Brij Mohan Chandra v. Municipal Board, Nainital — 1968 DIGILAW 180 (ALL)

ORDER S.D. Singh, J. - This is an application u/s 561-A of the Code of Criminal Procedure for quashing certain proceedings against the Applicant pending in the court of I he Sub-Divisional Magistrate, Nainital. 2. The facts briefly stated are that the Applicant was travelling in a roadways bus from Bhowali to Nainital. At Kaila Khan Municipal toll barrier an attempt was made to realise from him toll-tax, but he refused to pay. The Executive Officer, Municipal Board, Nainital thereupon filed a complaint against him u/s 190(1)(e) of the Code of Criminal Procedure stating that the Applicant had committed breach of Rule 1 of the Rules for the assessment and collection of tolls within the municipality of Nainital. The Applicant's contention is that the levy of toll-tax by the Municipal Board on passengers is ultra vires the taxing power of the Municipal Board. 3. Under Notification No. 1450/XI-476 E dated 19th August, 1921 published in part III of the UP Gazette dated 20th August, 1921 levy of toll tax under certain heads u/s 128(1)(vii) of the UP Municipalities Act, 1916 was sanctioned by the Government u/s 135(2) of the same. This Notification has continued to be in force during the last 48 years with minor changes here and there. According to the latest rules, as they stand, toll tax may be charged under the following heads: 2. Motor Vehicles cither than car, per passenger carried....Re. 1/- 2(a) Motor Vehicles other than cars carrying passengers only, or carrying partly passengers and partly goods in addition to toll on passengers and the toll on goods, as may be payable under item No. 2 above and No. 3 below-respectively per vehicle....Rs. 2/- Note : Children over three and up to 12 years of age will be charged at half the rate prescribed in items 1 and 2 above. There are other items in the Schedule relating to levy of toll-tax on different types of motor vehicles but it is not necessary to mention them as we are not concerned with the same. 4. There are other items in the Schedule relating to levy of toll-tax on different types of motor vehicles but it is not necessary to mention them as we are not concerned with the same. 4. The main contention of the Applicant is that a Municipal Board is authorised to levy toll-tax only on vehicles and other conveyances, animals and laden coolies entering the Municipality and not on passengers and that when the Applicant who was travelling in a roadways bus was required to pay toll-tax, it amounted either to a demand which was not permissible under the law as it stands, or to a levy of toll-tax on a passenger which was not permissible under the law and consequently ultra vires the taxing power of the Municipal Board, Nainital. 5. The entire contention of the Applicant centres round the interpretation of Clause (vii) of Section 128(1) of the Municipalities Act, 1916 which reads as below: (vii) a toll on vehicles and other conveyances, animals and laden coolies entering the municipality; Connected with it may also be considered Clause (xiv) of the same Section 128(1), which reads: (xiv) any other tax which the State Legislature has power to impose in the State under the Constitution. 6. The first Notification for the imposition of toll-tax u/s 128(1) of the Municipalities Act, 1916 was issued in 1921 when the power to impose or levy a tax was regulated by the provisions of the Government of India Act, 1916. The Scheduled Taxes Rules prescribed by the Government under Notification No. 311-S, dated the 16th December, 1920 u/s 80A(3) of the aforesaid Act specified the legislative field of the provincial legislative councils. The Scheduled Taxes Rules prescribed by the Government under Notification No. 311-S, dated the 16th December, 1920 u/s 80A(3) of the aforesaid Act specified the legislative field of the provincial legislative councils. Under para 3 of these rules, power to levy a tax of the nature mentioned in Schedule II could be delegated by the provincial legislative councils to a local authority and the very first item in Schedule II is "a toll." The provincial Legislature could, therefore, delegate authority to a local authority to impose a toll-tax; but while serial No. 1 of Schedule II aforesaid empowered the provincial Legislatures to delegate complete authority to Ideal authorities to levy tolls Clause (Vii) of Section 128(1) of the UP Municipalities Act; already extracted above gave the Municipal Committees only restricted power in that respect and authorised them to levy a toll only on "vehicles and other conveyances; animals and laden Coolies entering the municipality." The constitutional provisions even Under the Government of India Act; 1935 Continued to be the same. 