Sarpanch, Meghraj Gram Panchayat vs President, Taluka Panchayat and Others

Jayant Patel, J.—The petitioner-Gram Panchayat has approached this Court for giving appropriate direction to the Taluka Panchayat to

refund 40% of the gross collection of the cess made by it for the year 1995-96, and it is also prayed for giving appropriate direction to the

respondents to assign 50% of the gross collection of Taluka Panchayat cess and surcharge on octroi as per Section 206 of Gujarat Panchayats

Act, 1993 (hereinafter referred to as ""the Act"").

The short facts of the case are that the petitioner is a gram Panchayat duly constituted under the provisions of the Act. It is collecting the octroi

and other local taxes and it is the contention of the petitioner-Panchayat that collection of certain taxes which are meant for the purpose of Taluka

Panchayat is made by the Gram Panchayat and is given to the Taluka Panchayat. It is an admitted fact that the petitioner-Gram Panchayat was

paid 10% of the collection for the year 1995-96. However, 90% of the amount of the gross collection was retained by the Taluka Panchayat,

Meghraj. The petitioner had made representation to the authority for refund of 40% of the gross collection for the year 1995-96. However,

nothing was done, and therefore, this petition.

Mr. Adeshra appearing for the petitioner submitted that on true and correct interpretation of Section 206(2)(b) of the Act, the fund of the

Taluka Panchayat, at the most, can constitute 50% and not more. He submitted that therefore the Taluka Panchayat has no authority to retain more

than 50% of the gross collection, and therefore, the Gram Panchayat is entitled to get back 50% of the gross collection. Mr. Adeshra in

furtherance of his submission has also contended that the intention of the legislature behind making the provisions is to see that the Gram Panchayat

is sufficiently compensated and can utilise something for the betterment of the residents of the gram Panchayat, Mr. Adeshra submitted that the

Taluka Panchayat, under no circumstances, can retain the amount exceeding 50% from the gross collection.

On behalf of respondent-Taluka Panchayat, Mr. Pahwa submitted that the State Government has passed an order dated 21-12-1967 in

purported exercise of powers under Clause (b) of Sub-section (2) of Section 183 of Gujarat Panchayats Act, 1961 whereby the State

Government has determined 10% of gross collection of the tax or fee as the percentage for the purpose of said sub-clause and submitted that the

amount of 10% is admittedly paid, and therefore, he submitted that in view of the general order passed by the State Government under the old Act

of 1961 which continues (the order continues) after the new Act since there is no further order passed by the State Government u/s 206(2)(b)

when the notification was brought to the notice of the Court whereby the aforesaid general order has been passed by the State Government on 21-

12-1967. Mr. Adeshra for the petitioner submitted that as per the provisions of the Act for each financial year the Stale Government has to pass a

separate order, and therefore, he submitted that at the most the order produced on behalf of the Taluka Panchayat can be said to be the order for

the year 1967-68 and it cannot be for the year 1995-96. He further submitted that the Government could not pass the order de hors the statutory

provisions, and therefore, he further submitted that the petitioner-Gram Panchayat is entitled to the benefits conferred by the statute and the Taluka

Panchayat has no authority to retain the amount exceeding 50% of the gross collection. Section 206(2)(a) and (b) which are relevant for the

purpose of this petition read as under :

206(2)(a) Where in the exercise of powers under Sub-section (1) a Taluka Panchayat imposes a tax or fee in any area within the jurisdiction of a

village Panchayat, such tax or fees shall be collected by the village Panchayat concerned from those persons who are liable to pay the same under

the rules made by the Taluka Panchayat in accordance with the provisions of Section 215 as if it were a tax or fee imposed by the village

Panchayat concerned under the provisions of this Act and shall be paid to the Taluka Panchayat at such time and in such a manner as the Taluka

Panchayat may specify.

(b) Such percentage not exceeding 50% of the gross collection of such tax or fee in any financial year as the State Government may by general or

special order determine shall not form part of the taluka fund, but shall be assigned to the village Panchayat in such a manner as the Taluka

Panchayat may determine.

