http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

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

       Vs.

RESPONDENT: THE   CORPORATION   OF  THE  CITY  OF   BANGALORE   BY   ITS

DATE OF JUDGMENT: 03/02/1961

BENCH: KAPUR, J.L. BENCH: KAPUR, J.L. HIDAYATULLAH, M. SHAH, J.C.

CITATION:  1962 AIR 1263            1961 SCR  (3) 698  CITATOR INFO :  D          1966 SC1686  (9)  R          1980 SC 882  (17)

ACT: Municipality--Octroi--Resolution intending to levy and final levy, if separate Publication necessary--Notice  technically defective,  if can be validated--Power to specify goods  not mentioned in the Schedule--Excessive delegation--Raw  Cotton or Wool, nature of--City of Bangalore Municipal  Corporation Act,  1949  (Act  LXIX of 1949), ss.  38(1),  97(e),  98(1), 98(2).

HEADNOTE: The City of Bangalore Municipal Corporation resolved to levy octroi on cotton and wool and the resolution was notified in the Official Gazette as required by s. 98(1) of the City  of Bangalore   Municipal  Corporation  Act.   Objections   were invited  and  the appellants filed their objections  to  the tax.  Final resolution in regard to the tax was passed under s. 98(2) of the Act which was published in local  newspapers but not in the Official Gazette.  Notices were also sent  to the  appellants to the effect that after  considering  their objections  the Municipality had decided to levy  octroi  on the goods at the rate already notified.  The appellants then filed  applications in the High Court under Art. 226 of  the Constitution challenging the legality of the levy of  octroi but  the High Court dismissed the applications.   On  appeal with a certificate of the High Court: Held,  that  publication of the resolution in  the  Official Gazette  and invitation of objections under s.  98(1)  which were  filed, were sufficient compliance with the  provisions of  the  Act.   The notice stating that  the  tax  had  been resolved  to  be  levied  instead of  stating  that  it  was intended  to  be  levied was at the  most  only  technically defective  but all such defects were validated by s.  38  of the  Act.  It was not necessary first to pass  a  resolution specifying the goods and then another resolution showing the intention of the Municipality to tax those goods.  The goods and  the rate of tax were specified and the resolution,  was passed after following the procedure laid down in s.  98(1). This amounted to substantial compliance with the  provisions

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

of the Act. The legislature has laid down the powers of the Municipality to  tax  various goods and enumerated certain  goods;  Class VIII in Part V of Schedule III read with s. 97(e) of the Act authorised the Municipality to impose tax on other  articles and goods.  In 699 the  present  case there was a resolution  which  sought  to include the goods in dispute in the Schedule for the purpose of imposing the tax. Bijay  Colton  Mills Ltd. v. Their Workmen [1960]  2  S.C.R. 982, distinguished. The  conferment  of power upon the Municipality  to  specify goods  under  Class  VIII is in the  nature  of  conditional delegation and does not amount to excessive delegation. Baxter v. Ah Way (1909) 8 C.L.R.  626, followed. Hamdard  Dawakhana  v. Union of India [1960] 2  S.C.R.  671, held not applicable. The High Court was right in holding that Cotton and Wool  do not  cease to be raw materials for the purposes of the  Act, merely  because they are ginned and pressed in  bales.   The resolution in the present case covered the articles imported by  the  appellants into the limits of  the  Corporation  of Bangalore.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 448 and 449 of 1957. Appeals  from  the judgment and order  dated  September  27, 1956, of the Mysore High Court in Writ Petitions Nos. 44 and 45 of 1955. N.   C. Chatterjee, D. N. Mukherjee and B. N. Ghose, for the appellant in C. A. No. 448 of 1957. V.   L.  Narasimhamoorthy, S. N. Andley, J.  B.  Dadachanji, Rameshwar  Nath and P. L. Vohra, for the appellant in C.  A. No. 449 of 1957. G.   R. Ethiraiulu Naidu, Advocate-General, Mysore,, B.   R. G. K. Achar and K. R. Choudhuri, for the respondent. 1961.   February 3. The Judgment of the Court was  delivered by KAPUR,   J.-These  are  two  appeals  brought  against   two judgments and orders of the High Court of Mysore which arise out of two petitions filed by the appellants under Art.  226 challenging the legality of the imposition of octroi on wool and  cotton under s. 98 of the City of  Bangalore  Municipal Corporation  Act (Act LXIX of 1949), which for the  sake  of convenience, will be termed the " Act ". On March 31, 1954, a resolution was passed purporting to  be under s. 98(1) of the Act by which it was 700 resolved to levy an octroi on cotton and wool as follows :- Name of the Articles                          Rate of duty 1.   Raw cotton and wool       (this includes both loose               Rs. 1/9/- per       and compressed, made in              cent. ad valorem       India or foreign) 2.   ...  ... This  was notified in the Mysore Gazette on April  3,  1954, and  was also published as required by s. 98(1) of the  Act. Objections  were  invited and it is admitted that  both  the appellants  filed their objections.  Final resolution  under s. 98(2) was passed on December 21, 1954, and the resolution in regard to octroi came into force as from January 1, 1955.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

