it is neither possible nor desirable to lay down any hard and fast rule. The question is substantially one of fact and "must be determined with reference to the act complained of and the attendant circumstances." I think, however, that the following test which their Lordships of the Privy Council laid down con- cludes the matter so far as this Act is concerned. Their Lord- ships say: "A public servant can only be said to act or to pur- port to act in the discharge of his official duty, if ·his act is such as to lie within the scope of his official duty." Now I can understand it being said that an act which is within the scope of an official duty cannot be taken out of that category simply because it is carelessly or negligently performed, but I cannot see how an act which is expressly prohibited by Jaw can be said to lie there. If a magistrate directed to supervise a sentence of whipping duly imposed by a competent Court has the wrong man whipped by mistake or imposes more lashes than war-

ranted. I can understand him being protected. He is there act- ing within the scope of his duty. But if. instead of having the man whipped. he has him branded with a hot iron he would not, in my opinion, be able to claim the protection. In the same way I cannot see how a Municipal Committee can

(') A.LR. [1948] P.C. 128. c•r 19391 F.c.R. 159. COUUT Rl<iPORTS [J 96ii) :J S.C.R. be said to be acting 'under the Act.' when it does that which is expressly prohibited by "the Legislature. Say it purported to tax salt. Its action would not be covered by sec. 73 because the Constitution Act makes that an exclusively Central subject. Say also a municipality attempted to tax marriages or births. that would be completely beyond its province and it could not be heard to say that because it has been given certain limited powers of taxation, therefore it 'purports to act' under the Act wha tcver the nature of the tax it attempts to impose. In the same way, if the Le:;islature limits the authority of the Com- mittee tc a '.Tiaximum of Rs. 50 I do not think it can be sciid to purport to act within the scope of the Act if it

beyond its limited provisions." A reference may be made to the decision in The Amraoti Town Municipal Committee v. Shaikh Bhikan(') which apparently takes a contrary view. There f:'liyogi J., sitting singly has held that a suit against a munic;pal committee for the recovery of a tax ille- gally collected is governed bys. 48 of the Central Provinces Muni- cipalities Act, and, is, therefore, barred by limitation if not filed within six months of the. date of the co1J11ction of the tax. That case is, however, distinguishable in that there was no prohibition to the levy of the tax and all that had happened was that proper procedure had not been followed in imposing the tax. This was thus a case of something purporting to be done under the Act but not done strict- ly in accordance with the provisions. That such a case would squarely fall within the ambit of s. 48 cannot be questioned. But the point is whether what was done by a local body under the colour of an Act can be regarded as something purported to be done under the Act even though neither the local body nor even the State Legislature has the power to do what was in fact done. The next case referred to was Gajadhar Hirata/ v. Municipal Committee, Washim('). That was also a case in which a tax on bojhas and bales of ginned cotton was raised from Re. 0-2-3 per bale to Re. 0-4-0 per bale and the learned Judges held, following the decision in the New East India Press Co.'s case(') that the enhancement was ultra vires of Art. 276 of the Constitution. The · other question did not arise for consideration in this case. This decision is, therefore, of little assistance to us, because it is not contended before us that the enhancement of the tax is valid. There is, however, another decision in the. same volume at p. 483 (The Municipality of Chopda v. Motila/ Manekchand)

which is relevant for consideration in this appeal. In that case a Division Bench, while pointing out that the particular tax which was levied by the Municipality was in ·substance a tax on trade within the meaning of Art. 276 of the Constitution and being in (') I.L.R. [1939) Nag. 216.

(') I.L.R. [1958) Born, 625. ,_ (') T.L.R. [19-18) Nog. 971. t !l KALA BRANDA!\ V. MUNO. COMMITTEE (Mudholkar, J.) excess of Rs. 250 p.a. was beyond the competence of the Munici- pality, held that a suit for its refund beyond the time prescribed by rules was barred by limitation. According to the learned Judges the levy of the tax though beyond the authority of a Municipality was "an act done in pursuance or execution or intended execution of the Bombay District Municipal Act" and was merely a wrongful act as distinguished from an ultra vires or illegal act. In coming to this conclusion they followed a previous decision of the High Court in Jalgaon Borough Municipality v. The Khandesh Spin· ning and Weaving Mills Co. Ltd.('). Incidentally we may mention that an appeal was brought before this Court from that part of the decision in The Municipality of Chanda, East Khandesh v. Motilal Manekchand Press Factory, Chanda(') which held that the levy was unconstitutional. Ayyangar J. who spoke for the Court has stated towards the end of the Judgment as follows:- "In the circumstances the correctness of the decision of the High Court in holding the impugned levy to be a tax on

'callings or employments' and therefore subject to a pecuniary limit of Rs. 250 per year does not really arise for considera- tion. The respondents had in their plaint, no doubt, challenged the entirety of the levy and sought relief on that basis, but they had however pleaded in the alternative that the tax might be held to be one on 'a trade etc.' and therefore within Art. 276(2) and claimed relief on this footing in the alternative. The learn· ed Civil Judge had accepted this alternative contention

and had granted them a decree on that basis and the respondents had not challenged the correctness of that decision by preferring an appeal; and the learned Judges of the High Court had accepted this view of the nature of the levy. We however consider it proper to add that there is consider- able force in the opinion expressed by the High Court that the tax in question. at the date when the same was challenged, being a levy imposed on persons carrying on the business of pressing cotton, was a tax on 'professions, trades, callings, or employments' and that the learned Jndges of the High Court came to a correct conclusion that the respondents were entitled to the declaration which was granted as regards the maximum amount of the tax th2t could be levied from the respondents " In

Bornur,h Municipality's case(') on which the High Court :eiied in Mo'.i'.al case, what had happened was !h.1s: The Mumc1pahty actmg under s. 73(iv) of the Bombay Mumc1pal Boroughs Act, 1925 levied octroi duty on fuel oil or fur- nace oil under certain rules and by-laws framed by it with the sanction of the Government which provided for thP levy bf an octroi duty on various articles including 'oils used for machinery'. (') M Bom. L.R. 65.

(1) C.A. No. 168of1901 decided on Mo.rob !!, 1962 (1) 55 Bom. L.R. 65. Lfl'I!{} '30 [ -5 SUl'l\Wi'.111 OOUl\T l\EPOIITB [1966] 3 a.o;a. It was found that the Municipality was not entitled to levy any octroi duty on fuel oil or furnace bi1 which was not comprised within the items enumerated in the octroi rules and by-laws. The respondent who had paid the tax instituted a suit for its recovery. One bf the questions which arose for consideration was whether the provisions of s. 206 of the Bombay Municipal Boroughs Act, 1925 corresponding to those of s. 48 of the Central Provinces and Berar Municipalities Act, 1922 applied tb the case. The learned Judges of the High Court held that what the municipality did was not an act done in pursuance of the Act. but it was an act which it purpcY'ted to do in pursuance of the Act and that there· fore its action was well within the terms of s. 206. In the course of the judgment Bhagwati J.. observed that the acts which fell within the c;ltegory of those "don.e or p11rporting to have been done in pursuance bf this Act" could only be those which were done under a vestige or semblance of authority or of a shadow of right. If an act was outrageous and extraordinary or ·<;ould not be supported at all, not having been done with a vestige or bf

or a shadow of !nvested in the party domg that act, 1t would not be an act which ls done or purported · to have been done in pursuance of the Act. The distinction is really between ultra vires and illegal acts, on the one hand, and wrongful acts, on the other-wrongful in the sense that they purport to have been done in pursuance of the Act; they are intended to have been done in pursuance of the Act if they are done with a vestige or semblance of authority, or a sort of a right invested in the party doing those acts. The learned Judge then referred to cer· tain decisions and said that under s. 73(iv) of the Act power was given to the Municipality to impose octroi duty on articles and goods imported within its jurisdiction. What had happened there was that the defendants, on the interpretation which they gave to the words "oils used for machinery", did something which ultimate- ly, on an adjudication in that behalf, the court found tb be wrong. By acting in that way what the Munidpality purported to do could not be said to be illegal or outrageous and extraordinary or done without having any vestige or semblance of authority or without even a shadow of a right.

Apart from the fact that much of what was said In this case Is opposed to a recent decision of this Court to which we will presently make a reference certain observations made by Bhagwati J., in fact lend support to the <irgument advanced before us by Mr. Patwar- dhan. The observations we have in mind are to the effect that where a municipality, not having the power to levy a particular tax at all, either wholly or in regard to some classes of goods, had purported to levy the same it would certainly be an act which was "outrageous and extraordinary, or done without having any vestige or sernb· lance of authority or without even a shadow of a right". Here, the overstopping of its authority by the Municipality con.sists not in the matter of the selection of a class of good11 but of that of the rate at LlL.l BllANDAB v. KUNC. COWIITTEE (Mwfholkar, J.)

