Bangalore Woollen, Cotton and Silk
Mills Co. Ltd. Vs. The Corporation of The City of Bangalore  INSC 35 (3
CITATION: 1962 AIR 1263 1961 SCR (3) 698
CITATOR INFO :
D 1966 SC1686 (9) R 1980 SC 882 (17)
Municipality--Octroi--Resolution intending to
levy and final levy, if separate Publication necessary--Notice technically
defective, if can be validated--Power to specify goods not mentioned in the
Schedule--Excessive delegation--Raw Cotton or Wool, nature of--City of
Bangalore Municipal Corporation Act, 1949 (Act LXIX of 1949), ss. 38(1), 97(e),
The City of Bangalore Municipal Corporation
resolved to levy octroi on cotton and wool and the resolution was notified in
the Official Gazette as required by s. 98(1) of the City of Bangalore Municipal
Corporation Act. Objections were invited and the appellants filed their
objections to the tax. Final resolution in regard to the tax was passed under s.
98(2) of the Act which was published in local newspapers but not in the
Official Gazette. Notices were also sent to the appellants to the effect that
after considering their objections the Municipality had decided to levy octroi
on the goods at the rate already notified. The appellants then filed
applications in the High Court under Art. 226 of the Constitution challenging
the legality of the levy of octroi but the High Court dismissed the
applications. On appeal with a certificate of the High Court:
Held, that publication of the resolution in
the Official Gazette and invitation of objections under s. 98(1) which were
filed, were sufficient compliance with the provisions of the Act. The notice
stating that the tax had been resolved to be levied instead of stating that it
was intended to be levied was at the most only technically defective but all
such defects were validated by s. 38 of the Act. It was not necessary first to
pass a resolution specifying the goods and then another resolution showing the
intention of the Municipality to tax those goods. The goods and the rate of tax
were specified and the resolution, was passed after following the procedure
laid down in s. 98(1).
This amounted to substantial compliance with
the provisions of the Act.
The legislature has laid down the powers of
the Municipality to tax various goods and enumerated certain goods; Class VIII
in Part V of Schedule III read with s. 97(e) of the Act authorised the
Municipality to impose tax on other articles and goods. In 699 the present case
there was a resolution which sought to include the goods in dispute in the
Schedule for the purpose of imposing the tax.
Bijay Colton Mills Ltd. v. Their Workmen
 2 S.C.R.
The conferment of power upon the Municipality
to specify goods under Class VIII is in the nature of conditional delegation
and does not amount to excessive delegation.
Baxter v. Ah Way (1909) 8 C.L.R. 626,
Hamdard Dawakhana v. Union of India  2
S.C.R. 671, held not applicable.
The High Court was right in holding that
Cotton and Wool do not cease to be raw materials for the purposes of the Act,
merely because they are ginned and pressed in bales. The resolution in the
present case covered the articles imported by the appellants into the limits of
the Corporation of Bangalore.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 448 and 449 of 1957.
Appeals from the judgment and order dated
September 27, 1956, of the Mysore High Court in Writ Petitions Nos. 44 and 45
N. C. Chatterjee, D. N. Mukherjee and B. N.
Ghose, for the appellant in C. A. No. 448 of 1957.
V. L. Narasimhamoorthy, S. N. Andley, J. B.
Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant in C. A. No. 449
G. R. Ethiraiulu Naidu, Advocate-General,
Mysore,, B. R. G. K. Achar and K. R. Choudhuri, for the respondent.
1961. February 3. The Judgment of the Court
was delivered by KAPUR, J.-These are two appeals brought against two judgments
and orders of the High Court of Mysore which arise out of two petitions filed
by the appellants under Art. 226 challenging the legality of the imposition of
octroi on wool and cotton under s. 98 of the City of Bangalore Municipal
Corporation Act (Act LXIX of 1949), which for the sake of convenience, will be
termed the " Act ".
On March 31, 1954, a resolution was passed
purporting to be under s. 98(1) of the Act by which it was 700 resolved to levy
an octroi on cotton and wool as follows :Name of the Articles Rate of duty
1. Raw cotton and wool (this includes both
loose Rs. 1/9/per and compressed, made in cent. ad valorem India or foreign) 2.
This was notified in the Mysore Gazette on
April 3, 1954, and was also published as required by s. 98(1) of the Act.
Objections were invited and it is admitted
that both the appellants filed their objections. Final resolution under s.
98(2) was passed on December 21, 1954, and the resolution in regard to octroi
came into force as from January 1, 1955.
It may be mentioned that the final resolution
passed under s. 98 (2) of the Act was not published in the Official Gazette but
was published in the local newspapers and a notice dated December 23,1954, was
also sent to the appellants to the effect that after considering their
objections the Municipality had decided to levy an octroi on the goods at the
rate already notified.
The appellant in C.A. 448/57, filed a
petition in the High Court on March 15, 1955, under Art. 226 challenging the
validity of the imposition of the octroi on the grounds:(1) that the tax was in
contravention of s. 98(2) of the Act in so far as a notice was not published in
the Official Gazette;
(2) that the tax was in contravention of s.
130 of the Act and (3) that there was excessive delegation.
