Municipal Council, Raichur Vs. Amar
Chand Prasanna [1967] INSC 164 (1 August 1967)
01/08/1967 SHAH, J.C.
SHAH, J.C.
SIKRI, S.M.
CITATION: 1968 AIR 255 1968 SCR (1) 87
ACT:
Mysore Municipalities Act, 1964, ss. 57,
80(5), 94, 95, 96, 97, 123(1), 824(4) and (5)--Resolution levying octroi
whether can be adopted by confirmation of resolution passed by Standing
Committee--Modification in resolution whether can be adopted by circulation
among members and subsequent confirmation by general body--Modification in
model bye-laws must comply with s. 324(4) and (5)--Defect in some of the
bye-laws does not make the rest of the bye-laws unenforceable.
HEADNOTE:
On June 11, 1965, the Standing Committee of the Raichur Municipal Council resolved to levy octroi duty according to Sch. II
under s. 94 of the Mysore Municipalities Act, 1964.
It was recited in the resolution that the
confirmation of the general body be obtained. The general body unanimously
approved the resolution of the Standing Committee. On October 27, 1965 the notification under s. 95 of the Act inviting objections from the public was
published; no objections were received. On February 26, 1966 there was a special general body meeting and it was. resolved to levy octroi with effect
from April 1, 1966. This resolution was however amended by modification of its
second paragraph on March 25, 1966. Approval to this modification was obtained
at first by circulation to the members on March 31, 1966 the minutes of the
meeting dated February 26, 1966 and the adoption of the resolution modifying
the second paragraph by circulation on March 25, 1966, were read, heard and
confirmed unanimously. As required by s. 123 of the Act the model bye-laws
framed by Government were adopted but the table of rates in model bye-law 16
relating to the levy of storage fee and charges on goods placed in the bonded
warehouses was, left blank. The rates were fixed by the Council by its
resolution of March 31, 1966. On April 16, 1966 sanction of the Government
under s. 96 of the Act to the levy of octroi and the adoption of model by-laws
was given and on May 3, 1966, the notification under s. 97 of the Act imposing
octroi duty under Sch. II and adopting the bye-laws was published. The
respondents who were dealers in cloth in Raichur moved the High Court of Mysore
under Art.
226 of the Constitution. The High Court held
that though octroi had been properly levied its collection wag unauthorised
owing to defects in the bye-laws adopted. The municipality appealed. The
following questions fell for consideration: (i) whether the resolution levying
the octroi and the subsequent modification of the said resolution were
procedurally valid (ii) whether the fixation of rates for the purpose of model
bye-law 16 was validly made, the procedure in s. 324(4) and (5) not having been
followed-, (iii) whether the bye-laws were unenforceable for the reason that
they did not fix the time for the purpose of bye-laws 23, 27 and 28 and did not
give a list of articles for the purpose of bye-laws 33 to 36.
HELD:(i) The resolution of the Standing
Committee selecting octroi tax for imposition expressly stated that
confirmation of the general body would be obtained, and such confirmation was
actually obtained. It could not in the circumstances be contended that 88 there
was no valid resolution by the Municipal Council under S. 94 selecting octroi
duty for imposition. [92F-H] The resolution modifying the original resolution
dated February 26, 1966 was no doubt passed by circulation but later the said
circulation was "read, heard and confirmed unanimously" by the
general body. Under s. 80(5) any irregularity not affecting the merit of the
case can be cured and s. 97(2) prohibits enquiry into the regularity of the
procedure by which a tax has been imposed after a notice under s. 97 (1) is
published. No material had been placed before the Court to show that in making
the modification s. 57 had not been complied with. [93A-D] Municipal, Board,
Hapur v. Raghuvendra Kripal & Ors., [1966] 1 S.C.R. 950, relied on.
(ii)If bye-laws in respect of the matters
specified in cl.
(m) of S. 324(1) are made and submitted for
sanction or model bye-laws framed by the Government for those purposes are
adopted, the requirements of s. 123(1) will be satisfied, and if Government
sanctions the resolution of the Municipal Council imposing octroi duty under S.
97(1) and the notice is duly published. octroi duty may be collected by the
Municipal Council. Defect in 'the bye-laws will not affect the authority of the
Municipal Council to collect the tax for the authority arises under s. 94(3)
from Act and the Rules. [94C-D] The Municipal Council by fixing a tariff for
storage fee under bye-law 16 modified the model bye-laws, and since the
modification was made without the Procedure prescribed in s.
324(4) and (5) the said bye-law was invalid.