5Jl which it has levied and collected a tax. It has levied and collected a tax beyond constitutional limits. Therefore, to the extent it has done so the tax could properly be said to have been levied without a vestige or semblance of authority or even of a shadow of right. We may now refer to the recent decision of this Court in The B Poona City Municipal Corporation v. Dattatraya Nagesh Deo- dhar('). That was a case in which the Municipal Corporation had imposed a tax on the refund of octroi duty collected by it on goods imported within the Municipal limits of the city. Its practice was to deduct the tax from the amount which it was required to refund a

and pay the person entitled to the refund only the balance. A suit was instituted by the respondents for refund of the amount illegally deducted by the Corporation from the octroi refund made by the Corporation to the respondents. It was contended on behalf of the Corporation that the deduction made by it was valid and that the suit was barred by limitation. This Court upheld the contention of the respondents that the Corporation had no power to impose the D tax and that in fact there was a prohibition against the imposition of such a tax by the Corporation. On the plea of limitation, which was founded upon the provisions of s. 487 of the Bombay Act which are almost the same as those of s. 48 of the Act with which we are concerned, this Court observed :

p "The benefit of this section would be available to the Cor- poration only if it was held that this deduction of ten per cent was 'an act done or purported to be done in pursuance or

execution or intended execution of this Act.' We have already held that this levy was not in pursuance or execution of the Act. It is equafty clear that in view of the provisions of s. 127 (4) (to which we have already referred) the levy could not be said to be 'purported to be done in pursuance or execution or intended execution of the Act.' For, what is plainly prohibited by the Act cannot be claimed to be purported to be done in pursuance or intended execution of the Act.''

Sub-sec. (4) of s. 127 of the Act to which this Court has referred is in the following terms : "Nothing in the section shall authorise the imposition of any tax which the State Legislature has no power to impose in the State under the Constitution."

It is pertinent to bear in mind that the conclusion of this Court on the question whether the act was "done or purported to be done" under the Act was not based solely on this provision and reliance was placed upon it as affording additional support to the conclusion already arrived at. It seems to us that this provision was enacted by way of abundant caution. For, the Constittltion is the (') [1914] I S.C.B. 178.

t>l2 fundamental law of the land and it is wholly unnecessary to pro- vide in any law made by the Legislature tha!t anything done in disregard of the Constitution is prohibited. Such a prohibition has to be read in every enactment. This decision does appear to con- clude the matter.

During the pendency. of the suit before the trial court the ap- pellant had preferred a writ petition before the High Court at Nag; pur in which it contended that the notification of April 10, 1941 enhancing the tax from one anna per bojha and one anna per bale to four annas per bojha and four annas per bale was illegal and ultra vires and should therefore be ·quashed. This petition was , granted by the High Court on April 12, 1955. There was, therefore, a direct decision before the trial court and the appellate court which though it could not be treated as res judicata was binding on those courts and was treated as such by them and it is perhaps because of this that it was not sought to be urged on behalf of the Municipal Committee when the second appeal was argued before the High Court that the notification is valid and, therefore, the Municipal Committee could recover the tax at the enhanced rate. Though Mr. Viswanatha Sastri did say that the decision of the High Court is not res judicata he did not directly challenge its correctness. What he argued was as follows:

The levy of a tax on professions, trades, callings etc. was within the power of the Provincial Legislature and is now within the power of the State Legislature. It could in the past and can even now levy such a tax at the rate of 4 annas per bojha and 4 annas per bale, that both uQder s. 142-A of the Government of India Act and Art. 276 of the Constitution

the Municipal Committee could collect such· a tax to the constitutional limit (which was formerly Rs. 50 p.a. and is after the coming into force of the Constitution Rs. 250 p.a.). The mischief, according to him, is not in the levy but in the realisation of an excess over the limit. To put it differently, the ban is not upon the rate of tax but upon excess collection thereof. Therefore, the collection of a tax above the constitu- tional limit was not without jurisdiction but only illegal or irregular. A suit by an assessee to recover the amount paid by him in excess of the constitutional limit would therefore be iv respect of a matter "purported to be done" under the Act and the provisioru; of s. 48 of the' Act would apply to it. Further according to him every suit against a Committee for anything done or purported to be clone under the Act

must comply with the conditions laid down in the section. He points out that the of the tax was made by an authority competent to make an assessment, that in making it the authority proceeded in accordance with the provisions of th0 Act and assessed the tax as authorised by Rules which had been sanctioned by the former Government of Central

Provinces and Berar. So, even if it is assumed that any of c KAI.A BHANDAR v. MUNO. COMMITTEE (Mudlwlkar, J.) the Rules were ultra vires and therefore the assessment and recovery of the tax was illegal, what the authority had done was something purported to be done under the Act. Some

of these arguments were advanced in cases discussed earlier and rejected. In support of his contention he placed reliance on the decisions in Richard Spooner and Bomanjee Nowrojee v. Juddow(') and

Dhondu Dagdu Patil v. The Secretary of State for India('). These cases were not pressed in aid in the decisions so far considered and we would deal with them now. Before we deal with these cases it is necessary to point out the rationale upon which s. 142-A of the Government of India Act, 1935 was enacted and on which Art. 276 of the Constitution now rests. It is that the legislative spheres of the Provinces and the Centre came to be clearly demarcated in regard to items falling within Lists I and II of Schednle VII of the Government

of India Act and now to those falling within the same lists of Schedule VII of the Constitution. Taxes on professions, trades, callings and employments are taxes on income and are thus outside the provincial I and now State-list and belong exclusively to Parlia- ment and before that to the Central Legislature. Yet under a large ·number of laws enacted before the Government of India Act, 1935 came into force, power was conferred on local governments and local authorities to impose taxes on such activities. This was obviously in conflict with s. I 00 of the Government of India Act. When this was realised s. 142-A was enacted by the British Parliament which saved the power conferred by pre-existing laws but limited the amount payable to Rs. 50 after 31st March, 1939. A saving was made. however, of pre-existing laws subject to certain conditions with which we are not concerned. The provisions of this section have been substantially reproduced in Art. 276 of the Constitution with the modification that the upper limit of such tax payable per annum would be Rs. 250 instead of Rs. 50. A tax can be recovered only if it is 'payable' a!Ild it would be payable only after it is assessed. It is, therefore, futile to contend that the ban placed by the aforesaid provisions extends only to recoveries and not to an earlier stage.

Now coming to the cases, the first was one in which the ques- tion considered by the Privy Council was whether the Supreme Court at Bombay was competent to entertain a suit for recovery of damages brought by one Hurkissondas Hurgovundass against the Collector of Bombay and others in respect of trespass and nuisance committed by certain officers of the Collectorate while purporting to execute a distress warrant issued against one Narrondass for non- payment of arrears of land revenue. Under the letters Patent dated Dec. 8, 1823 the jurisdiction of the Supreme Court was barred "in any matter concerning the revenue under the management of the (') 'M.I.A. 353, 379.