It  may be mentioned that the final resolution passed  under s.  98  (2)  of the Act was not published  in  the  Official Gazette  but  was published in the local  newspapers  and  a notice  dated  December  23,1954,  was  also  sent  to   the appellants  to  the  effect  that  after  considering  their objections the Municipality had decided to levy an octroi on the goods at the rate already notified. The  appellant in C.A. 448/57, filed a petition in the  High Court  on  March 15, 1955, under Art.  226  challenging  the validity of the imposition of the octroi on the grounds:- (1)  that  the tax was in contravention of s. 98(2)  of  the Act in so far as a notice was not published in the  Official Gazette; (2)  that the tax was in contravention of s. 130 of the  Act and (3) that there was excessive delegation. The  appellant in C. A. 449/57, filed its petition on  March 17,  1955, in which besides challenging the validity of  the imposition  of  the tax on grounds above set  out,  it  also challenged the vires of the imposition on the grounds :- , 1.   that  the  levy of the octroi was in  contravention  of Art.  276(2)  of the Constitution by which a  tax  on  trade exceeding Rs. 250/- per annum could not be imposed 701 2.   that   it  was  a  contravention  of  Art.  301   which guaranteed freedom of inter-State trade and commerce, and 3.   that  it was in contravention of Art. 19(1)(g)  of  the Constitution. The  High  Court  rejected  all  these  objections  and  the appellant  has  come to this court on a certificate  of  the High Court under Art. 133(1) of the Constitution. In  order to decide the question of the legality of the  tax it  is necessary to refer to the relevant provisions of  the Act.   Section 97 enumerates the taxes and duties which  the Corporation  is  empowered to levy under the  Act.   Section 97(e) provides: " 97.  The Corporation may levy- (e)an octroi on animals or goods or both brought within  the octroi limits for consumption or use therein." Section  98  which  deals with the  powers.  of  control  of Government  and  the  procedure  for  the  levying  of   the Municipal taxes provides:               Section  98  (1).  "  Before  the  Corporation               passes  any resolution imposing a tax or  duty               for  the  first  time  it  shall  direct   the               Commissioner  to  publish  a  notice  in   the               Official Gazette and in the local news. papers               of  its intention and fix a reasonable  period               not being less than one month from the date of               publication  of  such notice in  the  Official               Gazette  for  submission of  objections.   The               Corporation,   may,  after   considering   the               objections, if any, received within the period               specified, determine by resolution to levy the               tax  or duty.  Such resolution  shall  specify               the rate at which, the date from which and the               period of levy, if any, for which such tax  or               duty shall be levied.               (2)   When   the   Corporation   shall    have               determined  to  levy any tax or duty  for  the               first time or at a new rate, the  Commissioner               shall forthwith publish a notice in the manner               laid  down in sub-section (1)  specifying  the               date  from  which, the rate at which  and  the               period of levy, if any, for which such tax  or

