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PETITIONER: BANGALORE   WOOLLEN,  COTTON  AND  SILK  MILLS  CO.    LTD.,

       Vs.

RESPONDENT: CORPORATION  OF THE CITY OF BANGALORE, BY ITS  COMMISSIONER,

DATE OF JUDGMENT: 05/04/1961

BENCH: KAPUR, J.L. BENCH: KAPUR, J.L. AIYYAR, T.L. VENKATARAMA DAS, S.K. HIDAYATULLAH, M. SHAH, J.C.

CITATION:  1962 AIR  562            1961 SCR  Supl. (3) 707  CITATOR INFO :  D          1966 SC1686  (9)  RF         1981 SC 991  (10)  RF         1987 SC1059  (18)

ACT: Municipality--Octroi--Constitutionality of--Final resolution for  levying not published in Official  Gazette--Defect,  if can  be validated--City of Bangalore  Municipal  Corporation Act,  1949  (69 of 1949), ss. 38(1)(b), 98, 1O3,  Sch.  III, Part V, Classes I to VIII--Constitution of India, Arts. 276, 301--Government  of India Act, 1935 (26 Geo.  V, Ch. 2),  s. 142--A.

HEADNOTE: The appellants in the two appeals and petitioners under Art. 32  of the Constitution challenged the constitutionality  of the  imposition  of octroi duty on cotton and  wool  on  the grounds that (1) the failure to notify the final  resolution of  the imposition of the tax in the Government  Gazette  as required  by  s. 98(2) of the City  of  Bangalore  Municipal Corporation  Act  was fata I to the tax, and  that  (2)  the imposition  of  the  tax offended Art. 276  or  301  of  the Constitution. Held,  that the impugned octroi duty did not contravene  the provisions of Arts. 276 and 301 of the Constitution. Hamdard  Dawakhana  (Wakf) v. The Union of  India  [1960]  2 S.C.R. 671, held inapplicable. Atiabari Tea Co. Ltd. v. The State of Assam [1961] 1  S.C.R. 809, referred to. section  38(1)(b)  of  the  Act  validated  any  defect   or irregularity  in proceedings taken under the Act  which  did not  affect the merits of the case.  The failure to  publish the  final  resolution  did not affect  the  merits  of  the imposition of the tax and was therefore not fatal to it. The mere fact that S. 38(1)(b) occurred in a chapter dealing with Municipal Authorities or the other parts of the Section dealt  with another subject was no reason for confining  its operation to those subjects only. Harla  v. State of Rajasthan [1952] S.C.R. 110 and State  of

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Kerala v.  P. J. Joseph A.I.R. 1958 S.C. 296, referred to. The  contention that the impugned tax contravened  the  pro- visions of Art. 276 of the Constitution was not sustainable. Entry 52 in List II of the Constitution and entry 49 in  the Government  of  India Act, 1935, which relate  to  taxes  on entry  of goods into a local area are not affected  by  Art. 272 of the Constitution and 708 s.   142-A of the Government of India Act, which are similar to each other and relate only to a distinct head of taxation i.e., taxes on professions, trades and callings etc. The  Municipality  of Chopda v.  Motilal  Manekchand  I.L.R. [1958]  Bom,  483,  Gajadhar Hiralal  Ginning  and  Pressing Factory  v.  The Municipal Committee, Washim  I.L.R.  [1958] Bom. 628 and Secretary, Municipal Committee, Karanja v.  The New East India Press Co. Ltd., Bombay A.I.R. 1949 Nag.  215, distinguished. Classes  I  to VII in Schedule III of Part  V  make  certain specified  articles  taxable and Class VIII  makes  "  other articles which are not specified" taxable if approved by the Corporation The combined effect of ss. 97 and 130 and Part V of Schedule III including Class VIII is that the words  used are of very general nature and would have the same effect as if all articles were intended to be and were included. Anwarkhan Mahboob Co. v. The State of Bombay [1961] 1 S.C.R. 709, followed.