(') I.L.R. 37 Bom. IOI, 106. SUl'IIEME OOUllT llEPOllTS I.CJ.II. said Governor and Council of Bombay respectively …… or concern- ing any act done according· to the usage and practice of the country. or the regulations of the Governor and Council of Bombay afore- said." Similar provisions were contained in s. 8 of Statute 21 Geo. III, c. 70. The Supreme Court over-ruled the defendant's conten- tion on the ground that what was due from the plaintiff was not revenue but a perpetual ground rent which was incapable of being enhanced and could not be regarded as revenue at all. After hold- ing so Lord Campbell who delivered the opinion of the Judicial Committee observed:

"The point. therefore, is, whether the exception of jurisdic- tion only arises where the Defendants have acted strictly. according to the usage and practice of the contrary. and the Regulations of the Governor and Council. But upon this ·sup- position the proviso is wholly nugatory; for if the Supreme Court is to inquire whether the Defendants in this matter

concerning the public revenue were right in the demand made, and to decide in their favour orJy if they acted in entire con- formity to the Regulations of the Governor and Council of

Bombay, they would equally be entitled to succeed, if the Statutes and the Charters contained no exception or proviso for their protection. Our books actually swarm with decisions putting a contrary construction upon such enactments, and

there can ·be no rule more firmly established, than that if parties bona fide and not absurdly believe that they are acting in pursuance of Statutes, and according to law, they are entitled to the special protection which the Legislature intend- ed for them, although they have done an illegal act. In this case it may well be that the warrant against the goods of

Tookaydass did not authorise the taking of the goods of Hur- govindass, or even that Hurgovindass might not be liable for the arrears of 'quit rent' ,which. accrued before he became owner of the house. Still the Collector was evidently of

opinion, that a distress might be made for the whole of the arrears due, and that it was sufficient to introduce into the warrant the name of Tookaydass, in. whose name the house continued to be registered. The other Defendant never could have doubted the sufficiency of the warrant. If Indian revenue- oflicers have fallen into a mistake, or without bad faith have been guilty of an excess in executing the duties of their office, the object of the Legislature has been, that they should not be liable to be sued in a civil action before the Supreme Courts." Later in his opinion Lord Campbell said:

Hlf it concerned the revenue, or was a matter concerning an act bona fide believed to be done according to the Regulations of the Governor and Council of Bombay, his (i.e., of the Judge of the Supreme Court) jurisdiction was gone, although prima KALA BllANDAR V. MUNC. C0!4MITTEI (MudhQfkar, J.)

.6. facie it appeared to be a trespass over which his jurisdiction might be properly exercised." This case would have assisted Mr. Sastri only if what was done was something which could legally have been done by the Munici- pality but was wrongly done by it as, for instance, the collection of a lawful tax from a person other than the one from whom it was due. But this decision is no authority for the proposition that if the Collector recovered or tried to recover from a person a sum of money as arrears of land revenue even though it did not fall within the definition of revenue or tried to collect a sum of money which he was expressly .prohibited by law from collecting, he would still o be said to have purported to act under the revenue law which em- powered him to collect land revenue. If an act of trespass was com- mitted in execution of a distress warrant for recovery of such monies. a suit for damages would not have been barred.

In the next case what the High Court was dealing with was the claim of the plaintiff against the Government for damages occasioned by the wrongful cancellation of his licence to sell liquor. The suit had been dismissed by the trial judge as barred by the provisions of s. 67 of the.Bombay Abkari Act, 1878, firstly because the Collector had acted bona fide in pursuance of the Act and secondly because it was not instituted within four months from z the date of the act complained of. The High Court upheld the dis- missal of the suit and in the course of its judgment observed: r

"It is quite true that the Collector's action is not strictly in conformity with the section which authorises the revocation only on the actual conviction of the licensee. But the circum- stances under which the Collector acted are so near the cir- cumstances legally entitling him to act as he did that we feel bound to say the act was done in pursuance of the Statute. The law upon this point may be found stated in many cases, of which we may notice Hermann v. Saneschal('). In strictness, anything not authorized by a Statute cannot be said to be in pursuance of it, while if it is authorized by the Statute clearly it would need no other protection. But if effect were given to such a construction it would altogether do away with the pro- tection intended to be given; accordingly the general principle is that if any public or private body charged with the execu- tion of a Statute honestly intends to put the law in motion and really and not unreasonably believes in the existence of facts. which, if existent. would justify his acting and acts accordingly, his conduct will be in pursuance of the Statute and will be protected."

The learned Judges then referred to Spoonu' s case(') also. Mr. Sastri laid particular emphasis on the concluding portion (') [1862] a' L.J.C.P. 43. (') 4 M.I A. 363, 379. SUPRElllE COURT REPORTS

[1961i] 3 8.C.ll. of the observations quoted above. This again, it may be said, is not a decision which is quite in point. There was no want of juris- diction in the Collector to do what he did but there was only the absence of facts which, had they existed would have given him power to do what he did. Cases of this type must be distinguished from those like the present in which we must imply a constitutional or statutory prohibition against the act done. Where such prohibi- tion exists or can be implied, anything done or purported to be done by an authority must be regarded as wholly without jurisdic- tion and is not entitled to a protection of the law under colotll' of which that act was done.

It is true, as urged by Mr. Sastri, that it was within the compe- tence of the respondent committee to raise the rate of tax from one anna to four annas per bojha and bale even after the coming into force of s. 142-A of the Government of India Act, 1935. The levy of tax at that rate cannot, therefore, be regarded to be beyond the jurisdiction of the respondent so long as the constitutional limit was not exceeded. What is, however, contended on behalf of the appellant is that the action of the Committee in compelling it to pay the tax in excess of the amount which was constitutionally recoverable from it in respect of any one year was ultra vires, that thereby the provisions of section 142-A have been trans- gressed and, therefore, this was a case of utilization by the Com- mittee of the provisions of the Act and the rules made thereunder for doing something which was prohibited by the Government of India Act, 1935 and is now, by the Constitution. It is true that the Committee had jurisdiction to recover an amount up to the constitutional limit. But it cannot fairly be contended on its behalf that merely because of this, that the recovery by it of an amount in excess of the constitutional limit was only irregular or at the worst illegal. Where power exists to assess and recover a tax up to a particular limit and the assessment or recovery of anything above that amount is prohibited the assessment or recovery of an amount in excess is wholly without jurisdiction and nothing else. To such a c;,i,se the Statute under which action was purported to be taken can afford no protection. Indeed, to the extent that it affords

it would be bad. But where, as here, the validity of a prov1s1on of a statute can be upheld upon a possible con- struction of that provision it w.ould be the duty of the court to so construe it as to avoid rendering the provision unconstitutional c

and reject a construction which will invalidate the provision. ll The final contention urged by Mr. Sastri is based upon the . decision of the Privy Council in Raleigh Investment Company Ltd. v.

in Council('). IIis argument is that the Munici- palities Act contains adequate provisions dealing with refund of taxes and that the provisions of s. 85(2) bar a suit for recovery of a (') 7' I.A. 50

c KALA BHANDAR v. "1UNC. COMMITTEE (Mui!holkar, J.) tax wrongfully recovered by tbe Municipal Committee. It may be mentioned that the contention was not raised in the suit or in the grounds of appeal before the High Court and has not therefore been considered by it. It has been raised for the first time in the statement of case. But the scope of an appeal cannot, even at the instance of the respondent who is entitled to support a decree in his favour even upon a ground found against him by the High Court, be permitted to be enlarged beyond that of the appeal before the High Court or the courts below. But as it is a question of consider· able importance and might be raised in other similar suits which are said to be pending, we propose to deal with it.

Before dealing with Raleigh Investment Co.'s case(') we may refer to the provisions of the Act which Mr. Sastri placed before us. Sec. 83(1) provides for an appeal against the assessment or levy of or refusal to refund any tax under the Act before the Deputy Com- missioner and sub-s. ( 1-A) for a revision before the State Govern· ment. Sub-sec. (2) provides that if the authority hearir.g the appeal or revision entertains a reasonable doubt on any question as to the liability to or the principles of assessment of a tax it shall draw ap a statement of the facts of the case and the point on which the doubt is entertained and refer the statement with his 0wn opinion on the point for the decision of the High Court. There is, however. no express provision like that of s. Jl(J) or s. 33(4) of the Indian Income-tax Act entitling the assessee to a hearing either in the appeal or revision petition. Section 85 empowers the State Govern· ment to make rules for regulating the refund of taxes, and such rules may impose limitations on such refunds. Sub·section (2) thereof provides that no refund of any tax shall be claimable by any person otherwise than in acc<irdancc with the provisions of this Act and the rules made thereunder. This sub-section can be availed only if the Act or the rules provide for making a claim for refund. The rules relating to refunds. if there are any, were. however, not placed before us. Nor was our attention drawn to any provision of the Act or to any rule which makes it obligatory upon a person to apply to the Municipal Committee for a refund of a tax. Even assuming that the Act contemplates obtaining a refund only upon compliance with rules made thereunder, does it contemplate cases where refund or repayment on the ground of the unconstitutionality of the levy? It will be noticed that sub-s. (I) of this section empowers the State Government to impose by rules limitations on the refunds-presumably including limitation on the amount of refunds-and sub·s. (2) bars a claim for refund otherwise than in accordance with the rules made under sub-s. (!). These provisions cannot possibly apply to case where the right to obtain a refund or repayment is based upon the ground that the action of the Committee was in violation of a constitutional provision. To hold otherwise would lead to the startling result (1) 74 I.A. 60.

