H.L. Anand, J.
1. This judgment would dispose of S. C. A. Nos. 55/75, 56/75 and 57/75.
2. By these applications under Article 133(1) of the Constitution of India, the New Delhi Municipal Committee seeks leave to appeal to the Supreme Court against our judgment accepting the petitions of the States of Andhra Pradesh, Jammu and Kashmir and Punjab under Articles 226 and 227 of the Constitution of India challenging the validity of the imposition of house-tax by the Committee on the immovable properties belonging to the States within its territorial limits.
3. The principal question that these petitions raised for our consideration was whether the immovable properties belonging to the States situated in New Delhi were immune from house-tax livable under the provisions of the Punjab Municipal Act, 1911, as applicable to Delhi, by virtue of the exemption granted to the Property of a State from 'Union taxation' by Article 289(1) of the Constitution of India. The subsidiary question that arose for consideration was as to whether the expression 'State' in clause (4) of Article 246 of the Constitution of India meant and included the Union Territories or not.
4. On the principal question, it was contended on behalf of the various states that by virtue of Article 289(1) of the Constitution of India, the property of a State was exempt from Union taxation; that the expression 'Union taxation' would mean taxation which the Union was empowered to impose: that by virtue of Article 265 of the Constitution of India, Union taxation must be co-extensive with the laws which parliament a competent to make; that by virtue of Article 246(4) of the Constitution of India, the Power of Parliament to make laws extends not only to subjects enumerated in the Union List and the Concurrent List but also to matters included in the State List in relation to the Union Territories, that any taxation which has its genesis in by law made by Parliament or which is deemed to have been made by Parliament would be Union taxation; that the agency through which taxes were collected or the funds to which the proceeds may go or the entity to which the funds are ultimately allocated was wholly irrelevant for the determination of the question as to whether a Particular tax was part of Union taxation, hat tax on property livable in the Union Territory of Delhi by virtue of the provisions of the Punjab Municipal Act, as extended to Delhi, though relating to a matter that falls within the State List, would nevertheless be deemed to be Union taxation because by virtue of the application of the Act to the Union Territory of Delhi, it would be deemed to have been incorporated in law made by Parliament and, thereforee, be treated as law made by Parliament by virtue of its power under clause (4) of Article 246 of Constitution of India and that the properties of the various States situated in the Union Territory of Delhi would, thereforee, be exempt from tax on property.
5. On the other hand, it was contended on behalf of the Committee that the test to determine if a tax formed Dart of Union taxation within the meaning of Article 289(1) was if the proceeds from it formed Part of the Consolidated Fund of India under Article 266(1) of the Constitution of India, that the proceeds of tax on property under the Act did not form part of the Consolidated Fund of India but were kept by the Committee for its own purpose: that the tax on property was enumerated as one of the subjects in the State List: that the Act was a Piece of State legislation and did not, by virtue of its application to the Union Territory of Delhi, become a piece of Central legislation: that by virtue of Article 246 of the Constitution of India the Union legislation and the State legislation are two different fields of legislative action and taxation which has its genesis in any of the matters enumerated in List I or List Iii alone would form part of Union taxation; that the Act was not made by Parliament by virtue of power under Article 246(4) of the Constitution of India: that Union had no power to impose tax on property and that the Property of the various States in the Union Territory would, thereforee, not be exempt from this tax.
6. On an examination of the legislative history of the Punjab Municipal Act, 1911, its extension to the Union Territory of Delhi by virtue of central enactments from time to time, the scheme of the Constitution of India with regard to the distribution of legislative powers between the States and the Union and provisions of Articles 246(4) and 289(1) of the Constitution of India, we came to the conclusion that by virtue of the extension of the said Act to Delhi in exercise of the power conferred by the Central enactments, the Punjab Municipal Act, 1911 had become a Central Act as if made by Parliament under clause (4) of Article 246 of the Constitution of India; that Union taxation would be co-extensive with the power of Parliament to make laws; that by virtue of clause (4) of Article 246 of the Constitution of India, Parliament was competent to make laws with regard to the Union Territories irrespective of whether the law related to any subject which was enumerated in the State List because in case of Union Territories, under the scheme of the Constitution, Parliament becomes repository of all legislative powers and that the tax livable under the Punjab Municipal Act in the Union Territory of Delhi would be part of Union taxation and the Property of the States would, thereforee, be exempt from such taxation by virtue of the Provisions of Article 289(1) of the Constitution of India. In support of the aforesaid conclusion, we sought re-enforcement from the decision of the Supreme Court in the case of Re: The Bill to Amend Section 20 of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act, : [1964]3SCR787 .