JUDGMENT: CIVIL APPELLATE JURISDICTION :Civil Appeals Nos. 448 and 449 of 1957                          with Writ Petitions Nos. 97 and 107 of 1961. Appeals  from  the judgment and order  dated  September  27, 1956, of the Mysore High Court in Writ Petitions Nos. 44 and 45 of 1955. M.   C.   Setalvad,  Attorney-General  for  India,’  N.   C. Chatterjee,  D.  N.  Mukherjee  and B.  N.  Ghose,  for  the appellant  in  C.  A.  No. 448/57  and  Petitioner  in  Writ Petition No. 97/1961. M.   C.   Setalvad,  Attorney-General  for  India,   V.   L. Narasimhamoorty,  S. N. Andley, J. B. Dadachanji,  Rameshwar Nath and P. L. Vohra, for appellant in C. A. No. 449157  and Petitioners in W. P. No. 107 of 1961. A.   V.   Viswanatha   Sastri  and  K.  R.   Choudhri,   for respondents in C. As.  Nos. 448 and 449 of 57 and W.   Pa. Nos. 97 and 107/1961. 1961.  April 5. The Judgment of the Court was delivered by KAPUR.,  J.-A  Divisional  Bench  of  this,  Court  made   a reference* under the proviso to Cl. (3) of Art. 145 on  the. following two points:- (1)  Whether the imposition in the present caw offends  Art. 276 or 301 of the Constitution ? *See p. 698 ante. 709 (2)  Whether  the failure to notify the final resolution  of the  imposition  of the tax in the  Government,  Gazette  is fatal to the tax ? The  facts  of  the case are set out in  the  order  of  the Divisional Bench and it is unnecessary to restate them.  The appellants in the two appeals and in the two petitions under Art. 32 are challenging the constitutionality of the  octroi duty   on  cotton  and  wool  imposed  by   the   respondent Corporation  within  its octroi limits.  The  procedure  for

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levying  municipal  taxes  and  the  power  of  control   of Government in regard to those taxes is laid down in s. 98 of the  City of Bangalore Municipal Corporation Act (Act 69  of 1949)  hereinafter termed the Act.  The procedure is that  a resolution intending to impose a tax has to be passed by the Corporation and that resolution is required to be  published in  the Official Gazette and in the local  newspapers.   The rate payers can then submit objections and after considering such  objections  received  during the  specified  time  the Corporation  may by resolution determine to levy the tax  or duty.    When  such  a  resolution  has  been   passed   the Commissioner is required to publish forthwith a notification in the Official Gazette and in the newspapers as set out  in sub-s.  (1)  of s. 98 of the Act.  This notification  is  to specify  the  date  from which, the rate at  which  and  the period of levy, if any, for which such tax is levied. As has been stated in the order of the Divisional Bench  all other  requirements of s. 98 were complied with except  that the  notification in the Government Gazette as  required  by sub-s. (2) was not published.  This, it was submitted, was a defect which was fatal to the legality of the imposition  of the tax.  To support this submission reliance was placed  on two  judgments of this Court in Harla v. State of  Rajasthan (1) and State of Kerala v. P. J. Joseph (2).  In the  former case the-Jaipur Opium Act was enacted by a resolution of the Council   of   Ministers  appointed  by   the   then   Crown Representative  but  this law was  neither  promulgated  nor published in the Gazette nor made known to the public.   The mere passing of the resolution by the (1) [1052] S.C.R. 110, (2) A.I.R. 1958 S.C. 296, 710 Council of Ministers without publication was held not to  be sufficient  to  make the law operative.  At p. 114,  it  was observed  that  reasonable  publication  of  some  sort  was necessary  and that natural justice required that  before  a law could operate it had to be promulgated or published  and it must be broadcast in some recognizable way.  Similarly in the  latter case there was no publication in the Gazette  of the  Order  of the Government made in the  exercise  of  the power conferred by an Act nor was there any communication of the  order  to the person affected thereby and it  was  held that  not  having been published in the Gazette it  was  not valid  and  could  not  have the  force  of  law.   But  the respondent  relied upon s. 38(1)(b) of the Act  which  cures defects  or irregularities not affecting the merits  of  the case.  That section provides:-               S.    38(1).   "  No act done,  or  proceeding               taken  under  this  Act  shall  be  questioned               merely on the ground-               (a).................................................... (b) of any defect or irregularity in such act or proceeding, not  affecting  the merits of the case.  " Thus  under  that provision  any  defect  or irregularity  not  affecting  the merits  of the case saves any act done or  proceeding  taken under the Act on the ground of such irregularity or  defect. The appellants contended that the section has no application to defects in regard to procedure under s. 98 of the Act for the imposition of taxes because s. 38 read as a whole refers to  a  different  situation  and  that  there  was  internal evidence  in  the  section itself to show  that  it  has  no relevance  to  the objection taken by the  appellants.   The section,  it  was  argued, is in  Chapter  11  dealing  with Municipal  Authorities and this particular provision  is  in that Part of the Chapter which deals with provisions  common

