1. Under Section 66(1)(o) of the C.P Municipalities Act, 1922, as applied to Berar, a terminal tax was imposed by the Yeotmal Municipality. The rules made by the Municipal Committee of Yeotmal to impose the terminal tax, sanctioned by the Local Government, are published in the Central Provinces Gazette of 1st April 1933 under Notification No. 1507-478-M-VIII. The rules provide for a terminal tax on certain goods imported by rail and road and certain goods exported by rail and road, and among the latter is item 5 “cotton (cleaned)”. The material part of the notification may be quoted:
“In exercise of the powers conferred by sub-s. (5) of Section 67 of the Central Provinces Municipalities Act, 1922 (Central Provinces Act 2 of 1922), as applied to Berar, the Local Government is pleased to confirm the following rules made by the Municipal Committee of Yeotmal, in the Yeotmal district, under S. 66, sub-s. (1), cl. (o) of the said Act, to impose a terminal tax on the articles imported into or exported from the limits of the Yeotmal Municipality by rail or road subject to the following rules, in supersession of those sanctioned under Central Provinces Gazette Notification No. 226-497-X-VIII, dated 29th September 1921:
RULES.
1. The municipal committee shall levy terminal tax on the goods imported or exported by rail or road, as specified in the schedule below:
Import by rail and road
Export by rail and road
Serial No.
Name of article
Rate per maund of 40 seers
By rail
As. P.
By road
As. P.
…
…
…
…
5
Cotton (cleaned)
0 9
0 9
…
…
…
…”
2. The plaintiff brought the suit out of which this second appeal arises claiming refund of sums which he alleged had been wrongfully levied on goods which he brought by road from Pandharkawada to Yeotmal when he despatched them from Yeotmal railway station by rail. It is common ground that this was a case of through traffic which passed through the municipal limits to the railway station at Yeotmal from which the goods were despatched by rail, the tax being collected by the railway as an agent of the municipality. The plaintiff seeks a refund of the tax which he says was illegally collected and has claimed a perpetual injunction against the municipality and the railway company. The first appellate Court has decided that the goods were liable to the tax and has also decided that the suit is within time. It is contended by the respondent, the municipality, that the claim for refund is out of time in view of S. 48 of the Act, and it is also contended that the civil Court has no jurisdiction to decide the liability of the plaintiff to pay this tax, in view of the special procedure prescribed by S. 83 of the Act. Thus three points arise for decision. It is contended by the learned advocate for the plaintiff appellant that the goods which were exported from Pandharkawada could not be said to be exported from the limits of Yeotmal Municipality even though those goods passed through the limits of that municipality and were sent by rail from the terminal point of those limits. It was contended that if there were any doubt as to the meaning of the words “articles imported into or exported from the limits of the Yeotmal Municipality by rail or road,” this doubt must be resolved in favour of the subject according to well established principles of construction of taxing statutes. The learned advocate cited certain passages in Halsbury's Laws of England to show that goods in transit were not subject to customs duties, and though he conceded that the views of the Local Government as to the incidence of the tax which were expressed in favour of the plaintiff, when the subject fell for consideration in correspondence between the municipality and the Local Government, were not binding on the Court, he emphasized that the Court should give due weight to the opinions of the authority which approved the tax and the rules for its levy. He also relied on the wording of S. 66(1)(o) which is as follows: “a terminal tax on goods or animals imported into or exported from the limits of a municipality.” He said that the word “or” was disjunctive, and that the words could not refer to through traffic and that if it was intended to tax through traffic a further provision would have been made. He pointed out the absurdity of goods booked by rail being taxed as they passed on the railway line through the limits of one municipality after another, and said that even though the railway line might lie within municipal limits goods carried by trains passing through could not be said to be imported within municipal limits and exported from municipal limits within the meaning of the Act or the meaning of the notification.
