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TMI Blog1965 (9) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the tax assessed in respect of their houses, petitioned to the High Court at Allahabad under Art. 226 of the Constitution and asked for a writ or order preventing the appellant Board from realising the tax. Their contention was that the tax was illegal as it was imposed in contravention of the provisions of the Municipalities Act. The main grounds of objection were (a) that the, resolution of the appellant Board framing the proposal was not published in a local paper of Hapur printed in Hindi, and (b) that the rules framed for the imposition of the tax did not accompany the resolution which was affixed on the notice board at the office of the appellant Board in purported compliance with the requirements for publication. The imposition was also challenged on the ground that Arts. 14 and 19 of the Constitution were violated. The petition was heard by Mr. Justice James who decided all the points against the appellant Board. He held that the tax was illegal inasmuch as the mandatory requirements of the Municipalities Act were not complied with by the appellant Board while imposing the tax, and that s. 135(3) of the Act (which cures all defects in the imposition of tax by making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on requires the Board to prepare a draft of the rules which it desires the State Government to make and the Board is required to publish the proposal, the draft rules so framed, and a notice in the prescribed form, in the manner laid down by s. 94. That section says that every resolution passed by a Board at a meeting, shall, as soon thereafter as may be, be published in a local paper published in Hindi and where there is no such local paper, in such manner as the State Government may, by general or special order, direct. After the notice etc. are published, s. 132 enables any inhabitant of the Municipality to, submit to the Board an objection in writing to all or any of the proposals framed by it and the Board is required to consider the objection so submitted and to pass order thereon by special resolution. If the Board decides to modify its proposals or any of them it must publish the modified proposals and (if necessary) the revised draft rules with a fresh notice, for objections. Any new objection so received has to be dealt with in the same way. After the Board has finally settled the proposals, it has to submit the proposals, the objections (if any) and the orders made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is admitted that two Hindi weeklies entitled Janmat and Bharatvarsh and one Hindi daily entitled Vyapar were published at that time at Hapur. The appellant Board did not publish the notice etc. in these journals because, in its opinion, none of these papers was a suitable local paper having wide circulation in the town at the time. Notification of the 5th July, 1916 provides that, where, in a Municilpality, there is no local paper, a copy of every resolution passed by a Board at a meeting shall, within ten days from the date of the meeting, be pasted up and for thirty days be kept pasted up on a notice board to be exhibited for public information at the building in which the meetings of the Board are ordinarily held. Two objections against the tax found favour with the High Court. The first objection arose from the non-observance of s. 94(3) which, as already noticed, requires that the publication of the proposal etc. should be in a local newspaper published in Hindi. The High Court held that there was no need to take recourse to the notification of the 5th of July 1916, because the first part of S. 94(3) could be complied with. The next objection against the tax was that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , consider them, and then get them approved by Government. After this approval there must be a final special resolution imposing the tax from a particular date and the Government then notifies the imposition of the tax. It is the duty of Government to see that the various steps laid down for the imposition of the tax are followed. Before it notifies the resolution Government satisfies itself about the requirements. The notification is made conclusive proof that the tax is imposed in accordance with the provisions of the Act. The question arises : Is this rule of conclusive evidence such as to shut out all enquiry by courts ? We have no hesitation in answering the question in the negative. There are certain matters which, of course, cannot be established conclusively by a notification under s. 135(3). For example, no notification can issue unless there is a special resolution. The special resolution is the sine qua non for the notification. 'The State Government cannot impose, a tax all by itself by notifying the imposition of the tax, without a resolution by the Board. Again, the notification cannot authorize the imposition of a tax not included in s. 128 of the Municipalities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de but s. 94(3) was held to be directory. In the other minority opinion distinction was made between provisions for the protection of tax payers which were stated to be mandatory and provisions for promoting despatch, publicity and efficiency were stated to be directory requiring substantial but not literal compliance. In that case the notice imposing water tax in Rampur was published in Hindi but in a news-paper published in Urdu. The majority treating the latter part of s. 131 (3) as directory held that there was Substantial compliance. The minority treating s. 131(3) to be mandatory upheld the tax treating s. 94(3) as directory. One of the minority views relied upon s. 135(3) as shutting out enquiry. In Berar Swadeshi Vanaspati v. Municipal Committee Sheogaon Anr. [1962] 1 S.C.R. 596 the Municipality passed a resolution tinder s. 67(1) of the C. P. Berar Municipalities Act, 1922. Sub- sections (1) to (7) incorporated provisions similar to ss. 131-135 of the U. P. Municipalities Act. An attempt to question the tax on the ground that the procedure prescribed by s. 67 was not followed was repelled. It was observed: This notification therefore 