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

             duty shall be levied." 702 It was argued that instead of passing a resolution  Imposing the   octroi  duty,  the  Corporation  should  have   ’first published its " resolution " to impose the tax and that  the Corporation could not at once pass " a resolution " by which it  imposed  the tax.  It published that resolution  in  the Official   Gazette  and  also  in  accordance   with   other provisions  of  s. 98(1) and invited objections  which  were filed.  The only defect, if defect it can be called at  all, was that instead of saying that it " intended " to impose  a tax,  the notice which was published said the tax "had  been resolved to be levied." This is a technicality and is of  no substance. The  next  objection raised was that after  the  Corporation adopted  the  resolution imposing the tax  which  was  after considering  all the objections the publication was only  in local  newspapers  and  there  was  no  publication  in  the Government  Gazette and this, it was submitted, was  such  a serious  defect as to make the imposition illegal and  ultra vires.   In  support counsel for the  appellants  relied  on certain judgments where publication in the Official  Gazette was held to be a condition precedent to the legality of  the imposition  of  the  tax.  These cases are  Krishna  Jute  & Cotton  Mills  v. The Municipal  Council,  Vizianagram  (1); Municipal   Council,  Rajamundry  v.   Nidamarti   Jaladurga Prasadarayudu (2).  Reference was made also to The Municipal Council, Anantapur v. Sangali Vasudeva Rao (3) ; Manak Chand v. Municipal Council(4) and State of Kerala v. P. J.  Joseph (5  ).  This  question  we are not  considering  as  we  are referring   this   case  to  a  larger  Bench   on   certain constitutional points and shall refer this question also  in the sequel. The second objection raised was that there was no compliance with s. 130 of the Act.  That section is as follows :-               Section  130.   "  If  the  corporation  by  a               resolution determines that an octroi should be               levied on animals or goods brought within  the               octroi limits of               (1)   A.I.R. 1926 Mad. 152.               (2)   A.I.R. 1926 Mad. 800.               (3)   (1931) I.L.R. 55 Mad. 207.               (4)   A.I.R. 1951 Raj. 139.               (5) A.I.R. 1958 S.C. 296, 299.               703               the city, such octroi shall be levied on  such               articles or goods specified in Part V Schedule               III  at  such rates not exceeding  those  laid               down  in the said’ Part in such manner as  may               be determined by the corporation." That  is not a charging section but it imposes a  limitation on  the power of the Municipality as to the rate at which  a tax  can  be imposed.  It was further argued that  before  a resolution  under s. 98(1) could be passed the goods  sought to be taxed had to be specified under  s.    130  read  with Schedule 111, Part V of the Act. Clause  18 of that Schedule provides that octroi on  animals and  goods  shall be levied at the rates not  exceeding  the following.   Classes  I  to VII specify  articles  on  which octroi can be levied at the maximum rate.  Class VIII was as follows:      Octroi                             Maximum rate      "Other articles which are not speci-      fied above and which may be        Rs.2-0-0 per cent.      approved by the Corporation         ad valorem"

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

    by an order in this behalf That  class empowers the Municipal Council to impose  octroi duty on other articles which are not specified but which may be  approved  by  the  Corporation.   In  other  words   the Corporation can choose other articles upon which tax can  be imposed  and the respondent Corporation in the present  case did  resolve to impose tax on raw cotton and wool  and  also fixed  the  rate  at Rs. 1-9-0 per cent.  ad  valorem.   The submission that as a result of the operation of s. 130 first a resolution had to be passed specifying raw cotton and wool as  goods on which octroi duty would be levied and then  the procedure  under s. 98(1) and (2) had to be gone through  is without  substance.   What the Corporation did was  that  it passed  a  resolution choosing these goods to  be  goods  on which  octroi  duty  was  to  be  levied  and  by  the  same resolution  it resolved that the goods therein specified  be taxed   at  the  rate  therein  specified.   There   is   no contravention  of  s.  130 even if  the  contention  of  the appellants  was  to be taken most strictly, The  goods  were specified;   the 704 rate  of tax to be levied on the goods was  also  specified; the  resolution  was  passed to that effect  and  the  other procedure  laid down in s. 98(1) was then followed.  In  our opinion  it is not necessary that first a resolution  should be  passed specifying the goods and then another  resolution should  be passed showing the intention of the  Municipality to  tax  those  goods.  What  has  been  done  substantially complies with the provisions of the Act. It was next argued that the words of Class VIII in Part V of Schedule  III  where the’ words used are  "  other  articles which are not specified above " and which may be approved by the Corporation by order in this behalf meant that the goods must  be  precisely  defined and included  by  name  in  the Schedule and that the use of the word in this behalf " meant adding  to the list of articles in Schedule  III.   Reliance was  placed  on  the interpretation of the word  "  in  this behalf  " as given by this Court in Bijay Cotton Mills  Ltd. v.  Their Workmen (1).  But that case has no application  to the facts of the present case because the resolution was, as a  matter  of fact, passed for the purpose  of  imposing  an octroi  duty  on the goods in dispute.  The  words  used  in Bijay Cotton Mills Ltd. v. Their Workmen(2) were in  another context  and’  even  there  all that was  said  was  that  a notification had to issue making the Central Government  the appropriate  Government.   As  we have  said  above  in  the present case there was a resolution which sought to  include these goods in the Schedule for the purpose of imposing  the tax. The excessive nature of delegation under Class VIII in  Part V of Schedule III was also urged but this was not a question which  was  raised  in  the High  Court  nor  is  there  any substance  in the matter.  The argument raised was that  the power  of the Municipal Corporation to specify  goods  under Class   VIII  was  excessive  delegation  which   was   both uncanalised  and uncontrolled and reliance was placed  on  a judgment  of  this Court in Hamdard Dawakhana  v.  Union  of India("); but that case has no application to the facts (1) [1960] 2 S.C.R. 982. (2) [1960] 2 S. C.R. 671, 705 of  the present case.  In the present case  the  Legislature has laid down the powers of the Municipality to tax  various goods.   It has enumerated certain articles and animals  and Class VIII read with s. 97(e) of the Act has authorised  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