8U¥.Ulllll COURT &SPORTS (!1160j S i.C.R. that what was incompetent to the State Legislature to do or autho- rise a commillee lo do directly can be permitted to be done indirectly by empowering the State Government to make rules for refund whercunder the amount of refunds could be so limited as lo permit retention by the committee of the tax recovered by it in excess of the constitutional limit. In our view. therefore, s. 85 of the Act cannot, in any event, be said to provide a machinery for obtaining refunds in cases of this kind. Since s. 85 is inapplicable, a fort;ori s. 83 cannot apply either. We must there- fore procc•;d on the footing that the Act does not provide a machinery for making a claim for refund or repayment in such cases.

It would be pertinent to advert also to the provisions of s. 84. sub-s. (3) of which deals with "Bar of other proceedings". Sub-s. (I) provides for the period of limitation for an appeal under s. 83(1). Sub-sec. (2) empowers the appellate authority to require the assessee to deposit the tax before the hearing or the decision of the appeal. Sub-sec. (3) is in the following terms:

"No objection shall be taken to any valuation. a!ISCSSment, or levy. nor shall the liability of any person to be assessed or taxed be questioned, in any other manner or by any other authority than is provided in this Act."

It "ill be seen that there is no express mention of a civil court in this sub-section ;1s there was in s. 67 of the Indian Income-tax Act, 1922. In facts. 48 of the Municipalities Act contemplates the insti- tution of a suit ;ubject to fulfilment of certain conditions and thus indicates that it was not the intention of the legislature to the

machinery provided by the Act exclusive. But even if a bar to the jurisdiction of a civil court be assumed or implied, there is an absence of a reference to "refund" in sub-s. (3) of s. 83. In other V.·ords, no finality seems to have been given io a decision rendered by an authority under s. 83 refusing to refund a tax improperly or illegally assessed or recovered. In the light of

circumstances we have to consider the applicability of the decision in Raleigh /11l'estmc111 Co.'.1 case('). In that case the Privy Council considered the effoct of certain provisions of the Indian Income-tax Act, 1922 which prescribed remedies to an assessee who sought to challenge the assessment made against him and also the provi5ions of s. 67. The relevant portion of s. 67 was that "no suit shall be brought in any civil court 10 set aside or modify any assessment made under this Act …….. ". After examining all these provisions the Privy Council said that an effective and appropriate machinery was pro- vided by the Act itself for the review of any assessment on grounds of law, including the question whether a provision of the Act was 11/tra 1•ires and it was in that setting that s. 67 had to be construed. Then it went on to say that the phrase "assessment made under this Act" in s. 67 meant an assessment finding its origin in an activity of

acting as such and that the circumstance that (') 7U.A. llO. c r uu :aHJ.NDil •· 11.u:ac. 0011.11.1'.!Tn (JlJ./iolkar, l.) lag he had taken into account an ultra vires provision of the Act was in that view immaterial in determining whether the assessment was "made under this Act." But, with respect, we find it difficult to ap- preciate how taking into accouat an ultra vires provision which in law must be regarded as not being a part of the Act at all, will make the assessment as one 'under the Act'. No doubt the power to make an assessment is conferred by the Act and, therefore, making an assessment would be within the juriildiction of the assessing autho· rity. But the jurisdiction can be exercised only according, as well as with reference, to the valid provisions of the Act. When, however, the authority travels beyond the valid provisions it must be regard- ed as acting in excess of its jurisdiction. To give too wide a cons- truction to the expresilion "under the Act" may lead to the serious consequence of attributing to the legislature, which owes its exis- tence itself to the Coniltitution, the intention of affording protection to unconstitutional activities by limiting challenge to them only by resort to the special machinery provided by it in place of the normal remedies available under the Code of Civil Procedure, that is, to a machinery which cannot be as efficacious as the one pro- vided by the i:eneral law. Such a construction might necessitate the consideration of the very constitutionality of the provision which contains this expression. This aspect of the matter does not appear. to have been considered in Raleigh . Investment Co.'s case(').

This decision has been briefly referred to by this Court in Firm and Iliuri Subbayya Chetty & Sons v. The State of Andhra Pra- desh(') and what this Court has observed is this: /'In determining the effect of s. 67, the Privy Council consi- dered the ilcheme of the Act by particular reference to the machinery provided by the •ct which enables an assessee

to raise in courts the question whether a particular provmon of the Income-tax Act bearing on the assessment made is or is not ultra vires. The presence of such machinery observed the Judgment, though by no means conclusive

marches with a construction of the section which denies a1t7rnative jurisdic!ion to enquire into the same subject-matter. It 1s that the 1udgment shows that the Privy Council took

view that even the constitutional validity of the taxing pro- v1s1on can be challenged by adopting the procedure prescribed by the Income-tax Act; and this assumption presumably pro- ceeded on the b:isis that if an assessee wants to challenge the VtrC8 of the taxing provision on which an assessment is purport· ed to re made against him, it would be open to him to raise that point" before the taxing authority and take it for a decision before the Court under s. 66(1) of the Act, It is not necessarv for us to consider whether this assumption is wcll founded Or not. But •he presence of the alternative machinery by way of (') 7• I.A. IO.

(') [IllU] l 8.C.R. '52 a> T64. BUl'REWl BEl'ORTS (1980] 3 S.C.B. .appeals which a particular statute provides to ·a party aggriev- etl by the assessment or<,ler on the merits, is a relevant con- sideration and that consideration is satisfied by the Act with. :which we are concerned in the present appeal."

We have alre11dy adverted to the provisionil of ss. 83 and 85 of the Act which are the only provisions brought to our notjce as pro- viding a machinery under the Act for challenging an assessment and we have pointed out

they do not cover a case like the pre- sent. Again the .Provision for an appeal before a Deputy Commis- sioner who is an authority who performs numerous functions under different' Jaws, functions which are executive, ·as well as administra- tivp arid judicial, cannot be regarded as on par with one which provides for an appeal before an Appellate Assistant Commissioner under the Income-tax Act, an authority whose duties are confined to matters a.rising under that Act. Further, the latter Act contains a safeguard in the shape of an appeal to the Income-tax Appellate Tribunal w.hich deals exclusively with !llatters arising under that Act and is an independent tribunal. Iii the circumstances it must be held that even in the class of cas.es to which. the provisions of ·ss. 83 and 85 of the Municipalities Act apply they cannot be. said to provide a sufficiently effective remedy to an assessee to challenge the assessment made against l]im or to a person who is aggrieved by the act!on of the Committee levying or refusing to refund a tax. lt is true that Sub-sec (2) of s. 83 provides for a reference to the High Couri but even

provision cannot be said to be a sufficient- ·J y efficacious remedy for challenging the assessment made on an assessee. For w)lether to make a refefence or not is at the discretion of the appellate or revisional authority and the Act does not confer upon the person aggrieved a right to move the

Court, as does the Income-tax Act, to require a refei:ence to be made in an appro- priate case. We may again rl'!nt out that there is a .complete absence of a provision corresponding to s. 67 of'the Indian Income Tax Act barring the institution of a suit in so far a.S refusal of r\:fund o[ a tax is concerned.

In Secretary of State v. Mask & Co.(') the Privy Council has observed that it is settled law that the exclusion of the jurisdiction of the civil courts is not to be readily iriferred, but that such exclu- sion must either be explicitly expressed 'or clearly implied. As earlier pointed out; this decision has been approyed by this Court in the case of Firm and l/luri Subbayya ·C'1etty& Sons('). Further, one of the corollari!'S flowing from the\ principle that the Constitu- tion is the fundamental la.w of. the land is that. the normal remedy of a suit will be available for obtaining redress against the violation .of a constitutional provision. The Co11rt ,must, therefore, lean in favour of construing a law in sucli a way as not to take away this right an5f render illusory the protection' afforded by the Constitu- tion. So,. whatever be t11e position with·respect to s. 67 of the Indian (') [11140) 87 I.A. 222, 2!l6,

<'> [I9taJ i s.c.lli. 75z •t 764. c c LU.A BBANDAR V. MUNC. COMMITTEE (.lfudho/ka.r, J.) b2J Income-tax Act, so far as s. 83(3) of the Act is concerned, we find it reasonably possible to construe it as not depriving a person of his right to obtain redress from a civil court in respect of an amount recovered from him as a tax in violation of Art. 276 of the Consti- tution.

