Coal companies challenged demand notices for a coal tax levied since 1935 by a mining local board's successor under s. 51 of the Central Provinces Local Self-Government Act, 1920. The Supreme Court upheld the original imposition, held s. 51 covered the coal tax, and sustained its continuance via saving provisions.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
THE SUPREME COURT REPORTS
THE AMALGAMATED COALFIELDS LTD. , 96, AND OTHERS
February zo.
v.
THE JAN AP ADA SABHA, CHHINDW ARA
(B. P. SINHA, c. J., s. K. DAS, A. K. SARKAR, K. C. Das GUPTA and N. RAJAGOPALA AYYANGAR, JJ.J
Coal Tax-L,gality of-Local Legislature authorising stick levy by local authority-Legislative competence-Central Provinces Local Self-Government Act. r920 (C. P. 4 of r920), s. 5r-Government of India Act, r9r5 (5 & 6 Geo. 5, Ch. 6r), ss. 80A(3), 8r(r)(3), 84(2)-Government oj India Act, r935 (26 G,o. 5, Ch. 2), s. r43C onstitution oj India, Art. 227.
Section 51 of the Central Provinces Local Self-Government Act, 1920, empowered a district council, subject to the previous sanction of the local Government, to impose "any tax, toll or rate, other than those specified in ss. 24, 48,49, and 50.'' On March 12, 1935, an Independent Mining Local Board functioning in the area in which the petitioners were working certain mines situated therein, and having vested in it all the powers of a dis- trict council, resolved to impose a tax on coal, coal-dust and coke manufactured at the mines or sold within the territorial jurisdiction of the Board. The petitioners who were served with notices of demand requiring them to pay certain sums of money as the tax due by them for despatches of coal from their mines, challenged the legality of the levy of the tax on the grounds, intl'f alia (1) that the Act which by s. 51 authorised the imposition of the tax, had been passed by the local legislature without the previous sanction of the Governor-General, thereby contra- vening s. 80A(3) of the Government of India Act, 1915, and that even if it was found that the Act was validly passed before the coming into force of the Government of India Act, 1919, which introduced s. 8oA into the Act of 1915, the power conferred by s. 51 to levy tax was exercised only in 1935 and by that date s. 8oA had been introduced into the Government of India Act, 1915, and that thereafter there could be no legal imposition of a tax without the previous sanction of the Governor-General being obtained, (2) that s. 51 of the Central Provinces Local SelfGovernment Act, 1920, on its language and ,in the context of other provisions referred to in that section, did not authorise ~ the levy of a tax of the nature of the coal tax, and (3) that, in any case, the tax ceased to be legally leviable after the coming
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r96r into force of the Government of India Act, r935, and of the Constitution of India, since a tax like that in question could be im- Amalgamated posed only by the Central Government. Coalfields Ltd. Held: (r) that the Central Provinces Local Self-Government v. Act, 1920, having received the assent of the Governor-General, Janap~da Sabha, its validity cannot be challenged in view of the saving clauses Chhindwa•a in the proviso to s. 80A(3) and s. 84(2) of the Government of India Act, 1915. (2) that the validity of Central Provinces Local SelfGovernment Act, 1920, when enacted, not being open to any objection under the Government of India Act, 1915, any subsequent amendments to the latter Act could not in any manner affect its continued validity and operation. (3) that on the proper construction of s. 51 of the Act of 1920, the levy of a coal tax is not excluded from the purview of the local authority.
(4) that the continued levy of the tax in question even after the coming into force of the Government of India Act, r935, and the Constitution of India, is valid in view of s. 143 of the Act of 1935 and Art. 227 of the Constitution.
ORIGINAL JURISDICTION: Petition No. 31 of 1959.
Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights.
M. C. Setalvad, Attorney-General of India, IS. N. Andley, J.B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the petitioners.
B. Sen and J. N. Shroff, for the respondent.
Ayyangar ]. AYYANGAR, J.-This petition under Art. 32 has been filed impugning the validity of two ~otices of demand served on the petitioners requiring them to pay what has been compendiously described as "coal tax" by the respondent, which is a Local Board constituted under the Central Provinces & Berar Local Government Act, 1948 (C. P. & Berar Act XXXVIII of 1948). The ground of challenge is that there was no legislative power for the levy of the tax and that consequently the fundamental rights of the petitioners under Art. 19(l)(f) and (g) are being violated.
