District Board Banaras v. G. F. Kellner and Co. — 1953 DIGILAW 348 (ALL)

JUDGMENT R. Dayal, J. - Messers G.F. Kellner and Co., Ltd., instituted a suit against the District Board of Banaras for a declaration that they were not liable to pay any circumstances and property tax to the Defendant and that the Defendant's levying such a tax on the Plaintiff was ultra vires and illegal and for the recovery of the amount that had been realised by the Defendant from the Plaintiff, such amount being said to be Rs. 1391/1/4 for the years 1941 to 1945. Amongst various grounds, that were urged for the basis of the Plaintiff's claim, was the ground that the Plaintiff was a caterer and refreshment room keeper at the Moghalsarai Railway Station and, as such, held a service under the Crown and did not carry on business there within the meaning of the U.P. District Boards Act (Act No. X of 1922). 2. It may be mentioned that, before instituting the suit, the Plaintiff had objected to the assessment of the tax by the District Board of Banaras and had appealed to the District Magistrate u/s 128 of the District Boards Act against the assessment of the tax. The objection and appeal were unsuccessful. 3. The Defendant contested the suit on various grounds. One of the grounds was that the Plaintiff did not hold a service under the Crown, as contemplated by Section 114 of the District Boards Act and the other was that the suit, as framed, was not maintainable in the civil court in view of Section 131 of the District Boards Act. Other contentions need not be mentioned as they are not material for the disposal of the appeal. 4. The Plaintiff further alleged that in case it was liable to the tax, the amount of tax could not have exceeded Rs. 50/ - a year in view of Section 142-A of the Government of India Act, 1935, and the Professions Tax Limitation Act (Act No. XX of 1941). The trial court decreed the Plaintiff's suit in full. The Defendant District Board of Banaras has filed this first appeal. 5. Messrs G.P. Kellner and Company, Ltd., had also instituted another suit in the Court of Small Causes at Banaras for the refund of Rs. 500/ - realised by the District Board of Banaras on account of tax on circumstances and property for the year 1945-46. The Defendant District Board of Banaras has filed this first appeal. 5. Messrs G.P. Kellner and Company, Ltd., had also instituted another suit in the Court of Small Causes at Banaras for the refund of Rs. 500/ - realised by the District Board of Banaras on account of tax on circumstances and property for the year 1945-46. This suit was also decreed and the District Board of Banaras has, therefore, filed Civil Revision No. 102 of 1947 against that decree. 6. We do not agree with the contention for the Appellant that the suit was not maintainable in view of Section 131 of the District Boards Act. If, under the Provisions of the District Boards Act, the District Board could not have taxed the Plaintiff-company, a suit for a declaration that the tax had been levied illegally could be instituted in the Civil Court. It was held by a Full Bench of this Court in District Board of Farrukhabad v. Prag Dutt and Ors. 1948 A.W.R. (H.C.) 346, that if a tax is not imposed in accordance with the provisions of the U.P. District Boards Act, the District Board cannot rely on the Act to oust the jurisdiction of the civil court. We, therefore, agree with the findings of the court below that the suit was maintainable. 7. Section 114 of the U.P. District Boards Act lay down the conditions and restrictions which would govern the power of a Board to impose a tax on circumstances and property under Clause (b) of Section 108 of the Act. One of such conditions is that the tax may be imposed on any person residing or carrying on business in the rural area, provided that such a person had so resided or carried on business for total period of at least, six months in the year under assessment. Section 114 further provides that the words "carrying on business" do not apply to service under the Government or local body. The expression 'service under the Government' was substituted in place of the expression 'service under the Crown' by the Adaptation of Laws Order, 1950. The Board did not assess the tax on the Plaintiff on the basis of his residing with in the rural area but has assessed the tax on account of the Plaintiff's carrying on business in the rural area. The Board did not assess the tax on the Plaintiff on the basis of his residing with in the rural area but has assessed the tax on account of the Plaintiff's carrying on business in the rural area. The Plaintiff claims exemption from the tax on the ground that what the Plaintiff did in connection with the catering business amounted to service under the Crown. This contention of the Plaintiff was accepted by the Court below in view of the case reported in AIR 1937 547 (Lahore) . We are of the opinion that the Plaintiff's contention is not sound. 