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1966 DIGILAW 211 (KER)

DISTRICT REGISTRAR v. POPULAR AUTOMOBILES

1966-08-11

M.S.MENON, P.GOVINDA NAIR

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Judgment :- 1. The question is whether a duty at 4% should be levied on a transfer of immovable property effected by the first respondent on 23 51963 in the area of the Malom Panchayat by virtue of S.66 (4) read with S.71 of the Kerala Panchayats Act, 1960 (hereinafter called 'the Act'). 2. The first respondent moved a writ application O. P. No. 1509 of 1963 challenging such a levy and the writ application has been allowed by a learned judge of this Court holding that such a levy is not warranted and that the authorisation of such a levy would infringe Art.14 of the Constitution of India. This appeal is by the State of Kerala and the District Registrar against that decision. 3. The levy was sought to be supported before the learned judge by reason of R.9 of schedule V to the Kerala Panchayats Act, 1960. That rule reads thus: "Continuance of existing taxes. Any tax, cess or fee which was being lawfully levied by any Panchayat at the commencement of this Act shall continue to be levied by the Panchayat for the year in which this Act is brought into force and unless and until the Director by general or special order otherwise directs for subsequent years also." This schedule refers to S.146 of the Act which runs thus: "First reconstitution of Panchayats. (1) In regard to the first reconstitution in accordance with the provisions of this Act of Panchayats in existence at the commencement thereof and otherwise in first giving effect to the said provisions, they shall be read subject to the rules in Schedule V." We have left out sub-section 2 of S.146 as it is not material. 4. The Panchayat in question, the Malom Panchayat, was reconstituted on 11 1962, and as indicated earlier the transfer in question was on 23 51963. In view of this we do not consider that reliance can be placed on the 5th schedule to the Act in support of the levy and the learned Advocate General who appeared for the appellants did not contend before us that notwithstanding the reconstitution of the Panchayat on 1-1-1962 the provision in Schedule.5 of the Act which is a transitory provision to apply till the Panchayat is reconstituted will be available for sustaining the levy. 5. 5. He however urged relying on S.18 of the Madras General Clauses Act, 1891, that the notification issued under S.67 of the Madras Village Panchayats Act, 1950, on 23-5-1952, must be deemed to be notification issued under the corresponding provisions of the Act, i. e., S.66(4) read with S.71 of the Act and contended that the levy is sustainable. 6. The Madras Village Panchayats Act, 1950, contained provisions very similar if not identical to, those embodied in S.66(4) and S.71 of the Act in S.63(2) and S.67 respectively. The notification dated 23 51952 was issued under S.67 of the Madras Village Panchayats Act which is similar to S.71 and fixed a rate of 4 per cent as the duty. 7. Before we proceed further we must read S.66(4) and S.71 of the Act which we extract below: "66(4) A duty shall also be levied in every Panchayat area on certain transfers of property in accordance with the provisions of S.71". 71. Duty on transfer of property. (1) The duty on transfer of property shall be levied - (a) In the form of a surcharge on the duty imposed by the Kerala Stamp Act, 1959, on every instrument of the description specified below, which relates to the immovable property situated in the area under the jurisdiction of a Panchayat; (b) at such rate as may be fixed by the Government not exceeding four per centum on the amount specified below against such instruments. Amount on which duty should be levied. The amount or value of the consideration for the sale set forth in the instrument. (2) On the introduction of the duty aforesaid (a) S.28 of the Kerala Stamp Act, 1959, shall be read as if it specifically required the particulars to be set forth separately in respect of property situated in the area under the jurisdiction of a Panchayat and in respect of property situated outside such area; and (b) S.62 of the Kerala Stamp Act, 1959, shall be read as if it referred to the Panchayat as welt as Government. (3) The Government may make rules not inconsistent with this Act for regulating the collection of the duty, the payment thereof to the Panchayat and the deduction of any expenses incurred by the Government in the collection thereof. (3) The Government may make rules not inconsistent with this Act for regulating the collection of the duty, the payment thereof to the Panchayat and the deduction of any expenses incurred by the Government in the collection thereof. (4) The amounts collected in the Panchayats in a taluk as surcharge on the duty on transfers of property under this section shall be pooled every year for the entire taluk and distributed among all the Panchayats in the taluk in accordance with the rules prescribed in this behalf." 8. If the notification issued under the Madras Village Panchayats Act, 1950, on 23 51952 can be deemed to be a notification issued under the corresponding provision, viz., S, 71 of the Act, the levy seems to be justifiable. 