There is no dispute on the point that prior to the Act of 1993 similar provision u/s 183(2)(a) and (b) under Gujarat Panchayats Act, 1961 was in

pari materia with Section 206(2)(a) and (b) of Gujarat Panchayats Act, 1993.

On a correct interpretation of Clause (b) of Sub-section (2) of Section 206, it transpires that the State Government may by a general or special

order determine that part or percentage of gross collection not exceeding 50% shall not form part of Taluka Panchayat fund and shall be assigned

to the village Panchayat in such a manner as the State Government may determine. Therefore, the State Government is having the power to pass

special or general order to determine the percentage not exceeding 50% which may not be considered as the fund of Taluka Panchayat and shall

be assigned to village Panchayat. In the present case, the State Government has passed an order u/s 183{2)(b) which is in pan materia with the

Section of the new Act and this order is not an executive order but can be said to be legislative action of the State Government as provided under

the scheme under Taxing statute of the Panchayat Act. I do not agree with the interpretation sought to be canvassed by Mr. Adeshra that the

Taluka Panchayat may not be able to retain the fund and has to assign the said fund to the village Panchayat from the gross collection of a

percentage exceeding 50% even if ordered by the State Government by general or special order. The provision is made under the statute for

providing 50% is the maximum amount for the purpose of attribution to the village Panchayat, and once it is to be attributed to the Gram Panchayat

or assigned to the Gram Panchayat, it will not form as a fund of Taluka Panchayat or taluka fund. Therefore, the language used in Clause (b) ""shall

not form part of taluka fund"" is to be read and interpreted vis-a-vis the word ""shall be assigned to the village Panchayat"". Therefore, the State

Government can by special or general order determine the percentage not exceeding 50% from the gross collection of such tax or fee. As the

word ""shall not form part of taluka fund"" has nexus with the word ""shall be assigned to village Panchayat"" the only interpretation would that 50% is

the maximum amount which may be assigned to the village Panchayat and it cannot be interpreted that the Taluka Panchayat cannot retain the fund

exceeding 50% stipulating as the maximum limit for the purpose of retaining fund by the Taluka Panchayat. Therefore, the said contention of Mr.

Adeshra fails.

As regards the second contention of Mr. Adeshra that the order passed by the State Government can at the most be applicable for the year

1967-68 is also devoid of any merit, the reason being that the State Government has power to pass the general order for fixing a percentage for

attribution or allocation of fund to the Gram Panchayat and the same can be for Gram Panchayats of the whole State. Not only that, but on correct

interpretation of the provisions of the Act, it appears that this power vested with the State Government u/s 206(2) of the Act which is a

subordinate legislation, and therefore, once the State Government has passed order unless it is substituted by another order, it would remain in

force. I do not find any justification in restricting the applicability of such order under the Act for a particular period of 1967-68, because nothing is

reflected in such order and so far as the provisions of the Section is concerned, the word ""in any financial year"" is given for the purpose of

determining the percentage and it has no nexus with the power of the State Government for any particular financial year. But, at the same time, it

cannot be said that when a general order is passed, the State Government cannot pass special order. However, in absence of anything stated in the

order, there is no valid reason to restrict its applicability to that particular year and it is more rationale to consider that the said general order is

applicable subsequently also. Therefore, I am of the view that the order passed by the State Government dated 21-12-1967 is a general order and

is holding the field since in any case. Mr. Adeshra is not in a position to show any other subsequent order fixing a different percentage than the

percentage fixed in the order dated 21-12-1967.

In view of the above, I am of the opinion that when an amount of 10% as fixed by the State Government is already paid to the Gram Panchayat,

it cannot be said that the Taluka Panchayat has wrongly retained the amount from the gross collection, and therefore, the Gram Panchayat is not

entitled to any amount from the gross collection as prayed for in the petition.

In the result, petition fails. Rule is discharged. There shall be no order as to costs.