Territorial nexus for local tax: residence was not implied as mandatory where business activity satisfied the statutory condition.

Section 14(1)(f) of the United Provinces Town Areas Act, 1914 did not require residence within the town area as an implied condition where the statute and rules permitted the tax to be levied on a person carrying on business there. The Court read the provision with Rule 3 made under section 39(2) and held that the relevant territorial nexus was satisfied by business activity, while the proviso was aimed at preventing multiple taxation, not adding a residence requirement. The assessment could not, however, be sustained by reference to section 14(1)(d) when it had actually been made under section 14(1)(f).

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Issues: (i) Whether a tax imposed under section 14(1)(f) of the United Provinces Town Areas Act, 1914 required residence within the town area as a necessary condition; (ii) Whether the assessment could be supported by reference to section 14(1)(d) when the assessment was in fact made under section 14(1)(f).

Issue (i): Whether a tax imposed under section 14(1)(f) of the United Provinces Town Areas Act, 1914 required residence within the town area as a necessary condition.

Analysis: Section 14(1)(f) did not expressly make residence within the town area an indispensable requirement. The governing rules framed under section 39(2) of the Act, particularly Rule 3, permitted the circumstances tax to be imposed on a person either residing or carrying on business within the town area, provided the relevant nexus existed for the prescribed period. The scheme of section 14 also showed that the different taxing heads could overlap, and the proviso to clause (f) was intended to prevent multiple taxation. Reading a compulsory residence requirement into clause (f) would make the proviso largely ineffective and would add words not found in the provision.

Conclusion: Residence within the town area was not a necessary condition for liability under section 14(1)(f), and the assessment was valid on the basis that the assessee carried on business within the town area.

Issue (ii): Whether the assessment could be supported by reference to section 14(1)(d) when the assessment was in fact made under section 14(1)(f).

Analysis: The assessment list prepared under section 15 had to reflect the actual statutory basis on which the assessee was assessed, and once confirmed it could not be justified on a different clause not relied upon by the assessing authority. The legality of the levy therefore had to be tested with reference to the clause under which the assessment was actually made.

Conclusion: The assessment could not be upheld on the footing of section 14(1)(d) when it had been made under section 14(1)(f).

Final Conclusion: The levy was upheld because clause (f), read with the rules made under the Act, authorised the tax on a person carrying on business within the town area, even though residence there was not shown.

Ratio Decidendi: Where the statute and valid subordinate rules prescribe alternative territorial nexuses for a local tax, residence cannot be treated as an implied mandatory condition if the assessee otherwise satisfies the statutory nexus and the provision does not say so in express terms.

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