Vallabhdas & Ors Vs. Municipal
Committee, Akola  INSC 23 (27 January 1961)
CITATION: 1967 AIR 133 1961 SCR (3) 618
Octroi Tax--Legality of imposition--"
System of Assessment ", meaning of--C. P. & Berar Municipal Act, 1922
(C. P. & Berar II of 1922), S. 67(2).
The Municipal Committee, Akola, passed a
resolution to impose an octroi tax and forwarded it along with the draft rules
of assessment and collection to the State Government.
The State Government published a notification
in the Gazette which contained the articles to be taxed, the rate or rates at
which they were to be taxed and a brief statement of objects and reasons for
the imposition of the tax. This was followed by draft rules as to how taxation
was to be done.
Thereafter the Municipal Committee affixed on
its notice board and also published in the local newspapers the said proposed
rules but the draft rules in regard to the " system of assessment "
were not published along with other particulars. It was alleged by the
appellants that the Municipality by not publishing the draft rules of the
" system of assessment ", failed to comply in full with the mandatory
requirements of s. 67(2) of the Act rendering the imposition of tax illegal.
Held, that the words " system of
assessment " did not necessarily mean the whole procedure of taxation,
i.e. imposition, collection and procedure in regard to collection and refund.
The notice and not the draft rules relating to assessment and collection were
required under the Rules to be affixed on the notice 619 board of the
Municipality and at other conspicuous places of the town. In the instant case
the publication of the Rules relating to the rates at which the tax had been
imposed was sufficient compliance with the provisions of Section 67(2) of the
C. P. S Berar Municipal Act, 1922, and the rules made there under.
CIVIL APPELLATE JURISDICTION: Civil Appeal
Appeal from the judgment and order dated November
18, 1958, of the Bombay High Court at Nagpur in Special Civil Application No.
201 of 1958.
N. C. Chatterjee, M. N. Phadke, S. A. Sonhi
and Ganpat Rai, for the appellants.
A. V. Viswanatha Sastri, B. R. Mandekar and
A. G. Ratnaparkhi, for respondent No. 1.
G. C. Mathur and R. H. Dhebar, for respondent
1961. January 27. The Judgment of the Court
was delivered by KAPUR., J.-This is an appeal against the jugdment and order of
the High Court of Judicature of Bombay at Nagpur dismissing a petition under
Arts. 226 & 227 of the Constitution challenging the legality of the
imposition of the octroi tax under s. 66(1)(e) of the C. P. & Berar
Municipal Act (Act II of 1922) hereinafter termed the Act.
The appellants who were the petitioners in
the High Court are some of the rate-payers of the town of Akola in the
erstwhile State of Bombay and respondent No. 1 is the Municipal Committee,
Akola. On November 11, 1957, respondent No. 1 passed a resolution to impose an
octroi tax on animals and goods brought within the limits of the Akola
Municipality. This resolution and the draft Rules of Assessment and Collection
were later on forwarded by the Akola Municipality to the State Government for
A notification dated January 3, 1958, was
published in the Bombay Government Gazette on January 16, 1958. This Gazette
Notification contained the draft rules, the schedule of goods liable to octroi
duty and the rates to be charged.
This was in accordance with the requirements
of s. 67(2) of the Act. Respondent 620 No. 1, the Municipal Committee, affixed
on the Notice Board of the Committee and published in the local newspapers the
proposed rules for the imposition of the tax, but the objection of the
appellants is that they did not publish along with them the draft of the "
System of Assessment ".
It is true that a pamphlet in Marathi
language was distributed in the town of Akola and the proposals were also
published in the local newspaper Jan-Sewak. Objections to the proposals were
filed by some of the rate-payers of the town of Akola and all of them were
considered and a resolution was passed by the Municipal Committee on March 3,
1958, and that is the resolution which was challenged in the petition filed in
the High Court by a petition dated April 14, 1958, p raying for the quashing of
the resolution and for the issuing of a prohibitory order against the State
Government against sanctioning the proposal sent by the Municipal Committee. On
April 18, 1958, a rule was issued by the High Court to the opposite parties
calling upon them to show cause why the, order as prayed should not be made.
This notice was served on the Special
Government Pleader on May 9, 1958, and the Special Government Pleader put in
his appearance on June 17, 1958. On June 23, 1958, an interim injunction was
issued, but previous to that on June 19, 1958, a final notification was issued
by the Government approving of the proposal to impose the octroi tax. As a
consequence of this the petition was allowed to be amended, but ultimately the
High Court dismissed the petition and this appeal has been brought on a
certificate of the High Court.