The appellant in C. A. 449/57, filed its petition
on March 17, 1955, in which besides challenging the validity of the imposition
of the tax on grounds above set out, it also challenged the vires of the
imposition on the grounds :,
1. that the levy of the octroi was in
contravention of Art. 276(2) of the Constitution by which a tax on trade
exceeding Rs. 250/per annum could not be imposed 701
2. that it was a contravention of Art. 301
which guaranteed freedom of inter-State trade and commerce, and
3. that it was in contravention of Art.
19(1)(g) of the Constitution.
The High Court rejected all these objections
and the appellant has come to this court on a certificate of the High Court
under Art. 133(1) of the Constitution.
In order to decide the question of the
legality of the tax it is necessary to refer to the relevant provisions of the
Act. Section 97 enumerates the taxes and duties which the Corporation is
empowered to levy under the Act. Section 97(e) provides:
" 97. The Corporation may levy(e)an
octroi on animals or goods or both brought within the octroi limits for
consumption or use therein." Section 98 which deals with the powers. of
control of Government and the procedure for the levying of the Municipal taxes
Section 98 (1). " Before the Corporation
passes any resolution imposing a tax or duty for the first time it shall direct
the Commissioner to publish a notice in the Official Gazette and in the local
news. papers of its intention and fix a reasonable period not being less than
one month from the date of publication of such notice in the Official Gazette
for submission of objections. The Corporation, may, after considering the
objections, if any, received within the period specified, determine by
resolution to levy the tax or duty. Such resolution shall specify the rate at
which, the date from which and the period of levy, if any, for which such tax
or duty shall be levied.
(2) When the Corporation shall have
determined to levy any tax or duty for the first time or at a new rate, the
Commissioner shall forthwith publish a notice in the manner laid down in
sub-section (1) specifying the date from which, the rate at which and the
period of levy, if any, for which such tax or duty shall be levied." 702
It was argued that instead of passing a resolution Imposing the octroi duty,
the Corporation should have 'first published its " resolution " to
impose the tax and that the Corporation could not at once pass " a
resolution " by which it imposed the tax. It published that resolution in
the Official Gazette and also in accordance with other provisions of s. 98(1)
and invited objections which were filed. The only defect, if defect it can be
called at all, was that instead of saying that it " intended " to
impose a tax, the notice which was published said the tax "had been
resolved to be levied." This is a technicality and is of no substance.
The next objection raised was that after the
Corporation adopted the resolution imposing the tax which was after considering
all the objections the publication was only in local newspapers and there was
no publication in the Government Gazette and this, it was submitted, was such a
serious defect as to make the imposition illegal and ultra vires. In support
counsel for the appellants relied on certain judgments where publication in the
Official Gazette was held to be a condition precedent to the legality of the
imposition of the tax. These cases are Krishna Jute & Cotton Mills v. The
Municipal Council, Vizianagram (1);
Municipal Council, Rajamundry v. Nidamarti
Jaladurga Prasadarayudu (2). Reference was made also to The Municipal Council,
Anantapur v. Sangali Vasudeva Rao (3) ; Manak Chand v. Municipal Council(4) and
State of Kerala v. P. J. Joseph (5 ). This question we are not considering as
we are referring this case to a larger Bench on certain constitutional points
and shall refer this question also in the sequel.
The second objection raised was that there
was no compliance with s. 130 of the Act. That section is as follows :Section
130. " If the corporation by a resolution determines that an octroi should
be levied on animals or goods brought within the octroi limits of (1) A.I.R.
1926 Mad. 152.
(2) A.I.R. 1926 Mad. 800.
(3) (1931) I.L.R. 55 Mad. 207.
(4) A.I.R. 1951 Raj. 139.
(5) A.I.R. 1958 S.C. 296, 299.
703 the city, such octroi shall be levied on
such articles or goods specified in Part V Schedule III at such rates not
exceeding those laid down in the said' Part in such manner as may be determined
by the corporation." That is not a charging section but it imposes a
limitation on the power of the Municipality as to the rate at which a tax can
be imposed. It was further argued that before a resolution under s. 98(1) could
be passed the goods sought to be taxed had to be specified under s. 130 read
with Schedule 111, Part V of the Act.
Clause 18 of that Schedule provides that
octroi on animals and goods shall be levied at the rates not exceeding the
following. Classes I to VII specify articles on which octroi can be levied at
the maximum rate. Class VIII was as follows:
Octroi Maximum rate "Other articles
which are not specified above and which may be Rs.2-0-0 per cent.
approved by the Corporation ad valorem"
by an order in this behalf That class empowers the Municipal Council to impose
octroi duty on other articles which are not specified but which may be approved
by the Corporation. In other words the Corporation can choose other articles
upon which tax can be imposed and the respondent Corporation in the present
case did resolve to impose tax on raw cotton and wool and also fixed the rate
at Rs. 1-9-0 per cent. ad valorem. The submission that as a result of the
operation of s. 130 first a resolution had to be passed specifying raw cotton
and wool as goods on which octroi duty would be levied and then the procedure
under s. 98(1) and (2) had to be gone through is without substance. What the
Corporation did was that it passed a resolution choosing these goods to be
goods on which octroi duty was to be levied and by the same resolution it
resolved that the goods therein specified be taxed at the rate therein
specified. There is no contravention of s. 130 even if the contention of the
appellants was to be taken most strictly, The goods were specified; the 704
rate of tax to be levied on the goods was also specified;
the resolution was passed to that effect and
the other procedure laid down in s. 98(1) was then followed. In our opinion it
is not necessary that first a resolution should be passed specifying the goods
and then another resolution should be passed showing the intention of the
Municipality to tax those goods. What has been done substantially complies with
the provisions of the Act.