9. But it is urged in the first instance that the notification of 23 51952 issued under the Madras Village Panchayats Act cannot be so deemed by virtue of S.18 of the Madras General Clauses Act itself. That section is in these terms: "18. Where an Act repeals and re-enacts, with or without modification, all or any of the provisions of a former Act, references in any other Act to the provisions so repealed shall be construed as references to the provisions so re-enacted, and if notifications have been published, proclamations or certificates issued, powers conferred, forms prescribed, local limits defined, offices established, orders, rules and appointments made, engagements entered into, licences or permits granted, and other things duly done, under the provisions so repealed, the same shall be deemed, so far as the same are consistent with the provisions so re-enacted, to have been respectively published, issued, conferred, prescribed, defined, established, made, entered into, granted or done under the provisions so re-enacted." The contention is that the notification cannot be so considered because the notification would be inconsistent with the provisions of the Act. The reasoning is that S.66(4) of the Act which we have already read envisages the issue of a notification for every Panchayat in the Kerala State and the notification dated 25 51952 can at best apply only to the Malabar area of the State and cannot therefore be considered to be one issued under the Act as it would be inconsistent with the provisions of the Act. We do not think that this reasoning is sound. We do not think that this reasoning is sound. The power to issue a notification under S.71 will include a power to issue a notification for a part of the area of the Kerala State. This is so notwithstanding the wording of S.66(4) of the Act. Such a notification cannot be said to be inconsistent with the provisions of S.66(4) or S.71 for it seems to us to be well established that the State can choose to levy a tax or duty with reference to a particular area or with reference to a particular class of people. Whether such a levy would be valid or not would depend on the question whether Art.14 of the Constitution has been complied with or not. The notification of 23 51952 issued under the Madras Panchayats Act may apply only to the Malabar area for there were two General Clauses Acts in force in the State one for the Madras area (The Madras General Clauses Act) and the other (The Travancore-Cochin General Clauses Act 1125) for the Travancore-Cochin area and the two continued in force in the respective areas till the latter was extended to the Malabar area as well by Act II of 1957. Even when the Act extended to . the Malabar area, it could not have application to the Madras Village Panchayats Act, 1950 because of the definition of the term 'the Act' in S.2(3) of that Act reading as under: "a Proclamation or Act of Travancore-Cochin, an Act or Ordinance of Travancore-Cochin, an Act passed by the Legislature of Kerala, an Ordinance Promulgated by the Governor under Art.213 of the Constitution, or where with respect to the State of Travancore-Cochin or Kerala, the power to make laws is vested with the President or other authority under sub-clause (9) of clause (1) of Art.357 of the Constitution, any law made in exercise of such power.". 10. The section corresponding to S.18 in the Interpretation and General Clauses Act, 1125, i. e., S.23 cannot therefore have any application with reference to the Madras Village Panchayats Act or the notification issued thereunder. The continuance of that notification, if at all, can only be by virtue of S.18 of the Madras General Clauses Act. And that Act can have application only in the Malabar area of the Kerala State. For these reasons the notification may apply only to the Malabar area. The continuance of that notification, if at all, can only be by virtue of S.18 of the Madras General Clauses Act. And that Act can have application only in the Malabar area of the Kerala State. For these reasons the notification may apply only to the Malabar area. Even so, we think it should stand if for other reasons it is not found to be unsustainable. 11. Before proceeding to deal with the argument that such a notification will be violative of Art.14 we may refer to a further argument advanced by counsel on behalf of the respondent based on S.18 of the Madras General Clauses Act, 1891. This has reference to the meaning of the words 'the Act' in S.18. Referring to Chapter II, S.12, and the definition of the term 'the Act' in S.3 (17a) it is contended that S.18 can apply only to a Madras Act as defined in S. (17a) and in Chapter III in which S.18 occurs, and that therefore S.18 cannot apply to the Act. S.3 (17a) is in these terms: "'Madras Act' shall mean an Act made by the Governor of Fort St. George in Council under the Indian Counsels Act, 1861 to 1909 or any of those Acts, or the Government of India Act, 1915, or by the Local Legislature or the Governor of the Presidency of Madras under the Government of India Act or by the Provincial Legislature of Madras under the Government of India Act, 1935, or by the Legislature of the State of Madras under the Constitution." And S.12 enacts thus: "This Chapter shall apply to all Madras Acts made unless a contrary intention appears in any such Act. but it shall not affect anything done or commenced prior to the commencement of this Act under any enactment now in force." We think counsel is correct in his contention that unaided by any other provision S.18 can apply only to such Acts as are mentioned in Chapter III and to 'Madras Acts' as defined in S.3 (17a). But before finally coming