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to  the  Corporation  and its Standing  Committees  and  the marginal  note shows that the object of enacting it was  the validation  of  proceedings  of  the  Corporation  and   its Standing  Committees  and that the whole section  should  be read  in  that  context.  So read,  it  was  submitted,  the section  must  be taken to be.,% saving  provision  for  the validity of proceedings 711 of the Municipal Authorities which was clear from cl. (a) of sub-s.  (1)  which  deals with defects on the  B  ground  of vacancy or defect in the constitution of the Corporation  or of any Standing Committee and subs. (2) of that section also has  reference  to  the  meetings  of  the  Corporation  and therefore,  it was contended, I the defect  or  irregularity mentioned  in cl. (b) of sub,section (1) in any act done  or proceeding  taken also must have reference to that  kind  of defect  which is referred to in other parts of the  section. It was further submitted that the words " not affecting  the merits  of the case " showed that the reference was  not  to any  defect  in regard to the procedure  for  imposition  of taxes but defects etc. which might arise in the  proceedings of  the Corporation and which have reference to a defect  in the   constitution  of  the  Corporation  or  its   Standing Committees.  Reference was also made to the marginal note in the section. It  is unnecessary in this case to discuss the relevance  of marginal notes in the construction of s. 38(1)(b) because in our  opinion  the language is unambiguous and clear  and  it validates  any defect in any act done or  proceedings  taken under  the Act and makes it immune from being questioned  on the  ground  of any defect or irregularity in  such  act  or proceedings not affecting the merits of the case and  merely because   it  is  in  a  chapter  dealing   with   Municipal Authorities  or  other  parts of the  section  dealing  with another subject is no reason for confining its operation  to the defects con. tended for by the appellants. The  resolution  was published in newspapers  and  was  also communicated  to those affected by it and thus it  was  well known.  The failure to publish it in the Government  Gazette did not affect the merits of its imposition.  The answer  to question  No. 2 referred therefore is that the mere  failure to notify the final resolution of the imposition of the  tax in  the Government Gazette is not fatal to the  legality  of the imposition. The  other  question  referred  is  whether  the  imposition offends Art. 276 or 301 of the Constitution, 712 Article 276 as far as it is relevant for the purposes of this case provides:-               Art.  276(1)  "  Notwithstanding  anything  in               article  246, no law of the Legislature  of  a               State relating to 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  or employments shall be  invalid  on               the ground that it relates to a tax on income.               (2)   The  total amount payable in respect  of               any  one  person to the State or  to  any  one               municipality,  district board, local board  or               other  local authority in the State by way  of               taxes  on  professions, trades,  callings  and               employment  shall not exceed two  hundred  and               fifty rupees per annum." It  was  contended that the imposition of the  impugned  tax

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contravenes  the provision of Art. 276(2) as it is of a  sum more  than Rs. 250 and is therefore unconstitutional.   This contention  is  not  well founded.   There  ’was  a  similar provision  in  the Government of India Act, 1935,  i.e.,  s. 142-A  but there the amount mentioned in sub-s. (2) was  Rs. 50  per annum and this limitation was placed as  from  after the 31st day of March, 1939.  A reference to the legislative lists will show that neither the Article 276 nor s. 142-A of the Government of India Act, 1935, has any reference to  the tax  now  impugned.   In  the  Devolution  Rules  under  the Government  of India Act, 1915, taxes which could be  levied for the purpose of local bodies were  the following:-               " Item No. 7. An octroi.               Item  No. 8. A terminal tax on goods  imported               into or exported from, a local area save where               such  tax is first imposed in a local area  in               which  an octroi was not levied on  or  before               the 6th July 1917.               Item  No. 9. A tax on trades, professions  and               callings.  "               In  the  Government of India  Act,  1935,  the               relevant entries in the Legislative List--List               II-were 46 and 49 which were as follows:               46.  " Taxes on professions, trades,  callings               and  employments,  subject, however,  ’to  the               provisions               713               of section one hundred and forty-two A of this               Act."               49.   " Cesses on entry of goods into a  local               area’ for consumption, use or sale therein.               "  Terminal   tax was taken to List  I,  i.e.,               Central List and is now entry 89 in the  Union               List  (List I).  Corresponding entries  to  46               and  49 of the Government of India Act,  1935,               in the Constitution in.  List II are 52 and 60               which are as follows :-               52.   "Taxes  on  the entry of  goods  into  a               local  area  for  consumption,  use  or   sale               therein.  "               60.   " Taxes on professions, trades, callings               and employments.  " The  history  of  these taxes therefore shows  that  in  the Devolution  Rules under the Government of India  Act,  1915, octroi,  terminal tax and taxes on professions and  callings were  three  distinct heads of taxation.  Similarly  in  the Government  of India Act, 1935, and in the Constitution  the two entries are separate.  Therefore when s. 142-A was added in  the  Government of India Act, 1935,  its  operation  was limited to entry 46 of List II and had no reference to entry 49 which deals with cesses on entry of goods.  The  position under  the  Constitution is exactly the same  and  therefore neither  s. 142-A of the Government of India Act,  1935  nor Art.  276  has any effect on entry 49 in the  Government  of India  Act,  1935  or entry 52  in  the  constitution.   The learned Attorney-General in support of his argument that the impugned tax is a tax on trade, relied upon three judgments: The  Municipality  of Chopda v.  Motilal  Manekchand  (1)  ; Gajadhar Hiralal Ginning & Pressing Factory v. The Municipal Committee, Washim (2 ); and Secretary, Municipal  Committee, Karanja v. The New East India Press Co.  Ltd., Bombay (3  ). None  of  these cases has any applicability to the  tax  now impugned because the facts were different and the imposition was   of   a  different  character.   The  attack   on   the constitutionality  of  the  impugned tax on  the  ground  of

