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PETITIONER: MUNICIPAL BOARD MAUNATH BHANJAN

       Vs.

RESPONDENT: SWADESHI COTTON MILLS CO. LTD. & ORS.

DATE OF JUDGMENT28/01/1977

BENCH: SHINGAL, P.N. BENCH: SHINGAL, P.N. CHANDRACHUD, Y.V.

CITATION:  1977 AIR 1055            1977 SCR  (2) 865  1977 SCC  (1) 875

ACT:             U.P.  Municipalities Act, 1916, Ss. 131(3),  134(1.)   &         (2),   135(2)  and 300--Draft rules for levying  octroi  not         changed  after  publication u/s 131 (3)--Whether  their  Re-         publication    necessary   on   mere   reduction   of    tax         rates--Re-publication  only  of reduced tax  rates,  whether         violates S. 300 and the General Clauses Act. S.  23--Resolu-         tion u/s 134(2), whether rendered nugatory if passed  before         publication  of  rules--Notification  u/s  135(2),   whether         requires specific reference to section.

HEADNOTE:             In  1968-69  the respondent was constructing  a  textile         factory within the area of the appellant Board, and obtained         exemption  from the levy of octroi on its incoming  building         material  on the ground that it was a new concern.  It  then         started bringing more articles within its premises with  the         result  that  octroi was demanded from it.   The  Board  got         permission from the State Government for realising the same.         In a writ petition by the respondent to challenge the  levy,         the High Court struck down the imposition of octroi on three         grounds:                           I. The provisions of Ss. 134(1) and 300 of                       the  Act and S. 23 of the General Clauses  Act                       were violated owing to publication only of the                       tax rates and not the draft rules for the levy                       of octroi.                          II. The resolution of the Board u/s  134(2)                       could  not  authorise  the  imposition of  tax                       as  it  was passed before the  publication  of                       the   rules.                       III. No notification was published as required                       u/s 135 (2).         Allowing the appeal by special leave, the Court             HELD: 1. The draft rules were once published as required         by  sub-s.  (3) of s. 131, and as only the  rates  had  been         reduced  and  the rules had not been modified,  it  was  not         necessary to re-publish them. [868 A-F]             Municipal  Board,  Hapur v. Raghuvendra  Kripal  &  Ors.         [1966] 1 SCR 950 and Raza Butand Sugar Co. Ltd. v. Municipal         Board, Ramput, [1965]  1  SCR 970, referred to.             2.  The Resolution dated June 20, 1950, could  authorise

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       the  imposition of the tax from July 15, 1950,  although  it         was passed before the publication of the rules.  The resolu-         tion was not rendered nugatory and it was not necessary  for         the Board to pass another one.  [868 G-H]             3.  It is the nature of the notification which is  deci-         sive  of the section under which it has been issued  and  it         would not matter if it did not make a specific reference  to         sub-section  (2)  of  section 135 and made  a  reference  to         Section 300 instead.  [869 B]

JUDGMENT:         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 527 of 1976.             Appeal  by  Special Leave from the  Judgment  and  Order         dated  the  26-3-1976 of the Allahabad High Court  in  Civil         Misc. Writ No. 6277 of 1974.         866               L.N.  Sinha,  Sol.  General, S.C.  Agarwala  and  V.J.         Francis for the Appellant.         Yogeshwar Prasad and (Miss) Rani Arora for Respondent No. 1.         O.P. Rana for Respondent No. 2.         The Judgment of the Court was delivered by               SHINGHAL, J.  This appeal by special leave is directed         against the judgment of the Allahabad High Court dated March         26,  1976.  It relates to the validity of the imposition  of         octroi  with  effect from July 15, 1950,  on  certain  goods         brought within the Maunath  Bhanjan Municipality,  hereinaf-         ter referred to as the Board.              The  challenge to the imposition was made by  the  Swa-         deshi Cotton Mills Company Ltd., hereinafter referred to, as         the  Company.   The Company started constructing  a  textile         factory, a part of which, at any rate, fell within the  area         of  the Board.   It applied for and obtained exemption  from         the levy of octroi on its building material on   the  ground         that  it  was a new concern.   It however  started  bringing         more  articles within its premises, and the Octroi  Superin-         tendent    made a demand for a payment octroi on  June   25,         1969.  The  Company tried to avoid the levy on the basis  of         the  order  of exemption, but the Executive Officer  of  the         Board repeated the demand on May 30, 1970 and June 16, 1970.         The Board also wrote to the  State Government for permission         to realise octroi from the Company. The Government gave  the         permission  to  realise  the tax.    The  Company  thereupon         challenged  the  levy of the octroi in the High Court  by  a         writ  petition.    The  High Court took the  view  that  the         initial  imposition of the octroi was illegal,  allowed  the         writ petition, and issued a mandamus directing the Board not         to  realise  the tax.  The  Board  feels aggrieved  and  has         come up in appeal to this Court.              It  appears  that  the Company took  four  grounds  for         challenging the levy of octroi, but the High Court  examined         only  the following ground, as it took the view that it  was         enough for the   Company’s success in the petition, and  did         not examine the other grounds,--                           "that  the  procedure prescribed  for  the                       imposition   of                        taxes by municipal boards under sections  131                       to 135 of the                        U.P.  Municipalities Act, 1916, was not  fol-                       lowed by   the                        Municipal Board."              Counsel for the parties have accordingly confined their         arguments to the finding of the High Court in favour of  the         Company on  this ground.