3. Two unreported cases have been traced in which this matter came up for the consideration of this High Court. In one case decided ex parte by Niyogi, J. Misc. civil Case No. 84 of 1938, Misc. Civil Case No. 84 of 1938 decide on 27th February 1939, Betul a reference was made in accordance with the procedure laid down in S. 83 of the Act, and Niyogi, J., referring to S. 66(1)(o) of the Act, held that goods imported were those which were brought within the limits of the municipality for consumption, and that the term “import” did not include any goods in transit through the municipality. He said that the fact that the goods were brought by road and were to be despatched by rail did not affect the character of the goods as being in transit. Another case was Civil Revn. No. 608 of 1940 Civil Revn. No. 608 of 1940, decided on 7th October 1941, Muncpl. Comt. decided by Pollock, J. This was a revisional application against the decision, of a Small Cause Court which had taken the view for which the plaintiff contends. In that case the non-applicant had taken delivery of seven waggons of fruit which had been consigned to him at Khandwa and had immediately been rebooked to another station without removal from the railway limits. The railway station of Khandwa lay within the municipal limits. Pollock, J. held that if goods merely passed by rail through the railway station on their way to the destination to which they were booked, they could not be said to be brought within the local limits of the Khandwa Municipality merely because the railway happened to pass through the municipal limits; but he said that where the goods were actually booked at the Khandwa railway station, the answer was not so easy. He then referred to two contradictory decisions of the Allahabad High Court, in one of which it was held that the word “bring” contained an element of pause or repose, and in one of which an exactly contrary view was held. He also referred to I.L.R (1940) ALL. 4, (’39) 26 A.I.R 1939 All. 736 , I.L.R (1940) All. 4 , 187 I.C 468, Dehra Dun in which it was held that on the plain meaning of the word “import,” goods brought into municipal limits and despatched by rail were liable to a terminal tax. He made no final decision for the reason that he was concerned with a revision from a decision of the Small Cause Court which followed the decision of the Allahabad High Court in A.I.R 1996 ALL. 83 (’36) 23 A.I.R 1936 All. 83 , 160 I.C 862 that the word “bring” involved the element of pause or repose. He bore in mind that the rules must be interpreted liberally and in favour of the subject, and refused to interfere with the decision of the Small Cause Court holding that it could not be said that the decision of the Small Cause Court was contrary to law.
4. Another decision has been brought to notice in the argument before me, that is I.L.R (1941) Bom. 97. (’41) 28 A.I.R 1941 Bom. 11 , I.L.R (1941) Bom. 97 , 192 I.C 635, Narottamdas Harjivandas & Co. There a similar view is taken to that taken in I.L.R (1940) ALL. 4, (’39) 26 A.I.R 1939 All. 736 , I.L.R (1940) All. 4 , 187 I.C 468, Dehra Dun as to the meaning of import, but the case rested not only on the definition of import but also on the definition of “terminal tax.” The learned advocate for the appellant seeks to distinguish the reported Allahabad decision on the ground that the term “import” was defined in the taxing rules which the Allahabad High Court had to construe. But, nevertheless, the definition of import was held to be in accordance with the ordinary meaning of the word. The definition was as follows: “Import shall mean bringing the goods into the terminal tax limits from outside those limits.” and the Court referred to the plain meaning of the word. I would remark that the United Provinces Municipalities Act provided that a municipality “may impose a tax on goods imported into any municipality” and so it would seem that the tax would have been ultra vires if the word import did not apply to goods in transit.
5. In the case of an octroi tax, goods subject to the tax must be those brought within the limits of the municipality for sale, consumption or use within those limits. But that is not enacted in the case of a terminal tax where “import” or “export” is the sole requisite for taxation. The argument of the learned advocate for the appellant based on the wording of S. 66(1)(o) appears to me to be unsound. The word “or” was, I think, used for the reason that if the word “and” were used it might be considered that the tax was confined to goods which were both imported into and exported from the limits of the municipality. In fact, if the word “and” had been used, goods which were only imported, or goods which were only exported could not be taxed at all unless the word “and” were read disjunctively and not conjunctively, and it might well be that in construing a taxing statute the word “and” would be read conjunctively in favour of the subject. I cannot find anything in the phraseology of S. 66(1)(o) to suggest that it cannot apply to goods in transit. Can it be suggested that S. 66(1)(o) would preclude the taxation of goods which were brought into Yeotmal on one date and exported a month later? and if not, how can one introduce into the meaning of the section a difference based on the time that the goods remain in the municipality? The construction must surely depend on the true meaning of the words “imported” and “exported” in reference to the “limits of the municipality.” The argument of the learned advocate for the appellant based on the fact that customs duties are exempted in the case of goods in transit, is an argument as to the interpretation of the words “export” and “import” in relation to the fact that goods in transit are often exempted from taxation by the provisions of other taxing. Acts. But so far as the point of construction is concerned, based on the meaning of the words, it appears to me that this argument recoils on the appellant. For example, in considering the normal use of these words, the very passages he cited from Halsbury's Laws of England tell against him. I quote the following:
“The following goods are exempted from the general ad valorem duty:
goods imported solely for re-exportation after undergoing a process which does not change their form or character, or after transit through, or transhipment in the United Kingdom.”
6. Again in respect of duties under the safeguarding of Industries Act, 1921, we find the following words:
“The following goods are exempted from key industries duty:
transit goods imported for exportation after transit through the United Kingdom or by way of transhipment.”