to the conclusion that it only applies to such Acts we think it is necessary to refer to the provisions of S.121 of the States Reorganisation Act, 1956, as well. That section is in these terms: "Power to construe laws. But before finally coming to the conclusion that it only applies to such Acts we think it is necessary to refer to the provisions of S.121 of the States Reorganisation Act, 1956, as well. That section is in these terms: "Power to construe laws. Notwithstanding that no provision or insufficient provision has been made under S.120 for the adaptation of a law made before the appointed day, any court, tribunal or authority required or empowered to enforce such law may, for the purpose of . facilitating its application in relation to any State formed or territorially altered by the provisions of Part II, construe the law in such manner, without affecting the substance, as may be necessary or proper in regard to the matter before the court, Tribunal or authority." It is not contended before us that this section is not available for construing S.18 of the Madras General Clauses Act which continued in operation by virtue of S.119 of the States Reorganisation Act, 1956, and which could have been adapted under S.120 of the same Act. The argument is that if we propose to read 'the Act' in S.18 to include an Act passed by the Kerala Legislature, i. e. the. Kerala Panchayats Act, 1960, then we are not construing S.18 but we are rewriting the section. We think that S.121 of the States Reorganisation Act, 1956, is meant exactly to cover circumstances such as the one that has arisen in this case. There is no point in enacting S.119 of the States Reorganisation Act, 1956, and keeping in force the Madras General Clauses Act if the effect of that would be to make S.18 of the Act non-available in regard to any statute passed by the Kerala Legislature after the appointed day. This is a matter in regard of which provision could easily have been made under S.120 by altering the words or the meaning of the words 'the Act' in that section. If inadequate provision has been made in that regard under that section and even if no provision has been made in that section, this Court has been given the power to construe S.18 of the Madras General Clauses Act with a view to facilitate its application in relation to any State formed or territory altered by the provisions of Part II. Kerala State is a State constituted under that Part cannot be doubted and in order to give effect to the provisions of S.121, we cannot but read 'the Act' in S.18 of the Madras General Clauses Act to include the Act in question, viz., the Kerala Panchayats Act, 1960. We propose to read the section in this manner. 12. Our attention has been drawn to the decision of the Andhra Pradesh High Court to the effect that if no adaptation has been made under S.120 of the States Reorganisation Act, 1956, the provisions under S.121 of the Act cannot be relied on for the purpose of making such adaptations as could have been made under S.120. The ruling is in Bh. Satyanarayanamurti v. Income tax Appellate Tribunal, Madras Bench reported in 1957 A. P. 123. With great respect we are unable to agree with this view for it seems to us that such a view would defeat the very purpose for which S.121 of the States Reorganisation Act has been enacted and such a conclusion cannot be supported on the wording of S.121. 13. This leads us to the question as to whether the continuance of such a levy for the Malabar area of the Kerala State alone and that after the coming into the force of the Act under which there can be a levy for the whole of the State is discriminatory and violative of Art.14 of the Constitution or not. 14. Counsel on behalf of the respondent has mainly relied on two decisions of the Supreme Court in support of his contention that it is discriminatory apart from the general arguments advanced on the basis that there is no intelligible differentia for a classification which would perpetuate a levy in an area which according to counsel stands in the same footing as the other areas in the State. The decisions of the Supreme Court are those in State of Rajasthan v. Rao Monohar Singhji reported in AIR. 1954 SC. 297 and in Jai Lal v. The Delhi Administration reported in AIR. 1962 SC. 1781. In the first of these cases it was held that the law in one part of Rajasthan State which prevented Jagirdars from collecting their dues while those in the other part of the State were allowed to do so was discriminatory and the law was held to be void. 1962 SC. 1781. In the first of these cases it was held that the law in one part of Rajasthan State which prevented Jagirdars from collecting their dues while those in the other part of the State were allowed to do so was discriminatory and the law was held to be void. This decision came up for consideration before the Supreme Court again in Anant Prasad Lakshminiwas Ganeriwal v. State of Andhra Pradesh and others reported in AIR. 1963 SC. 853. In the meantime dealing with the different laws pertaining to sales tax in the Madhya Pradesh State another decision has also been rendered by the Supreme Court in Bhaiyalal Shukla v. State of Madhya Pradesh and others reported in AIR. 1962 SC. 981. In Anant Prasad Lakshminiwas Ganeriwal v. State of Andhra Pradesh and others reported in AIR. 1963 SC. 853, the decision in State of Rajasthan v. Rao Manohar Singhji reported in AIR. 1954 SC. 297 was distinguished thus: "In the latter case, the Jagirdars of a particular area became singled out after the creation of the State of Rajasthan and management of their properties was taken away from them while the Jagirdars of the rest of Rajasthan retained the management of their properties. It was in those circumstances when there was a pre-existing law in one part of Rajasthan to which there was nothing corresponding in the rest of Rajasthan that this Court held that the patent discrimination arising in that case was violative of Art.14". Their Lordships then chose to follow the principles laid down in the decision in Bhaiyalal Shukla's case, AIR 1962 SC. 981. 