8. On the record of the suit, against the decision of which has been filed the civil revision, is a copy of the agreement between the Plaintiff-company and the railway administration. The agreement refers to the Plaintiff-company as licencees and purports to be in connection with the licence given to the Plaintiff company by Governor General in Council as represented by the Chief Operating Superintendent, East Indian Railway Administration. The agreement does not purport to be a contract of service between the Plaintiff-company and the Governor General in Council. Its various terms (shortly to be referred) do not establish what is considered to be the essence of service and of the relationship between a master and a servant. The essence of service lies in the control which the alleged master exercises or can exercise over the manner in which the alleged servant carries out the duties, he had undertaken to perform. 9. Learned Counsel for the Respondent relied on the case reported in Performing Right Society, Limited v. Mitchell and Booker Palait De Daner, Limited 1924 (1) K.B. 762. It was observed at page 757: It seems, however, reasonably clear that the final test, if there be a final test, and certainly the test to be generally applied, lies in the nature and degree of detailed control over the person alleged to be a servant. This circumstance is, of course, one only of several to be considered, but it is usually of vital importance. The point is put well in pollock on Torts, 12th ed. pp. 79, 80: "The relation of master and servant exists only between persons of whom the one has the order and control of the work done by the other. This circumstance is, of course, one only of several to be considered, but it is usually of vital importance. The point is put well in pollock on Torts, 12th ed. pp. 79, 80: "The relation of master and servant exists only between persons of whom the one has the order and control of the work done by the other. A master is one who not only prescribes to the workman the end of his work, but directs or at any moment may direct the means also, or, as it has been put, 'retains the power of controlling the work' see per Crompton J. in Sadler v. Henlock 4 E. & B. 570, 578. A servant is a person subject to the command of his master as to the manner in which he shall do his work: see per Bramwell, L.J. in Yemen v. Noakes 1880 6 Q.B.D., 530, 532, and the master is liable for his acts neglects and defaults, to the extent to be specified. An independent contractor is one who undertakes to produce a given result, but so that in the actual execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in things not specified beforehand. 10. Judged by the test as laid down in that case, the agreement between the Plaintiff-company and the Governor-General in Council does not establish the relationship of master and servant between the parties to the agreement. We may now refer to the terms of this agreement to elucidate the point. In part 1 of the agreement, the licencees agreed to undertake the catering in the refreshment rooms at various railway stations, including Moghal Sarai, and to run tea stalls. Under Para 2, the licencees had to pay the annual rent for the use of the said refreshment rooms and electric fittings including fans to the East Indian Railway Administration. The payment of such rent is not consistent with the relationship of master and servant and fits in well with the status of the Plaintiff-company as licencees who had been allowed the use of those rooms and electric fittings. The payment of such rent is not consistent with the relationship of master and servant and fits in well with the status of the Plaintiff-company as licencees who had been allowed the use of those rooms and electric fittings. Under Para 6 of the agreement, the licencees were required to supply to the passengers travelling in the trains, at required times, refreshment and dishes of sound and wholesome foods and drinks at a scale of rates to be approved of by the Chief Operating Superintendent. Paras 7 to 10 of the agreement lay down certain restrictions about the selling of intoxicants and fix special rates to be charged from the employees of the East Indian Railway Administration. Para 13 provides for the keeping of a complaint book in the refreshment rooms and for the inspection of the complaint book by the Divisional Superintendent or any other official of the Railway Administration. Para 14 lays down that the servants employed by the licencees would be paid by the licencees and would be men of experience kept, at all times, neatly and properly dressed. Under Para 16, the licencees were to supply and maintain all necessary articles of furniture etc. in the said refreshment rooms at their own expense. This again is inconsistent with the ordinary relationship of master and servant. If the Plaintiff-company was the servant, such articles would have been normally supplied by the master. 