'clearly is one which direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thus to set at naught the Act itself. This is not a right reading of the relevant 'provisions. We have already pointed out that the power to tax is conferred on the State Legislature but is exercised by the local authority under the control of the State Government. The taxes with which we are concerned are local taxes for local needs and for which local inquiries have to be made. They are rightly left to the representatives of the local population which would bear the tax. Such taxes must vary from town to town, from one Board to -another, and from one commodity to another. It is impossible for the Legislature to pass statutes for the imposition of such taxes in local areas. The power must be delegated. Regard being had to the democratic set-up of the municipalities which need the proceeds of the taxes for their own administration, it is proper to leave to these municipalities the power to impose and collect these taxes. The taxes are, however, predetermined and a procedure for consulting the wishes of the people is devised. But the matter is not left entirely in the hands of the Municipal Boards. As the State Legislature cannot supervise the due observance of its laws by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chieving consultation of the local population and close scrutiny of the actions of their representatiaves in imposing the tax. The notification which issues is given finality by the voice of the Legislature. It would, there CI/65- 18 fore, appear that in the selection of the ox and its imposition the Legislature plays a decisive part and also lays down the method by which the tax is to be imposed. The Legislature does not make local enquiries, hear objections and decide them-functions which are most inappropriate for the Legislature to perform. This task is delegated to the appellant Board which is the representative body of the local population on whom the tax is levied. In other words, all the essential functions of Legislation are performed by the State Legislature and only the minor functions necessary for the imposition of the tax and the enquiries which must be made to ascertain local opinion are left to the Municipal Boards. An additional check is available as Government can veto the actions of a Board if it does not carry out the mandate of the Legislature. In our judgment, there was no excessive delegation or a conferral of Legislative functions on the appellant Board or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objection is, therefore without substance. In the result we are of opinion that the judgment of the High Court under appeal must be set aside. We accordingly set it aside and order the dismissal of the petition under Art, 226 and 227 of the Constitution from which the present appeal has arisen. In the circumstances of the case there shall be no order as to costs. Wanchoo J. I regret I am unable to agree. This appeal by special leave from the judgment of the Allahabad High Court raises the question of vires of s. 135(3) of the U.P. Municipalities Act, No. 2 of 1916, (hereinafter referred to as the Act). the facts in the case are not in dispute and may be briefly stated. The appellant, namely, the Municipal Board Hapur, decided to impose water tax from April 1, 1957. In consequence, steps were taken under ss. 131 to 135 of the Act to effectuate that purpose. However, proposals and draft rules were never published as required by s. 131(3) of the Act. All that was done was that a notice in the form set forth in Sch. III was pasted on the notice-board and there was some beat of drum with respect to the notice. Even so, the draft rules were not appended to the notice which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Court. The appellant thereupon got special leave and that is how the matter has come up before this Court. The main contention on behalf of the appellant before this court is that s. 135(3) which lays down that the notification under s. 135(2) would be conclusive proof that the tax had been imposed in accordance with the provisions of the Act bars any enquiry into the various procedural steps taken for the imposition of the tax, and the court where such a question is raised must hold that the tax has been imposed in accordance with the provisions of the Act. Once the court comes to that conclusion it would mean that it must assume that the necessary procedural steps for imposing tax had all been properly complied with and therefore there could not be any invalidity of the tax on the ground that all steps necessary for the valid imposition of the tax had not been taken. It is further submitted that s. 135(3) bars enquiry as to the procedural steps necessary for imposing the tax which are contained in ss. 131 to 133 of the Act, and it is urged that what a court can enquire is whether the special resolution as required by s. 134 has been passed by the municipality or not. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls of the procedure contained in ss. 131 to 135 may be briefly summarised thus. When a board desires to impose a tax it has to pass a special resolution framing proposals specifying the tax, the persons or class of persons on whom the tax will be imposed, the amount or rate leviable and any other matter referred to in s. 153 which the State Government requires by rules to be specified. The board has also to prepare a draft of the rules which it desires the State Government to make in that behalf. After the proposals and draft rules have been prepared the board is required to publish them along, with a notice in the form set forth in Sch. III: (see s. 1 3 1). On the publication of the notice along with the proposals and draft rules any inhabitant of the municipality has the right to submit objections in writing and the board has to take such objections into consideration and pass orders thereon by special resolution. If the board decides to modify its proposals, it shall publish the modified proposals and (if necessary) revised draft rules in the same manner as the original proposals and draft rules were published. If any objections are received to the modified proposals they are ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment. It is after all this elaborate procedure has been gone through that a tax can be validly imposed by the delegate, namely the board. This brings us to s. 135(3) which has already been set out. The first question that arises is the interpretation of this provision. As I have already indicated two different submissions have been made in this connection on behalf of the parties. The appellant submits that this section only bars enquiry by the court into the procedural provisions contained in s. 131 to s. 133. On the other hand, the respondents contend that this provision bars enquiry into all matters contained in s. 128 to s. 135(1). If the words of this provision were to be literally interpreted they lay down that the notification under s. 135(3) shall be conclusive proof that the tax has been imposed in accordance with the provisions of the Act. 