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It may be stated at the outset that the tax now • impugned has been imposed by the local authority
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from March 12, 1935 and that the first occasion when x96z its validity was attacked was in only 1957, though if Amalgamated the petitioners are right in their submissions their Ccalfidds Ltd. acquiescence might not itself be a ground for denying v. them relief. Before however we set out the points fanapada Sabha, urged by the learned Attorney-General in support of Chhindwara the petition, it would be convenient if we narrate briefly the history of the levy of this tax. Ayyangar f.
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Section 51 of the Central Provinces Local SelfGovernment Act, 1920 (C. P. Act IV of 1920), which will be referred to hereafter as the Act, ran :
"51(1). Subject to the provision of any law or enactment for the time being in force, a district council may, by a resolution passed by a majority of not less than two-thirds of the members present at a special meeting convened for the purpose, impose any tax, toll or rate other than those specified in sections 24, 48, 49 and 50.
(2). The first imposition of any tax, toll or rate under sub-section (1) shall be subject to the previous sanction of the local Government."
The petitioners are working certain mines situated in the district of Chhindwara and for the area covered by the mines an Independent Mining Local Board was constituted in or about 1926 and such Boards are included in the definition of a Local Board under the Act and they have vested in them all the · powers of a District Council. This Mining Board, after obtaining the previou.; approval of the local Government, passed on March 12, 1935, by the majority requisite under s. 51(1) of the Act a resolution to impose a tax on coal, coal-dust and coke in the following terms:
"The tax shall be levied at the rate of three pies.. per ton c:n coal, coal dust or coke, manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the territorial jurisdiction of the Independent Mining Local Board." The tax has been levied and collected ever since.
The Local-Self Government Act of 1920 was repeal•. ed and re-enacted by the Central Provinces & Berar Local Government Act, 1948, but nothing turns on
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r96r this, because the later enactment and certain amendments made subsequently contain provisions for the Amalgamated · f h L l B d Coalfields Ltd. contmuance o t e oca oar s constituted under v. the repealed enactment and for the continued exigi- Janapada Sabha, bility of the taxes and cesses in force at the date of Chhindwara the commencement of the Act of 1948. The respondent was, as stated earlier, constituted under the Act Ayyangar ]. of 1948 and is 'admittedly the successor of the Independent Mining Board which imposed the tax by its resolution dated March 12, 1935, and is legally entitled to continue the levy if the original imposition was valid. There is only one other matter to be mentioned at this stage, viz., that the rate of duty which, as seen from the resolution extracted earlier, was 3 pies per ton when imposed in 1935 was raised by the local body to 9 pies per ton in 1949, this being the rate which now prevails. On August 23, 1958, the Chief Executive Officer of the respondent-Sabha served two notices of demand on the first and second petitioners requiring them to pay sums of Rs. 21,898.64 and Rs. 11,838·09 respectively as the tax due by each, for despatches of coal from their respective mines for the period January 1, 1958, to June 30, 1958. It is the validity of these notices that is impugned in this petition.
The submissions of the learned Attorney-General were three:
(1) The levy of the tax by the Independent Mining Board was invalid at the date of its original imposition in 1935, and consequently the respondent-Sabha -its successor-obtained no authority to continue the same.
(2) Assuming the levy was valid when originally imposed, it ceased to be legal after the coming into force, first of the Government of India Act, 1935 and later of the Constitution of India in 1950 under which the tax in question or some portions of it became exclusively leviable by the Central or Union Government and would not be covered by the saving as to previously existing taxes in s. 143 of the Government of India Act, 1935, and subsequently of Art. 277 of the Constitution.
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(3) Assuming further that the provision contained r96r in s. 143 of tlie Government of India Act covered the Amalgamated tax, the protection afforded by it or the continuance Coalfields Ltd. for which it provided, is only for a tax at the rate of v. 3 pies per ton prevailing before the commencement of .Janapada Sabha, the Government of India Act (April 1, 1937), and the Chhindwara increase in the rate to 9 pies per ton in 1949 rendered the levy and the demand illegal either in whole or at Ayyangar f. least in part.
