The Berar Swadeshi Vanaspathi &
Others Vs. The Municipal Committee, Shfgaon & ANR  INSC 16 (15
AIYYAR, T.L. VENKATARAMA DAS, S.K.
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)
of-Irregularities-Issuance of Government Notification- Effect-C. P. & Berar
Municipal .Act, 1922 (C. P. & Berar 11 of 1922); s. 67, sub-ss. (6) and
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.
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 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:
(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 specified.
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 subs. (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 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 powers
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
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 powers 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 subs. (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
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 subs. (7) of
s. 67 and having been notified in the Gazette it is conclusive evidence of the
tax having been imposed in accordance with the provisions of the Act and it
cannot be challenged on the ground that all the necessary steps had not been
In our opinion this appeal is without force
and is therefore dismissed with costs.