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Issues:
Validity of imposition of water tax by Municipal Board, Sitapur under U.P. Municipalities Act, 1916. Detailed Analysis: 1. Compliance with Procedure for Imposing Tax: The Allahabad High Court quashed the water tax imposed by the Municipal Board, Sitapur, citing non-compliance with the procedure outlined in Sections 131 to 135 of the U.P. Municipalities Act, 1916. The High Court held that the levy was invalid due to the Board not following the prescribed procedure for imposing the tax. 2. Publication of Preliminary Proposal and Draft Rules: The Municipal Board passed a special resolution framing the proposal for the water tax, which included levying the tax at a rate of 12% per annum on the annual value of buildings and lands. The draft rules were duly prepared and published in a local paper, but the proposal was not separately published. However, objections were filed, considered, and modifications were made to the proposal, reducing the tax rate to 10% and exempting certain properties. 3. Procedural Defects and Cure under Section 135 Sub-section (3): The respondents raised objections regarding the non-publication of the preliminary and modified proposals as required by the Act. However, the Supreme Court held that the procedural defects were cured by Section 135 Sub-section (3) since the Municipal Board had the power to levy the tax, passed the necessary resolutions, and the defects were not fundamental, causing no substantial prejudice to the municipality's inhabitants. 4. Precedents and Compliance with Publication Requirements: The Court referred to previous cases where defects in publication were considered cured by the statutory provision similar to Section 135 Sub-section (3). The Court found substantial compliance with the publication requirements, ensuring that the inhabitants were informed of the proposals and had the opportunity to raise objections. 5. Conclusion and Dismissal of Writ Petitions: The Supreme Court allowed the appeals, setting aside the High Court's order and dismissing the writ petitions. The Court emphasized that the procedural irregularities in the imposition of the water tax were not fundamental and did not invalidate the levy, as the necessary steps were taken in accordance with the Act, as evidenced by the notification under Section 135 Sub-section (2) being conclusive proof of the tax imposition. In conclusion, the Supreme Court upheld the imposition of the water tax by the Municipal Board, Sitapur, emphasizing that the procedural defects were not substantial and were cured by the relevant statutory provision.
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