We have already pointed out that no machinery is provided by the Act for obtaining a refund of tax assessed and recovered in excess of the Constitutional limit and that the machinery actually provided by the Act is not adequate for enabling an assessee to challenge effectively the constitutionality or legality o'. assessment or levy of a tax by a municipality or to recover from it what was realised under an invalid Jaw. It is, therefore,' not possible to infer that the jurisdiction of the civil court is barred. The decision in the Raleigh Investment Co.'s case(') does not, therefore, help the respondent. Moreover, we must bear in mind the provisions of Art. 265 of the Constitution which preclude the levy or collection of a tax except by authority of Jaw, which means only a valid Jaw. There was no corresponding provision in .the various Acts for the govern- ance of India which preceded the Constitution. Under Art. 226 the Constitution has provided a remedy to a citizen to obtain redress in respect of a tax levied or collected under an invalid law. remedy will not be affected by any provisinn like s. 67 of the Indian Income-tax Act or like s. 84(3) of the Municipalities Act. We must not lose sight of the fact that what the appellant has claimed in the suit is the repayment by the Municipal Committee of an amount recovered by it in excess of that which under the Constitution it was competent to recover from the appellant. The appellant bas not sought to modify or set aside any order made by an authority acting or purporting to act under the Act. No doubt, the relief of repayment is claimed on the

that the enhance- ment of the rate is unconstitutional. No d'oubt also that the appel- lant had sought a further relief of injunction. As regards the first, the position is that the High Court of Nagpur has held. in the peti- tion under Art. 226 preferred by the appellant, the enhancement to be unlawful. This decision was rendered by the Court during the pendency of the suit and was binding on the civil court in which the suit was pending and has been in fact followed by it. As regards the relief of injunction, that relief became unnecessary because of the order made by the High Court in the Writ petition·. It is apparently for this reason that the civil court did not award that relief to the appellant. In view of the High Court's decision it was not at all necessary for the trial court to consider in the suit before it the question of the validity of the assessment by or collection of the tax but only to. ascertain the amount which was payable to the appel- lant and whether the suit was barred under s. 48 or s. 85(2) as con- tended by the respondent. In these circumstances, we are of opinion that the appellant's suit cannot be said to be barred even if we interpret s. 84(3) of the Municipalities Act in the same way as the Privy Council interpreted s. 67 of the Indian Income-tax Act. rl 1' r..t.

(1966] s 8,0.L We may further observe that where there 19 an expre,5 prohibi· tion in a statute against a· local authority from imposing a tax, as for instance the recovery in the Statute construed by this Court in the Poona City Municipal Corporation easel') or where prohibition can be implied-,-whcther it be with regard to an item of taxation or with regard to the rate of ta or the quantum of tax payable by an individual assessee-the action of a local authority or of any of its instrumentalities in transgressing that prohibition must be regarded as being in excess of its jurisdiction. Here there i1 a prohi· bition in s. 142-A of the Goverruncnt of India Act and now in Art. 276 of the Constitution, which preclude a State Legislature from making a law enabling a local authority to impose a tax on "profes· sions, trades, callings and employments" in excess of Rs. 250 per annum. These provisions have to be read in the Act or to be deem- ed by implication to be there as the Constitution is the paramount law to which all other laws are subject as was the Government of India Act, 1935 before January 26. 1950. It therefore,

the date specified in s. 142-A of the Government of India Act or after the commencement of the Constitution a local authority or any of its instrumentalities imposed or imposes a tax which is in excess of the permissible amount, it would be exceeding its jurisdiction and a provision like s. 84(3) of the Act will not bar the jurisdiction of a civil court to entertain a suit instituted by a per6on from whom it is collected for the repa vment of the money recovered from him in excess of the permissible amount. There is a real distinction bet- ween those sases where .a suit was held to be incompetent and the kind of cases which we have before us. Thus where the question merely is, whether the assessment had been made according to law, the Assessing Officer of the Municipality having jurisdiction on the subject matter and over the asscssce the provisions of s. 84(3) may be a bar to a suit. Where, however, the question raised Is as to the jurisdiction of the Assessing Officer to proceed against the and levy on or collect from him an amount in excess of thai permit· ted by the Constitution, the matter would be entirely out of the bar of that provision. Herc since the Assessing Oftlcer had no authority to levy a tax beyond whats. 142-A of the Govcrrunent of India Act. 1935 permitted or

Art. 276 permit' his proceedings are void In so far as they purport to levy a tax in excess of the pcnnissible amount and authorise its collection and the assessment order is no answer to the suit for the recovery of the execs.' amount. To this extent, even the order of assessmeni cannof obtain the protection of s. 84(3) of the Act and, therefore. the appellant's suit is main- tainable.

For all these reasons we hold that the High Court was in error in dismissing the appellant's suit. We hold the same in the connect· cd appeal and accordingly allow both the appeal.! with cost! throughout

(') [19"] I 8.C.!I. !YI. r KA.LA BllANDAR v. MUNC. COMMITTEE (Dayal, J.) Raghu"8r Dayal J. We have given careful thought to the ques- tions of law arising in this appeal, but regret we have not been able to agree with the view expressed by brother Mudholkar J .. in the majority judgment.

We need not recapitulate the facts which have been fully set out in the judgment of Mudholkar J. The questions of law which arise for determination are: {i) whether the respondent's collecting the amount in excess of the amount which it could have collected on account of the tax on trade, in view of the provisions of Art. 276 of the Constitution, was 'an act done or purported to be done under the Act' within the meaning of s. 48(1) of the Central Provinces & C Berar Municipalities Act, 1922 (Act II of 1922), hereinafter called the Act; and (ii) whether the suit is barred by s. 84(3) of that Act. The question in short boils dowp. to this : whether the expres- sion 'anything done or purporting to be done' under the Act will cover only those acts which would be in strict conformity with the provisions of the Act or will also cover such acts which the Munici- pal Committee is competent to do under the Act, but in doing which the Committee has, in some manner, acted beyond the provi- sions of the Act or beyond any other legal provision.

Section 48 of the Act refers to suits against the Committee or any of the other specified persons acting under the directions of the Committee, for anything done or purported to be done under the Act. If a suit is for anything done or purported to be done under the Act, the necessary conditions laid down in the section are to be satisfied before the institution of the suit. One condition is that the suit is to be instituted after the expiration of two months after the service of a notice, in writing, to the persons mentioned· in sub-s. (!). Another is that that suit be instituted within six months from the date of accrual of the alleged cause of action. If a suit is not instituted after giving notice or within this period, it has to be dis- missed.

The question then is : what is the present suit for? And it is only on the determination of the nature of the act to which the present suit relates that it caln be said whether the suit is covered by s. 48 tJr not I.e., whether the act can be said to be done or pur- ported to be done under the Act.

The plaintiff claims a decree for the amount alleged to haye been illegally collected from him as tax and for a permanent Injunc- tion. The illegality of the collection is said to be on account of there ir being an upper limit for a person's liability to tax on trade and calling, in view of s. 142A of the Government of India Act, 1935 (shortly referred to as the 1935 Act) and Art. 276 of the Constitu- tio.n. The limit under the Constitution is Rs. 250. It was Rs. 50 under the 1935 Act. What was collected from the appellant was the tax assessed on him. According to the appellant, the amount assess- ed exceeded the legal limit and therefore what had been collected In exces11 of that limit was collected illegally.

….. ; . . … . (1965] 8 S,CJ.R, We may now consider the procedure laid down for the collec- tion of tax under the Act before we determine the nature of the alleged excessive collection of tax from the appellant. Section 66 empowers the Committee to impose the taxes enumerated in sub-s. (!), clause (b) of subs. (I) mentions a tax on persons exercising any profession or m:t. or carrying on any. trade or calling, within the limits of the municipality. Sub-section (2) empowers the State Government, by rules made under the Act, to regulate the imposi- tion of taxes mentioned in the section and to impose maximum amounts of rates for any tax. The rate of tax fixed by Government Notification dated December 22, 1936 was enhanced by another Notification dated April 10, 1941. The former rate of one anna: was enhanced to four annas. These notifications did not lay down any upper limit for the amount of tax payable by one person td the Municipality. The legality of the imposition is not questioned. The legality of the enhancement was questioned by the appellant through Miscellaneous Petition No. 389 of 1954 decided by the High Court on Apr.ii 12, 1955. The appellant prayed, by that peti- tion, for the issue of a writ prohibiting the Committee from collect- ing taxes under the notification of 1941. The High Court did not hold the notification to be bad in law. What it held was that the· tax was invalid to the extent it offended against s. 142A of the 1935 Act and that it was also invalid to the extent it offended against art. 276 of the Constitution. The writ issued by the High Court was a writ of mandamus prohibiting the Municipality from resorting to the 1941 Notificaticm for the purpose of collecting tax in excess of Rs. 250 per annum. The Municipality therefore was empowered to impose tax in 'accordance with the notification of 1941 and, in view of s. 142A of the 1935 Act and art. 276 of the Constitution, the total tax claimable on account of this tax from the appellant could not exceed Rs. 50 or Rs. 250 respectively during the period when s. l42A was in force and later when art. 276 came into force. The next step, after the Imposition of a valid tax, according to the Act, relates to the assessment of tax on the person's liability to pay it. Section 71 empowers the State Government to make rules under the Act regulating assessment of tax and for preventing the evasion of assessment and s. 76 empowers the State Government to make rules regulating the collection of taxes. The rules for assess- ment and collection of taxes framed in 1936 were notified on December 22, 1936.