7. On the subsidiary question, whether the expression 'State' in clause (4) of Article 246 of the constitution of India included the Union Territory of Delhi, we found that Prior to its amendment by the constitution (Seventh Amendment) Act, 1956, clause (4) of Article 246 of the Constitution of India empowered Parliament to make laws with respect to any matter for any part of the territory of India not included in Part A, or Part B of the First Schedule: that under the scheme of the Constitution, Prior to the said Act, Union territories did not figure in the Constitution. Clause (4) of Art. 246 as then worded, thereforee, empowered Parliament to make laws with respect to the territories of India comprised among others in Part C States; that the expression 'State' is not defined by the Constitution of India but the definition of the expression in the General Clauses Act, as it stood before the constitutional amendment, meant. 'a Part A State, a Part B State or a Part C state', that after the aforesaid constitutional amendment, Section 3(58) of the General Clauses Act was also modified pursuant to the Adaptation of Laws Order, 1956 issued by virtue of the provisions of Article 372-A of the Constitution of India and according to the amended definition, the term 'State' in relation to the period after the said amendment meant 'a State specified in the First Schedule to the Constitution and shall include a Union Territory'. We further found that there was an apparent conflict between the two decisions of the Supreme Court in the case of Management of Advance Insurance Co. Ltd. v. Gurudasmal, : [1970]3SCR881 and Shiv Kirpal Singh v. V. V. Giri, : [1971]2SCR197 on the question if the amended definition of the expression 'State' in the General Clauses Act would apply to the interpretation of the Constitution of India not withstanding that Article 367 of the Constitution of India permitted the use of the General Clauses Act for the purpose of interpretation of the Constitution of India as adapted under Article 372 of the Constitution of India only; and that the adaptation under Article 372-A of the Constitution of India could not ensure for the purpose of interpretation of the Constitution. It was however, unnecessary for us to pursue the question any further because we held, following the decision of the Supreme Court in T. M. Kanniyan v. Income tax Officer, : [1968]68ITR244(SC) , that the definition of the expression 'State' in the adapted Section 3(58) of the General Clauses Act was repugnant to the subject and context of Article 246(4) of the Constitution of India and that the amended definition would not, thereforee, regulate the provisions of Article 246 of the Constitution of India and that in interpreting clause (4) of Article 246 of the Constitution of India, the distinction between the States and the Union Territories could not lost sight of.
8. Leave to appeal against the judgment is sought to be justified on behalf of the Committee on the ground that both the principal and the subsidiary questions are questions of considerable importance which not only involve an interpretation of Arts. 246 and 289 of the Constitution of India, as indeed the scheme of the Constitution with regard to the distribution of legislative powers between the Union and the States but is a question of general importance having revenue implications for the various States as well as the Committee and similarly situated in other local bodies.
9. On behalf of the various States it is not disputed that the questions before us were substantial questions as to the interpretation of the Constitution and were of general public importance but leave was nevertheless opposed on the ground that inasmuch as both the questions were answered by us on the basis of the decisions of the Supreme Court, it could not be said that the questions still needed to be decided by it.
10. On behalf of the Committee it was, however, contended that the decision of the Supreme Court in Re: The Bill to Amend Section 20, of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act. 1944, : [1964]3SCR787 even while containing weighty observations which could support the conclusion arrived at by us on the principal question did not nevertheless directly involve the question before us nor was the Supreme Court called upon in that case to consider the various facets of the question and that it could not, thereforee, be said that with the aforesaid decision, no question survived which needed to be considered and decided by the Supreme Court.