'Tolls' were mentioned in list it of the 7th Schedule of that Act at Serial No. 33 and even Under list II of the 7th Schedule of the Constitution; 'tolls' are mentioned at Serial No. 59 in the State Legislative List; but the State Legislature's jurisdiction to levy toll-tax has been extended to some extent under list II inasmuch as under Serial No. 56 the Setat Legislature may even levy toll-tax on goods and passengers Carried by road or on inland waterways. But the delegated power of the Municipal Board td levy toll-tax Continues td be exactly the same as it was when the Municipalities Act was placed on the statute book. There has been ho extension of powers of the Municipal Board td levy toll tax beyond what was delegated to them under Clause (vii) Section 128(1) of the Municipalities Act. 7. That being the position, any levy of a toll-tax on passengers would be beyond the competence of the Municipal Boards. It could be Urged that Clause (xiv) of Section 128(1) of the Municipalities Act authorises "the Municipal Board td levy any other tax which the State Legislature has power td impose in the State under the Constitution. But that aspect of the case is concluded by the decision of their Lordships of the Supreme Court in the case of Municipal Board of Hardwar Vs. But that aspect of the case is concluded by the decision of their Lordships of the Supreme Court in the case of Municipal Board of Hardwar Vs. Raghubir Singh etc., AIR 1966 SC 1502 . In that ease the question raised was Whether a toll-tax which was not covered by the provisions of Clause (vii) aforesaid Could still be a valid levy of tax Under Clause (xiv) aforesaid or not. Their Lordships held that that was not possible. They observed in this respect as follows: If the matter is confined to Clause (vii) it is clear that the Board Could levy toll only on vehicles entering the municipality and not on Vehicles leaving the municipality. The Legislature having expressly so limited the power of the Board no extension of that power Could be Contemplated Under Clause (xiv) even if it may be right td say that tolls as such cart be levied on vehicles leaving the municipality as well as Vehicles entering the municipality a point which we do not decide. The larger power if any must be held to be cut down by necessary implication. To permit tolls td be levied do vehicles leaving the municipality would render ineffective that part of Clause (vii) which lays emphasis on vehicles Entering the municipality; Such ah extension of power through Clause (xiv) cannot be supported. The view taken by the Supreme Court in other words was that having restricted the powers of the Municipal Boards td levy toll-tax under Clause (vii) and permitted them to levy toll-tax only in certain Specified Cases; the Legislature Could not have intended td Vest powers in Municipal Boards Under Clause (xiv) Which it had specifically Withheld from them Under Clause (vii); If there were any such intention on the part of the Legislature; that is; if the Legislature had intended td delegate unrestricted powers td Municipal Boards to levy tolls which power the State Legislatures have under the relevant entry in list II of 7th Schedule of the Constitution; then the Legislature would have Used the single word "tolls" in Clause (vii) instead of making Use of that word and then qualifying it by a number of Circumstances immediately following thereafter. 8. 8. The obvious inference, therefore; is that a toll on passengers Could riot be levied Under Clause (vii) of Section 128(1) of the Municipalities Act and the power to levy a toll-tax cannot be exercised by the Municipal Boards even Under Clause (xiv) aforesaid. 9. What was contended Oh behalf of the Municipal Board was that the Municipal Board, Nainital; never intended to levy a tax on passengers that its intention was to levy toll-tax only on vehicles; in this case; buses and that it Was only a made of realisation of that tax which was prescribed under the byelaws notified under Notification No. 1319/XI-24H dated 10th June 1922. It was Urged that Section 153 of the Municipalities Act empowered the State Government to frame rules to regulate and govern "the assessment the collection or composition of taxes and in the case of octroi, or toll the determination of octroi or toll limits." It was further urged that when the State Government provided by rules that the tax would be collected from passengers, it merely provided a mode of collection of the toll-tax, on vehicles. The specific rule which so empowers the Municipal Board to realise toll-tax from passengers is para 2 of Rule 2(a). It reads as follows: The toll on a laden motor vehicle shall be paid by the person incharge of the vehicle. The toll on a passenger shall be paid by the passenger. It is unfortunate that this particular rule was made to read in a manner which seems to make it mean what might not have been in the mind of the Municipal Board or the State Government. In framing this