LexTHE CANTONMENT BOARD,MATHURA versus KRISHNA BRICKS AND LIME FACTORY
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THECANTONMENTBOARD,MATHURA
v.
KRISHNA BRICKS AND LIME FACTORY
SEPTEMBER 12, 1996
[N.P. SINGH AND S.B. MAJMUDAR, JJ.]
Cantonments Act, 1924: Section 60.
Imposition of Tax-By cantonment Board-On trades and call-
ings-Rate of tax-Held : must be within the ceiling limit fixed by Art.
276(2)-S. 60 linked Board's power to impose tax with that of any
Municipality in the State where Cantonment was situated-Since power of
municipality was subject to ceiling fixed by Art. 276(2), Board's power was
also subject to such ceilin~Hence, Board did not have unlimited taxing
power-U.P. Municipalities Act, 1916, S. 128(1)(ii}-Constitution of India,
1950, Art. 276(2).
The respondent was the owner of a brick kiln and was carrying on
the business of manufacturing and selling of bricks. A suit was filed by the
respondent for restraining the appellant~Board from realising tax at the
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rate of 0.75p per thousand bricks by raising it from 0.19p per thousand E
bricks. It was contended by respondent that it neither derived any ad-
vantage from the Board nor any service was provided by the Board to it.
As such, the realisation of the tax at the aforesaid rate was in contraven-
tion and in violation of Section 60 of the Cantonments Act, 1924 read with
Section 128(1)(ii) of the U.P. Municipalities Act, 1916. The suit was dis-
missed and the judgment was affirmed in first appeal. However, in second F
appeal, the High Court came to the conclusion that the ceiling and restric-
tion imposed by Article 276(2) of the Constitution, as applicable to the
State, any municipal, district board, local board or other local authority
within such State in respect of imposition of taxes on professions, trades
and callings, was applicable even on the Board which had been established G
under the aforesaid Cantonments Act. On that finding the notification
raising the rate of tax was declared to be invalid being hit by Article 276(2)
of the Constitution. Being aggrieved the appellant-Board preferred the
present appeal.
Dismissing the appeal, this Court
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SUPREME COURT REPORTS [1996] SUPP.6S.C.R.
HELD : 1.1. Article 276 of the Constitution within a prescribed limit,
enables the legislature of the State to make law for imposition of taxes on
income for the benefit of the State or municipality, district board, local
board to other local authority from professions, trades, callings saying that
such law shall not be invalid on the ground_ that it relates to a tax on income.
In view of Article 276, no law of legislature of a State relating to imposition
of taxes for the benefit of the State or of a municipality, district board, local
board, or other local authority therein in respect of professions', trades,
callings shall be valid, if it provides the total amount payable in respect of
any one person to the State, exceeding the limit fixed by Article 276tl) of
the Constitution. [144-C]
1.2. In the instant case the impugned notification imposing enhanced
tax of 0.75p per thousand bricks on brick-kiln owners was issued by the
Cantonment Board under Section 60 of the Cantonments Act, 1924. As such
the said notification shall not be deemed to have been issued in exercise of
power under a law enacted by the legislature of the State for the objects
D mentioned in Article 276. Section 60 of the Cantonments Act, prescribes two
conditions for imposition of tax by the Board. Firstly, that there must be a
previous sanction of the Central Government and secondly that only such
tax can be imposed within any cantonment which under any enactment for
the time being in force may be imposed in any municipality in the State
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wherein such cantonment is situated. The framers of the Cantonment Act
did not desire to delegate and authorise the Board to impose any tax.
{144-E-G]
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1.3. In exer~ise of power under Section 128(1) (ii) of the U.P.
Municipalities Act, 1916, the Municipal Board of any municipality within
the State could impose a tax on trades and callings carried on within the
municipal limits. Therefore, any Board within the State can also impose
such tax within the cantonment area because of Section 60 of Cantonments
Act. When Section 60 links the power to impose tax with any enactment
for the time being in force in respect of any municipality in the State where
the cantonment is situated, then it shall be deemed that it has also
prescribed the limit of the ceiling of such tax with refeExcerpt shown. Read the full judgment & AI analysis in Lexace.