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PETITIONER: VILLAGE PANCHAYAT OF KANHAN PIPRI

       Vs.

RESPONDENT: STANDING COMMITTEE, ZILA PARISHAD, NAGPUR, AND ORS.

DATE OF JUDGMENT: 17/08/1967

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. SHAH, J.C. SHELAT, J.M.

CITATION:  1968 AIR  183            1968 SCR  (1) 213

ACT: Bombay Village Panchayat Act 1958 (Bombay Act 3 of 1958), s. 124(5)--Maharashtra  Panchayats Taxes and Fees  Rules  1960, rr.  3, 4, 5, 21, 22--Levy of octrai by Panchayat  under  r. 22--Procedure under rr. 3 & 4 followed--Collection of octroi commenced  without Prior approval of octroi limits under  r. 21  by Collector--such collection whether  valid--subsequent approval  by  collector whether  validates  collection  made earlier--Appeal under r. 124(5)--Limitation Rule 5 providing for  appeal against levy of octroi within 60 days of  notice under r. 4--Scope and validity of r. 5.

HEADNOTE: The  appellant Panchayat levied octroi duty on goods  coming within  its limits by following the procedure laid  down  in rr. 3 and 4 of the Maharashtra Village Panchayats Taxes  and Fees  Rules 1960.  Although the resolution  finally  levying octroi was passed on February 25, 1963 and the octroi limits were  fixed by resolution dated March 17, 1963 the  approval of  the Collector to the octroi limits as required by r.  21 was not obtained till January 14, 1964.  When the  Panchayat began  collecting  octroi on April 1,  1963  the  respondent company  appealed  under  s. 124(5) of  the  Bombay  Village Panchayat Act, 1958 to the Panchayat Samita.  The appeal was rejected as it was considered time-barred under r. 5 of  the Taxes & Fees Rules which required an appeal under s.  124(5) of the Act to be filed within 60 days of the publication  of the  notice  under  r. 4. On  further  appeal  the  Standing Committee,  Zila Parishad, Nagpur decided in favour  of  the respondent company on the ground that the Panchayat had  not complied  with r. 21.  The Panchayat filed a  writ  petition under  Art. 226 of the Constitution.  The High Court  upheld the  findIng of the Standing Committee as to the  effect  of non-compliance with r. 21.  It however further held that  r. 5 in requiring all appeals under a. 124(5) of the Act to  be filed within 60 days of the publication of the notice  under s.  4 was arbitrary and destructive of the right  of  appeal and  therefore ultra vires.  The Panchayat appealed to  this Court. Held:     (i) Octroi can be validly levied under r. 22 after following  the  procedure in rr. 3 and 4 Rule 3  deals  only

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with (i) selection of the tax and (ii) the rate at which  it is to be levied.  Rule 4 deals with final publication of the notice levying octroi.  The levy of octroi under r. 22  read with  rr.  3 and 4 does not require prior  approval  to  the octroi  limits by the Collector under r. 21. [219D-H;  220A- C]. (ii) However the octroi cannnot be validly collected  before the octroi limits are approved by the Collector under r. 21. Collections made earlier cannot be regularised by subsequent approval.   The  plea on behalf of the  appellant  that  the approval of the Collector on January 14, 1964 should  relate back to April 1, 1963 could not be accepted. [220 D-E]. (iii)     Rule 5 is not invalid as it does not apply to  all appeals under, s. 124(5).  The rule follows rr. 3 and 4  and is  headed "appeal against levy of any tax or fee," and  the period  of sixty days of limitation commences from the  date of the publication of the notice 214 under  r.  4  i.e. the notice following the  decision  of  a Panchayat to levy any tax or fee.  This date shows that r. 5 is dealing only with appeals against levy of any tax and not with  the assessment or imposition of a tax or  any  further appeals  to  the Panchayat Samiti under s. 124(5).   In  its context and setting the heading of r. 5 brings out the scope of the rule, [220 F-H]. Accordingly  the  appeal of the company to  the  Samiti  was wrongly  dismissed  as time-barred.  It followed  from  this that  the Standing Committee was entitled to deal  with  the appeal on merits. [220 H].

