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PETITIONER: THE BERAR SWADESHI VANASPATHI &OTHERS

       Vs.

RESPONDENT: THE MUNICIPAL COMMITTEE, SHFGAON &ANOTHER

DATE OF JUDGMENT: 15/02/1957

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

CITATION:  1962 AIR  420            1962 SCR  Supl. (1) 596  CITATOR INFO :  RF         1965 SC 895  (12,14,23)  RF         1966 SC 693  (11)  RF         1970 SC  58  (5)

ACT: Octroi Tax-imposition of-Irregularities-Issuance of  Govern- ment Notification-Fffect-C.  P. & Berar Municipal .Act, 1922  (C. P.  &  Berar 11 of 1922); s. 67, sub-ss.  (6)  and (8).

HEADNOTE: The  respondent  Municipality  passed  a  resolution   under s.67(1)  of  the C.P. & Berar Municipal Act, 1922,  for  the purpose of levying an octroi duty which was published in the State   Gazette  along  with  the  rules   for   assessment. Objections  were invited to the said proposed tax, and  only one objection was filed within time which was also rejected. The  Government gave its sanction to the imposition  of  the tax and draft Rules by two Notifications. The appellants filed a petition challenging the legality  of the imposition of the tax inter alia on the ground that  the notifications  were  ultra vires.  They contended  that  all steps necessary for the imposition of tax had not been taken and that objections raised within time by the respondent No. 1  were  not considered on their merits  and  were  rejected merely  on the ground that there was only one- objector;  as this was one of the essential steps for the validity: of the imposition of tax it could not be said that s. 67 of the Act had  been  complied  with,  therefore  the  imposition   was invalid. Held, that where the Government Notification clearly was one which directed imposition of Octroi Tax it fell within subs. (  7) of s. 67 of the Act and having been once  notified  in the  Gazette  sub-s.  (8)  of s. 67 of  the  Act  came  into operation  and the issue of the notification was  conclusive evidence  of the Tax having been imposed in accordance  with the provisions of the Act, and it could not be challenged on the ground that all necessary steps had Rot been taken.

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JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 234 of 1959. Appeal from the order dated February 15, 1957 of the  Bombay High  Court  of  Judicature  at  Nagpur  in  Special   Civil Application No. 2-N of 1956. S.   P. Varma, for appellant No. 1. 597 B.   S. Shastri and Ganpat Rai, for respondent No. 1. B.   R. L. Iyengar and T. M. Sen, for respondent No. 2. 1961.  March 28.  The Judgment of the Court was delivered by KAPUR,  J.-This  is an appeal on a certificate by  the  High Court of Bombay against the judgment and order of that Court passed  on a petition under Art. 226 of the Constitution  by the  present  appellants in regard to the  legality  of  the notification levying an octroi duty on certain goods. The  appellants are some of the ratepayers of the  Municipal Committee  of  Shegaon  which is respondent No.  I  in  this appeal.   The other respondent is the State of Bombay.   The appellants  were  carrying  on  trade  and  business   which involved  their  bringing  goods within the  limits  of  the Municipal   Committee.   On  July  25,1954,  the   Municipal Committee passed a resolution for tile purpose of levying an octroi  duty instead of terminal tax.  This  resolution  was published in the State Gazette on June 29, 1956, along  with rules  for assessment.  Oil August 4, 1956, objections  were invited  to the proposed tax.  The objections by  the  first appellant  were filed on August 4, 1956, and by some  others on  August 5 and 6. At a meeting of the Municipal  Committee dated   August  16,  1956,  the  objections  of  the   other appellants  were rejected as being time barred and those  by the  first appellant were rejected because it was  the  only objector   whose   objections  were   within   time.    Some representations  were  made by the first  appellant  to  the Government  and  a few days later the other  objectors  also made  similar representations but the Government issued  the notification  sanctioning the imposition of the tax and  the Draft  Rules  on  October  27,  1956,  though  the   Gazette Notifications  were published on two separate  dates,  i.e., October 30 and October 31, 1956.  The appellants then  filed a  petition  under Art. 226 in the High Court of  Bombay  at Nagpur  challenging the legality of the, imposition  of  the tax.  Two main grounds were urged- (1) that the notification was ultra 598 vires because s. 67 of the C. P. & Berar Municipalities Act, 1922 (Act II of 1922), hereinafter termed the ’Act’, had not been complied with and (2) that the rate of tax in regard to certain  articles was unauthorised in that it was more  than the  maximum which could be levied under the law.  The  High Court  rejected  the first ground but  accepted  the  second objection and gave relief accordingly. Appellants  Nos.  2  to  6 have  not  taken  steps  for  the prosecution  of the appeal and the appeal, in so far  as  it relates to them, is dismissed for non-prosecution. The  appellant No. 1 before us has challenged the  vires  of the  imposition  on  two grounds: (1)  that  all  the  steps necessary for the imposition of the octroi duty had not been taken and therefore s. 67 had not been complied with and (2) that as a matter of fact there was no notification  imposing an  octroi duty.  For the purpose of the decision  of  these objections  it  is necessary to refer to the scheme  of  the Act,  Chapter  IX  of  which  relates  to  the   imposition, assessment  and collection of taxes.  Section 66  enumerates