11. Article 133(1) of the Constitution of India empowers the High Court to grant a certificate of fitness if inter alia, the High Court is satisfied that the question which the appeal involves needs to be decided by the Supreme Court. The expression 'need' connotes something more than a mere wish and introduces an element of necessity. While it is neither necessary nor desirable to encase the expression 'need' within the strait - jacket of any judicially evolved definition where Parliament, in its wisdom has thought it fit to leave it undefined or to attempt to lay down exhaustively the circumstances in which the High Court may be justified in granting leave, broadly a matter would appear to us to need a decision of the Supreme Court either where the examination of the question by the Courts discloses a conflict of judicial opinion or the decision of the question involved turns on an application of the first Principles and the decided cases do not Provide a guide and even otherwise where two views were clearly Possible on a question, one of which bad been taken by the High Court. Whatever be limits of the powers of the High Court under the aforesaid Article, it appears to us to be obvious that where the question involved in an appeal appears to the High Court to be settled by a decision of the Supreme Court directly on the question, it would be difficult for the High Court to say that the question still survives so as to need a consideration of and a decision by the supreme Court.
12. In Re: The Bill to amend Section 20 of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act, 1944, : [1964]3SCR787 , the provisions of Article 289(1) of the Constitution of India fell for consideration before the Supreme Court as a result of a proposal to introduce in Parliament a bill to amend Section 20 of the Sea Customs Act and Section 3 of the Central Excises and Salt Act with a view to applying provision of the said two Acts to goods belonging to the States in regard to which certain doubts arose as to whether the provisions of the Bill were inconsistent with Article 289 of the Constitution of India, as a result of which the matter came before the Supreme Court on a Presidential reference under Article 143 of the Constitution of India. The contention on behalf of the States was that in interpreting Article 289 of the Constitution, it must be held that the immunity extended to all Union taxation, whether 'on' property or 'in relation' to property while it was contended on behalf of the Union that the immunity from taxation granted by the Article was confined to tax on property and on income and that the immunity did not extend to all taxes and should not be interpreted to include taxation 'in relation to property'. The, contention of the Union prevailed and it was held that the property of the State would be exempt from all taxes 'on property' which may be livable by the Union in the course of the arguments, a contention was raised that inasmuch as List I did not empower Parliament to make laws with respect to tax on property, the expression 'property' in Article 289(1) of the Constitution of India must be construed as meaning taxes in relation to property. This contention was negatived by Sinha. C. J., as he then was and who spoke for the Court, on the ground that by virtue of clause (4) of Article 246 of the Constitution of India, Parliament would have power to make laws with respect to the Union Territories even in respect of matters enumerated in the State List including taxation on property.
13. While the aforesaid decisions an authority for the proposition that Union taxation would be taxation imposed by laws which Parliament was competent to make and that by virtue of, Article 246(4) of the Constitution of India, Parliament would be competent to make laws in respect of the Union Territories with reference to even subjects enumerated in the State List including laws imposing tax on property, the Supreme Court was not directly concerned with the question if having regard to the legislative history of the Punjab Municipal Act, 1911, it could be said to partake the character of a central enactment or be deemed to have been made by Parliament by virtue of power conferred on it by clause (4) of Art. 246 of the Constitution of India and if the house tax livable under the said provision would be Union taxation in relation to the Union Territories notwithstanding that the proceeds from the State tax never formed Part of the Consolidated Fund of India but were retained by the Committee for its own purpose.
14. The decision on the subsidiary question, however, appears to us to be fully covered by the decision of the Supreme Court in the case of T. M. Kanniyan v. Income-tax Officer, : [1968]68ITR244(SC) and could not, thereforee, be said to survive so as to need a consideration and a further decision by the Supreme Court.
15. Having regard, thereforee, to the importance of the principal question, its revenue implications for the various States and the local bodies in the Union Territories and the likelihood of such questions recurring in relation to other States or local bodies other than the Committee and the need for an authoritative decision of the Supreme Court touching the various facets of the question, we grant leave to the Committee to appeal against the aforesaid judgment but would, in the circumstances, confine the leave to the principal question, that is, whether the properties of the States situated in the Union Territory of Delhi would be exempt from house-tax livable under the Punjab Municipal Act, 1911 by virtue of exemption granted to such Properties try Article 289(1) of the Constitution of India from Union taxation.
16. In the circumstances, there would be no costs.
S.N. Shankar, J.
17. I agree.
18. Ordered accordingly.