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TMI Blog1942 (2) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to agricultural income-tax might be made upon them. On the 7th October 1939, they instituted this suit against the Province of Bihar calling in question the validity of the impugned Act and praying for a declaration that the Act was ultra vires of the Bihar Legislature and that the notice served upon them was invalid and ineffective. The plaint also referred to an amending Act (Bihar Act No. V of 1939) but as nothing turns on the provisions of that Act, it is unnecessary to refer to it separately in this judgment. 2. The suit was dismissed by the High Court on the 17th April 1941, and the Plaintiffs have come up in appeal to this Court. 3. The grounds set out in the plaint, on the basis of which the validity of the impugned Act is questioned, are- (a) that the impugned Act repeals, amends or is repugnant to an Act of Parliament extending to British India within the meaning of Section 108(2)(a), or a Governor-General's Act within the meaning of Section 108(2)(b) of the Constitution Act, that is to say, Regulation I of 1793 (the Bengal Permanent Settlement Regulation), and therefore required the previous sanction of the Governor-General, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivator or receiver of rent in kind to render the produce raised or received by him fit to be taken to market, or (iii) the sale by a cultivator or receiver of rent in kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in Sub-clause (ii); [(c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator, or the receiver of rent in kind, of any land with respect to which any operation mentioned in Sub-clauses (ii) and (iii) of Clause (b) is carried on: Provided that the building is on or in the immediate vicinity of the land, and is a building which the receiver of rent or revenue or the cultivator or the receiver of rent in kind by reason of his connexion with the land requires as a dwelling-house, or as a store-house, or other out building.] 6. It will be observed that the whole of paragraph (c) has been omitted in the impugned Act. 7. It has been brought to our notice that by Bihar Act No. I of 1942, paragraph (a) of the definition of agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the impugned Act to rent or income derived from land in Bihar was necessary. 10. It is common ground between the parties that local cesses or rates imposed upon lands within municipal limits which are used for agricultural purposes are not assessed and collected in the Province of Bihar by officers of the Crown as such and that the income, if any, derived from such of these lands as are revenue free would fall within the purview of the impugned Act, though such income is not agricultural income within the definition of that expression in the income-tax Act. To this extent therefore it is admitted that the definition of agricultural income in the impugned Act is wider than the definition of that expression in the Income-tax Act. That being so, it was contended that the whole of the impugned Act must be held to be ultra vires of the Provincial Legis-lature. 11. There is no mention in the plaint of the existence in the Province of Biliar of revenue-free land within municipal limits which is used for agricultural purposes and is assessed to a local rate. No evidence was led in the suit, as it was assumed that after certain admissions had been made on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le texture of the Act was inextricably interwoven and that the portions within the competence of the Dominion Parliament could not be contemplated as existing independently of the rest of the Act which had been found to be beyond such competence. They were also of the opinion that as the main legislation was invalid as being in pith and substance an encroachment upon provincial rights, the rest of the Act must fall with it as being in part ancillary to it. We are here faced with no such contingency. The definition of agricultural income in the impugned Act does not in terms include income derived from land situate within a municipality, and paragraph (c) of s.s. (1) of the definition as construed by us above is a very minor part of it. The definition in the impugned Act should, in our opinion, be so read as to confine its operation to income which can be properly classified as agricultural income within the meaning of the definition in the Income-tax Act, and in respect of which alone the Provincial Legislature was competent to legislate: see the recent opinion of this Court In re The Hindu Women's Rights to Property Act [1941] F.C.R. 12. The relevant authorities have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s processes distinct from the determination of the general rate which is to be done by the District Board. Assessment may be described as comprising the process of valuation of land and the determination in respect of each estate of the amount of cess payable by the estate on the basis of the valuation at the rate determined by the District Board. The valuation of land is dealt with in Chapter II of the Act, and has throughout to bo carried out by the Collector. On the basis of this valuation the determination of the amount in respect of each estate has also to be done by the Collector (s. 38). It is not disputed that the cess is collected by the Collector. There can therefore be no doubt that the road cess leviable under the Bengal Cess Act is assessed and collected by the Collector. The question, however, is whether the Collector in performing these functions acts as an officer of the Crown as such or merely as a delegate or functionary of the District Board. In this connexion our attention was drawn to Section 9. of the Cess Act which provides that the proceeds of the road cess in each district shall be paid into the District Road Fund of such district as thereinafter provided. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector. It cannot be denied that the Collector in assessing and collecting the public works cess does function as an officer of the Crown as such. That being so, it would not be reasonable to hold that in respect of the assessment and collection of the road cess under the same statutory provisions he functions in any other capacity. 