Village Panchayat of Kanhan Pipri Vs.
Standing Committee, Zila Parishad, Nagpur, & Ors  INSC 178 (17 August
17/08/1967 SIKRI, S.M.
CITATION: 1968 AIR 183 1968 SCR (1) 213
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.
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 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; 220AC].
(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].
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
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 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
"........ 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. Therefore 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 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
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
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 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
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
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 applicable. 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 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 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 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
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
immediately 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 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.