15. As late as 1964, the principle laid down in the Madhya Pradesh case reported in AIR. 1962 SC. 981 has been reiterated by the Supreme Court in State of Madhya Pradesh v. Bhopal Sugar Industries Ltd., reported in AIR. 1964 SC. 1179. An earlier decision of the Supreme Court has also been referred to in this case. We do not think that the decision in State of Rajasthan v. Rao Manohar Singhji reported in AIR. 1954 SC 297, relied on by the first respondent lays down any general principle which is applicable to cases such as this. 16. There has been a law in the Malabar area of the Kerala State, the Madras Village Panchayats Act, 1950. We do not think that the decision in State of Rajasthan v. Rao Manohar Singhji reported in AIR. 1954 SC 297, relied on by the first respondent lays down any general principle which is applicable to cases such as this. 16. There has been a law in the Malabar area of the Kerala State, the Madras Village Panchayats Act, 1950. There was a levy also of a surcharge at the rate of 4 per cent from 23-5-1952. Though there was a similar Panchayat Act in the Travancore-Cochin area, there was no provision in that Act for the imposition of a levy similar to the one imposed under the Madras Village Panchayats Act. The levy under the Madras Act continued till 1-11-1956 during which period the Travancore-Cochin area have had no such levy. In fact the levy under that Act continued even after 1-11-1956 till 1-1-1962 when the Kerala Panchayats Act came into force. We cannot view the question without reference to these historical consideration. A geographical classification based on historical considerations can be had has been laid down by the Supreme Court in more than three cases to which we have already referred to. We see no reason why the same principle should not be applied to this case as well. We think that no distinction arises from the fact that the law relating to Panchayat has been codified for the whole of the Kerala State and brought into force from 1-1-1962 and that law contained a provision for the imposition of such a levy for the whole of the State. Even so, we think, that before a uniform policy can be decided upon by the State as regards the whole of the area of the State it is permissible to continue the system that has been obtaining for a considerable length of time before the enactment of the Kerala Panchayats Act and before the States Reorganisation on 11-1-1956. In permitting such a levy to continue nothing worse or different has been done. 17. It is not as though that there is nothing to be investigated or considered before deciding on a levy at a uniform rate for the whole of the State. Inequality can arise not only from treating people similarly situated in a different fashion but also from treating similarly those who are differently situated. 17. It is not as though that there is nothing to be investigated or considered before deciding on a levy at a uniform rate for the whole of the State. Inequality can arise not only from treating people similarly situated in a different fashion but also from treating similarly those who are differently situated. Perhaps this is the reason why when in 1965 finally it was decided to impose levy on the whole of the State it was decided to have 3 per cent levy instead of 4 percent levy which was in force in the Madras area. These are matters which must be left to the State and as has been pointed out by the Supreme Court in State of Madhya Pradesh v. Bhopal Sugar Industries Ltd., reported in AIR 1964 SC. 1179, it is not for this court to lay down any period of time or to indicate when such a uniform principle must be applied. 18. The only other decision on this aspect of the case to which reference should be made is the decision of the Supreme Court in Jai Lal v. The Delhi Administration reported in AIR. 1962 SC. 1781. We think the facts of the case are entirely different, and the situation that arose there was also quite different. For the reasons which obtained as early as a century back and which had ceased to exist long before the matter came up for consideration a distinction has been made between those on the North of the Jumna and Ganga and those of the South, The Supreme Court found that there is no basis for such a classification. This decision has not been applied in State of Madhya Pradesh v. Bhopal Sugar Industries Ltd., reported in AIR. 1964 SC. 1179 and in Anant Prasad Lakshminiwas Ganeriwal v. State of Andhra Pradesh and others reported in AIR. 1963 SC. 853. We do not think that the decision can have any application in deciding this case. 19. In the result we have to sustain the levy imposed on the transfer of immovable property effected by the first respondent on 23 51963. We therefore set aside the judgment under appeal and allow this Writ Appeal. There will be no order as to costs in this Writ Appeal.