1962 (2) TMI 76 - SC - Indian Laws

Court upholds validity of terminal tax levy by Janpad Sabhas, affirms retrospective amendment. Limited provincial legislature power on tax continuity.

The court dismissed the appeals and upheld the validity of the continued levy of the terminal tax by Janpad Sabhas. It held that the retrospective ... - Issues Involved:1. Interpretation of Section 143(2) of the Government of India Act, 1935.2. Validity of the tax levied by Janpad Sabhas under the Central Provinces and Berar Local Government Act, 1948.3. Impact of the repeal of the Central Provinces and Berar Local Self Government Act, 1920.4. Legislative competence of the Provincial Legislature to amend and enact laws retrospectively.5. Continuity of tax levy under Article 277 of the Constitution.Issue-wise Detailed Analysis:1. Interpretation of Section 143(2) of the Government of India Act, 1935:The core question was the interpretation of the words 'continue to be levied and to be applied to the same purposes until provision to the contrary is made by the Federal Legislature.' The court examined whether the local authority could continue to levy the tax on bidis and bidi-leaves even after the Government of India Act, 1935 came into force. The court concluded that Section 143(2) provided a saving clause to prevent dislocation of local finances, but it did not confer a plenary power to legislate on those topics until the Central Legislature intervened.2. Validity of the tax levied by Janpad Sabhas under the Central Provinces and Berar Local Government Act, 1948:The court analyzed whether the Janpad Sabhas, which replaced the District Councils, were legally competent to levy the terminal tax. The court noted that the tax was identical in incidence to the one lawfully levied before April 1, 1937. The court held that the Janpad Sabhas could continue to levy the tax if it was established that the amendment to Section 192 of the Act of 1948 was validly enacted.3. Impact of the repeal of the Central Provinces and Berar Local Self Government Act, 1920:The court examined the provisions of Section 192 of the Act of 1948, which repealed the Act of 1920 but provided certain savings. The court noted that the repeal was not absolute and unconditional but was modified by a saving clause. The court held that the right to collect taxes was transferred to the Janpad Sabhas, but this did not necessarily enable them to impose new taxes. The court concluded that the amendment to Section 192 by the Act of 1949, which gave retrospective effect, was necessary to validate the continued levy of the tax.4. Legislative competence of the Provincial Legislature to amend and enact laws retrospectively:The court considered whether the Provincial Legislature had the competence to enact the amendment to Section 192 with retrospective effect. The court held that the Provincial Legislature had a limited legislative power under Section 143(2) to either continue or discontinue the levy of the tax. The court concluded that the amendment to Section 192 by the Act of 1949, which manifested the legislative intent to continue the tax without any break, was valid.5. Continuity of tax levy under Article 277 of the Constitution:The court noted that if the tax had been lawfully levied by the Janpad Sabhas immediately before January 26, 1950, it could continue to be levied after the Constitution came into force under Article 277. The court held that the levy of the tax by the Janpad Sabhas was lawful if it was authorized by Section 143(2) of the Government of India Act, 1935, and the amendment to Section 192 of the Act of 1948 was validly enacted.Conclusion:The appeals were dismissed, and the court upheld the validity of the continued levy of the terminal tax by the Janpad Sabhas. The court held that the amendment to Section 192 of the Act of 1948 by the Act of 1949, which gave retrospective effect, was valid and provided the necessary legal continuity for the tax levy. The court also emphasized the limited legislative power of the Provincial Legislature under Section 143(2) to either continue or discontinue the levy of the tax.