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1375 of 1966. Appeal from the judgment and order dated October 22, 1965 of the   Bombay  High  Court  Nagpur  Bench  in  Special  Civil Application No. 355 of 1964. M.   N. Phadke and Naunit Lal, for the appellant. B.   R. Agarwala and S. B. Nerkar, for respondent No. 1. A.   K.  Sen, A. S. Bobde, G. L. Sanghi, and O.  C.  Mathur, for respondent No. 2. M.  S.  K.  Sastri, R. N. Sachthey, S. P. Nayar  for  R.  H. Dhebar, for respondent No. 3. The Judgment of the Court was delivered by Sikri,  J This appeal by certificate of fitness  granted  by the  High  Court of Judicature at Bombay (Nagpur  Bench)  is directed  against the judgment of that Court dismissing  the petition  filed  under art. 226 of the Constitution  by  the Village Panchayat of Kanhan Pipri, appellant before us.  The appellant  had  in this petition prayed for the issue  of  a writ quashing the resolution dated April 6, 1964, passed  by the  Standing  Committee, Zila Parishad, Nagpur, and  for  a writ  of  mandamus directing the Standing Committee  not  to interfere  with  the right of the appellant  to  impose  and collect  the  octroi duty pursuant to its  resolution  dated February 25, 1963. In  order  to appreciate the points raised before us  it  is necessary   to  give  the  relevant  facts   and   statutory provisions.    The  Village  Panchayat  of   Kanhan   Pipri, hereinafter  referred  to as the Panchayat,  was  originally constituted under the C.P. & Berar Panchayat Act, 1946 (C.P. &  Berar  Act No. 1 of 1947).  On June 1, 1959,  the  Bombay Village  Panchayat  Act,  1958  (Bombay  Act  III  of  1959) hereinafter  referred  to  as the Act came  into  effect  in Vidharba region, and by virtue of this Act the appellant was

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deemed to be a Panchayat under the Act. On July 14, 1961, the Panchayat passed resolution No. 2 with a view to levy octroi duty.  The resolution, after  reciting the need 215 for   levying  octroi  duty  and  the   relevant   statutory provisions, concludes: "........  it passes the resolution to levy  minimum  octroi tax  on the goods coming within its local limits as per  the Schedule No. 1 of the Rules." On  November  17, 1962, resolution No. 5  was  passed  which reads as follows:               "5.  The  meeting considered the  question  of               imposition  of  octroi  duty.   It  has   been               unanimously   resolved  that  by   virtue   of               Grampanchayat Resolution No. 2, dated 14-7-61,               that octroi duty shall be imposed on the goods               coming  into its local limits,  the  committee               accepts  the  same.   The  matter  of  levying               octroi duty shall be undertaken in  accordance               with the Panchayat Act and its rules.   There-               fore  matter  of  Octroi  Rules,  calling  for               objections for the tax and taking of decisions               thereon after the consideration, number of the               octroi  posts  and place etc.  should  be  got               decided  by the appropriate  authority.   This               matter  may be taken into hand very  urgently.               It is so decided, by the majority." On  January  26, 1963, a public notice was issued  under  r. 3(b)  of the Maharashtra Village Panchayats Taxes  and  Fees Rules,  1960 hereinafter referred to as the Fees Rules.   On February  19,  1963, M/s Brooke Bond of  India  (Pr.)  Ltd.- hereinafter referred to as the Company-respondent before us, preferred objections against the proposed levy of octroi. On February 25, 1963, resolution No.3 was passed. After setting out  the  previous resolutions and the  publication  of  the notice by beat of drum, and the various objections received, it concludes:-               "Having considered all these above  objections               and    suggestions   and   having   given    a               satisfactory  explanation for the  same,  this               Committee unanimously resolves that as per the               above  resolution octroi should be  levied  on               all  the goods coming into the limits  of  the               Panchayat,as  per schedule I item  1,and  levy               the  minimum  octroi  as  per  the  rules   in               Schedule I item 2. This levy should come into     fo rce               from  1-4-1963  and its final  publication  be               done  on 1-3-1963 as per rules and  by  public               notice  and by announcement by beat  of  drums               (through loudspeakers.)" On March 17, 1963, resolution No. 3 was passed fixing octroi limits  and  number of octroi nakas and  their  places.   On March  18,  1963,  the Panchayat  wrote  to  the  Collector, Nagpur, seeking his approval to the octroi limits, number of octroi nakas and their places. It appears that the Panchayat started collecting octroi from April 1, 1963.  On May 29, 1963, the Company filed an appeal 216 under  s.  124(5) of the Act before  the  Panchayat  Samiti, Parseoni.   The  Panchayat  Samiti,  however,  rejected  the appeal  by  its resolution dated September  4,  1963.   This decision  was  communicated to the Company by  letter  dated September  19,  1963,  stating that  the  appeal  "has  been