21. Gilbert v. Corporation of Trinity House (1886) 17 Q.B.D. 795 and Metropolitan Meat Industry Board v. Sheedy [1927] A.C. 899 which were cited to us do not seem to give any support to the Appellants. The question at issue in the first case was whether the Corporation of Trinity House and in the second whether the Metropolitan Meat Industry Board were or were not servants of the Crown. The question that we have to consider here is not whether the District Board or its officers can be regarded as officers of the Crown, but whether the Collector, who is admittedly an officer of the Crown, acts as such in the performance of the duties assigned to him under the Cess Act. We have no doubt that he does. 22. It was also argued that by virtue of Section 100 of the Cess Act which authorizes the Board of Revenue to invest at any time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t after the East India Company had obtained the Diwani of the Provinces of Bengal, Bihar and Orissa in 1765, annual settlements of the jama were the rule and settlements for any longer period the exception. These annual settlements caused great hardship to and resulted in grave dissatisfaction among the landholders and zamindars of these provinces. In many cases they were dispossessed of their estates as a consequence of failure to accept a settlement or of default in the payment of the jama settled. The situation deteriorated to such a degree that Parliament was compelled to take note of it, and Section 39 of Pitt's India Act laid a duty upon the Court of Directors of the Company to carry out an investigation into the complaints of landholders and zamindars and effectively to redress the same, and also to give orders and instructions to the several Governments and Presidencies in India for the settling and establishing upon principles of moderation and justice, according to the laws and constitution of India, the permanent rules by which their respective tributes, rents and services shall m future be rendered and paid to the Company Lord Cornwallis was sent out as Governor-G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -General by Section 36 of the Act were the same those of the executive authority conferred upon him by Section 7. If that was indeed so, as well may have been the case, the Governor-General in Council possessed adequate legislative authority for the enactment of the Regulation. But even if there were some doubt as to the extent of his legislative authority it must be presumed to have been set at rest by the direction given that all courts in these Provinces must give effect to the provisions of these Regulations (see Section 8 of 37 Geo. III c. 142). In either case the Regulation was an enactment of a subordinate legislative authority which no doubt derived its own authority from an Act of Parliament, but whose enactments did not thereby become Acts of Parliament. 26. Reliance was placed upon the observations of Sir Richard -Garth C.J. in Empress v. Burah and Book Singh I.L.R. (1877) Cal 140, and upon the judgment of the Privy Council in the same case on appeal reported as The Queen v. Burah (1878) 5 Ind. Ap. 178. In that case Their Lordships had to deal with a question which bears no analogy whatsoever to the question now before us. An Act of the Indian Legislature pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 7(2), read with the 2nd entry in the Second Schedule, without any saving or reservation, and was no longer in operation when the impugned Act was passed. 30. It was argued on behalf of the Respondent that even assuming that Regulation I of 1793 was an Act of Parliament, it was not an Act extending to British India within the meaning of Section 108(2)(a) of the Constitution Act, inasmuch as British India means all territories for the time being comprised within the Governors' Provinces and the Chief Commissioners' Provinces [s. 311 (1)], and the Regulation applies only to the Provinces of Bengal, Bihar and Orissa. In the view taken by us of the meaning of the expression Act of Parliament in Section 108(2)(a), it is not necessary for us to decide whether extending to British India in that section means extending to the whole of British India, or extending to the whole or any part of British India, and we accordingly express no opinion on this point. 31. When counsel for the Appellants had concluded his reply on this part of the case, we intimated to him that we were unable to accept his contention that Regulation I of 1793 was an Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct does not thereby in any manner whittle down or derogate from the assurances given to zamindars and landholders by Regulation I of 1793. This question was dealt with by Their Lordships of the Privy Council in Prabhatchandra Barua v. King Emperor I.L.R. (1930) 58 cal. 430, where Lord Russell of Killowen, who delivered the judgment of Their Lordships observed: In Their Lordships' opinion, while the Regulations contain assurances against any claim to an increase of the jama, based on an increase of the zamindari income, they contain no promise that a zamindar shall in respect of the income which he derives from his zamindari be exempt from liability to any future general scheme of property taxation, or that the income of a zamindari shall not be subjected with other incomes to any future general taxation of incomes (p. 447). With these observations we find ourselves in respectful agreement. 35. It was contended that the impugned Act was not a general measure of taxation of incomes but was confined to agricultural income which in the Province of Bihar was derived mainly from permanently settled estates. This contention loses sight of the fact that owing to the divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from permanently settled estates overlooks the contingency, which is bound to arise in at least some Provinces, that if this argument were to prevail, agricultural income derived from estates settled otherwise than under the Permanent Settlement Regulation would be equally exempt from liability to agricultural income-tax during the period of a current settlement, and entry No. 41 in List II would in such Provinces be reduced to a nullity. We have in mind Provinces where the period of a settlement is by legislation fixed not permanently but for a number of years. For instance, by virtue of Section 53A of the Punjab Land Revenue Act (Central Act No. XVII of 1887), the normal period of time for which an assessment under the Act shall remain in force is forty years. Could it be argued that Provincial legislation imposing agricultural income-tax in that Province should not operate in respect of agricultural income derived from estates assessed under the provisions of the Punjab Land Revenue Act till after the expiry of the period of the then current settlement. This would leave practically nothing on which such a measure could operate and we could not accept a construction of the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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