Case Note & Summary
The case arose from a civil suit filed by the respondent, a brick kiln owner, against the appellant Cantonment Board, Mathura. The Board had been realizing tax on manufacturers of bricks at the rate of 0.19 per thousand bricks and subsequently, by notification dated 22.11.1958, raised the rate to 0.75 per thousand bricks under Section 60 of the Cantonments Act, 1924. The respondent challenged the enhanced tax, alleging that no advantage or service was being provided by the Board and that the realization violated Section 60 of the Cantonments Act, 1924 read with Section 128(1)(ii) of the U.P. Municipalities Act, 1916, and Article 276(2) of the Constitution. The trial court dismissed the suit, and the first appellate court affirmed that dismissal. On second appeal, the Allahabad High Court held that the ceiling under Article 276(2) of the Constitution applied to the Cantonment Board and declared the notification invalid. The Board filed appeals before the Supreme Court. The core legal issue before the Supreme Court was whether the ceiling imposed by Article 276(2) of the Constitution on taxes on professions, trades, callings and employments applied to a Cantonment Board established under the Cantonments Act, 1924, and consequently whether the notification dated 22.11.1958 was invalid. The Court examined Section 60 of the Cantonments Act, which empowers the Board, with the previous sanction of the Central Government, to impose any tax which a municipality in the State may impose under any enactment. It noted that a municipality's power to tax professions, trades, callings and employments is expressly controlled by Article 276 of the Constitution. Article 276(2) prescribes that the total amount payable by any one person to the State or any local authority by way of such taxes shall not exceed Rs.250 per annum, later raised to Rs.2,500 by the Constitution (Sixtieth Amendment) Act, 1988. The Court referred to the Constitution Bench decision in Bharat Kala Bhandar Ltd. v. Municipal Committee, Dhamangaon, which explained the historical background of Section 142-A of the Government of India Act, 1935 and Article 276. It also relied on Mahapalika of the city of Agra v. The Agra Brick Kiln Owners Association, where the Supreme Court held that the constitutional maximum prevails and that any levy above the statutory ceiling is void to the extent of excess. Applying these principles, the Court reasoned that the constitutional limitation binds all local authorities, including Cantonment Boards, and that the Board's power under Section 60 cannot be exercised in violation of Article 276(2). Consequently, the notification imposing tax at 0.75 per thousand bricks exceeded the permissible annual maximum and was invalid. The Supreme Court dismissed the appeals filed by the Cantonment Board and upheld the Allahabad High Court's judgment declaring the notification dated 22.11.1958 invalid. The decision confirms that Article 276(2) of the Constitution is an overriding constitutional limitation on taxation of professions, trades, callings and employments by any local authority, including a Cantonment Board.
Headnote
A) Constitutional Law - Taxes on Professions, Trades, Callings and Employments - Applicability of Article 276(2) ceiling to Cantonment Boards - Constitution of India, Article 276(2) and Article 246; Cantonments Act, 1924, Section 60 - The High Court declared the notification dated 22.11.1958 imposing brick tax at 0.75 per thousand bricks invalid as violative of Article 276(2). The Supreme Court examined the statutory and constitutional scheme and held that the constitutional maximum on taxes on professions, trades, callings and employments applies to a Cantonment Board, whose power under Section 60 cannot exceed the limit. Held, the notification was invalid to the extent it exceeded the permissible ceiling. (Paras 1-14) B) Interpretation of Taxing Statutes - Local Authority Taxation - Previous Sanction and Constitutional Limitation - Cantonments Act, 1924, Section 60; U.P. Municipalities Act, 1916, Section 128(1)(ii) - The Board may impose any tax which a municipality in the State may impose under any enactment, but a municipality's power to tax professions, trades and callings is controlled by Article 276(2). Any assessment or recovery of tax above Rs.250 per annum (now Rs.2,500) is void and can be challenged in a civil suit. The Court relied on Bharat Kala Bhandar Ltd. and Mahapalika of Agra to hold that the constitutional ceiling prevails over local tax notifications. Held, the notification fixing 0.75 per thousand bricks exceeded the annual per person maximum and was invalid to that extent. (Paras 15-16) C) Precedent - Constitutional Ceiling on Tax on Trades - Section 142-A of Government of India Act, 1935 and Article 276(2) of Constitution of India - The historical evolution from Section 142-A of the Government of India Act, 1935 to Article 276 of the Constitution established a maximum limit on taxes on professions, trades, callings and employments. The Court reaffirmed that the ceiling applies to pre-Constitution and post-Constitution notifications, and any levy above the limit is beyond jurisdiction. Held, the notification imposing 0.75 per thousand bricks was invalid as it crossed the constitutional maximum. (Paras 15-16)
Issue of Consideration
Whether the ceiling and restriction imposed by Article 276(2) of the Constitution applies to a Cantonment Board established under the Cantonments Act, 1924, and whether the notification dated 22.11.1958 fixing tax at 0.75 per thousand bricks is invalid as being in excess of the constitutional ceiling.
Final Decision
The Supreme Court dismissed the appeals filed by the Cantonment Board, Mathura and upheld the judgment of the Allahabad High Court declaring notification dated 22.11.1958 invalid as it imposed a tax on bricks at 0.75 per thousand in excess of the constitutional ceiling under Article 276(2).
Law Points
- Article 276(2) of the Constitution imposes a ceiling of Rs.250 per annum (raised to Rs.2
- 500 by the Constitution (Sixtieth Amendment) Act
- 1988) on taxes on professions
- trades
- callings and employments
- this constitutional ceiling applies to all local authorities including Cantonment Boards established under the Cantonments Act
- 1924
- the power of a Cantonment Board under Section 60 of the Cantonments Act
- 1924 cannot exceed the constitutional maximum
- any tax imposed in excess of the permissible limit is void to the extent of excess
- previous sanction of the Central Government under Section 60 does not cure constitutional invalidity
- a suit challenging recovery of tax above the constitutional ceiling is maintainable in civil court.