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rejected  by  the  Samiti as per its  resolution  dated  4th September,  1963,  because  the same was  not  filed  within limitation as per the provisions of Bombay Village Panchayat Act and Rule 5 of Taxes and Fees Rules of 1960." The  Company thereupon filed an appeal before  the  Standing Committee, Zila Parishad, Nagpur-hereinafter, referred to as the  Standing  Committee-on  October 22,  1963.   While  the appeal  was  pending, the Tehsildar Ramtek  on  January  14, 1964, approved the octroi limits and the number and location of octroi nakas within the limits of the jurisdiction of the Panchayat under r. 21 of the Fees Rules.  On April 6,  1964, the Standing Committee allowed the appeal of the Company  on two grounds; first, that it was necessary for the  Panchayat to  have  the octroi limits fixed with the approval  of  the Collector  before levying octroi under r. 21; and  secondly, that the Company was not importing tea within the limits  of the Panchayat for consumption, use or sale.  Thereupon,  the Panchayat,  as  already stated, filed an  application  under art. 226 of the Constitution before the High Court. The  High  Court held that the Panchayat  Samiti  could  not dismiss  the  appeal  of  the Company  as  being  barred  by limitation  because r. 5 of the Fees Rules was  ultra  vires the  powers  of the rule-making authority.  The  High  Court further held that the octroi duty was not validly levied  by the  Panchayat as it had failed to fix the octroi limits  in accordance  with law.  The High Court did not deal with  the question  whether  the company’s tea was imported  into  the limits of the Panchayat for consumption, use or sale because it  felt  that sufficient facts had not been  found  by  the Standing  Committee.  The High Court felt that it would  not be proper to determine facts for itself. The learned counsel for the appellant contends before us (1) that  r.  5 of the Fees Rules was intraviress (2)  that  the Standing Committee had no jurisdiction to decide the  appeal on  merits as the appeal to the Panchayat Samiti was  barred by  limitation; (3) that the octroi duty has been levied  in accordance  with  law; (4) that, at any rate, the  levy  was good after the octroi limits were fixed on January 14, 1964; (5)  that the approval of the octroi limits on  January  14, 1964,  relates back to April 1, 1963; and (6) that  the  tea was imported into the Panchayat limits for consumption,  use or sale. Before we deal with these points it is necessary to set  out the  relevant  statutory provisions.  Section 3(13)  of  the Bombay Village Panchayat Act, 1958 (Bombay Act III of  1959) defines  "octroi"  or "octroi duty" to mean "a  tax  on  the ’entry of goods into a village 217 for  consumption,  use  or sale  therein".   Section  124(1) empowers Panchayats to levy all or any of the taxes and fees mentioned therein, and reads as follows:               "124(1).  It shall be competent to a panchayat               to levy all or any of the following taxes and,               fees  at  such rates as may be decided  by  it               (but subject to the minimum and maximum  rates               which  may be fixed by the  State  Government)               and  in  such  manner  and  subject  to   such               exemptions as may be prescribed, namely:-     .................................................. (ii) octroi.................." Section 124(5) provides for appeals in these terms:               "Any person aggrieved by the assessment,  levy               or imposition of any tax or fee may appeal  to               the   Panchayat  Samiti.   A  further   appeal               against  the  order of  the  Panchayat  Samiti