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       As  the ground on which the Company has succeeded  is  quite         general and vague, we asked counsel for the parties to refer         to. the precise plea in that respect, in the writ  petition.         They could however only invite our attention to3 ground  No.         6  of the writ petition where the Company has merely  stated         that the imposition of octroi was void and illegal  "because         mandatory provisions for imposition of octroi tax as provid-         ed in the U.P. Municipalities Act has not been followed." It         is  therefore obvious, and has not been disputed before  us,         that the         867         Company  took a very vague ground to challenge the  validity         of  the imposition of octroi, and left it to the High  Court         to embark on a roving and fishing inquiry, on the off chance         of finding some violation of the so-called "mandatory provi-         sions for the imposition of octroi." It has not been disput-         ed  before us that the High Court undertook such an  inquiry         and struck down the imposition on the following ground,--                           (1)  The draft rules for the levy  of  the                       tax were not published, and only the rates  of                       octroi  were  published,  so  that  there  was                       violation  of the provisions of section 23  of                       the  General Clauses Act and  sections  134(1)                       and 300 of the Act.                           (2) The order of the District  Magistrate,                       which was equivalent to the special resolution                       of the Board under sub-section (2) of  section                       134  was invalid as it was passed on June  20,                       1950, while the rules were finalised and  pub-                       lished on July 15, 1950.                           (3) There was no "foundation or basis"  of                       the  notification under section 135(2) and  no                       such notification was published.             Counsel for the Company however strenuously argued  that         there was no compliance with the provisions of sections  131         to 133 also, and made a reference to the decisions in Munic-         ipal  Board, Hapur v. Raghuvendra Kripal and  others(1)  and         Raza  Buland Sugar Co. Ltd. v. Municipal Board,  Ratnpur(2),         for the purpose of showing that parts of sections 131 to 134         were  mandatory,  and had to be followed. We find  that  the         High Court has.categorically stated that the Company did not         assert that sub-sections (2) and (3) of section 131 had  not         been complied with, and that there was "no dispute regarding         compliance with the provisions of section 131."         The  High  Court has also stated that the COmpany  "has  not         asserted. that any of the provisions of section 132 has  not         been  followed."  It has further stated that there  was  "no         complaint  of non-compliance with the provisions of  section         133  also."  There was thus no challenge to the validity  of         the  imposition of octroi on the, ground that there  was  no         compliance with the provisions of sections 131, 132 and  133         and  we  are not called upon to examine  the  argument  that         there  was non-compliance with the provisions of those  sec-         tions.    There was also no dispute in the High  Court  that         "the Municipal Board   was competent to impose octroi  tax."         We shall accordingly examine the three grounds, on which the         High Court has held the imposition of octroi as invalid,  in         this background.         Ground  No.  1.   The High Court has  held  that  there  was         no  previous publication of the draft rules for the levy  of         octroi   and that only the rates of octroi  were  published.         So  that  there   was breach of the provisions  of  sections         134(1)and 300 of the United         (1) [1966]  1 S.C.R. 950.         (2) [1965] 1 S.C.R. 970.