As a result the Municipal Council was not entitled to levy any charge for
storage under bye-law 16. But the validity of other bye-laws was not thereby
affected. [94H-95C] (iii)The time contemplated to be fixed for the purposes of
byelaws 23(e), 27 and 28 need not be fixed in the byelaws. If time is fixed by
resolution of the Municipal Council after the bye-laws are sanctioned, there
would be no defect in the bye-laws. [95E-F] Bye-laws 33 to 36 depend for their
operation upon the list of articles being effectively incorporated in bye-law
32.
Failure to incorporate the list of articles
would result in the Municipal Council I being unable to enforce compliance with
the requirement of taking out a licence. The rest of the by-laws did not threby
become ineffective. [95G-H]
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 23822384 of 1966.
Appeals from the judgment and orders dated
October 6, 1966 of the Mysore High Court in Writ Petitions Nos. 1056, 1607 and
1298 of 1966, S. T. Desai, S. C. Javali and Vineet Kumar, for the appellant (in
all the appeals).
M. M. Ramamurthi and Shyamala Pappu, for
respondent No. 1 (in all the appeals) and respondent No. 2 (in C. A. No. 2382
of 1966).
89 The Judgment of the Court was delivered by
Shah, J.-On May 3, 1966 the Municipality of Raichur imposed octroi duty on
goods specified in Sch. 11 to the Mysore.
Municipalities Act 22 of 1964, entering the
municipal limits for consumption, use or sale. The respondents who are traders
in cloth at Raichur moved the High Court of Mysore by-petitions under Art. 226
of the Constitution challenging the levy and collection of octroi duty on goods
described in Sch. II of the Act in pursuance of the notification dated May 3,
1966. The High Court of Mysore held that the tax was properly imposed, but in
their view collection of the tax was not authorised by law. The High Court
accordingly issued a writ of mandamus restraining the Municipal Council,
Raichur from recovering the octroi duty levied in pursuance of the notification
dated May 3, 1966. The Municipal Council, Raichur, has appealed to this Court
against the orders passed by the High Court.
The relevant provisions of the Mysore
Municipalities Act 22 of 1964 and the Bye-Laws may be summaried. By s. 94 the
Municipal Council is authorised, subject to the general or special orders of
the Government, and after observing the preliminary procedure prescribed by s.
95, to levy, among other taxes, octroi on goods specified in Sch. II entering
the municipal limits for consumption, use or sale therein.
By sub-s. (3) of S. 94 it is provided that
the taxes specified in sub-s. (1) shall be assessed, levied and collected in
accordance with the provisions of the Act and the rules made by the Government
under s. 323. Section 95 prescribes the procedure preliminary to imposition of
tax.
A municipal council has by resolution passed
at a general meeting to select for the purpose one or more of the taxes
specified in s. 94 and in such resolution to specify the classes of persons or
of property or of both which the municipal council proposes to make liable and
to prescribe exemptions which it proposes to make, the amount or rate at which
the municipal council. proposes to assess any such class, and in the case; of octroi,
the octroi stations. The resolution must be published in the official Gazette
and in such other manner as may be prescribed. Any inhabitant of the
municipality may within one month from the publication of the notice submit his
objection to the imposition of the tax or to the amount or rate proposed, or to
the classes of persons or property to be made liable, or to any exemptions
proposed. The municipal council must take into consideration the objections and
submit to the Government of the State such objections with its opinion thereon
and any modifications proposed in accordance therewith together with a copy of
the notice. A resolution sanctioned by the Government together with a notice
reciting the sanction and the date and number thereof may then be published by
the ,municipal council in the official Gazette, and the tax as prescribed by
the, resolution shall be imposed accordingly.
Sub-section (2) of "The publication of a
notice under this section shall be conclusive evidence that the tax has been
imposed in 90 accordance with the provisions of this Act and the rules made
thereunder".
Section 123 provides that every municipal
council when submitting for sanction a proposal for the imposition of octroi,
shall submit therewith for sanction bye-laws for the purposes of cl. (m) of
sub-s. (1) of s. 324 or adopt model bye-laws made for the said purposes.
Section 124 deals with "non-liability for octroi and refund of octroi on
goods in transit". Section 125 invests the municipal council with power to
exempt articles liable to octroi duty, and S. 126 relates to the presentation
of bills for octroi and prescribes penalties for evasion of payment of octroi.
Section 127 prescribes the penalty for
selling articles liable to octroi without a licence, or for being in possession
of any such article on which octroi has not been paid. Section 323 authorises
the Government to make rules for carrying out all or any of the purposes of the
Act and to prescribe forms for any proceeding for which it considers that a form
shall be prescribed. Exercising the authority conferred by s. 323 the
Government of Mysore published on September 2, 1965, the Mysore Municipalities
Taxation Rules, 1965. Rules 25 to 32 deal with the collection of octroi.