11. Para 17 provides that the licencees would keep the said refreshment rooms, kitchen, cooking utensils and all other articles neat and clean and would comply with all reasonable requirements of the Divisional Superintendent and of the Medical Officers of the Railway Administration with a view to the provision of sound and wholesome food to the passengers travelling on the East Indian Railway. Great stress has been laid on this provision by learned Counsel for the Respondent in submitting that the Railway Administration fully controlled the working of the Plaintiff-company. The only control, which the Railway Administration could exercise by virtue of the provisions of Para 17 of the agreement, was with respect to the quality of the food to be supplied. Great stress has been laid on this provision by learned Counsel for the Respondent in submitting that the Railway Administration fully controlled the working of the Plaintiff-company. The only control, which the Railway Administration could exercise by virtue of the provisions of Para 17 of the agreement, was with respect to the quality of the food to be supplied. The control did not extend to the Railway Administration laying down the kind or food to be supplied, the way in which, it was to be cooked and any other detailed instructions with respect to the providing of various meals etc., the Plaintiff-company had undertaken to cater for. It was not open to the Railway Administration to order that any particular dish should be supplied. It was not for the Railway Administration to lay down the number of servants, the licencees had to engage. The Railway Administration could not prescribe or lay down conditions with respect to the purchase of raw materials. In all respects relating to the running of the business, the licencees were free. The various conditions laid down did not relate to the actual manner in which the business was to run but related to safeguarding cleanliness both in the preparation of food and in its service to the passengers. Other restrictions related to the enforcement of the conditions of certain laws and to the maintenance of orderly conduct at the railway stations. 12. Para. 25 of the agreement lays down that - the Administration reserve the right to resume possession of any part of the premises if required, for the purposes of working of the said Railway. 13. Para. 26 lays down that the Administration agreed that telegrams ordering refreshments would be accepted for despatch by the said Railway fee of charge. Both these stipulations do not fit in with the alleged relationship of the master and servant. A servant has no right against his master with respect to the accommodation on which he performs his duties and no question could arise for making charges on account of telegrams despatched by the Railway Administration on behalf of the passengers in connection with its own work to be carried out by its own servants. The same can be said with respect to the stipulation in Para. The same can be said with respect to the stipulation in Para. 28, by which the Railway Administration agreed to free carriage by rail of various articles required to be used in the said refreshment rooms and restaurant cars. 14. Para. 29 of the agreement provides: The Administration will not be held responsible for any loss or damage occurring to consignments carried free by rail under this Agreement, but will take all reasonable care to secure their safe transit. 15. If a servant gets articles on behalf of his master, the loss, if any, would be expected to be borne by the master but this stipulation lays down just the contrary and, therefore, is a clear indication of the fact that this agreement did not bring into effect the relationship of master and servant between the Governor General in Council and the Plaintiff-company. 16. It is clear from what has been said above and from other terms of the agreement that the licencee Plaintiff-company was absolutely free to use its own discretion in respect of the matters about which nothing was said in the agreement in connection with the supervisory control of the Governor General in Council. We are, therefore, of the opinion that, as already mentioned, the Plaintiff-company cannot be said to be a servant of the Governor General in Council. 17. The case reported in S.L. Kapoor v. Emperor A.I.R.1937 Lab. 547 is distinguishable. A caterer, on the termination of his contract, did not vacate the premises. Order to dispossess him was passed by a Magistrate u/s 138, Railways Act, which provided for such orders against Railway Servants. It was held that the caterer was a 'Railway Servant' both because the expression, as defined in the Railway Act, applied to him and because the relationship of master and servant existed in view of certain terms of the Agreement between him and the Railway Administration. Some of such terms are not in the agreement between the Plaintiff and the Governor General in Council. The Railway Administration in the present case could not fine the Plaintiff or direct it about the dress its servants were to wear or about the pattern of crockery to be used. Some of such terms are not in the agreement between the Plaintiff and the Governor General in Council. The Railway Administration in the present case could not fine the Plaintiff or direct it about the dress its servants were to wear or about the pattern of crockery to be used. To our mind, power to give such directions dose not affect the question as they do not relate to the main work of the Plaintiff which related to the preparation of sound and wholesome food. The expression 'Railway Servant' means, in view of S. 3(7) of the Railways Act, any person employed by a Railway Administration in connection with the service of the Railway. The expression 'service of the Railway' is not identical with the expression "service under the Crown". 