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       868         Provinces Municipalities Act, 1916, hereinafter referred  to         as the Act, and section 23 of the General Clauses Act.    It         will  be  recalled that the High Court has  found  that  the         Company  had not challenged the imposition of octroi on  the         ground that there was non-compliance with the provisions  of         sections  131 to 133.  It cannot therefore be disputed  that         the draft rules were published as required by sub-section(3)         of section 131.   Moreover we find from the affidavit  which         has  been  filed  on behalf of the Board  that  its  Officer         incharge  wrote  to the prescribed Authority on  January  9,         1950,  that the draft rules had been published in the  "San-         sar" on November 1, 1949, and may be sanctioned.   A copy of         that  letter has been placed on the record. It may  also  be         mentioned that the Officer Incharge wrote to the Commission-         er  intimating  that only two objections had  been  received         which were for reduction of the tax, and that after  consid-         ering  them  the  rate  of the tax  had  been  reduced  from         Rs.1/8/-  to Re. 1/- per maund, and the necessary  amendment         had  been  made in the rate chart.  An  objection  was  also         received from the  Shoe Makers’ Association, and the Commis-         sioner  directed  that  if the Board wanted  to  make    any         modification,  it may again publish the modified  proposals.         This  was done on February 14, 1950, but as only  the  rates         had  been reduced, and the rules had not been  modified,  it         was  not necessary to republish the draft rules.   The  Pre-         scribed Authority accordingly  sanctioned the same on  April         1, 1950,  under section 133.   The rules were  forwarded  to         the  Prescribed  Authority  on April 26,  1950,  and    were         published in the State Gazette dated July 7, 1950.   It  was         stated  in  the notification that the rules  were  published         under section   300 of the Act, which required their  previ-         ous  publication, but there  can be no doubt that it  was  a         notification under sub-section (2) of section 135 as it  was         issued  after receipt of the Board’s special resolution   in         pursuance  of the sanction of the Prescribed Authority,  and         it  was directed that the rules shall take effect from  July         15, 1950.   It is therefore futile to contend that the rules         were not made in accordance with the provisions of  sections         134(1)  and  300 of the Act and section 23  of  the  General         Clauses  Act which requires certain conditions to    be  ob-         served  in  regard  to the making of  rules  after  previous         publication.             Ground  No.  2.  It is not in dispute that  the  special         resolution  for  the imposition of the tax was sent  by  the         Officer  Incharge of the Municipal Board on June  20,  1950,         stating  that July 15, 1950. had been fixed for the levy  of         the tax.  It is true that the rules were published under the         notification dated July 7, 1950, but that would  not  neces-         sarily lead to the conclusion that the resolution dated June         20,  1950, was rendered nugatory, or that it  was  necessary         for the Board to pass another resolution.   The notification         shows  that the authority concerned not only  published  the         resolution by its notification dated July 7, 1950, but  also         stated  that  they shall take effect from   July  15,  1950,         which  was the date fixed by the resolution dated June   20,         1950,  for the imposition of the tax.   There was  therefore         no  justification  for taking the view that  the  resolution         dated  June 20, 1950 could not authorise the= imposition  of         the  tax  from July 15, 1950, merely because it  was  passed         before the publication of the rules. At any rate any techni-         cal defect in the date of the resolution could not have         869         the  effect of making the imposition void in the  facts  and         circumstances of this case.

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           Ground No. 3.  As has been shown, the notification dated         July  7, 1950, which was published under section 300 of  the         Act, was,   in fact and substance, issued under the authori-         ty  of  sub-section (2)  of section 133, and  it  would  not         matter if it did not make a specific reference to that  sub-         section  and  made a reference to section 300  instead.  The         High  Court  therefore erred in thinking that there  was  no         notification  under-sub-section (2) of section 135  at  all.         It  is the nature of the notification which is  decisive  of         the section under which it   has been issued, and we have no         doubt that the impugned notification was really issued under         sub-section (2) of section 135.             We  have thus no doubt that the notification had  really         been  issued in compliance with the requirement of  sub-sec-         tion  (2) of section 135  of the Act.   That  would  attract         the  application  of sub-section (3) of that  section  which         provides as follows,--                        "135(3) A notification of the imposition of a                       tax  under subsection (2) shall be  conclusive                       proof that the tax has been imposed in accord-                       ance with the provisions of this Act."         So when a probative effect had been given by law making  the         notification  of  the imposition of the tax  as  "conclusive         proof"  that the  tax had been imposed "in  accordance  with         the  provisions of the   Act", no evidence could be  allowed         to  combat that fact, and we have no hesitation  in  holding         that the imposition was according to the law.             It is not disputed that Maunath Bhanjan is an industrial         town,  and  its Board was collecting octroi since  July  15,         1950.   The Company started the construction of its  factory         in  1968-69,  and, as has been stated, it  applied  for  and         obtained  exemption from the levy of octroi on its  building         material on the ground that it was a new concern. The  Board         granted the exemption on July 21, 1967, for a period of   10         years,  and  that  fact was acknowledged  in  the  Company’s         letter  dated August 18, 1967.  The Company prayed  for  the         continuance  of  the exemption even after that  time  limit.         The State Government however granted the exemption for  five         years.    The  Company  started  "importing"  certain  other         articles,  and the State Government ultimately gave  permis-         sion  to the Board on April 2, 1973 to realise  octroi  from         the  Company with effect from May, 1974.  The  Company  once         again applied for further exemption on August 14, 1973,  but         without success. It is thus clear that, far from having  any         doubts  about  the validity of the imposition  and  levy  of         octroi,  the.  Company  accepted the  validity  thereof  and         prayed  for exemption.   It availed of that  exemption,  for         some  years, and applied for its extension until as late  as         August   14, 1973.   It was only when further exemption  was         refused,  that the Company thought of filing the writ  peti-         tion.   As  has been shown, the Company did not,  even  then         venture to point out any reason why the imposition could  be         said to be invalid, and merely stated that the         870         "procedure"  prescribed under sections 131-135 had not  been         followed. That was far too vague a plea to justify  investi-         gation and interference in the exercise of the extraordinary         jurisdiction  of the High   Court under article 226  of  the         Constitution.             The appeal is allowed, the impugned judgment of the High         Court  dated  March  26, 1976, is set aside,  and  the  writ         petition is dismissed with costs.         M.R.                                  Appeal allowed.         871

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