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TMI Blog1957 (9) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... me when the bales were pressed by the owner (of the bale) to the tax collecting Karkun. Sanction to the levy of this tax was accorded by the Government of Bombay as from 7-4-1920. On 25-3-1924, the Commissioner, Central Division, sanctioned enhancement of the tax to eight annas on each pressed cotton bale, and the tax continued to remain payable by the owner. In 1946 the rules framed y the Municipality under Section 4(1 (1) of the Bombay District Municipal Act were modified, and the tax was made payable by the manager of the pressing factory within fifteen days from the presentation of the bill demanding payment of the tax. The tax, however, continued to be leviable at the rate of eight annas for every bale of cotton full-pressed or repressed within the municipal limits of Chopda. Under the bye-Jaws of the Municipality duty to furnish information about the pressing of bales was imposed upon the managers of the pressing factories. In 1949 the rules were again amended and the Municipality, with the sanction of the State, enhanced the tax to one rupee for every bale of cotton full-pressed within the municipal limits of Chopda. Certain other modifications were made in the rules, but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to the decree for refund or injunction claimed by them. The Municipality also contended that the cotton manufacturing tax can be enforced against the plaintiffs in respect of the cotton bales pressed by them, even if the bales, did not belong to them. 5. The learned trial Judge held that the levy of the tax by the Municipality contravened Section 142-A of the Government of India Act 1935, and Article 276 of the Constitution, and that the suit filed without notice under Section 167-A of the Bombay District Municipal Act was maintainable. Holding that the suit filed after six months from the date on which the amount was paid by the plaintiffs under protest was still within limitation, the learned Judge passed a decree in favour of the plaintiffs for ₹ 7,828 and issued an injunction restraining the Municipality from levying and realising the cotton manufacturing; tax in excess of ₹ 250 per annum, from tile plaintiffs. 6. Against that decree the Municipality has appealed to this Court. The plaintiffs have filed cross-objections to the decree appealed from contending that interest from the date of the suit till the date of realisation should have been awarded. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vince, or to any one municipality, ........ ..... by way of tax on professions, trades, callings or employments, shall from and after the commencement of this Act cease to be levied to the extent to which such taxes exceed fifty rupees per annum. By Article 270 of the Constitution it was provided that a law of the Legislature of a Stale relating to taxes for the benefit of the State or of a Municipality in respect of professions, trades, callings or employments shall not be invalid on the ground that it related to a tax on income. By Clause (2) of Article 276 it was provided that the limit of such a tax shall not exceed ₹ 250 per annum in respect of any one person to the State or to the Municipality. That clause was followed by a proviso which enabled the levy of taxes at a higher rate if there was, in the financial year immediately preceding the commencement of the Constitution, in force in any State or Municipality, a tax on professions, trades, callings or employments, and such a tax could be continued to be levied until provision to the contrary was made by Parliament by law. It may be mentioned that Act 20 of 1941 has been repealed by the Adaptation of Laws Order, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means exchange of goods for goods or goods for money : but in a secondary sense it includes any business carried on with a view to profit whether manual or mercantile as distinguished from the liberal arts or learned professions or agriculture. The word, however, is of very general application and must always be considered with the context with which it is used (see Halsbury's Laws of England, 2nd Edition, Vol. 32, p. 303). In Stroud's Judicial Dictionary 3rd Edition, Vol. 4, p. 3057, it is observed that trade may have a larger meaning so as to include manufactures ; see Commissioners of Taxation v. Kirk, 1900 A. C. 588 (A). In several cases decided in England under the Revenue-Acts the expression trade has been held to include any skilled employment pursued for the purpose of gain. In The Chartered Mercantile Bank of India, London and China v. Wilson, (1877) 3 Ex. D. 108 (B), it was held that business of a telegraph company was trade within the meaning of 57 Geo. 3, C. 25, Section 1. At p. 113 Kelly, C. B. observed : It was not the intention of the Legislature to limit the meaning of the word trade to buying and selling. In Citizens Insurance Co. of Canada v. Pars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every bale of cotton being full pressed within the municipal limits of Chopda shall be levied and it was urged that the primary incidence of taxation was related to cotton bales and such a tax could not be regarded as a tax on trade. We are unable to agree with that contention. The liability to pay the tax is by Rule 3 imposed upon the manager of the pressing factory, and the quantum of tax is computed by reference to the number of bales pressed within the municipal limits by the manager. The charging rule, in our judgment, is Rule 3, and it is on the trading activity of the manager that the liability to pay the tax is imposed. In considering a question as to the nature of a tax the Court must have regard to the true nature as is often said the 'pith and substance' of the tax, and not merely to the form in which it may have been imposed. Lord Atkin in Callagher v. Lynn, (1937) A. C. 863 (G) observed ; It is well established that you are to look at the 'true nature and character of the legislation' Russell v. T e Queen, (1882; 7 App. Cas. 829 (H), 'the pith and substance of the legislation.' If, on the view of the statute as a whole, you find that the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government permitted alteration of the incidence of taxation. The Municipality, on the assumption that it was entitled to levy the tax continued to levy it, demand and collect the same. In the circumstances it must be held that the tax was levied and collected in execution or intended execution of the Act. 13. In Jalgaon Borough Municipality v. Khandesh Spinning and Weaving) Mills Co. Ltd., (K), it was held by a Division Bench of this Court, in considering an analogous provision of the Bombay Municipal Boroughs Act, 1925, that a levy of octroi duty on fuel oil or furnace oil under the rules and bye-laws framed with the sanction of the local Government by the Jalgaon Municipality could not be ordered to be refunded in a suit filed more than six months after the date; on which the cause of action accrued, even if the Court held that under the rules the Municipality was not competent to levy octroi duty on fuel oil or furnace oil. Mr. Justice Bhagwati, who delivered the judgment of the Court, in considering the words done or purporting to have been done in pursuance of this Act observed : The acts which would fall within the category of those 'done or purporting to have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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