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Madhya Pradesh High Court · body

1999 DIGILAW 99 (MP)

Alpana Theatre v. Nagar Palika Parishad

1999-02-02

R.S.GARG

body1999
ORDER R.S. Garg, J. 1. By this petition under Article 226 of the Constitution of India, the petitioner seeks to challenge the imposition of the show tax at the rate of Rs. 10/- per show. According to the petitioner, Municipality Gobara Nawapara is a class-Ill Municipality and is governed by the Provisions of M. P. Municipalities Act, 1961 (hereinafter referred to as Municipality Act). According to the petitioner, the rate of show tax was Rs. 3/- per show for the matinee (12.00 noon and 3.00 p.m. show) and Rs. 4/- for the night show i.e. 6.00 and 9.00 p.m. show. This tax was in vogue from 3-1-1976 upto 30-6-1986. According to the petitioner, the Municipality increased or enhanced the show tax without following the provisions of Section 127 of the Act. He submits that he could learn about the enhancement when demand dated 24-4-1987 for a sum of Rs. 7,160/- for the period between 3-1-1986 to 30-6-1986 was made against him. According to him, he objected to the said demand. He however deposited the said show tax but took up the matter in an appeal under Section 172 of the Municipality Act. The Appellate Forum rejected the appeal and a Revision submitted before the respondent No. 4 was also dismissed holding that the Appellate Forum could only see the correctness of the demand of the amount claimed under the demand but would not be entitled to see the legality of the demand nor could be able to consider whether the tax was rightly imposed or not. In this petition under Article 226 of the Constitution of India, the petitioner has sought to challenge the enhancement/imposition of the tax at the rate of Rs. 10 per show and has also submitted that the demand made by the respondent Municipality be quashed. 2. Shri Mohan Rao, learned counsel for the petitioner submits that the State Government has powers under Section 127 of the Municipality Act to issue general or special order relating to the imposition of the tax, therefore, and as the State has already issued a notification providing the minimum and maximum limit of the show tax, the respondent-Municipality had no authority to impose the tax beyond what is fixed by the State Government in its earlier notifications. Learned counsel for the respondent-Municipality contends that according to Section 130 of the Municipalities Act in case of Municipality other than Class-I Municipal Council with the previous sanction of the prescribed authority a council may vary the amount or rate of any tax which has already been imposed. Learned counsel submits that as the respondent- Municipality had obtained the previous sanction of the prescribed authority who is the director the imposition of the show tax or its enhancement cannot be challenged by the petitioner. 3. Shri J. P. Agrawal, learned counsel for the respondent-State has submitted that mainly the dispute is between the petitioner and the Municipality and the State has nothing to do with the present dispute but the State would have powers to issue special or general directions regarding imposition or fixation of the limits of the tax under Section 127 of the Municipalities Act. 4. I have heard the parties at length. 5. Section 127 provides that a council may, from time to time, and subject to the provisions of Chapter-VII, and any general or special order which the State Government may make in this behalf, impose in the whole or in any part of the Municipality any of the taxes, well described in Section 127(1), for the purposes of the Act Section 127(2) of Municipalities Act provides that the State Government may, by the rules made under the Act; (a) regulate the imposition, assessment and collection of taxes under the Act, (b) prevent the evasion of taxes imposed under the Act. Clause-C of Section 2 which gave authority to the State Government to frame rules to fix minimum or maximum limits of the tax have been deleted by M. P. Act 18 of 1975. 6. Section 130 of the Municipalities Act provides that with previous sanction of the State Government in case of a Class-I Municipal council, and in other cases with the previous sanction of the prescribed authority, which I would assume to be the Director under Section 23(7) of the Act, a council may abolish any tax already imposed under the Act or vary the amount or rate of any such tax. Perusal of Section 130 would provide that in case of Class-I Municipal Council with previous sanction of the State Government a council may abolish any tax already imposed under the Act or vary the amount or rate of such tax. Perusal of Section 130 would provide that in case of Class-I Municipal Council with previous sanction of the State Government a council may abolish any tax already imposed under the Act or vary the amount or rate of such tax. In case of any other Municipality this object can be achieved with the previous sanction of the prescribed authority. Whether the powers exercisable under Section 130 are independent of Section 127 of the Municipalities Act or these powers are subordinate to Section 127 of the Municipalities Act, is the main question to be considered. Section 127 provides that a council would be bound and has to act in accordance with any general or special order which the State Government may make in that behalf. The general powers to make general or special order flow in favour of the State Government under Section 127 and this power cannot be curtailed, curbed or controlled by Section 130 of the Municipalities Act. These general powers are for the purposes of asking the Municipality as to what is to be done by them in relation to imposition of the tax and in what manner. 