Rule I required a person carrying on the trade of ginning or pressing cotton into bales by means of steam or mechanical process to furnish to the Committee, annually, a return in the prescribed form which required the furnishing of the number of bojhas ginned and the number of bales pressed, with the total weight in maunds during the financial year in each case. This information was neces- sary as the rate of tax related to a bojha of 392 lbs. ginned cotton and a bale of 392 lbs. pressed cotton.

o'. c p !ULA BJ!ANDAR v. MUNC. COMMITTEE (Dayal, J.) Rule 4 provided that the tax would be assessed by a sub- committee on the basis of the information received under certain rules including r. 1. Rule 5 required the communication of the amount of assessment to the assessee. Rule 6 provided that objec- tions to the assessment would be received and considered by the sub-committee if presented within a month from the date of com- munication of the amount of assessment to the assessee and that the decision of the sub-committee would be final subject to the confirmation by the general committee. Rule 7 provided that the tax would be payable in one instalment on August I. each year Fresh rules were notified in 1941 and these were practically identi- cal with the 1936 rules.

It is not alleged that the tax as,essed on the appellant during the periods in suit had not been assessed by following the proce- dure laid clown in the rules. It follows from the statutory rules that once the tax is as>essed according to the rules, the assessee becomes

statutc'fily. to pay the assessed tax. Section 77 provides how any arrears of tax by the Committee under the Act can be recovered. They can be recovered on an applbtion to a Magistrate, by di"lress and sale of movable propertv of the defaulter within the limits of his jurisdiction. Sec- tions 77 A and 80 prnvide other procedure for arrears of certain taxes to be realised.

Section R3 provides for an nppeal. a.eainst the assessment or levy of or refusal to refund any tax under the Act. to the Deputy Commissioner or some other officer empowered by the State Gov- ernment in that behalf. Sub-s. (]Al allows a

aggrieved by the decision of the appellate authority to apply to the State Govern- ment for revision of the decision on that the decision is contrary to law or is repugnant to any principle of assessment of tax or that the appellate authority has exercised jurisdbion not vested in it bv law or has failed to exercise a jurisdiction vested in it by bw. Sub-s. Cl provides for a reference to the High Court by the annelhte authoritv or tre revisional authority on its own motion or on the anplic·,tion of any· person interested, for the opinion of the Hieh G'ourt on any question as to the liability or the orinciple of assessment of tax if such a question arises on the hcarirg of the appeaJ nr revision.

Sub-s. (3) of s. 84 provides: "No objection shall be taken to any valuation, assessment, or levy. nor shall the liability of any person to be assesi;ed or taxed be questioned. in any other manner or by any other

authority than is provided in this Act." L/P( li').ISC f – 7 SUPREME COl:RT REPORTS [1965] 3 8.0eRI Se<:tion 85 reads: "(I) The State Government may make rules under this Act regulating the refund of taxes, and such rules may impose

limitations on such refunds. (2) No refund of any tax shall be claimable by any person otherwise than in acordancc with the provisions of this Act and the rules made thereunder." It follows from the above provisions that an assessee has to pay the tax assessed and that if aggrieved with the assessment of tax he has to appeal against the assessment order. He can raise questions of law and fact in the a ppcal.

The appellant, in the present case, could have appealed against the assessment on the ground that the amount assessed exceeded the limits laid down fo; the tax under s. I 42A of the 1935 Act if that applied at the time of assessment or under art. 27.6 of thC' Constitution if the latter applied at the relevant time. His claim for the refund of any amount, if paid, would arise only after the amount assessed and paid is modified by the appellate er revisional authority. If that amount is not so modified, no question for the refund or repayment of any amount paid as tax ·under the Act arises. The statute provided for the assessment of tax and for its collectior. in case the assessee did not himself pay the assessed amount

to the rules. The present suit for the of the amount alleged to have been realised illegallv is in essence a suit for firstly modifying the amount assessed and then to decree the payment of the amount held to have been paid in excess of the tax as modified by the Court. It follows therefore. to our mind. that the suit relates to the act of the Committee in assessing the appellant wrongly by ignoring the constitutional provision that the amount payable bv a single person to the municipality for such tax was not to exceed a certain limit and that it is not merely with respect to the act of collecting the excess amount. In fact. the assessment of the entire tax was one act and so was the collection of the amount assessed. The act of assessing the tax or the consequen- tial act of collecting the amount cannot be broken up into two acts (j) of asscssin'.! the tax upto the legal limit and (ii) of assessing the tax with respect to the amount in excess of the legal limit. Neither can the act of collection be hroken up into two acts (j) of collecting the amount which can be legally

and <ii) of collecting the in excess of the legally realisable amount of tax. The act of assessment 0r of collection therefore was an act done by the Committee unJcr the provisions of the Act. though it may be, as appears to be the case. that it acted wrongly in assessing the tax at an excessive figure and consquently in collecting an amount in which could fi;l\·e been lega!Jv collected. The suit is therefore fully :ovcred by the provisions

(} l of s. 48 Qf the Act. c KALA BHANDAR v. MUNC. CJMMITTEE (Dayal, J.) Sub-s. (2) of s. 48, as already stated, provides that every such su.it, i.e. a suit falling within sub-s. (I) of that section, shall be dis- missed unless it is instituted within six months from the date of the accrual of the alleged cause of action. The suit was instituted in the instant case on December 6, 1952, more than 8 months after da.te of recovery of most of the amounts alleged to have been illegally recovered from the alJpellant and, clearly, the suit for the recovery of such amounts had to be dismissed.

The taxes for the years 1951-52 were recovered in small amounts on January 17, 1952, March 13, 1952, March 31, 1952 and August 27, 1952. The suit for the amount recovered on January 17 was also instituted after the period of limitation.

No notice with respect to the alleged illegal collection of taxes in March and August 1952 had been given to the Municipal Com- mittee as notice was given on January 10, 1952, prior to these col- lections and could not have possibly referred to them. The suit for these amounts also has to be dismissed as the condition precedent for the institution of the s9it under sub-s. (I) of s. 48 has not been satisfied.

There is another reason which justifies the dismissal of the ap- pellant's suit, though the view of the High Court on that point is in favour of the appellant. In view of s. 84(3) the assessment of the tax or the liability of the person assessed or taxed cannot be object- ed to in any manner or before any authority other than what is provided in the Act. Section 83 provides the procedure by which the assessment of tax can be questioned both on law and facts. The correctness of the assessment .cannot be questioned by any other manner and questioning by instituting the suit in a Civil Court would be one such other manner. We have already indicated that in essence the oresent suit is a suit for the modification of the taxes assessed and for consequential order decreeing the repayment of the amount held to have been collected in excess of the amount so modified. In view of sub-s. (3) of s. 84, exclusive jurisdiction to determine the correctness of the amount assessed is given to the authorities mentioned in s. 83. The result is that no other authority can enter into the question of the correctness of the assessment on grounds of law or fact. The present suit is barred from the cogni- zance of the Civil Court.

The views we have expressed find support from what has been decided by the Privy Council and this Court. We would first refer to those cases before dealing with the cases relied on for the appel- lant in support of the contention that the Committee had no juris- diction to assess the tax beyond the limit allowed by s. 142A or art. 276 and that therefore the act of the Committee was an act which could not be said to have been done or purported to have been done under the Act and that it was not necessary for the appellant to take recourse to the procedure laid down in ss. 48 and 83 of the Act. 1128.