'Me last words are very wide and it is contended on behalf of the respondents that they would include all the provisions of the Act and once a notification is issued under s. 135(2) the court is barred from inquiring whether the tax is against any of the provisions of the Act. I feel however that even though the words may be cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a rule of evidence as urged on behalf of the appellant or is it more than that and is a substantive provision in itself This Court had occasion to consider the question whether a rule of irrebuttable presumption was a rule of evidence or a substantive provision in Ishar Ahmad Khan v. Union of India [1962] Supp. 3 S.C.R. 235 and observed that the proper approach to adopt would be to consider whether fact A from the proof of which a presumption is required to be drawn about the existence of fact B is inherently relevant in the matter of proving fact B and has inherently any probative or persuasive value in that behalf or not. If fact A is inherently relevant in proving the existence of fact B and to any rational mind it would bear a probative or persuasive value in the matter of proving the existence of fact B, then a rule prescribing either a rebuttable presumption or an irrebuttable presumption in that behalf would be a rule of evidence. On the other hand, if fact A is inherently not relevant in proving the existence of fact B or has no probative value in that behalf and yet a rule -is made prescribing for a rebuttable or an irrebuttable presumption in that connection, that rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elpless in the matter, even though none of the provisions of S. 131 to S. 135(1) may have been complied with. This in my opinion is the effect of S. 135 (3), as it stands and there is no question of presuming that the proper authority would abuse that provision. Irrespective of the abuse or otherwise of that provision., the effect thereof in my opinion is to wipe out all the procedural safeguards provided in s. 131 to S. 135(1) of the Act relating to imposition of tax and to make the tax a completely valid imposition so long as there is a notification under S. 135(2). On this interpretation of S. 135(3) a serious question arises whether it is a provision which can be said to be intravires. As I have already indicated, this is a case of delegation of power to impose tax in so far as its rate and incidence is concerned. Generally speaking, I am of opinion that it is the duty of a legislature when imposing a tax to specify the rate at which the tax is imposed, for the rate of tax, again speaking generally, is one of the essentials of the taxing power given to the legislature. But I cannot fail to recognize that there may be situations where the legislature may delegate to a subordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly what constitutes essential function cannot be enunciated in general terms. But the essential legislative function consists in the determination of the legislative policy and its formulation as a binding rule of conduct. It cannot be said that an unlimited right of delegation is inherent in the legislative power itself. This is not warranted by the provisions of the Constitution and the legitimacy of delegation depends entirely upon its being used as an ancillary measure which the legislature considers to be necessary for the purpose of exercising its legislative powers effectively and completely. The legislature must retain in its own hands the essential legislative functions which consist in declaring the legislative policy and laying down the standard which is to be enacted into a rule of law and what can be delegated is the task of subordinate legislation which by its very nature is ancillary to the statute which delegates the power to make it. Provided the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere with the discretion that undoubtedly rests with the legislature itself in determining the extent of del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on like S. 135 (3), which at one stroke does away with all those safeguards-and this is what in my opinion S. 135(3) has done in the present case-the position that results after such provision is that there is delegation of even the essential function of fixing the rate to the subordinate authority without any safeguard. Such a delegation would in my opinion be excessive delegation and would be ultra vires. The question then is whether in the present case I should save the delegation contained in s. 128 read with the safeguards provided in s. 131 to S. 135(1) for the imposition of various taxes mentioned therein or uphold s. 135(3) which in one sweep does away with all the safeguards. In my opinion s. 135(3) is severable and the legislature would have provided for various safeguards contained in s. 131 to s. 135(1) when it delegated the power to impose a tax including the fixation of rate to municipal boards. It would therefore in my opinion be right to hold that sections 128 to 135(2) indicate proper delegation of the authority of the legislature to impose taxes specified in s. 128 and that it is sub-s. (3) of s. 135 which should be struck down because it is the only provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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