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             shall  lie  to the Standing  Committee,  whose               decision shall be final." Section  176(1) enables the State Government to  make  rules for  carrying into effect the purposes of the Act.   Section 176(2)(xxvi) provides:               "176(2) In particular but without prejudice to               the generality of the foregoing provision, the               State Government may make rules-               (xxvi)under   section  124  laying  down   the               maximum  and the minimum rates and the  manner               in  which and the exemption subject  to  which               taxes and fees specified in the section  shall               be leviable;............." In exercise of the powers under s.176 of the Act, the  State Government  made  the rules called the  Maharashtra  Village Panchayat  Taxes and Fees Rules, 1960.  Part I of  the  Fees Rules  is  headed "General", and apart from  definitions  it consists of three rules, which read as follows:               "3.  Procedure for levying tax  or  fee.-Every               panchayat before deciding to levy a tax or fee               shall   observe   the   following   procedure,               namely:-               (a)   The   Panchayat  shall,  by   resolution               passed  at  its meeting, select a tax  or  fee               which   it  proposes  to  levy  and  in   such               resolution shall specify the rate at which  it               is to be levied.               (b)   The  Panchayat shall then notify to  the               public the proposal together with that Part of               these rules 218               which  relates to that tax or fee by  beat  of               drum  in the village and by means of a  notice               affixed in the office of the panchayat and, at               the  village  chavdi or  chora,  specifying  a               date,  not  earlier than one month  after  the               date  of such publication, on or  after  which               the  panchayat  shall take the  proposal  into               consideration.               (c)   Any inhabitant of the village  objecting               to the levy of the tax or fee proposed by  the               panchayat may send his objection or suggestion               in writing on or before the date specified  in               the notice, published under clause (b).               (d)   On or after the date fixed under  clause               (b),   the   panchayat  shall   consider   all               objections  and suggestions made under  clause               (c) and may finally select a tax or a fee  and               decide the rate at which it is to be levied. 4.   Final publication of rules relating to tax or fee to be levied.-Where a panchayat finally decides to levy any tax or fee  the rules in that Part, of these rules which relate  to such  tax or fee, together with a notice stating the tax  or fee to be levied and the rate thereof, shall be published by the  panchayat by affixing a copy thereof in the  office  of the  panchayat.  It shall also announce by beat of  drum  in the village the fact of such publication. The  tax or fee shall accordingly be levied from.  the  date which  shall be specified in the notice and which shall  not be  earlier than one month after the date of publication  of the notice. 5.   Appeal against levy of any tax or fee-A person desiring to  make  an appeal under sub-section (5)  of  section  124, shall  do so within sixty days from the date of  publication of the notice under rule 4.

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The  scheme of the Fees Rules is first to prescribe  general rules  and  then to deal individually  with  various  taxes. Part II deals with tax on Buildings and Lands; Part III with Octroi; Part IV with Pilgrim Tax; Part V with tax on  Fairs, Festivals and Entertainments; Part VI with taxes on Bicycles and  on  Vehicles  drawn  by Animals; and  so  on.   We  are concerned with Part ITT.  This Part consists of rules 21  to 35, and two Schedules.  The important rules are rules 21, 22 and 23, and may be set out in full: "21.  Fixing of octroi limits and nakas.-A Panchayat  shall, with  the  approval  of  the Collector  or  of  any  officer authorised by the Collector not below the rank of  Mamlatdar Tehsildar,  Naib Tehsildar or Mahalkari, fix  octroi  limits and the number and location of octroi Nakas within 219 the limits of its jurisdiction.               22.   Rate of octroi-Octroi may be levied by a               panchayat,   after  following  the   procedure               prescribed in rules 3 and 4, on all or any  of               the goods specified in column 1 of Schedule 1,               annexed, to this Part, which are imported into               the octroi limits for consumption, use or sale               therein and at such rates as may be decided by               it but not below the minimum and not exceeding               the  maximum rates specified in columns 2  and               3, respectively, of that Schedule.               23.   Payment  of  octroi on  introduction  of               goods,  etc.-The octroi shall be paid  at  the               octroi  Naka at the time when the articles  in               respect  of which it is leviable are  imported               into the octroi limits of a panchayat."               Rules  30, 31, 32 and 33 deal with  refund  of               octroi. We  may first deal with the question of the validity of  the levy  of octroi duty.  It seems to us that the  octroi  duty has been levied in accordance with law.  It would be noticed that  the  rule which authorises the levy is  r.22,  but  it enjoins  that the procedure prescribed in rr.3 and 4  should be  followed before the octroi duty can be levied.  When  we turn  to  rr.3 and 4, it would be noticed that  these  rules prescribe  the procedure for levying tax or fee and are  not confined  to octroi duty only.  Rule 7 which deals with  tax on  buildings and lands also prescribes that  the  panchayat shall  follow the procedure prescribed in rr.3 and 4  before levying a tax on buildings and lands.  Similarly, r.37 which deals  with  tax  on pilgrims provides  that  the  procedure prescribed  in  rr.3 and 4 should be  followed.   Again,  in r.53, which deals with tax on vehicles, a reference is  made to rr. 3 and 4. Rule 71 which deals with tax on  professions also  contains  a reference to rr. 3 and 4.  Rule  84  which deals with fee on markets and weekly bazars has a  reference to  rr.3 and 4. Rule 93 which deals with fee  on  cartstands and  tonga-stands makes the procedure in rr.3 and  4  appli- cable.  The scheme of the Fees Rules accordingly seems to be that the general procedure for levying taxes or fees is laid down and then this procedure is made applicable to the  levy of various taxes mentioned in the other parts of the  Rules. Viewed  in this background, it seems to us that r.3(b)  does not  require the Panchayat to fix the octroi limits  in  the resolution  passed  under  r.3(a). It only  deals  with  two items; (1) selection of the tax and the rate at which it  is to  be  levied.  Rule 3(c) has to be  similarly  read.   The inhabitants of the village would be entitled to object  only to these two matters, namely, (1) the tax or fee imposed and the  rate  at  which it is levied.  Under  r.3(d)  what  the

