1990 (3) TMI 67 - SC - Income Tax

Whether the power to levy the tax or fee is conferred on that authority and if it falls beyond to declare it ultra vires? Held that - The courts cannot review the wisdom or advisability or expediency of a tax as the court has no concern with the policy of legislation, so long as they are not inconsistent with the provisions of the Constitution. It is only where there is abuse of its powers and transgression of the legislative function in levying a tax, it may be corrected by the judiciary and not otherwise. Taxes may be and often are oppressive, unjust, and even unnecessary, but this can constitute no reason for judicial interference. When taxes are levied on certain articles or services and not on others, it cannot be said to be discriminatory. Cooley observes Every tax must discriminate ; and only the authority that imposes it can determine how and in what directions. The TAC having decided to impose weighing dues on the goods mentioned in the bye-laws, it is not for the court to question it on the ground that some similar commodities or commodities arriving by rail or road were not subjected to the tax. The tax having not been found to be discriminatory or otherwise illegal, we do not find any force in the submission that it imposed any unreasonable restriction on the appellants rights guaranteed under article 19(1)(g) of the Constitution of India. Appeal dismissed.

Issues Involved:
1. Validity of the bye-laws promulgated by the District Magistrate.
2. Authority of the Town Area Committee (TAC) to impose weighing dues.
3. Nature of weighing dues: tax or fee.
4. Allegations of double taxation.
5. Allegations of discriminatory taxation.
6. Allegations of unreasonable restriction on rights under Article 19(1)(g) of the Constitution.

Issue-wise Detailed Analysis:

1. Validity of the Bye-laws Promulgated by the District Magistrate:
The appellant contended that the bye-laws were invalid as they were not framed by the TAC. The court examined the validity of the bye-laws promulgated by the District Magistrate on November 18, 1934, after the notification published by the Government of U.P. issued under section 38(1) of the Town Areas Act. The court noted that the District Magistrate was functioning as the TAC during its suspension and that the bye-laws were ratified by the TAC on January 9, 1935. Hence, the contention that the District Magistrate had no power to promulgate the bye-laws was rightly rejected by the learned courts below.

2. Authority of the TAC to Impose Weighing Dues:
The appellant argued that the TAC had no power to impose weighing dues. The court analyzed the empowerment under the notification and concluded that the TAC was empowered to make bye-laws for the establishment, regulation, and inspection of markets. However, section 298(2)F(d) of the Municipalities Act, as modified in the notification, did not authorize the imposition of any tax. The court noted that section 14 of the Town Areas Act, which dealt with taxation, did not mention weighing dues. The High Court concluded that the TAC became empowered to levy all those taxes which the State Government could levy under section 128(1) of the Municipalities Act, including entry tax and tax on the sale or purchase of goods, and that the weighing dues were validated retrospectively by section 13 of the U.P. Town Areas (Amendment) Act, 1962.

3. Nature of Weighing Dues: Tax or Fee:
The appellant claimed that the weighing dues were a fee and not a tax. The court explained that a fee is paid for performing a function and is not considered a tax, while a tax is payable for the common benefits conferred by the authority on all taxpayers. The court noted that the TAC justified the charging of weighing dues by stating that it maintained sanitary staff, provided lighting, ensured correct weighment, and prevented cheating. However, the TAC conceded that there was no quid pro quo and that the weighing dues were a tax. The court held that the weighing dues constituted a tax and not a fee.

4. Allegations of Double Taxation:
The appellant argued that there was double taxation as the TAC imposed weighing dues in addition to the sales tax imposed by the State Government. The court explained that double taxation in the strict legal sense means taxing the same property or subject-matter twice, for the same purpose, for the same period, and in the same territory. The court concluded that there was no double taxation in this case as the taxes were not imposed for the same period, on the same goods, at the same time, and for the same purpose. The court also noted that the Constitution does not prevent the same person or property from being subject to both State and municipal taxation.

5. Allegations of Discriminatory Taxation:
The appellant contended that the weighing dues were discriminatory as some products and goods entering the TAC by rail or motor transport were exempted. The court held that it is for the Legislature or the taxing authority to determine the need, policy, and selection of goods or services for taxation, and that courts cannot review these decisions. The court noted that the TAC explained the reason for not taxing certain products and that the courts cannot review the wisdom or advisability of a tax as long as it is not inconsistent with the Constitution. The court concluded that the tax was not discriminatory.

6. Allegations of Unreasonable Restriction on Rights under Article 19(1)(g) of the Constitution:
The appellant argued that the tax imposed an unreasonable restriction on their rights guaranteed under Article 19(1)(g) of the Constitution. The court found that the tax was not discriminatory or otherwise illegal and, therefore, did not impose any unreasonable restriction on the appellant's rights.

Conclusion:
The court found no merit in the appeal and dismissed it, making no order as to costs. The interim orders, if any, were vacated.

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