7. These exemptions of course depend on special provisions, but the passages illustrate very clearly the common use of the words “import” and “exportation.” A further example may be cited from the Berar Municipal Manual in which the Government of India's instructions regarding terminal taxation are published at pp. 368 to 371. At p. 369:
“Again, road-borne goods are largely brought to a municipality for export by rail, and if they are subjected to terminal taxation when thus exported, there is no need to tax them when brought in by road.”
8. At page 368:
“The Government of India while adhering to the principle that municipal taxation should not operate, so far as can be avoided, as a transit duty on through trade, are prepared to concede that a light terminal tax with no refunds may in practice prove less burdensome to through trade than the octroi system as hitherto administered.”
9. I have no doubt that when goods are brought in from outside to municipal limits simply for export from the terminus of those municipal limits, they are, when so exported, ex-ported from the limits of the municipality. The meaning of the word “export” or the word “exported” seems to be clear enough and in connexion with a terminal tax they are related to traffic rather than origin. One has to look at the municipal limits from which the traffic proceeds, and not to the place where the goods were originally manufactured and from which they were first exported. Under S. 69 the municipality has power to make exemptions from tax, and when this is so any argument based on the fact that in many cases of taxation through traffic is exempted has little force on the question of interpretation, the more especially when the procedure of taxing through traffic and then exempting through traffic if necessary with certain safeguards, enables a municipality to control through traffic in such a way that evasion followed by legal disputes will not occur. I consider that the decision of the learned Judge of the first appellate Court is right and that the appeal should be dismissed. As regards the contention of the respondent that the Court had no jurisdiction, the case law was reviewed by me recently on the point whether the civil Court has jurisdiction to give relief on the ground that a tax is illegal, and I held that a civil Court had no jurisdiction to declare a tax invalid on procedural grounds which did not involve a jurisdictional defect: I.L.R (1948) Nag. 623. (’43) 30 A.I.R 1943 Nag. 224 , I.L.R (1943) Nag. 623 , 208 I.C 116 Meantime there has been a reported decision in I.L.R (1943) Nag 525, (’43) 30 A.I.R 1943 Nag. 277 , I.L.R (1943) Nag. 525 , 209 I.C 399, Vidarbba Mills, Berar, Limited, Ellichpur in which it is emphasized that a matter dealt with by the special procedure enacted in S. 83 of the Act cannot be raised in the civil Courts. In so far as the present matter relates not to the jurisdiction of the municipal committee to impose a tax but to the incidence of a legal tax, the question falls, I think, under Section 83(1) and (2) of the C.P Municipalities Act, 1922. But in so far as the construction of S. 66(1)(o) is involved, it appears that a question of jurisdiction is involved. I prefer therefore not to decide the case on this point, and content myself with saying that if it is only construction of the taxing notification that is involved I am of opinion that the trial Court has no jurisdiction. Here on a strict view of the pleadings the construction of the Act is not involved, but construction of the notification is really inseparable from construction of the Act itself.
10. The next question concerns limitation. In none of the cases cited before me has the construction of S. 48 of the Act been raised. In 31 N.L.R 347 (’35) 22 A.I.R 1935 Nag. 172 , 31 N.L.R 347 , 158 I.C 793, Nagpur the point was not raised and in 32 ALL. 491,9 the competition was between Article 2 of the Limitation Schedule which deals with tort and Article 62 which deals with implied contract. Nothing is said in S. 48(1) as to the nature of the suit, whether it is framed for such reliefs as those described in Article 62 or whether it is a suit in tort. To say that the suit is of a nature which falls under Article 62 is of itself no answer to the contentions raised under S. 48 of the Act, the more especially when the plaintiff in his reply founds his case on tort. The question here is whether this is a suit against the committee for anything done or purporting to be done under the Act. It is contended by the learned advocate for the appellant that if the levy of this tax is illegal it does not purport to be done under the Act. I do not consider there is any force in this contention. The tax purports to be levied in virtue of taxation imposed in accordance with the provisions of the Act, in virtue of the powers conferred by S. 66(1)(o), and I consider that the levy of the tax even though illegal is something purporting to be done under the C.P Municipalities Act, and I do not consider that S. 48 can be confined to torts. The allegation in the plaint is that defendant 1 wrongfully realised at the Yeotmal Station through defendant 2, the Great Indian Peninsula Railway, the terminal tax on the goods. This appears to me to be an act falling within S. 48(1) and although it is alleged that the recovery was done in utter disregard of the rules and not in good faith, I consider that the recovery purported to be done under the Act. Prom this point of view the claim for refund would be out of time, for though an injunction was also asked for, it has not been suggested that S. 48(3) would save this claim for money. I hold therefore (1) that the term “export” applies to through traffic and (2) that S. 48(2) applies to the claims for refund. The appeal is dismissed with costs. Leave to appeal is granted. Pleaders fees Rs. 43 for appellant and Rs. 43 for respondents.
11. Appeal dismissed.