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panchayat does is to consider objections and suggestions and then  finally make the choice as regards two  things,  i.e., the tax or fee to be imposed and the rate at which it is  to be levied. 220 This interpretation is reinforced by a proper reading of  r. 4. Rule 4 requires a notice stating two things; (1) the  tax or  fee  to  be levied and (2) the rate.   But  the  learned counsel  for  the Company, Mr. Ashok Sen, argues  that  this interpretation  is  not correct because para 2 of  r.4  says that the tax shall accordingly be levied from the date which shall  be specified in the notice, and he says that  if  the octroi  limits  had  not been approved of by  the  time  the resolution  is passed, how could the tax be levied from  the date  specified  in  the notice.  But r.4  has  to  be  read alongwith  r.21, and if so read, it would mean  that  before the  octroi  duty  can  start being  levied,  r.21  must  be complied with.  In other words, para 2 of r.4. must be  read to  mean  that  the octroi will be  levied  from  that  date provided r.21 had been complied with. We  are, however, unable to agree with the  learned  counsel for the appellant that before the octroi limits are approved octroi can be collected.  We consider that the fixing of the octroi  limits  with  the approval of the  Collector  is  an essential  condition precedent to the levy of  octroi  duty. The learned counsel for the appellant says that the approval of  the  Collector on January 14, 1964,  relates  back  and, therefore,  the  levy  of octroi from  April  1,  1963,  was regularised.   We are unable to agree with this  submission. Apart  from  the fact that it may in  certain  circumstances lead to illegal levies, there is nothing in the language  of r.21  which indicates that the Collector can  regularise  an imposition made without the authority of law.  The Collector may in particular cases enlarge the octroi limits or  reduce the  octroi limits and it would lead to great  confusion  if either  of the things happens after the Panchayat  had  been collecting octroi duty within the octroi limits submitted by it to collector for approval. We  may here deal with a minor point which was mentioned  in the  course of arguments.  The High Court held that  "r.3(b) must therefore be interpreted as requiring the Panchayat  to notify to the public not only the the proposal about the tax selected by it for levy, but also the rules relating to that tax  which must mean the action taken under the Act and  the rules."  On  the  language  of  r.3(b)  we  are  unable   to appreciate  how action taken under the Act and the rules  is required to be notified to the public.  There is nothing  in the language to warrant such a construction. In  conclusion  we  hold that the octroi  duty  was  validly levied  and  that  it could be imposed  and  collected  with effect from January 14, 1964. Mr.  Sen  raised another point not dealt with  by  the  High Court.  He urges that there was no proper publication  under r.4. We are unable to allow him to raise this point at  this stage.   He says that this point was raised before the  High Court but it has not been 221 A    dealt  with  by  it.  He points out a  passage  in  the judgment  of the High Court but we are unable to agree  with him  that  the High Court has implied that  this  point  was raised before it.  He further says that this point was taken in the return filed on behalf of the Company.  Para 2 of the return only alleged:                     "This respondent says that at that  time               no copy of the Rules required to be  published