We shall now proceed to deal with these points in that order:
(1) That the imposition of the tax by the Independent Mining Board by resolution dated March 12, 1935, was invalid. This was songht to be rested on three distinct grounds:
(a) that the levy of the tax was in contravention of s. 80A(3) of the Government of India Act, 1915. Section 80A(3) enacted, to quote only the part material:
"The local legislature of any province may not, without the previous sanction of the GovernorGeneral, make or take into consideration any law-
(a) imposing or authorising the imposition of any new tax unless the tax is a tax scheduled as exempted from this provision by rules made under this Act; or
,, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The taxes now impugned are not within those enumerated in the schedules to the Scheduled Taxes Rules and hence the previous sanction of the GovernorGeneral was required before a bill authorising the levy of the tax could be taken into consideration. And the Act which by s. 51 authorised the imposition of the tax, had been passed by the local legislature without the previous sanction of the Government having been obtained.
The petition as filed setting out this contention proceeds on the basis that the Act was passed after the Government of India Act, 1919, by which s. 80A was introduced into the Act of 1915 came into force. If that had been the correct position, the proviso to s. 80A(3) readfo.g:
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| Amalgamated CoalfieldsLtd. v. JanapadaSabha, Chhindwara Ayyangar]. |
"ProvidedthatanActora provisionofanAct made by a local legislature,andsubse4uently assent- edtoby the Governor-Generalinpursuanceofthis Act, shall not be deemed invalidbyreason onlyof its requiringtheprevious sanctionofthe Governor- General under this Act." would be a complete answertothe above objection, since undertheGovernmentofIndiaAct, 1915, before andafteritsamendment in 1919, every bill passedby a local legislative council had,afterreceivingthe assentoftheGovernor,tobe transmittedtothe Governor-General and could become law onlyafter thelatterhad signified his assent (Vides. 81(1)&(3) oftheAct). Thatthe Governor-General had assented totheAct under this provision was never in dispute. The saving contained intheproviso is,itshould be noticed,inaddition tothegeneral saving contained s.84(2)oftheGovernmentofIndiaAct (to read only the material words): " ... the validityofany Actof... any local legislature shall not be open to question in any legal proceedings on the groundthattheAct affects ... a central subject" which isofwider import and designed to remove all questionsoflegislative competenceofthetype nowputforward fromthe purview of Courts. Atthestageofthearguments, however,itwas foundthatthe Acthadbecome law even prior tothe coming into forceofthe GovernmentofIndiaAct, 1919,withtheresultthatthecontention raised inthe petition based ons.80A(3)could not be urged.From therecitalsatthebeginningoftheActitwas found thattheprevious sanctionoftheGovernor-General hadbeen obtained totheintroductionofthe measure in the Local Legislature unders.79(2)ofthe Govern- mentofIndiaAct,1915-i.e.,befores.80A(3)intro- duced into the Government ofIndiaAct, 1919, was brought into force. The learned Attorney-General, therefore, modified his argumentandpresenteditin this form: No doubt whens.51ofthe Act was enacted,itwas withinthe competenceoftheLocal Legislature.Butthepower conferredbythatsection to levy thetaxwas exercised |
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only in 1935 and by that da'te s. SOA had been intro. '96' • duced into the Government of India Act and there. Amalgamated after there could be no legal imposition of a tax, not coalfields Ltd. included in the Scheduled Taxes Rules without the v. previous sanction of the Governor-General being ob. J anapada Sabha, tained. We consider this argument wholly without Chhindwara force. The validitv of s. 51 of the Act, when enacted, not being open to "any objection under the Govern- Ayyangar J. ment of India Act, 1915, the amendments effected to the Government of India Act, 1915, by the Act of 1919 did not in any manner, or to any extent, expressly or even by implication affect or trench upon the continued validity and operation of that section. Obviously, s. 80A(3) was only concerned to lay down the preliminaries for enacting a law after that provi• sion came into force and after a law has once been enacted and is in operation, there is no question of the procedure laid down for bills being attracted. This apart, all controversy is set at rest and any argup:ient of the type now urged is precluded by r. 5 of the Scheduled Taxes Rules which runs:
"Nothing in these rules shall affect the right of a local authority to impose a tax without previous sanction or with the previous sanction of the local Government when such right is conferred upon it by any law for the time being in force." . The submission therefore that before the power con· ferred by s. 51 of the Act, the previous sanction of the Governor-General had to be obtained or that there must be fresh legislation, must be rejected.
