Municipal
Board of Abu Road Vs. Jaishiv & Ors [1987] INSC 299 (27 October 1987)
MISRA
RANGNATH MISRA RANGNATH RANGNATHAN, S.
CITATION:
1988 AIR 388 1988 SCR (1) 584 1987 SCC Supl. 301 JT 1987 (4) 176 1987 SCALE
(2)832
ACT:
Rajasthan
Municipalities Act. 1959-S. l04 Levy of octroi by different municipalities
within the State on varying basis and at varying rates-Validity of.
HEADNOTE:
%
By a notification issued in 1964 under s. l04 of the Rajasthan Municipalities
Act, 1959, the State Government revised the rate of octroi levied on cloth by
the municipal board of Abu Road which was challenged by a batch of writ
petitions. A Single Judge of the High Court held that the provisions of s.
l04(1) of the Act were valid but the notification in respect of the municipal
board of Abu Road relating to cloth was bad. During the pendency of the appeals
before the Division Bench sub-s. (2) of s. l04 was added by s. 12 of the
Rajasthan Municipalities (Amendment) Act of 1978. The Division Bench overlooked
this amendment and reiterated the reasons of the Single Judge and dismissed the
appeals. By another notification issued in 1976, the State Government revised
the levy of octroi on all types of cloth in respect of Sujangarh Municipal
Board which was challenged by another batch of writ petitions relying on the
decision in the Abu municipal board cases; but the Single Judge, as also a
different Division Bench which dealt with the matter did not entertain the
challenge in view of the amended provision of s. l04 of the Act. These two
groups of appeals arose from the two batches of writ petitions aforesaid.
Allowing
the appeals preferred by the Municipal Board of Abu Road and dismissing the
appeals relating to Sujangarh Municipality.
^
HELD: There is no dispute as to exigibility of octroi.
Every
municipality under s. 7 of the Rajasthan Municipalities Act, 1959 is a body
corporate. People residing within each municipal area can be classified as one
group different from residing in any other municipality since octroi is to be
levied by the municipality as provided in s. l04(1) subject to the control
regarding the rates of levy by the State Government. The plea of discrimination
on the basis of the rates prevalent in another municipality cannot be entertained.
The scheme in s. 104 takes note of the position that local conditions and needs
varied and accordingly both in the proviso to sub-s. (1) as also in sub-s.
(2)
itself, emphasis on that feature has been put. It is thus open to the State
Government on the basis of local conditions and needs to prescribe different
rates in relation to different municipalities in the matter of taxes to be
levied, varying duty of octroi is, therefore, not open to challenge. The
Division Bench while dealing with the appeals of Abu Road municipality should
have taken note of the amendment of sub-s. (2) with retrospective effect.
[588B-E]
2.
In some municipalities the levy is on the value of goods while in others it is
on the basis of weight. Here again, the State Government seems to have applied
its mind and has authorised charge of octroi on weight basis taking into
consideration the special circumstances. In bigger municipalities where there
are wholesale markets particularly of cloth. a reduced rate of octroi has been prescribed
to encourage larger import. In smaller municipalities where the import is for
direct consumption the levy is on ad valorem basis at a higher rate. The State
Government seems to have also taken into consideration that in smaller
municipalities there is not much demand for costly and fine cloth which have
higher prices while the position is otherwise in bigger municipal areas. This
appears to be the justification for adopting the weight basis in respect of
larger municipalities and ad valorem basis for the smaller municipalities. This
seems to be a legitimate basis and we do not think any valid objection is
available against this differential treatment. Law is well settled that if unequal’s
are treated unequally there is no discrimination and Art. 14 of the
Constitution is not available to be invoked. [588E-H]
Civil
Appellate Jurisdiction: Civil Appeal Nos. 2255-56 of 1979.
From
the Judgment and order dated 20.12.1978 of the Rajasthan High Court in Special
Appeal Nos. 40 and 39 of 196.
V.M.
Tarkunde, Tapas C. Ray, Chandmal Lodha, S.K. Jain, Dalveer Bhandari and
Badridas Sharma for the appearing parties.
The
Judgment of the Court was delivered by RANGANATH MISRA, J. These are appeals by
special leave.
Two
of them being Civil Appeals 2255 and 2256 of 1979 are by the Municipal Board of
Abu Road. The rest of the appeals are by assessees living within the municipal
area of Sujangarh.
The
common ques- 586 tion involved in these appeals is as to whether the levy of
octroi by different municipalities- within the State of Rajasthan on varying
basis-some on weight of the material and others on the ad valorem basis of the
price thereof at varying rates is valid in law. l he High Court decided against
the Abu Road municipality while a different bench of that Court in the cases of
Sujangarh municipality decided in its favour on the same question.
Entry
52 of List II of Schedule VII read with Article 246(3) of the Constitution
authorises the State Legislature to raise a tax on the entry of goods into a
local area for consumption, use or sale. The Rajasthan Municipalities Act, 1959
(hereinafter referred to as the Act) in Chapter VII makes provisions for
imposition of taxes. Section 104 deals with obligatory taxes while section 105
authorises imposition of other taxes. As far as relevant, section 104
provides:- "(1) Every Board shall levy, at such rate and from such date as
the State Government may in each case direct by notification in the official
gazette and in such manner as is laid down in this Act and as may be provided
in the rules made by the State Government in this behalf, the following taxes,
namely- (i) .............................
(ii)
an octroi on goods and animals brought within the limits of the municipality
for consumption, use or sale therein; and (iii)............................
....................................