18. We, therefore, do not consider the case to go against the view we have expressed. 19. The evidence about the terms of agreement between the Plaintiff-company and the Governor General in Council of the Railway Administration on the record of the case giving rise to the first appeal is very meagre and, naturally, must fail to establish what the complete agreement on the record of the other case fails to establish. It follows that the evidence on the record of the case giving rise to the first appeal fails to establish that the Plaintiff company was a servant of the Railway Administration or of the Governor-General in Council. 20. It follows, therefore, that the Plaintiff-company was liable to be taxed u/s 114 read with Section 108 of the U.P. District Boards Act, 1922, and cannot get exemption on account of its business being considered to be due to service of the Crown. 21. Now we discuss the second contention for the Plaintiff-Respondent with respect to the amount of tax to be limited to Rs. 50 per annum only. 22. 21. Now we discuss the second contention for the Plaintiff-Respondent with respect to the amount of tax to be limited to Rs. 50 per annum only. 22. Sub-section (2) of Section 142-A of the Government of India Act, 1935, is to the following effect: 142-A. (2)-The total amount payable in respect of any one person to the Province or to any one municipality, district board, local board, or other local-authority in the Province by way of taxes on professions, trades, callings and employments shall not, after the thirty-first day of March nineteen hundred and thirty-nine, exceed fifty rupees per annum: Provided that, if in the financial year ending with that date there was in force in the case of any Province or any such municipality, board or authority a tax on professions, trades callings or employments the rate, or the maximum rate, of which exceeded fifty rupees per annum, the preceding provisions of this Sub-section shall, unless for the time being provision to the contrary is made by a law of the Federal Legislature, have effect in relation to that Province, municipality, board or authority as if for the reference to fifty rupees per annum there were substituted a reference to that rate or maximum rate, or such lower rate, if any, (being a rate greater than fifty rupees per annum) as may for the time being be fixed by a law of the Federal Legislature ; and any law of the Federal Legislature made for any of the purposes of this proviso may be made either generally or in relation to any specified Province, municipalities, boards or authorities. 23. In view of the proviso, the Federal Legislature passed the Professions Tax Limitation Act (Act No. XX of 1941), Section 2 of that Act lays down: 2. Notwithstanding the provisions of any law for the time being in force, any taxes payable in respect of any one person to a Province, or to any one municipality, district board, local board, or other local authority in any Province, by way of tax on professions, trades, callings or employments, shall from and after the commencement of this Act cease to be levied to the extent to which such taxes exceed fifty rupees per annum. 24. Section 3 of the Act provided that the provisions of Section 2 would not apply to any tax specified in the Schedule. 24. Section 3 of the Act provided that the provisions of Section 2 would not apply to any tax specified in the Schedule. The Schedule did not mention Section 108 or 114 of District Boards Act. 25. It was contended on the basis of Section 2 of the Professions Tax Limitation Act, 1941, that the upper limit of the tax on circumstances and property leviable by a district board cannot exceed Rs. 50/ -. Contention seems to be sound and has been upheld by the Full Bench of this Court in the District Board of Farrukhabad v. Prag Dutt and others. (1) The only reply, which learned Counsel for the Appellant could give to this submission, was that the expression, 'any one person', in Section 2 of the Professions Tax Limitation Act, must contemplate an individual and not a juristic person which the Plaintiff-company is. We see no reason to restrict this expression to individuals only. Sections 108 and 114 of the District Boards Act contemplate taxing of any person and therefore, contemplate the taxing of juristic persons. There is no indication either in the provision of S. 142-A of the Government of India Act, 1935, or, in any provision of the Professions Tax Limitation Act which should justify interpreting the expression 'any one person' in the restricted manner in which it is sought to be interpreted on behalf of the Appellant. We need not linger long on this question in view of what very fairly Shri Varma, learned Counsel for the Respondent, pointed out, practically, after the close of the reply for the Appellant. 