1956 (9) TMI 54 - SC - Indian Laws

Whether residence within the Town Area is a necessary condition for the imposition of the tax under clause (f)of the United Provinces Town Areas Act, 1914 ? Held that - Appeal dismissed. In view of the words and expressions used in section 14 of the Act, it cannot accepted the argument that clause (f) should be read as entirely independent of and unconnected with the other clauses and a different condition, namely residence within the-Town Area, must be read as a necessary part of clause (f). The assessment of the tax on the appellant under clause (f) of subjection (1) of section 14 of the Act was legally valid.

Summary

Issues Involved:
1. Validity of tax assessment under clause (f) of sub-section (1) of section 14 of the United Provinces Town Areas Act, 1914.
2. Requirement of residence within the Town Area for tax imposition under clause (f).
3. Legality of High Court's reference to clause (d) instead of clause (f) for tax validation.
4. Interpretation of relevant rules and conditions under the Act and associated rules.

Issue-wise Detailed Analysis:

1. Validity of tax assessment under clause (f) of sub-section (1) of section 14 of the United Provinces Town Areas Act, 1914:
The appellant was assessed a tax of Rs. 25 for the year 1950-51 by the Town Area Committee of Karhal under clause (f) of sub-section (1) of section 14 of the Act, which pertains to a tax on 'circumstances and property.' The appellant contested this assessment on the grounds that he did not reside within the Town Area and did not carry on any trade or business within that Area. The Appeal Officer dismissed the appeal, confirming that the appellant carried on business within the Town Area. The High Court also dismissed the appellant's writ application, suggesting that the tax could be imposed under clause (d) of sub-section (1) of section 14, which does not require residence within the Town Area.

2. Requirement of residence within the Town Area for tax imposition under clause (f):
The core issue was whether residence within the Town Area is a necessary condition for the imposition of tax under clause (f). The Supreme Court examined the relevant provisions and rules, particularly Rule 3 of the Rules regarding the Limitations, Restrictions, and Rate for the Circumstances and Property Tax. Rule 3 states that the tax assessed on the circumstances of an assessee may be imposed on any person residing or carrying on business within the Town Area, provided they have done so for at least six months in the year of assessment. The Court concluded that either residence or carrying on business within the Town Area is sufficient for tax imposition under clause (f).

3. Legality of High Court's reference to clause (d) instead of clause (f) for tax validation:
The appellant argued that the High Court erred in validating the tax under clause (d) when the assessment was originally made under clause (f). The Supreme Court agreed with the appellant, stating that the legality of the tax must be considered with reference to the clause under which it was actually assessed. Therefore, the assessment's validity should be examined under clause (f) and not under a different clause.

4. Interpretation of relevant rules and conditions under the Act and associated rules:
The Supreme Court analyzed the relevant sections and rules, including section 14 and Rule 3. The Court highlighted that clause (f) does not explicitly require residence within the Town Area for tax imposition. The rules provide that the tax can be imposed on persons either residing or carrying on business within the Town Area. The Court also addressed the proviso to clause (f), which prevents multiple taxation under different clauses, indicating potential overlapping between clauses (d) and (f). The Court rejected the argument that residence is a sine qua non for tax imposition under clause (f), emphasizing that the rules allow for either residence or business activity within the Town Area as sufficient conditions.

Conclusion:
The Supreme Court held that the assessment of the tax on the appellant under clause (f) of sub-section (1) of section 14 of the Act was legally valid. The appeal was dismissed with costs, affirming that either residence or carrying on business within the Town Area suffices for tax imposition under the relevant clause.