Rule 25 deals with the mode of collection; r.
26 with payment of octroi, r. 27 with assessment and collection of octroi at
octroi station; and r. 28 with the procedure in case where octroi is leviable
ad valorem. Rule 3.1 requires the municipal council to maintain a list of
traders and public bodies allowed to have an account current, and r. 32
requires a trader or public body allowed, to have an account current to present
a declaration in Form VII. Section 324 authorises the municipal council to
make, alter or rescind bye-laws, subject to the provisions of the Act and the
rules made thereunder. Clause (m) provides, insofar as it is material:
" providing for the exhibition of tables
of octroi, requiring a licence to be obtained for the sale of any article
liable to octroi and prescribing the, conditions on or subject to which such
licence may be granted, refused, suspended or withdrawn, regulating, subject to
any general or special orders which the Government may make in this behalf, the
system under which refunds are to be made on account thereof when the goods on
which the octroi has been paid, or article manufactured wholly or in part from
such goods, are again exported and the custody or storage of goods declared not
to be intended for use or consumption or for sale within the municipality;..................
Section 325(2) provides that a municipal
council may by resolution adopt in respect of any matter the model bye-laws
made by the Government under sub-s. (1) of s. 325 in respect 'of matters
specified in S. 324. Sub-section (3) of s. 325 provides:
"If a municipal council proposes to
adopt the model bye-laws in respect of any matter subject to any modifications,
the procedure specified in sub-sections (4), (5) and (6) 91 of section 324
shall be followed as if the modifications were bye-laws proposed to be made by
the municipal council. The modifications as approved by the Government shall be
published in the prescribed manner and the model bye-laws shall subject to such
modifications come into force from such date as may be specified by the
municipal council and where no date is specified on the date of such
publication". .
Sub-sections (4) & (5) of s. 324 set out
the procedure to be followed by the municipal council in the making and
publication of bye-laws. Sub-section (6) authorises the local Government while
approving the bye-laws to make any changes therein which appear to it-to be
necessary.
In the present case the Municipal Council
adopted the model bye-laws framed by the Government. It appears, however, that
the table of rates in model bye-law 16 relating to the levy of storage fee and
charges on goods placed in the bonded warehouses was left blank. The Municipal
Council has however by resolution prescribed a, table of rates of storage fee
and charges in respect of different classes of articles stored in the bonded
warehouses.
The respondents challenge in this Court the
validity of the imposition of octroi duty on two grounds: (i) that there was no
valid resolution by the Municipal Council under s. 94 of the Act selecting the octroi
duty for imposition, and (ii) that the model bye-laws having been altered by
adding a tariff of storage fee in the bonded warehouses without following the
procedure prescribed under s. 324(4) & (5), the model bye-laws could not be
deemed to have been validly adopted by the Municipal Council. They also submit
that the Municipal Council has no authority to collect octroi duty, and support
the judgment of the High Court, on that question.
Before considering the arguments advanced at
the Bar, the steps taken by the Municipal Council for imposing the tax and for
adoption of the model bye-laws may be briefly set out. On June 11, 1965 the
Standing Committee of the Raichur Municipal Council resolved to levy octroi
duty according to Sch. 11 under s. 94 of the Mysore Municipalities Act,' 1964,
at the maximum rates at the octroi barriers specified therein. It was recited
in the resolution that confirmation of the general body be obtained. By
resolution dated June 28, 1965 the general body resolved unanimously to confirm
the recommendations of the Standing Committee dated June 11, 1965. On October
27, 1965 the notification under s. 95 of the Act by the Municipality inviting
objections to the proposals to impose octroi tax was published. No Objections
were received from any resident of the Municipality against the proposal to
levy octroi. On February 26, 1966 there was a special general body meeting of
the, Municipal Council and it was resolved to levy 92 octroi with effect from
April 1, 1966. The resolution was in the following terms:
"After due decision and consideration it
was unanimously resolved to levy the octroi duty on all the goods imported
within municipal limits of Raichur under the Schedule II of Mysore
Municipalities Act, 1964, from the first day of April 1966. Further the
Committee resolved that the Hyderabad District Municipalities Octroi Rules,
1959, will continue till the new Octroi Rules and Byelaws are finalised under
Mysore Municipalities Act, 1964." But this resolution was amended on March
25, 1966, and the second paragraph was substituted by the following paragraph:"Further
the Committee resolved that the appended Bye-laws framed by the Municipality in
the light of Octroi Model Bye-laws 1965 published by the Government in the
Mysore Gazette dated 11th November, 1965, have been fully approved."