(1965] 8 B.O.R In Raleigh' lnyestment Co. Ltd. v. Governor-General in Council(') the Privy ColineiLh.ad to construes, 67 ofthe,Inpome-tax Act which provided: 'no suit shall be brought in any civil court to· set aside or modify any assessment made under this Act ….. .'. The· suit giving rise to the 'appeal• before the Privy Council .was· for a declaration that certain provision of the Act 'Yas ultra,. vires the legislative powers of the Federal Legislature, that therefore the appellant before the Privy Council was not liable°to be assesseCl or cl;iargep to tax in respect of certain dividends and the assessment was illegal and wrongful, for an injunction restraining the depart- ment from making assessment in future years in respect of such dividends and for the repayment of the amount said to have been illegally realised on account of the illegal assessment. The Privy Council said at p:. 62:

"In form the relief claimed does not profess to modify or set aside the assessment. In substance it does, for repayment of part of the· sum due by virtue of the notice of demand could not be ordered so long as the assess!l'ent stood."

The same ·ca.n be said respect to the claim for repaym·ent of the alleged illegal collection of the excess amount from the appel- lant. The Privy Council further said,: ''.An assessment made under the machinery provided by the

Act, if ba3ed on '.I provision subsequently held. to be ultra vires, is not a 'nullity like an order of a court lacking jurisdic- tion. Reliance on such a provision is not an excess of jurisdic- tion but a mistake of law made i11.!he course cif its exercise." In view· of what the Privy Council has said, the Committee's over- looking the constitutional provisions in· the exercise of its jurisdic- tion to assess the tax will not make its assessment of the tax an assessment without jurisdiction but would only show that the Com- mittee made a mistake of hw in

course of the c.xercise of its jurisdiction. The Pri\ly Council took into consideration the machinery pro- vided in· the Income-tax Act fer tl:e rJising objections to the assessment inade against him and held that effective and proper machinery was prmddetl by th.e Act itself for the review OI) grounds 6f law. This was however not the reason for their construing s. 67 'n the way they did. In fact, they considered. the constr.uction of 67 dear and said:

"Under the Act the income-tax officer is charged with the duty of asse3sing the total inccme· of ,the The obvious meaning. and in their-Lordships' opinion, the'correct.meanfog, of the phrase 'assessment made under this Act' is an assessment • C') T.R. 74 LA. 50.

c I ' i i i ltALA BHANDAB V. MUNC. CO.wa'ITEE (Dayal, J.) finding its origin in an activity of the assessing officer acting as such. The circumstance that the assessing officer has taken into account an ultra vires provision of the Act is in this view im- material in determining whether the assessment is 'made under this Act'. The phrase describes the provenance of the assess- ment: it does not relate to its accuracy in point of law. The use of the machinery provided by the Act, not the result of that use, is the test."

These observations fully apply to the expression 'the assessment of any tax under the Act' in sub-s. (!) of s. 83. lt follows that when the Committee made the assessment of the tax on the appellant the assessment was founded on the activity of the Committee acting as C the assessing authority and the fact that it overlooked the constitu- tional requirement is immaterial in determining whether the assess- ment is made under the Act. The expression 'made under the Act' has no relation to the accuracy of the assessment in point of law. The expression 'assessment of any tax under the Act' in s. 83 is equivalent in its content to the expression 'assessment made under D the Act'.

Lastly, the final observations of the Privy Council in this case that when an exclusive machinery for the determination of the tax is provided by the Act and the tax is 'assessed by thali machinery, there arises a duty to pay the amount of tax demanded E on the basis of that assessment and that the jurisdiction to question the assessment otherwise than bf the use of the machinery expressly provided by the Act would be inconsistent with the statutory obli- gation to pay arising by virtue of the assessment. The very fact that the appellant let the assessment become final without taking recourse to the orocedure of appeal and revision laid down in s. 83 F of the Act and thus became liable under the statute to pay the amount assessed, makes his questioning the correctness of the amount through the Court inconsistent with that obiigauon. H appc lfs that the Privy Council considered a special provision bar- ring the taking of objection to assessment of tax by any authority to be unnecessary. It said at p. 65:

"The only doubt, indeed, in their Lordships' mind, is whether an express provision was necessary in order to exclude jurisdiction. in a civil court to set aside or modify an assess- ment."

This would meet the contention for the appellant that sub-s. (3) of II s. 84 does not specifically refer to the Civil Court and therefore does not specifically bar jurisdiction of the Civil Court from. taking cog- nizance of a suft relating to the assessment of tax.

It may also be mentioned that s. 84(3) of the Act, by its terms, refers to an objection to assessment and not to 'assessment under the Act or assessment made under the Act'. This makes the provi- sions of s. 84(3) much wider in scope than those of s. 67 of the Indian Income-tax Act were.

Ci30 SUPREME. COUH'l' n1o:1•on·r:.; [1965] 3 s.c.a. The other case we would refer to is firm· & 11/uri Subbayya Chetty & Sons v. Tire Srate of Andhru Pradesh\'!. The appellant before this Court, in that case, sued the State of Andhra Pradesh for a decree for a certain amount on the ground that that amount had been illegally recovered from it under the Madras General Sales Tax Act, 1939. Section l8A of that Act provides that no suit or other proceeding shall, except as expressly provided in the Act, be instituted in any Court Lo set aside or modily any assessment made under the Act. This provision is practically identical in terms with that of s. 67 of the Income-tax Act which had been considered by the Privy Council in Raleigh's Ca.1e\-1. The contention raised before the Court was that if an order of assessment had been made illegally by the proper authority purporting to exercise its powers under the Act, such an assessment could not be said to be an assessment made under the Act. It was also contended that the use of the words 'anv assessment made under this Act' did not cover cases of assessmen"t which purported to have been made under the Act. This Court said at p. 759:

"The expression 'any assessment made under this Act' is, in our opinion, wide enough to cover all assessments made by the appropriate authorities under this Act whether the said assessments are correct or not. It is the activity of the assessing officer acting as such officer which is intended to be protected and as soon as itf-is shown that exercising his jurisdiction and authority under this Act, an assessing officer has made an order of assessment that clearly falls within the scope of s. ISA." The view expressed by this Court is practically the same as had been expressed in Raleigh's Case('). Jn fact, the only difference between the two cases appears to

that in the Privy Council case the illegality of the assessment was said to lie in basing the assess· ment on a provision which was said to be ultra vires the legislature while the illegality of the assessment made in the case before this Court lay in the alleged mistake of the assessing officer in constru- ing certain transactions to be transactions of purchases though they were really transactions of sale, the tax being leviable on purchases and not on sales. This Court referred to Raleigh's Case(') at p. 764 and did not express an opinion on the view of the Privy Council that even the constitutional validity of the taxing provision could be challenged by adopting the procedure prescribed by the Income- tax Act, a question which does not arise for consideration in the present case.

We are therefore of opinion that the construction put on the expression 'assessment mJde under the Act' in these two cases justifies the conclusion that the assessment of tax made on the ap- pellant in this case is covered by sul>-s .. rn of s. 83 of the Act and I S.C.R. 752.

(') 74 I.A. 00. CJ II c KALA BHANDAR v. MUNG. COMMITTEE (Dayal, J.) amounts to 'an act dom; under the Act' for the purposes of sub-s. (1) of s. 48 of the Act. It is therefore unnecessary to determine the scope of the expression 'an act purported to be done under the Act' in sub-s. (!) of s. 48.

We may now briefly deal with the cases relied on for the ap- pellant. Before, however, doing so, we may first deal with the case of Poona City Municipal Corporation v. Dattatraya Nagesh Deo- dhar(') decided by this Court. In this case the Poona Municipality had imposed a tax on the amount of octroi duty which had been levied on the goods imported within the Municipal limits but had been subsequently exported out of such limits within the specified periods. The Poona Municipality used to deduct 10 per cent of the amount to be refunded. This deduction was held to amount to a tax on the octroi refund. Such a deduction was imposed as a tax under s. 59(b)(xi) of Act III of 1901. The tax continued after the 1901 Act was repealed by the Bombay Municipal Boroughs Act, 1925. The Boroughs Act was, in its turn, repealed by the Bombay Provincial Municipal Corporation Act, 1949. That Act was ap- plied to Poona on February 15, 1950 and thereafter the powers of taxation of the Municipality were governed by s. 127 of that Act which authorised the. Corporation to impose the various taxes mentioned in that section. A tax on octroi refund was not one of such taxes. It could not come under cl. (f) which described: 'any other tax which the State Legislature has power under the

Constitution to impose in the States'. The State Legislature had no power under the Constitution to impose a tax on octroi refund. It was therefore held by. this Court that the amount of tax on octroi refund could not be imposed by the Poona City Municipal Corporation. It was, after holding so, that reference was made to sub-s. (4) of s. 127 which provided that nothing in that section would authorize the imposition of any tax which the State Legis- lature had no power to impose in the State under the Constitu- tion, and it was said:

"Apart from his absence of power to impose such a tax, which is clear from the earlier parts of s. 127, we have the categorical prohibition in sub-section 4 against the imposition of any such tax by the Corporation."

