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of <h1>Court Invalidates Imposition of New Taxes Post-Constitution</h1> <h3>Town Municipal Committee, Amraoti Taluq Versus Ramchandra Vasudeo Chimote And Another</h3> Town Municipal Committee, Amraoti Taluq Versus Ramchandra Vasudeo Chimote And Another - [1964] 53 ITR 444, 1964 AIR 1166, 1964 (6) SCR 947 Issues Involved:1. Construction of Article 277 of the Constitution.2. Validity of terminal taxes imposed by municipal authorities under notifications issued after the Constitution came into force.3. Legislative competence of the State to impose terminal taxes on new items or increase the rates of existing taxes.4. Interpretation of the term 'levied' in Article 277.Issue-wise Detailed Analysis:1. Construction of Article 277 of the Constitution:The primary issue revolves around the interpretation of Article 277 of the Constitution, which allows certain taxes to continue to be levied by municipalities or other local authorities even after the Constitution came into force, provided they were lawfully levied immediately before the Constitution's commencement. The court examined whether the terminal taxes imposed by the municipal authorities under post-Constitution notifications were saved by Article 277.2. Validity of Terminal Taxes Imposed by Municipal Authorities:The appeals challenged the validity of terminal taxes imposed by municipal authorities under notifications issued after the Constitution came into force. The court noted that terminal taxes on goods carried by rail were assigned exclusively to the Union under the Constitution. Therefore, any imposition of such taxes by the State or municipal authorities after the Constitution would be invalid unless saved by Article 277.3. Legislative Competence of the State:The court addressed whether the State had the legislative competence to impose terminal taxes on new items or increase the rates of existing taxes. It was argued that the State's power to levy terminal taxes was limited to those taxes that were being lawfully levied before the Constitution. The court rejected the argument that the State could impose new taxes or increase rates under Article 277, emphasizing that the provision was meant to avoid dislocation of finances by allowing the continuance of existing taxes, not the imposition of new ones.4. Interpretation of the Term 'Levied':The court examined the meaning of the term 'levied' in Article 277, focusing on whether it included the imposition of new taxes or merely the continuation of existing ones. The court concluded that 'levied' referred to taxes that were actually being collected before the Constitution, not merely those that could have been imposed. The court emphasized that the term included both the imposition and collection of the tax, and any new imposition or increase in rates would not be covered by Article 277.Separate Judgments:The court delivered a unified judgment for all three appeals, finding that the imposition of terminal taxes on new items or the increase in rates by the municipal authorities after the Constitution was not saved by Article 277 and was therefore invalid. The appeals were dismissed with costs to the contesting respondents.Conclusion:In summary, the court held that Article 277 does not confer unlimited legislative power to impose new taxes or increase rates but allows the continuance of taxes that were lawfully levied and collected before the Constitution. The imposition of terminal taxes on new items or increased rates by the municipal authorities was found to be invalid, leading to the dismissal of all three appeals.
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