It was next argued that the words of Class
VIII in Part V of Schedule III where the' words used are " other articles
which are not specified above " and which may be approved by the
Corporation by order in this behalf meant that the goods must be precisely
defined and included by name in the Schedule and that the use of the word in
this behalf " meant adding to the list of articles in Schedule III. Reliance
was placed on the interpretation of the word " in this behalf " as
given by this Court in Bijay Cotton Mills Ltd.
v. Their Workmen (1). But that case has no
application to the facts of the present case because the resolution was, as a
matter of fact, passed for the purpose of imposing an octroi duty on the goods
in dispute. The words used in Bijay Cotton Mills Ltd. v. Their Workmen(2) were
in another context and' even there all that was said was that a notification
had to issue making the Central Government the appropriate Government. As we
have said above in the present case there was a resolution which sought to
include these goods in the Schedule for the purpose of imposing the tax.
The excessive nature of delegation under
Class VIII in Part V of Schedule III was also urged but this was not a question
which was raised in the High Court nor is there any substance in the matter.
The argument raised was that the power of the Municipal Corporation to specify
goods under Class VIII was excessive delegation which was both uncanalised and
uncontrolled and reliance was placed on a judgment of this Court in Hamdard
Dawakhana v. Union of India("); but that case has no application to the
facts (1)  2 S.C.R. 982.
(2)  2 S. C.R. 671, 705 of the present
case. In the present case the Legislature has laid down the powers of the
Municipality to tax various goods. It has enumerated certain articles and
animals and Class VIII read with s. 97(e) of the Act has authorised the
Municipality to impose tax on other articles and goods.
This power is more in the nature of
conditional delegation as was held in Baxter v. Ah Way(1) where it was hold
that under a. 52 (g) of the (Australian) Customs Act, 1901, a power given to
prohibit by proclamation the importation of certain articles was not a
delegation of legislative power but conditional legislation because the
prohibition of importation was a legislative abet of Parliament itself and the
effect of sub-s. (g) of s. 52 was only to confer upon the Governor-General in
Council the discretion to determine to which class of goods other than those
specified in the section and under what conditions the prohibition shall apply.
All that the Legislature has done in the present case is that it has specified
certain articles on which octroi duty can be imposed and it has also given to
the Municipal Corporation the discretion to determine on what other goods and
under what conditions the tax should be levied. That, in our opinion, is not a
case which falls under the rule laid down by this Court in Hamdard Dawakhana v.
Union of India (2).
It was contended in C. A. 449/57 that the
imposition of duty on raw cotton could not cover processed cotton that is
cotton which had been ginned, combed and pressed. The High Court held that the
cotton by being ginned or pressed in bales does not cease to be raw cotton and
was to be regarded as raw for the purpose of the Act. The same would apply to
wool. The notification levying the tax specifically stated that raw cotton and
wool included both loose and compressed, i.e., compressed cotton and wool
whether it was Indian cotton or foreign cotton. It will not, in our opinion, be
a correct meaning to give to the notification if it were " interpreted to
apply only to cotton which had been gathered from the fields and had neither
been ginned nor pressed." We agree with (1) (1909) 8 C.L.R. 626. (2)
 2 S.C.R. 671.
706 the High Court that this resolution
covers the articles which the appellants in the two cases were importing into
the limits of the Corporation of Bangalore. I The learned Advocate-General
appearing for the respondent also relied on s. 38 of the Act which provides :
Section 38 (1). " No act done, or
proceeding taken under this Act shall be questioned merely on the ground-(a)
(b) of any defect or irregularity in such act
or proceeding, not affecting the merit of the case." This section
validates all defects and irregularities in any act or proceedings which do not
affect the merit; of the case. It was submitted that this section is in another
chapter, i.e., chapter 2 dealing with provisions common to the Corporation and
the Standing Committees. It may be that it is in another chapter but the
language of the section is wide and applies to all defects or irregularities in
any act or proceeding done not affecting the merits of the case.
In our opinion the following points should be
heard by the Constitution Bench*:(1) Whether the imposition in the present case
offends Art. 276 or 301 of the Constitution ? (2) Whether the failure to notify
the final resolution of the imposition of the tax in the Government Gazette is
fatal to the tax ? If the answer to these questions or any of them is in the
affirmative the appeal will have to be allowed. But if the two questions are
answered against the appellants the appeals will fail as all other points have
been decided by us against the appellants. The costs will follow the event
unless the Bench hearing the reference makes other order.
Referred to Constitution Bench final
*The decision of the Constitution Bench is