7. True it is that after deletion of Clause-C of Section 127(2) of the Municipalities Act the State does not have the powers to fix the maximum or minimum limit of the tax but this Court while considering this aspect in the matter of M. P. 818/1978, M/s Gopi Talkies v. Municipal Council, Raigarh, decided on 13-2-1979 by the Division Bench has held that the deletion of Section 127(2)(c) by amendment would have no effect on the ambit of the power conferred by Section 127(1) which is in very wide terms. 8. The question posed for consideration before the said Division Bench was whether the imposition of tax at the rate of Rs. 10/- per show contrary to the order/recommendations made by the State Government by its circular/letter dated 10-7-1975 was binding upon the Municipality or the Municipality was entitled to impose the tax at the rate of Rs. 10/- per show. 9. The Division Bench appreciating the language of the Circular dated 10-7-1975 came to the conclusion that though a recommendation was made to the authorities bring to the slab within the field prescribed by the State Government but the said letter in fact was an order under Section 127(1) of the Municipalities Act. 10/- per show. 9. The Division Bench appreciating the language of the Circular dated 10-7-1975 came to the conclusion that though a recommendation was made to the authorities bring to the slab within the field prescribed by the State Government but the said letter in fact was an order under Section 127(1) of the Municipalities Act. This Court further observed that the Order fixing the maximum/minimum limit was in the nature of a general order issued under Section 127(1) of the Act. The power of taxation which a municipality exercises under Section 127 is subject to any general or special order which the State Government may make in that behalf. 10. In the matter of Municipality of Anand v. State of Bombay AIR 1962 SC 988 , the Supreme Court was required to consider the provisions of Section 59(1) of the Bombay District Municipal Act. In the said case, the State Government had issued an order prohibiting imposition of octroi tax. It was held that because of that order the Municipality of Anand was not entitled to recover octroi tax. 11. Appreciating the provisions of Section 127(1) of the Act with Section 59(1) of Bombay District Municipal Act, this Court in the matter of Gopi Talkies (supra) held that the same meaning should be attributed to the word 'impose' as used in Section 127(1) of the Municipalities Act. 12. It cannot be disputed that there cannot be any levy of the tax or its recovery in breach of any general or special order of the Government even if the tax was originally lawfully imposed. In the present case, the tax was lawfully imposed by the Municipality but the enhancement was contrary to the general' direction issued by the State Government. True it is that before imposition of the tax previous sanction of the prescribed authority was obtained but the prescribed authority failed to appreciate that it was giving sanction contrary to the provisions of Section 127(1). The prescribed authority is also bound by the general or special directions issued by the State Government under Section 127(1) of the Municipalities act. True it is that before imposition of the tax previous sanction of the prescribed authority was obtained but the prescribed authority failed to appreciate that it was giving sanction contrary to the provisions of Section 127(1). The prescribed authority is also bound by the general or special directions issued by the State Government under Section 127(1) of the Municipalities act. It cannot be gain- said that all other authorities would be bound by the special or general orders issued by the State Government under Section 127 of the Act but the prescribed authority for the purposes of Section 130 of the Act would not be bound by the special or general orders issued by the State Government. 13. The sanction granted by the Director would certainly run contrary to the directions/orders issues/made by the State Government. He had no authority or jurisdiction to grant sanction in favour of the respondent- municipality permitting it to enhance the show tax from Rs. three/four to Rs. ten per show. So long as the State Government's order dated 10-7-1975 fixing the minimum and maximum rate of the tax was/is in force and so long as the State order continues to be an order under Section 127(1) of the Act neither the Municipality nor the prescribed authority can impose tax contrary to the spirit of the orders of the State Government. 14. Whether the tax was properly imposed or not, whether the proposal was routed in accordance with law or whether it was published or not is not required to be considered in this petition in view of the discussion aforesaid. 15. In view of the discussion aforesaid, it is held that the Municipality was not entitled to enhance the show tax contrary to the directions issued by the State Government. It is not known to the parties as to whether the order passed by the Government dated 10-7-1975 has been later on withdrawn or not. It is therefore made clear that if after 10-7-1975 the order fixing the minimum and maximum rate of tax has been withdrawn or any new directions/orders have been passed by the State Government then the Municipality shall be free to impose or enhance the tax keeping in view the directions issued by the State Government. 16. The petition is allowed. The imposition of the tax is quashed. 16. The petition is allowed. The imposition of the tax is quashed. The amount which has been recovered by the respondent-Municipality in addition to the amount earlier fixed shall be refunded back to the petitioner within a period of two months from today. As the respondents had recovered the tax under a bona fide belief that the director is competent to grant sanction in their favour I direct that the petitioner shall not be entitled to any interest on the said amount and further the parties shall bear their own costs throughout. Security amount, if any, be refunded to the petitioner after due verification.