Municipality  to  impose tax on other  articles  and  goods. This  power is more in the nature of conditional  delegation as  was held in Baxter v. Ah Way(1) where it was  hold  that under  a.  52 (g) of the (Australian) Customs Act,  1901,  a power  given to prohibit by proclamation the importation  of certain  articles was not a delegation of legislative  power but  conditional  legislation  because  the  prohibition  of importation was a legislative abet of Parliament itself  and the  effect of sub-s. (g) of s. 52 was only to  confer  upon the Governor-General in Council the discretion to  determine to  which class of goods other than those specified  in  the section  and  under what conditions  the  prohibition  shall apply.   All  that the Legislature has done in  the  present case  is  that it has specified certain  articles  on  which octroi  duty  can be imposed and it has also  given  to  the Municipal  Corporation the discretion to determine  on  what other  goods  and under what conditions the  tax  should  be levied.   That,  in our opinion, is not a case  which  falls under the rule laid down by this Court in Hamdard  Dawakhana v. Union of India (2). It was contended in C. A. 449/57 that the imposition of duty on  raw  cotton  could not cover processed  cotton  that  is cotton which had been ginned, combed and pressed.  The  High Court  held  that the cotton by being ginned or  pressed  in bales does not cease to be raw cotton and was to be regarded as raw for the purpose of the Act.  The same would apply  to wool.  The notification levying the tax specifically  stated that raw cotton and wool included both loose and compressed, i.e.,  compressed  cotton  and wool whether  it  was  Indian cotton or foreign cotton.  It will not, in our opinion, be a correct  meaning  to give to the notification if it  were  " interpreted to apply only to cotton which had been  gathered from the fields and had neither been ginned nor pressed." We agree with  (1) (1909) 8 C.L.R. 626.          (2) [1960] 2 S.C.R. 671. 706 the  High  Court that this resolution  covers  the  articles which  the appellants in the two cases were  importing  into the  limits of the Corporation of Bangalore.  I The  learned Advocate-General appearing for the respondent also relied on s. 38 of the Act which provides : Section  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 merit of the case." This section validates all defects and irregularities in  in any act or proceedings which do not affect the merit; of the case.   It  was submitted that this section  is  in  another chapter,  i.e., chapter 2 dealing with provisions common  to the Corporation and the Standing Committees.  It may be that it is in another chapter but the language of the section  is wide and applies to all defects or irregularities in any act or proceeding done not affecting the merits of the case. In  our opinion the following points should be heard by  the Constitution Bench*:-               (1)   Whether  the imposition in  the  present               case   offends   Art.  276  or  301   of   the               Constitution ?               (2)   Whether the failure to notify the  final               resolution of the imposition of the tax in the               Government Gazette is fatal to the tax ? If  the answer to these questions or any of them is  in  the affirmative the appeal will have to be allowed.  But if  the two  questions  are  answered  against  the  appellants  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

appeals  will fail as all other points have been decided  by us against the appellants.  The costs will follow the  event unless the Bench hearing the reference makes other order. Referred to Constitution Bench final disposal. *The decision of the Constitution Bench is reported infra. 707