1957 (1) TMI 61 - HC - Indian Laws

Summary

Issues Involved:
1. Imposition of tax on circumstances and property.
2. Applicability of the Professions Tax Limitation Act, 1941.
3. Retrospective effect of the Professions' Tax Limitation (Amendment and Validation) Act, 1949.
4. Jurisdiction and powers of the appellate court.
5. Constitutionality of the tax under Article 276(2) and Article 19(d) of the Indian Constitution.

Detailed Analysis:

1. Imposition of Tax on Circumstances and Property:
The defendant, the District Board of Muzaffarnagar, levied a tax on circumstances and property on the plaintiff, Upper India Sugar Mills Limited, for the years 1942-43, 1943-44, and 1944-45, amounting to Rs. 2,000/- annually. The plaintiff paid these taxes under protest and subsequently filed a suit for declaration and injunction, arguing that the tax was effectively a tax on trade and occupation, thus falling under the restrictions of the Professions Tax Limitation Act, 1941.

2. Applicability of the Professions Tax Limitation Act, 1941:
The plaintiff contended that under Section 2 of the Professions Tax Limitation Act, 1941, the District Board was prohibited from levying any tax exceeding Rs. 50/- per annum on professions, trades, callings, or employments. The trial court agreed with the plaintiff, holding that a tax on circumstances and property was virtually a tax on trade and occupation, and thus subject to the limitations of the 1941 Act. Consequently, the trial court decreed the plaintiff's suit for declaration and injunction.

3. Retrospective Effect of the Professions' Tax Limitation (Amendment and Validation) Act, 1949:
The appellant argued that the Amending Act of 1949, which came into force on December 28, 1949, exempted the tax on circumstances and property from the limitations imposed by the 1941 Act. The Amending Act provided that no tax on circumstances and property imposed before its commencement shall be deemed invalid merely because it exceeded the Rs. 50/- limit. The appellate court found that the Amending Act had retrospective effect, making the tax valid and applicable to pending proceedings, including those at the appellate stage.

4. Jurisdiction and Powers of the Appellate Court:
The appellate court held that it had the jurisdiction to consider subsequent changes in the law, including legislative amendments, even if they occurred after the trial court's judgment. The court emphasized that appellate proceedings in India are in the nature of a rehearing, allowing the appellate court to mold relief according to the modified law. The court referred to several provisions in the Code of Civil Procedure, including Section 107 and Order 41, Rule 33, which grant the appellate court extensive powers to pass any decree or order necessary to meet the ends of justice.

5. Constitutionality of the Tax under Article 276(2) and Article 19(d) of the Indian Constitution:
The respondent argued that the tax on circumstances and property exceeded the Rs. 250/- limit imposed by Article 276(2) of the Constitution on taxes on professions, trades, and callings. However, the court noted that the proviso to Article 276 allowed for higher taxes if they were in force in the financial year immediately preceding the commencement of the Constitution. Additionally, the respondent contended that the tax constituted an unreasonable restriction on the right to carry on a trade or business under Article 19(d). The court found that the tax, being limited to a maximum of Rs. 2,000/- and imposed only on those with a taxable income exceeding Rs. 200/- per annum, was reasonable and did not impose a direct restriction on trade.

Conclusion:
The appellate court allowed the appeal, set aside the trial court's judgment, and dismissed the plaintiff's suit. The court held that the retrospective effect of the Amending Act of 1949 validated the tax on circumstances and property, and the appellate court had the jurisdiction to apply the modified law. The court also found that the tax did not violate constitutional provisions. The costs of the appeal were to be borne by the parties, but the plaintiff was entitled to recover costs decreed by the trial court.