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             by  Rule  4 of the Rules was  exhibited  along               with the said Notice.  This respondent is  not               aware  and,  does not admit that the  fact  of               publication  of  the Notice under Rule  4  was               announced by beat of drum in the village."      This allegation is reiterated in para 9 of the  return. No such specific point was taken in the grounds of appeal to the  Panchayat  Samiti.   It was  broadly  stated  that  the procedure  required to be followed for imposing  octroi  had not  been followed in imposing the same.  Similarly, in  the grounds   of  appeal  to  the  Standing   Committee,   vague allegations were made "that the village Panchayat has  erred in law in not following the procedure contemplated by law in the matter of imposing the octroi and has acted contrary  to the principles of natural justice on an assumption that  the formalities  contemplated  by law were  complied  with."  He relies on the notice which is on the record to show that  as a matter of fact the publication was not in accordance  with law.   In  the circumstances noted above we  are  unable  to allow him to raise this point at this stage. Coming to the question of the vires of r.5,- it seems to  us that  the  High Court has placed a wrong  interpretation  on r.5.  The  High Court has held that as r. 5 applies  to  all appeals  under s.124(5) of the Panchayat Act, the fixing  of the commencement of the period of limitation as the date  of publication  of  the  notice under r.4 for  all  appeals  is arbitrary and destructive of the right of appeal.  But  this interpretation, with respect is not correct, if r.5 is  read in  the  setting in which it occurs.  Rule 5  follows  imme- diately rr.3 and 4 and is headed "Appeal against levy of any tax  or  fee", and the period of sixty  days  of  limitation commences  from  the date of the publication of  the  notice under  r.4,  i.e., the notice following the  decision  of  a Panchayat to levy any tax or fee.  This date shows that  r.5 is dealing only with appeals against levy of any tax and not with  the assessment or imposition of a tax or  any  further appeals to the Panchayat Simiti under s. 124(5).  It is true that  the  opening sentence makes a reference to  an  appeal under sub-s. (5) of s. 124, and this opening sentence  would cover all II appeals under sub-s. (5) of s. 124, but in  the context  and  setting, the heading of r. 5  brings  out  the scope  of the rule.  Accordingly. the appeal of the  Company to  the  Samiti was wrongly dismissed  as  time-barred.   It follows  from this that the Standing Committee was  entitled to deal with the appeal on merits. 222 The  only point that remains is whether the Company  brought tea into the octroi limits of the Panchayat for consumption, use  or  sale, therein.  As we have pointed  out,  the  High Court  felt difficulty in dealing with the question  because neither the Panchayat Samiti nor the Standing Committee  had found  sufficient  facts  to  enable it  to  deal  with  the question.  Mr. Sen says that he is willing to take the facts as  stated  at  the  bar by  the  learned  counsel  for  the appellant.  But we consider that it is an unsatisfactory way of dealing with questions of fact.  Before this question can be dealt with satisfactorily, all the relevant facts must be found  by  the  Standing  Committee, It  is  true  that  the Standing Committee inspected the premises of the Company but in  their order they have given very scanty facts,  They  do not  say  whether the tea is crushed, processed  or  treated chemically  to convert it into a marketable commodity.   The learned counsel for the Panchayat contends that these things are  done  and  that the  resultant  product  is  completely different  from the tea imported into octroi limits.  It  is

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also  not quite clear whether the tea which is  imported  by the  Company  is  known  in trade  circles  as  a  different commodity  from the tea actually sent out in boxes.  In  the circumstances we must also decline to deal with this point. In the result the appeal is allowed, and it is declared that the Panchayat could validly impose octroi duty from  January 14, 1964, in accordance with the resolutions dated  February 25,  1963, and March 17, 1963.  The case is remanded to  the High  Court  to deal with the question whether  the  Company imported  tea  for the purpose of consumption, use  or  sale within  the octroi limits of the Panchayat.  The High  Court may  either remand the case to the Panchayat Samiti or  deal with  it  as it may consider best in  accordance  with  law. Under  the circumstances there will be no order as to  costs in this appeal. G.C.                       Appeal allowed. 223