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(b) The second matter urged under this head was based on the meaning to be given to the opening words of s. 51 of the Act: "Subject to the provision of any law or enactment for the time being in force". It was suggested that the provision contained in s. 80A(3) of the Government of India Act read with the Scheduled Taxes Rules framed under that section constituted "a law for the time being in force" to which the power to levy the tax was subject. In the first place, it is clear that a law like that which is found in s. 80A(3) prescribing a procedure for enacting future Acts of the Local Legislature could not be
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r96 r comprehended within those words. But even if it did, in the face of r. 5 of the Scheduled Taxes Rules, the Amalgarnated Coalfields Ltd. construction suggested could have no basis. v. ( c) The last reason assigned for disputing the Janapada Sabha, validity of the original imposition of the tax, was that Chhindwara s. 51 of the Act on its language and in the context of the other provisions referred to in that section, did Ayyangar j. h h not .aut orise t e levy of a tax or cess of the nature of the "coal tax". We are wholly unable to accept this argument. The relevant words of s. 51 are: "impose any tax, toll or rate other than those specified in sections 24, 48, 49 and 50". It is not suggested that "the coal tax" is one specified in any of the sections set out, and hence there was power to levy any other tax including that which is now impugned. The learned Attorney-General however suggested that the tax authorised by s. 51 should still be somewhat like the taxes referred to in the other sections, though not identical with them. Obviously, in the face of the words "other than those ... " the rule of ejusdem generis is contra-indicated and if so on no rule of construction could "the coal tax" be excluded from the purview of the local authority. We, therefore, hold that the original imposition of the tax in 1935 was valid.
(2) The next question is: has the tax ceased to be le-. gally leviable by reason of the coming into force of the Government of India Act, 1935 and of the Constitution? Both these constitutional enactments contain express provisions whereby taxes, cesses, etc., which were previously lawfully levied by local authorities for the purposes of their local areas, might continue to be collected and applied for the same purposes notwithstanding that those taxes could thereafter be imposed only by the Central or the Union Government, as the case may be (Vide s. 143 of the Government of India Act, 1935, and Art. 277 of the Constitution). The objection therefore that "coal tax" or some of the components of it, .could have been imposed only by the Central Government or the Union Government is no ground for impugning the continued validity and exigibility of the tax. It is needless to add that if the
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tax fell within the Provincial or the State List, the z96z levy would be valid under s. 292 of the Government Amalgamated of India Act and Art. 372 of the Constitution even Coalfields Ltd. without the aid of the special provision in s. 143 or v. Art. 277. In view of these considerations the learned Janapada Sabha, Attorney-General did not address us seriously on this Chhindwara point.
Chhindwara Ayyangar ] .
(3) The last point urged was as regards the validity of the increase in the rate of tax to 9 pies per ton effected in 1949, i.e., after the commencement of ' Government of India Act, 1935. This objection was not even hinted in the petition now before us, and we did not consider it proper to permit petitioners to raise the point.
The result is that the petition fails and is dismissed • with costs .
Petition dismissed.
THE CHIEF INSPECTOR OF MINES AND ANOTHER
February IO.
v.
LALA KARAM CHAND THAP AR ETC.
(B. P. SINHA, c. J., s. K. DAS, K. c. DAS GUPTA,
N. RAJAGOPALA AYYANGAR and J. R. MunHOLKAR, JJ.)
Colliery Company-Violation of Coal Mines RegulationsProsecution of all directors of company, the managing agents and the manager of company-Legality-Mines Act of I923 repealed and re-enacted-Regulations made thereunder, if continue in force- ' Anyone of directors' meaning of-Indian Coal Mines Regulations, Ig26-Mines Act, r923 (4 of r923), s. JT(4)-Mines Act, Ig52, (35 of I95Z), ss. 2(r), 76-General Clauses Act, I897 (IO of r897), s. 24 -Constitution of India, Art. 20(I).
1~he directors of a company, which was the owner of a colliery, the directors of the managing agents of the company, and the manager and the agent of colliery were prosecuted for offences under ss. 73 and 74 of the Mines Act, 1952, for violation
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3 issues framed by the court
Was the coal tax imposed in 1935 under s. 51 of the Central Provinces Local Self-Government Act, 1920 invalid for want of previous sanction of the Governor-General under s. 80A(3) of the Government of
Did s. 51 authorise a tax of the nature of the coal tax?
Could the tax continue to be levied after the Government of India Act, 1935 and the Constitution?
8 provisions across 4 enactments
The Amalgamated Coalfields Ltd.
Others (petitioners with Amalgamated Coalfields Ltd.)
Janapada Sabha, Chhindwara
B. P. Sinha
S. K. Das
A. K. Sarkar
K. C. Das Gupta
N. Rajagopala Ayyangar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