The sole question which has been debated
before us is the legality of the imposition. The ground on which the legality
is challenged is that there was no full compliance with the mandatory
requirements of s. 67(2) of the Act. It is, therefore, necessary to deal with
the relevant provisions of the Act. Chapter IX of the Act deals with
Imposition, Assessment and Collection of taxes. Section 66 provides for the
taxes which can be imposed and s. 67 deals with the mode of the imposition of
the tax. By s. 71, the State 621 Government is empowered to make rules
regulating the assessment of taxes and for preventing evasion of assessment.
Section 76 empowers the State Government to make rules regulating the
collection of taxes and preventing evasion of payment. Section 85 em con powers
the State Government to make rules regulating the refund of taxes.
But it was argued on behalf of the appellants
that as the mandatory provisions of s. 67 as to publication of the "
System of Assessment " in accordance with the rules was not complied with,
the imposition of the tax was illegal.
Reliance was placed on certain judgments, but
it is not necessary to discuss those cases because in the circumstances of this
case they are of little assistance.
The respondents, on the other hand, submitted
that what was published was all that the section required and that the word
assessment there did not mean anything more.
As s. 67(2) has been mainly relied upon, it
may be quoted.
It provides:" 67(2) When such a
resolution has been passed, the committee shall 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." The scheme of s.
67 appears to be this: that when a Municipal Committee wishes to impose a tax
it has to pass a resolution at a special meeting and then it has to publish its
resolution for imposition of that tax so that the ratepayers may be able to
place their objections against the imposition. This publication must appear in
the Government Gazette and also locally as required by the rules. The Municipal
Committee has then to consider the objections, if any, of the rate-payers and
if the Committee does not consider it necessary to alter its original
proposals, it has to send its proposals with the objections received and its
decision thereon and any modifications of the original proposals to the State
Government which, after considering the matter, may sanction them or refuse to
sanction or sanction them with modifications, 622 The real objection of the
appellants was that the system of assessment had not seen published as
required. The Rule relating to publication under s. 67 is as follows :" 1.
A notice under section 67(2) of the intention of the municipal committee to
impose a tax, or under section 68(3) of the proposal of the committee to
increase the amount of rate of any tax, shall be forwarded to the State
Government through the Deputy Commissioner for publication in the " Madhya
Pradesh Gazette. " The notice under section 67(2)shall be accompanied by
draft rules for the assessment and collection of the tax.
After its publication in the Gazette the,
notice shall be published by affixing copies thereof to a notice board at the
municipal office and at conspicuous places in the town, and shall also be
published in the local papers, if any. As an alternative to its publication in
local papers, the committee may circulate the notice in print in vernacular
within the municipal limits. Proclamation shall also be made by beat of drum
throughout the municipality notifying the intention of the committee and
calling the attention of the inhabitants to the notice in question and to the
term of thirty days laid down in the law as that within which objections to the
proposed imposition or increase must be submitted to the committee."
According to this rule the notice under s. 67(2) has to be accompanied by draft
rules for the assessment and collection of the tax and after its publication in
the Gazette the notice has to be published by affixing copies thereof to a
notice board at the Municipal Office and at conspicuous places in the town and
has to be published in the local papers, if any, or it may circulate the notice
in print within the municipal limits. It is admitted that in the Gazette dated
January 16, 1958, the draft rules were published which contained the articles
to be taxed, the rate or rates at which they were to be taxed and what articles
were not to be taxed. It also contained a brief statement of objects. and
reasons for the imposition of the tax. This was 623 followed by draft rules as
to how taxation was to be done.
In short what was published in the Gazette
was admitted to conform to all the requirements of s. 67(2). But the contention
raised is that in the Jan-Sewak, a local Marathi newspaper, the rules which
were published contained the articles to be taxed, the rate or rates at which
they were to be taxed, but the draft rules in regard to " System of
Assessment " were not published along with it.
The High Court has pointed out that what was
done was a sufficient compliance with the provisions of s. 67(2) and that the
words " System of Assessment " meant only the stage of the imposition
of the tax and not other stages as a whole. Sections 71, 76 and 85, as has been
said above, deal with rules for assessment and for preventing evasion of taxes,
rules for collection of taxes and rules for refund respectively. Read together
these provisions of the Act support the decision of the High Court that the
words " System of Assessment " do not necessarily mean the whole
procedure of taxation, i.e., imposition, collection and procedure in regard to
collection and refunds. The rule also shows that what is to be affixed on the
notice board and at conspicuous places of the town is the notice and not the
draft rules relating to assessment and collection. In our opinion there has
been a compliance with the provision of s. 67(2) and that the publication of
the rules relating to the rates at which the tax had been imposed was
sufficient to comply with the provisions of the Act and the rules made there
under. It is unnecessary to deal with the efficacy of sub-ss. (7) and (8) of s.
In our opinion the judgment of the High Court
was right and the appeal is therefore dismissed with costs.