This reference was to emphasize that the impugned tax could not possibly be imposed under the Act. Sub-section (4) appears to been enacted as a matter of caution. There could be no necessity for sub-section (4) as s. 127 itself had provided for the taxes which could be imposed. Any tax which was not

in the .section could not possibly be imposed by the Corporation. The !eg1Slature might have considered the. any the specified taxes not remaining in future w1thm the leg1slatlve bst of the State and (') [1964] s s.c.R. 11s.

. 532 ' COURT REPORTS (1965] 3 s.c.R. '-… therefore provided th:it in such a conti!!gency a tax though spedfied · · A · in the section will not be imposed. The provision of sub-s. (4) did not in any way affect the decision of this Court in holding that the Poona Municipal Corporation could not ·impose a tax on octroi refund.

The other contention for the Poona Municipal Corporation was that the suit was instituted beyond the period of limitation prescribed under s. 487 o[ the 1949 Act. The suit would have been time-barred if the act of the Corporaticn imposing the tax on octroi refund could be hcid to be 'an act done or purported to be done in pursuance or in execution odntended execution' of the 1949 Act. This Court held that the tax was not levied in pursuance or in execution. of the Act" and therefore the benefit of s. 487 could not be availa!Jle to the Corporation.

The tiscd ins. 487 is different from the.one used in s. 48 of the Act. Ap;irt from this consideration, the act of imposing the tax cnuld not be said to have originated from·any provision of c

the 1949 Act and therefore could not possibly be held to be an act .D done under the 1949 Act. We do not think this case can be taken to support the appellant's contention that the assessment of the tax on it and the consequential collection of lhe amount in excess of the limit laid Clown by art. '276 of

Constitution was not an act done under the Act. The has relied oa the cases decided by the Nagpur Hieh Ct,urt and a brief reference may now be made to them. We· m<:y refer to the case reported as The Amraoti TOW/I Municipal Committee v. Shaikh Bhika11(') first.· The plaintiffs had sued to recover the t"JX which had been collected from' them in excess of !he la;vfulralc. TI1e sl!it was instituted after the plaintiffs had obtained a dec!arrttfon that the enhancement of the tax over · that rate was illegal. :rhe Municipal Committee had power to impose and enhance the 'tax. It however had enhanced the. tax without

the entiie bid down for such enhance- ment and had omitted 'ta consider the objectioQS filed against the· proposed enhancement. l he question before the High Court was · G whether the coHccticm of the tax at the enhanced rate was an act which fcli within the ambit of the expression 'anything done or · purportd _t:) be done under the Act' which Act. it may be-mention- ed, was the C.P. & Ikr::r Municipalities Act, 1929, the very Act with which· we are concerned in the pre>ent appeal. Niyogi J. ex- pressed at :p. 219 his agreement with the· principle that if. the Municipal Committee e;cm:i.sed a power which it did not possess, it should not

regarded :is ae:tin9 in pursuance of the statute gov- erning its afl;;irs and its acts should not be re:rarded as being done· under the statute. and further stated that that principle however did not help the Municipal . Conimittec. the appellant before him. (1) 1.L.R.

:!16. c !ULA BHANllAR v .. 'llJXO. CO\!MlTTEE (Dnyr.Z, J.) Niyogi J. then said, after noticing the failure of the Municipal Committee to consider the objections to the proposed taxes: "Now there can be no question that the·municipal com-

mittee, in imposing and collecting tax at four annas per animal, was acting ex<:ctly in accordance with secL10n 68. It must be observed that the1e is a tliiference between a case when a cor- porate body exercises a power which is wholly absent and a case where it has power but it exercises it illegally or with material irregularity. In the former case the municipal com- mittee's act from beginning to end is illegal; whereas in the latter case the act is quite legal in the beginning but becomes illegal in the end.".

Again he said: "Jn enhancing the tax and collecting it the municipal com· mittec was certainly exercisi11g although irregularly, the power conferred on it by section 68 and to that extent it appears to me that the contenticn that they were not acting under the statute is untenable."

The views expressed by Niyogi J., we may say with respect, find full support from l<aleii:h s Cwe( i and Subbayyu Clietty"s Case('). ,4mraoti Municipal Co111111it1ce"s Case() was in a way on all fours with the present case. In that case the Municipal Com- mittee overlooked the pro>ision of Jaw ab0ut consiliering the objec- tions to the proposed enhancc.11cnt in tax. In the present case the Committee overlooked the conslltCJtional rcquire,nent that the maximum limit of the tax payJble by a single individual is Rs. 250. The next case is District Co1111cil, Bltandara v. KMwrilal('). In this case the question before Bo,e J. was whether a suit for the recovery of an amount recovered in excess of what cculd be legally taxed came within the mischief of s. 71 and s. 73(1) of the Central Provinces Local Self-Government Act, 1910 (C. P. l V of 1920). Bose J. said at p. 92:

"It will be observed that both section 79 and the rule are confined to orders and decisions 1111der tire Act. It is im- possible to say that an order which contravenes the Jaw or is made in the face of an express statutory prohibition can be said to be under the Act. The words 'purporting to be given· or 'made under the Act' am not present in this section and so the .difficulty which

regarding the other point is not present here." We do not see why an ordinary decision given under the Act be not considered to be an order made under the Act. Neither of the expressions refer to the order or decision being correCt or not. (') 74 I.A. 50.

(') I.L.R. 1939 Nag. 216. (') [1964] I S.C.R. 752. (') !.L.R. [1949] Nag. 87. SUPRF..ME COURT REPORTS [1965] 3 B.C.I\, Section 73 of the Central Provinces Local Self-Government Act prescribed that no suit shall be instituted tic ………. for any- thing done or purporting to be do01e under that Act, unless the prescribed notice be first given. Bose J. presumably in view of what he had said earlier in connection with orders and decisions given under the Act. said:

"I am clear that what was done here was not done 'under the Act'. so the only question is whether it 'purported to be done· under the Act." In these observations he seems to have equated the expression 'given under the Act' with 'done under the Act'. His view, as we have already pointed out with reference to something done under the Act, docs not find support from Raleigh's Clue(') and Subbayya c Che11y's Case('). Bcse J. then considered the content of the expres- sion ·purported lo be done'. We need not discuss what he says on this point as we have held that the assessment made on the appel- lant was an assessment made under the Act and that the act of. illegal collection with respect to the amount in excess was an act done under the Act.

The appellant mainly relied on the Nagpur reported as M1111icipa/ Commi/lee, Karanja v. New East India Press Co. Ltd., Bombay('). It was held in that case that a suit for refund of a tax. illegally imposed by the Municipal Committee was not barred by reason of ss. 48. 83 and 84 of the Central Provinces Municipalities Act as the Municipal Committee did not act or purport to act under the Act in imposing the illegal tax. Bose, Acting C.J., deliver- ing the judgment, relied on his earlier decision in District Council, Bhandara Case(') and held that the claim for. the rccoYery of the tax illegally realised in excess of the permissible limit were not barred by reason of s;. 83 and 84. He then referred to s. 48 and. after stating that the act of the Municipality when prohibited hy 'I'

law was wholly beyond its jurisdiction and therefore s. 48 did not apply, said: "The distinction between a case where section 48 applies and a case where it does not is clearly shown in Tire Amraoti Town Municipal Commillee v. Shaikh Bhikan(')."

We have referred to this case and expressed full agreement with) the views expressed by Ni yogi J. there. It appears to us that the full significance of that judgment has been overlooked in Municipal Committee, Kara11ja Case(').

We hold that the appellant's suit for the recovery of the tax. realised in excess of Rs. 250 a year has been rightly dismissed· as (') 74 I.A. 50. (') I.L.11. [1114S] Nag. 971. (') [1964] I S.C.R. 752.

(') I.L.R. [1949] llag. 87. KALA BHANDAR v. MUNO. COMMITTEE (Dayal, j.) the correctness of the assessment of the tax could not be challenged by a suit in a Civil Court in view of s. 84(3) and as the provisions of s. 48 requiring the giving of notice to the Municipality and the institution of the suit within a certain period had not been complied with. We would therefore dismiss the appeal with costs.

ORDER In view of the majority judgment, the appeal is allowed with costs throughout.