26. He drew our attention to the Professions Tax Limitation (Amendment and Validation) Act (Act No. LXI of 1949). This Act came in force on the 28th of December, 1949. Section 2 of this Act is: 2. In the Schedule to Professions Tax Limitation Act, 1941, (hereinafter to as the said Act), after Item 3, the following items shall be inserted, and shall be deemed always to have been inserted, namely:- 3-A....... 3-B-The tax on persons assessed according to their circumstances and property, imposed under Clause (b) of Section 108 of the United Provinces District Boards Act, 1922 (U.P. Act X of 1922). 27. Section 3 of this Amending Act is: 3. Notwithstanding anything to the contrary in any other law for the time being in force. 3-B-The tax on persons assessed according to their circumstances and property, imposed under Clause (b) of Section 108 of the United Provinces District Boards Act, 1922 (U.P. Act X of 1922). 27. Section 3 of this Amending Act is: 3. Notwithstanding anything to the contrary in any other law for the time being in force. (i) no tax on circumstances and property imposed before the commencement of this Act under Clause (ix) of Sub-section (1) of Section 128 of the United Provinces Municipalities Act, 1916 (U.P. Act II of 1916), or Clause (b) of Section 108 of the United Provinces District Boards Act, 1922 (U.P. Act X of 1922), shall be deemed to be, or ever to have been invalid merely on the ground that the tax imposed exceeded the limit of fifty rupees per annum prescribed by the said Act, and the validity of the imposition of any such tax shall not be called in question in any Court ; and (ii) No Court shall entertain any claim for the refund of any portion of the tax referred to in Clause (i), merely on the ground that such portion is in excess of the limit referred to therein or enforce any decree or order directing the refund on that ground of any portion of such tax. 28. The result of the Amending Act is that the tax on circumstances and property levied u/s 105 of the U.P. District Boards Act is not subject to the limitations laid down under the Professions Tax Limitation Act and that, therefore, the m(sic) amount of such tax can be such as to be levied under the U.P. District Act, 1922, which had been in taken from before the 31 st of March, 1949, referred to in Section 142-A of the Government of India Act, 1935. The upper limit laid down under the rules framed by the U.P. Government u/s 114(d) of the U.P. District Boards Act is Rs. 2000/ -. The amount of tax levied on the Plaintiff-company, in any of the years in suit, is within that figure, and, therefore, was lawfully levied. 29. The upper limit laid down under the rules framed by the U.P. Government u/s 114(d) of the U.P. District Boards Act is Rs. 2000/ -. The amount of tax levied on the Plaintiff-company, in any of the years in suit, is within that figure, and, therefore, was lawfully levied. 29. Shri Varma, however, contended that this Act, i.e., the Professions Tax Limitation (Amendment and Validation) Act, 1949, was void in view of Articles 13 and 31 of the Constitution as the provisions of this Act deprived the Respondent of its property which had been decreed in its favour by the court below with respect to the refund of the amount of tax paid by it. We need not deal with this contention at length because we find that, by the Adaptation of Laws Order, 1950, the main Act, namely, the Professions Tax Limitation Act (Act No. XX of 1941) stood repealed. This means that the Act did not remain in force after the coming into force of the Constitution on the 26th of January, 1950, and that, therefore, no question of its being void in view of Articles 13 and 31 of the Constitution should arise. Even if any such question arose, it would not effect the validity of the Act prior to the 26th of January, 1950, in view of the amendment carried out in the principal Act and that amendment being deemed to exist from the very first day, the imposition of the tax for an amount larger than Rs. 50/ - was valid and its recovery from the Plaintiff-company was also valid. The repeal of the Act would not revive the right which the Plaintiff company had lost in the tax which had been realised from it validly. 30. As a result of our findings with respect to the Plaintiff-company being not exempted from the tax on circumstances and property leviable u/s 108 read with Section 144 of the U.P. District Boards Act and with respect to the amount of tax being not subject to any restrictions laid down in the Professions Tax Limitation Act, 1941, the Plaintiff's suit should fail. We, therefore, allow the appeal, set aside the decree of the court below and dismiss the Plaintiff's suit. In the circumstances of this case, we are of the decision that the parties should bear their costs. 31. We, therefore, allow the appeal, set aside the decree of the court below and dismiss the Plaintiff's suit. In the circumstances of this case, we are of the decision that the parties should bear their costs. 31. This order will govern Civil Revision No. 102 of 1947.