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contravention  of Art. 276 is therefore not sustainable  and must be rejected. (1)  I.L.R. [1958] Bom. 483. (2) I.L.R. [1958] Bom. 625. (3) A.I.R. 1949 Nag. 215. 714 The second ground of assault on the constitutionality of the tax  imposed  is based on contravention of ’Art.  301  which provides:- Art.  301.  " Subject to the other provisions of this  Part, trade, commerce and intercourse throughout the territory  of India shall be free." It was contended that the tax imposed directly affected  the movement  of  goods and therefore violates  Art.  301  which guarantees the freedom of trade throughout the territory  of India.   In  Atiabari Tea Co.  Ltd. v. State of  Assam  (1), Gajendragadkar, J., giving the opinion of the majority  said :-               "that  the content of freedom provided for  by               Art.   301   was  larger  than   the   freedom               contemplated by s. 297 of the Constitution Act               of  1935, and whatever else it may or may  not               include,  it  certainly includes  movement  of               trade  which  is of the very  essence  of  all               trade  and  is  its  integral  part.   If  the               transport  or the movement of goods  is  taxed               solely  on the basis that the goods  are  thus               carried  or transported that, in our  opinion,               directly  affects  the  freedom  of  trade  as               contemplated  by Art. 301.  If  the  movement,               transport or the carrying of goods is  allowed               to  be  impeded,  obstructed  or  hampered  by               taxation  without satisfying the  requirements               of Part XIII the freedom of trade on which  so               much  emphasis is laid by Art. 301 would  turn               to be illusory." According  to Shah, J., the content is wider.  At  page  241 the learned Chief Justice gave it a more restricted meaning. Relying on these observations it was contended that the  tax which  is affected by Art. 301 is one which is  directly  on movement  of  trade, i.e., from one point  to  another.   As against  this reliance was placed by the respondent on  Art. 305 which at the relevant time was as follows:-               Art.  305.  " Nothing in articles 301 and  303               shall  affect the provisions of  any  existing               law  except in so far as the President may  by               order otherwise direct;..." According to  this article the provisions of Art. 301 do not affect  the provisions of any existing law except in so  far as the President may otherwise direct and there (1)  [1961] x S.C.R. 809. 715 is  no such direction by the President.  " Existing law  has been defined in Art. 366, clause (10), to mean:               "   existing  law’ means any  law,  Ordinance,               order,  bye-law, rule or regulation passed  or               made   before   the   commencement   of   this               Constitution by any Legislature, authority  or               person  having  power  to  make  such  a  law,               Ordinance, order, bye-law, rule or  regulation               ; " and by Art. 372 all laws in force in the territory of  India immediately  before  the commencement  of  the  Constitution shall  continue to be in force until altered or repealed  or amended by a competent legislature.  It was these provisions