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the  taxes  which may be imposed and s.  67  prescribes  the procedure for imposing taxes.  Section 67 reads as under:---               Section  67(1) "A committee may at  a  special               meeting,  pass  a resolution  to  propose  the               imposition of any tax under section 66.               (2)   When such a resolution has been  passed,               the committee Bhall publish in accordance with               rules  made under this Act, a notice  defining               the   class  of  persons  or  description   of               property  proposed to be taxed, the amount  or               rate  of the tax to be imposed and the  system               of assessment to be’ adopted.               (3)   Any   inhabitant  of  the   municipality               objecting to the proposed tax may,  in  thirty               days  from  the  publication  of  the  notice,               submit   his  objection  in  writing  to   the               committee.               (4)   The  committee shall take  the  proposal               and   a  objections  received   thereto   into               consideration  at a special meeting,  and  may               modify the proposals so as not to affect their               substance  and  may then forward them  to  the               Provincial    Government   along   with    all               objections received, its decisions thereon               599               and  its reasons therefore.  If the  committee               decided  to  modify  the proposals  so  as  to               affect  their substance it shall publish  them               again in the manner prescribed in  sub-section               (2).               (5)   The Provincial Government, on  receiving               such  proposals  may  sanction  or  refuse  to               sanction the same, or sanction them subject to               such  modifications  as it may think  fit,  or               return  them  to  the  committee  for  further               consideration:                 (6)...................................               (7)   If any proposals for taxation have  been               sanctioned    under   sub-Section   (5)    the               Provincial  Government  may,  by  notification               direct the imposition of the tax as sanctioned               from  such  date as may be specified  in  such               notification,  and  thereupon, the  tax  shall               come  into effect as from the date  so  speci-               fied.               A  notification  of the imposition  of  a  tax               under   this  section  shall   be   conclusive               evidence  that  the tax has  been  imposed  in               accordance with the provision of this Act." The objection to the vires of the notification in regard  to procedure is that the objections raised by appellant No.  1, though within time, were"not considered on their merits  and were  rejected merely on the ground that there was only  one objector and as this was one of the essential steps for  the validity  of the imposition it could not be said that s.  67 had  been  complied with; and the imposition  was  therefore invalid.   The High Court rejected this plea because  of  s. 67(8),  although  it  found that  non-consideration  of  the objections was an error in procedure.  The language of  sub- s.  (8)  lends support to this view.  It provides  that  the issuance  of  the  notification  imposing  a  tax  shall  be conclusive  evidence  that  the  tax  had  been  imposed  in accordance  with  the  provisions of the Act.   But  it  was argued  that as a matter of fact there was  no  notification imposing  the tax and therefore the question  of  conclusive

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evidence  does  not  arise.  This, in our  opinion,  is  not established. As stated above, there were two notifications issued 600 by  the  Government  both  of October  27,  1956.   One  was published in the Gazette on October 30, 1956, and the  other on  the  following  day.   The  first  notification  was  as follows:-               "No. 4963-5869-M-XIII.-In exercise of the pow-               ers conferred by sections 71, 76 and 85 of the               Central  Provinces  and  Berar  Municipalities               Act,  1922 (11 of 1922), the State  Government               are  pleased to sanction the  following  draft               rules for assessment, collection and refund of               the  octroi  tax  within  the  limits  of  the               Shegaon Municipality, in the Buldana District.               The rules shall come into force from the  date               of  their publication in the  ’Madhya  Pradesh               Gazette Extraordinary’ ".               And the second notification stated:-               "No. 4962-5869-M-XIII.-In exercise of the pow-               ers conferred by sub-section (2) of section 67               of    the   Central   Provinces   and    Berar               Municipalities  Act,  1922 (II of  1922),  the               State  Government are pleased to  confirm  the               following  draft rules for the  imposition  of               the  octroi  tax  within  the  limits  of  the               SHEGAON  MUNICIPAL COMMITTEE, in  the  Buldana               district,  under clause (c) of sub- s. (1)  of               section  66  of the said Act, on  animals  and               goods brought for sale, expenditure or use  in               supersession  of  the rules of  terminal  tax,               sanctioned under Notification No.  3716-B-VIII               dated the 15th February, 1921.               The rules shall come into force from the  date               of  their publication in the  ’Madhya  Pradesh               Gazette Extraordinary"’. The  first  notification purports to be in exercise  of  the powers under s. 71 which relates to Rules for assessment and for  preventing evasion of assessment of taxes; s. 76  which provides for collection of taxes and s. 85 which relates  to refunds.  That notification therefore lays down the  various rules  and  other matters necessary for  the  collection  of taxes.   The second notification on the face of it is  under sub-s.  (2)  of  s. 67.  It appears to us  that  this  is  a mistake and should have been under sub-a. (7) of s. 67.   By this  notification the State Government confirmed the  draft rules for 601 the imposition of the octroi duty which in the context  must mean  imposition  of  the tax because the  very  first  rule states:-               Rule  1 "Octroi shall ordinarily be levied  on               commodities included in the following  classes               and  specified in the schedule hereto  annexed               and at the rates therein entered". The  various  classes of articles and commodities  on  which octroi  was  to  be levied are then set  out  and  then  the exceptions and explanations are given.  With these rules are the  schedules specifying the goods under each  class  which are  liable to octroi duty and the rate at which the  octroi duty was chargeable.  This notification therefore clearly is one which directs imposition of octroi and falls within sub- s.  (7) of s. 67 and having been notified in the Gazette  it is  conclusive  evidence of the tax having been  imposed  in

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accordance  with the provisions of the Act and it cannot  be challenged  on the ground that all the necessary  steps  had not been taken. In our opinion this appeal is without force and is therefore dismissed with costs. Appeal dismissed.