Approval to the modification in the second paragraph was obtained by
circulation to the members and not in an open general meeting. On March 31,
1966 the minutes of the meeting dated February 26, 1966, and the adoption of
the resolution modifying the second paragraph by circulation on March 25, 1966,
were read, heard and confirmed unanimously.
The storage fee under bye-law 16 of the model
bye-laws was also adopted. On April 16, 1966 sanction of the Government under
s. 96 of the Act to the levy of octroi and the adoption of model bye-laws was
given, and on May 3, 1966, the notification under S. 97 of the Act imposing
octroi duty under Sch. II to the Act and adopting the bye-laws was published.
Thereafter on various dates in the months of July and August 1966, the writ
petitions out of which these appeals arise were filed.
There is no substance in the contention that
the municipal council had not passed a resolution selecting the octroi tax for
imposition. As stated earlier, on June 11, 1965, the Standing Committee of the
Municipal Council had "resolved to impose octroi duty" under Sch. 11
to the Act. But the resolution also stated that confirmation of the general
body meeting should be obtained. The Municipal Council at its meeting dated
June 28, 1965 treated the resolution of the Standing Committee as a
recommendation and confirmed the recommendation. The resolution dated June 28,
1965, was passed by the general body and thereby the Municipal Council adopted
the recommendations of the Standing Committee, and resolved to select levy of
octroi duty at the maximum rates at the octroi barriers specified therein.
It is true that the resolution modifying the
original resolution dated February 26, 1966 was passed by circulation on March
25, 93 1966. But in view of the terms of s. 80(5) the validity of the
resolution was not liable to be questioned on the ground of irregularity which
manifestly did not affect the merit of the case., It may be recalled that on March
31, 1966 the "circulation dated 25-3-66 were read, heard and confirmed
unanimously." The plea that a resolution passed by the Municipal Council
cannot, under the Act, be modified or cancelled within three months is without
force. Section 57 of the Act provides that no resolution of a municipal council
shall be modified or cancelled within three months after the passing thereof
except by a resolution passed in the manner prescribed in that behalf. There
are no materials on the record to prove that the requirements of s. 57 were not
complied with, and s. 97(2) prohibits an enquiry into the regularity of the
procedure for imposition of the tax after a notice under s.
97(1) is published. This Court in Municipal
Board, Hapur v.
Raghuvendra Kripal & Ors.(1) in dealing
with a similar provision in s. 135 of the U. P. Municipalities Act 2 of 1916,
held that s. 135(3) shuts out enquiry into the procedure by which a tax had
been imposed. Hidayatullah, J., speaking for the majority observed (p. 958) .
"There is a difference between the tax
and the imposition of the tax. The former is the levy itself and the latter the
method by which the levy is imposed and collected. What the subsection does is
to put beyond question the procedure by which the tax is imposed, that is to
say, the various steps taken to impose it." Section 97(2) makes the
publication of the notice under s.
97(1) conclusive evidence that the tax has
been imposed in accordance with the provisions of the Act and the rules made
thereunder. The expression "imposed in accordance with the provisions of
this Act", in our judgment, means "imposed in accordance with the
procedure provided under the Act". All enquiry into the regularity of the
procedure followed by the Municipal Council prior to the publication of the
notice is excluded by s. 97(2). This is not a case in which the Municipal
Council had not selected a tax for imposition by a resolution: nor is it a case
in which the Municipal Council was seeking to levy tax not authorised by law.
A Municipal Council when submitting for
sanction a proposal for the imposition of octroi has to submit under s. 123
with the proposal for imposition of octroi, also' bye-laws for the purposes of
cl. (m) of sub-s. (1) of s. 324, or to adopt model bye-laws made for the said
purposes. It is to be noticed that under s. 94(3) of the Act the tax has to be.
assessed, levied and collected in accordance
(1)[1966] I S.C.R. 950.
94 with the provisions of the Act and the
rules made by the Government under s. 323. Bye-laws contemplated to be made
under s. 324(1)(m) and required to be adopted from the model bye-laws or
specially framed and submitted under s. 123 deal with matters of details, such
as the exhibition of tables of octroi; requiring a licence to be obtained for
the sale of any article liable to octroi and prescribing the conditions on or
subject to which such licence may be granted, refused, suspended or withdrawn-,
regulating the system under which the refunds are to be made when the goods on
which the octroi has been paid are again exported; for the custody or storage
of goods declared not to be intended for use or consumption or for sale within
the municipality; prescribing a period of limitation after which no claim for
refund of octroi shall be entertained; and prescribing the minimum amount for
which any claim for refund may be made. If byelaws in respect of these matters
specified in cl. (m) of s.