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which  were relied upon as an answer to the question of  the applicability of Art. 301.  But the learned Attorney-General argued  that the action taken by the  Municipal  Corporation was after the coming into force of the Constitution, being a levy  imposed as from January, 1955, that the imposition  of the tax was subordinate legislation which could not be saved under  Art.  305 and that the tax could only be  imposed  by resorting to the provisions of Art. 304(b) which provides:               Art.  304.   "  Notwithstanding  anything   in               article 301 or article 303, the Legislature of               a State may by law-               (a)....................................................               (b)   impose  such reasonable restrictions  on               the freedom of trade, commerce or  intercourse               with  or within that State as may be  required               in the public interest:               Provided  that  no Bill or amendment  for  the               purposes of clause (b) shall be introduced  or               moved  in the Legislature of a  State  without               the previous sanction of the President." The  argument  therefore was this that the Act  being  an  " existing law " might be saved under Art. 305 but that  would operate  on  and  save the taxes on  articles  specified  in Schedule III of Part V, item 18, i.e., octroi on animals and goods set out in Classes I to VII of that Part but would not save  the octroi on other articles under Class VIII  imposed after the Constitution because that would be an addition  of a bye-law, rule or order and would not fall within the  term " existing 716 law ". The impugned tax was levied under class VIII set  out in part V which is as follows :-      Octori                              Maximum rate      Class VIII-Other articles      which are not specified above      and which may be approved      by the Corporation by an            Rs. 2-0-0 percent.      order in this behalf............       ad valorem.      Octroi is to be levied by referenceto s. 130 of the Act      which provides:-               S.    130.    "  If  the  corporation   by   a               resolution deter. mines that an octroi  should               be  levied on animals or goods brought  within               the  octroi  limits of the city,  such  octroi               shall  be  levied on such  articles  or  goods               specified  in Part V of Schedule III  at  such               rates  not  exceeding those laid down  in  the               said Part in such manner as may be  determined               by the corporation." Therefore under this section if the Corporation resolved  to levy  octroi on animals or goods brought within  the  octroi limits  of  the city then this octroi was to  be  levied  at rates not exceeding those laid down in that section.   This, it was submitted, was subordinate legislation and  therefore was  not  saved  by Article 305 because"  existing  law"  as defined  means  any law, ordinance, order, by-law,  rule  or regulation  passed  before  the  Constitution  and  as   the impugned   tax  was  a  new  regulation  passed  after   the Constitution  it was not saved by Art. 305.  In  support  of this  reliance was placed on the observations of this  Court in Hamdard Dawakhana (Wakf) v. The Union of India(1); but as was  observed  by the Divisional Bench that  case  does  not apply to the facts of the present case. For the respondent it was argued that (1) goods and  animals were specified in the Act and therefore there was no  making

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or  passing of new regulations and (2) it is not a  case  of delegated   legislation  but  is  a  case   of   conditional legislation.   It  was  firstly  submitted  that  there   is sufficient  specification in the Act itself of the  articles on which the octroi duty could be levied.  Section 97 of the Act gives the power to levy octroi duty on animals or  goods without  any exception which are brought within  the  octroi limits.  Sections 98 (1)  [1960] 2 S.C.R. 671.  717 and 130 lay down the procedure for the levying of taxes  and impose  a limitation on the extent of the tax to  be  levied and Classes I to VII make certain articles taxable and Class VIII  makes  other articles and goods taxable  if  they  are approved  by the Corporation.  This approach to the  subject has  the  support of a decision of this Court  in  Anwarkhan Mahboob Co. v. The State of Bombay (1), where the facts were that  the assessee was subjected to a purchase tax under  s. 14(6)  of the Bombay Sales Tax Act, 1953 (Act III  of  1953) The  contention of the assessee was that the goods  had  not been  specified  in the Sales Tax Act.  In that Act  in  the schedule  were mentioned the goods the sale or  purchase  of which  was  subject to tax and the last entry was of  "  all goods  other  than  those specified from  time  to  time  in Schedule  A (and section 7A) and in the preceding  entries." The question for decision was whether that entry amounted to specification of goods for the purposes of Sales Tax and  it was  held  that  it  was.   This  case  was  sought  to   be distinguished on the ground that the words there were "  all goods  other than........... and those words would  comprise every  article which was not specifically mentioned  in  the Schedule.  We are unable to accept this distinction  because even  though  the  words used in  the  present  statute  are different  the combined effect of ss. 97 and 130 and Part  V of Schedule III including Class VIII which have been set out above  is  that the words are of ’very  general  nature  and would have the same effect as if all articles were  intended to  be and were included. In view of this it is  unnecessary to discuss the second contention. Therefore the answer to the first question referred is  that the impugned octroi duty does not contravene the  provisions of  Arts. 276 and 301.  In view of our decision on  the  two questions referred these appeals fail and are dismissed with costs.  One hearing fee. Consequently  Writ Petition Nos. 97 and 107  are  dismissed. There will be no order as to costs in those petitions. (1)  [1961] 1 S.C.R. 709.                                      Appeals dismissed.                                     Petitions dismissed, 718