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Issues:
1. Legislative competence of the State Legislature in imposing holding tax. 2. Authority of the Notified Area Committee to impose taxes. 3. Validity of the notification under Section 388 regarding the purpose of the notified area. Analysis: 1. The petitioners challenged the imposition of holding tax by the Mihijam Notified Area Committee on the grounds of legislative competence. The argument presented was that Sections 388, 389, and 390 exceeded the State Legislature's authority. Counsel contended that the legislation empowering the formation of a committee with all members nominated by the government might be unconstitutional under Item 5 of the State List. However, the court noted that the Bihar and Orissa Municipal Act, under which the tax was imposed, was enacted before the Government of India Act and continues to be valid under Article 372 of the Constitution. Therefore, the argument on legislative competence was deemed unsound. 2. The next point raised was regarding the power of taxation vested in the Local Government under Section 389(b) and the authority of the Notified Area Committee to impose taxes. The argument was that since Section 389(b) granted taxation power to the Local Government, there was no implied power for the Committee. However, the court highlighted Section 389(a), which allows the Local Government to apply provisions of the Act to a notified area, including taxation. The court emphasized that the Legislature granted taxation power to both the Local Government and the Committee concurrently, rejecting the argument that the Committee lacked authority to impose taxes. 3. The final contention was about the validity of the notification under Section 388 regarding the purpose of the notified area. The petitioners argued that the notification did not detail the purposes for which the area was constituted. The court examined subsequent notifications clarifying the purposes and provisions applied to the notified area, concluding that the notifications adequately described the area's purpose and activities. Therefore, the court found no legal invalidity in the notifications constituting the notified area and dismissed the application for a writ under Article 226 of the Constitution. In conclusion, the court ruled that there was no sufficient case for issuing a writ against the opposite parties, and the application was dismissed with costs to be paid to the State of Bihar.
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