324(1) are made and submitted for sanction or
model bye-laws framed by the Government for those purposes are adopted, the
requirements of s. 123(1) will be satisfied, and if the State Government
sanctions the resolution of the Municipal Council imposing octroi duty under s.
97(1) and the notice is duly published, octroi duty may be collected by the
Municipal Council. Defect in the bye-laws will not affect the authority of the
Municipal Council to collect the tax, for the authority arises under s. 94(3)
from the Act and the rules.
The Municipal Council of Raichur-adopted the
model byelaws made by the Government. None of the bye-laws "for the
purposes" of cl. (m) of s. 324 in the model bye-laws was defective or
incomplete. The model bye-laws undoubtedly did not prescribe the storage fee,
and the resolution of the Municipal Council levying storage fee at the rates set
out in the bye-laws and submitted to the Government was not made in conformity
with the terms of S. 324(4) & (5).
The High Court held that the bye-laws adopted
by the Municipal Council were invalid because (1) the resolution dated February
26,1966 could not have been modified by circulation; and (2) that it was not
shown that the Municipal Council had complied with the requirements of s. 57
when modifying the resolution dated February 26, 1966;
and (3) that the State Government had not
fixed the time prescribed by bye-laws Nos. 23(e), 27, 28 and 32, and since no
decision was taken on those bye-laws by the Municipal Council, the enforcement
of the octroi levy was "rendered difficult".
It is clear that under s. 325(3)
modifications to the model bye-laws alone require compliance with sub-ss. (4)
& (5) of s. 324. It may be assumed that fixing a tariff for storage fee
under bye-law 16 which is not prescribed under the model bye-laws amounts to 95
modification of the bye-laws, but even on that assumption only bye-law 16 may
be deemed to be invalid, and the power to collect the storage fee may not be
lawfuly exercised by the Municipal Council: that does not affect the validity
of the other bye-laws. If without a particular bye-law, the scheme of the. rest
of the bye-laws may be unworkable, it may follow by necessary implication that
the other bye-laws have also become ineffective. But that cannot be said of the
defect in adopting the table of fees for the purpose of bye-law 16. The
Municipal Council may not be entitled to levy any charge for storage under
bye-law 16, but that is the only effect of non-compliance with the terms of
sub-ss.
(4) and (5) of s. 324. The other bye-laws
remain valid and operative, for they are plainly severable.
Bye-law 23(e) of the model bye-laws provides
that no refunds shall be allowed in respect of goods which are transported
outside the municipal limits within one month of their being brought into the
municipal limits, but regarding which the intimation has not been given to the
Municipal Commissioner or Chief Officer within such time as may be fixed by the
Municipal Council. Bye-law 27 provides that the application for refund with the
goods to which it relates shall be presented at the Octroi Station through
which it is transported outside the municipal limits within such interval from
the hour of examination as the municipal council may determine. Similarly
bye-law 28 provides that the Octroi Official-in Charge of the Octroi Station
shall satisfy himself that the goods produced for transport outside the
municipal limits as covered by the refund application correspond with the
entries in the refund application form and that they are presented within the
time fixed by the Municipal Council under bye-law 27. In our judgment, the time
contemplated to be fixed for the purposes of bye-laws 23(e), 27 & 28 need
not be fixed by the byelaws. If time is fixed by resolution of the Municipal
Council even after the bye-laws are sanctioned, there would be no defect in the
bye-laws.
Bye-law 32 provides that no person shall sell
articles mentioned therein without obtaining a licence granted in that behalf.
The model bye-law is silent as to the articles which may not be sold without
obtaining a licence. Bye-laws 313 to 36 depend for their 'operation upon the
list of articles being effectively incorporated in bye-law 32.
Failure to incorporate the list of articles
would result in the Municipal Council being unable to enforce compliance with
the requirements of taking out a licence. But we are unable to hold that
because of the failure to fix the time under bye-laws 23(e), 27, 28, or for
failure to incorporate the list of articles in bye-law 32, the rest of the
bye-laws became ineffective. We are of the view that even without these
bye-laws and bye-law 16, octroi duty may be levied by the Municipal Council. In
our view, the High Court was in error in holding that the model byelaws which
were adopted by the Municipal Council were unenforceable.
96 The appeals must therefore be allowed and
the petitions filed by the respondents dismissed with costs in this Court.
One hearing fee. The order passed by the High
Court regarding the costs is maintained.
G.C. Appeals allowed.
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