(2)
A direction under sub-section (1) may provide for the levy of taxes at
different rates in different municipalities having regard to their varying
local conditions and needs, and on the same considerations and by a like
direction, the State Government may, from time to time (i) vary uniformally or
differently in relation to different municipalities, the rates of taxes levied,
or ( (ii)................................
587
Abu Road municipality prior to 1956 was a part of the State of Bombay and with
effect from Ist November 1956, as a result of the States Reorganisation Act of
1956, became a part of the State of Rajasthan. While within the State of Bombay
the Abu Road municipality had prescribed octroi duty on cloth at the rate of
1.9 annas per cent ad valorem and the rate continued till it was varied after
promulgation of the Rajasthan Municipalities Act of 1959. The rates in cities
like Jaipur were on the basis of weight. Judicial notice can be taken of the
fact that the areas which now constitute the State of Rajasthan prior to
independence of India were independent States of different dimensions and the
local conditions and needs of the people inhabiting those areas considerably varied.
There were 13 different Acts then in vogue governing the municipalities within
that State. The Rajasthan Municipalities Act was, therefore, introduced to
consolidate and amend the law relating to municipalities in that State. In
February, 1962, the State Government by notification dated 13th February, 1962
issued under section 104 of the Act fixed the rate of octroi at 0.50 paise in
place of 1.9 annas with effect from 15th February, 1962. By notification dated
10th of April, 1964, published in the Gazette on 20th of August, 1964, the
State Government in exercise of powers under section 104 of the Act revised the
rates of octroi and so far as the municipal board of Abu Road was concerned,
Item 62 of the Schedule provided the rate of 1 per cent ad valorem on cloth.
This led to the challenge before the High Court. The leamed Single Judge who
dealt with the writ petitions relied upon the provisions of section 104 of the
Act as it then stood and came to hold that the provisions of section 104(1) of
the Act were valid but the notification in respect of the municipal board of
Abu Road relating to cloth was bad.
During
the pendency of the appeals before the Division Bench of the High Court,
sub-section (2) of section 104 was added by section 12 of the Rajasthan
Municipalities (Amendment) Act of 1978. The Division Bench overlooked this
amendment and reiterated the reasons of the learned Single Judge and dismissed
the appeals by judgment dated 20th of December, 1978.
The
state Government authorised levy of octroi on all types of cloth at the rate of
one and a half per cent ad valorem in respect of Sujangarh Municipal Board by
notification dated 3rd January, 1976. 34 writ petitions were filed before the
High court challenging the levy. It was contended inter alia that there was
unreasonable discrimination between the citizens and traders of cloth within
Sujangarh Municipal area on the one hand and those of Jodhpur, Jaipur and other
named towns on the other, as by authorising levy of octroi at different rates
588 and on different basis discrimination resulted. Reliance was placed on the
decision in the Abu Board municipal cases but the Single Judge as also the
Division Bench did not entertain the challenge by relying upon the amended
provision of section 104 of the Act. That is how that group of appeals too has
come before this Court by special leave.
There
is no dispute as to exigibility of octroi. Every municipality under the Act is
a body corporate. Section 7 of the Act provides for it. People residing within
each municipal area can be classified as one group different from those
residing in any other municipality since octroi is to be levied by the
municipality as provided in section 104(1) of the Act subject to the control
regarding the rates of levy by the State Government. The plea of discrimination
on the basis of the rates prevalent in another municipality cannot be
entertained. The scheme in section 104 of the Act takes note of the position
that local conditions and needs varied and accordingly both in the proviso to
sub-section ( I) as also in sub-section (2) itself, emphasis on that feature
has been put. It is thus open to the State Government on the basis of local
conditions and needs to prescribe different rates in relation to different
municipalities in the matter of rates of taxes to be levied.
Varying
duty of octroi is, therefore, not open to challenge.
The
Division Bench while dealing with the appeals of Abu Road municipality should
have taken note of the amendment of sub-section (2) with retrospective effect.
In
some of the municipalities the levy is on the value of the goods while in
others it is on the basis of the weight. Here again, the State Government seems
to have applied its mind and has authorised charge of octopi on weight basis
taking into consideration the special circumstances. In bigger municipalities
where there are wholesale markets particularly of cloth, a reduced rate of
octroi has been prescribed to encourage larger import. In smaller
municipalities where the import is for direct consumption the levy is on ad
valorem basis at a higher rate. The State Government seems to have also taken
into consideration that in smaller municipalities there is not much of demand
for costly and fine clothes which have higher price while the position is
otherwise in bigger municipal areas. This appears to be the justification for
adopting the weight basis in respect of larger municipalities and ad valorem
basis for the smaller municipalities. This again seems to be a legitimate basis
and we do not think any valid objection is available against this differential
treatment.
Law
is well settled that if un-equals are treated unequally there is no
discrimination and Article 14 of the Constitution is not available to be
invoked.
589
In view of what we have said above, the appeals preferred by A Municipal Board
of Abu Road will have to succeed. They are allowed. Other group of appeals
relating to Sujangarh Municipality has to be dismissed. Parties are directed to
bear their own costs throughout.
Before
we part with the cases we would like to suggest that in the backdrop of a
consolidating and uniform municipal legislation now operating in the field, the
State Government may rationalise the rate structure prevalent in different
municipal areas so that assessment of octopi would be convenient, a common
method would be adopted and the challenge which is raised now and again-though
we have made it clear that it would be competent for the State Government to
allow varying rates in different municipalities keeping the provisions in
section l04 of the Act in view may be avoided.
H.L.C.
Appeals allowed.
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