rule the State Government speaks of "the toll on a passenger." There has been, even according to the contention put forward on behalf of the Municipal Board, no toll on a passenger so far levied either by the Municipal Board, Nainital or the State Government in any form. It was conceded even on behalf of the Municipal Board that what the Municipal Board had actually levied was a tax on vehicles and not a tax on passengers. It was conceded even on behalf of the Municipal Board that what the Municipal Board had actually levied was a tax on vehicles and not a tax on passengers. If this is what was intended, then it was meaningless on the part of the State Government to speak of 'toll on a passenger' in this rule, unless of course, when the vehicles-tax itself was sanctioned and levied at the rate of so many rupees per passenger, the intention was to levy a toll on passengers and not a toll on vehicles. If really what was intended was to levy a tax on passengers, though couched in a language so as to avoid constitutional difficulties, then the Municipal Board and the State Government did exceed the limits of their authority in levying the tax. The notification, as it stands, relating to the levy of toll-tax does not speak of levy of passenger tax and as has been said earlier even if it does, it is ultra vires the taxing authority of the Municipal Board which can be exercised only within the four corners of Clause (vii)of Section 128(1) of the UP Municipalities Act; and if it was not a levy of a toll on passengers, then to speak of a toll on motor vehicles as a toll on passengers was making use of a wrong language of which no advantage could be taken. 10. It was urged that when a tax on conveyance is levied, some provision has to be made for the assessment and collection of that tax and some provision made about the persons from whom that tax may be recovered and that if there is any reasonable or rational nexus between the levy of the tax and the persons from whom that tax may be recovered, the Municipal Board would be within its rights to realise the tax from the persons so named. It is difficult, however, to apply the nexus theory in a manner so as to enable the Municipal Board to recover the toll tax from the passengers travelling in a bus otherwise there will be no distinction left between a vehicles tax and a passenger tax. When a toll-tax is levied on a vehicle, it is levied at the point of its entry within the municipal limits. When a toll-tax is levied on a vehicle, it is levied at the point of its entry within the municipal limits. It is obviously, therefore, the person, who is incharge of the vehicle or who makes an attempt to take the vehicle inside the municipal limits who takes upon himself the responsibility for the payment of the toll-tax. There is no question of there being any nexus between the levy of the tax on the vehicle and the persons sitting inside the same. In the case of vehicles plying on hire, the driver or conductor of the vehicle can, of course, charge the amount of tax which has to be paid, from the passengers in addition to the fare which is normally charged from them. In some cases the toll-tax levied on any one entry may work out to be even more than the fare per passenger. Surely the owner of the vehicle or the driver will not pay the sane out of his own pocket." They may make a consolidated charge from the passenger or demand the two amounts separately. It is for a passenger to agree to make the payment or refuse to do so. If he refuses to do so, the owner or the driver of the vehicle has a right to refuse to give him a lift. If the passenger, knowing that a certain amount will be realised from him by the driver of the vehicle in addition to the normal fare to compensate him for the toll-tax which has to be paid for the entry of the vehicle in the limits of a Municipal Board, travels on the same, he undertakes a civil liability to make that payment, but certainly there is no privity of contract between the Municipal Board and the passenger; and if the passenger refuses to make payment of any such amount to the Municipal Board direct, no provision of the law is infringed by him and no offence thereby committed. 11. 11. The rules framed by the Government under the Notification dated 10-6-1922 as amended upto date to the extent they permit a vehicle tax being charged from the passengers in the shape of toll on passengers or in any other form, are ultra vires the rule making power of the Government and the levy of any such tax by the Municipal Board on passengers themselves is ultra vires the taxing power of the Municipal Board, Nainital. 12. In that view the application filed by the Applicant for quashing the proceedings succeeds. The application is allowed. The proceedings against the Applicant pending in the court of the Sub Divisional Magistrate, Nainital are quashed.