Municipal
Board, Bareilly Vs. Bharat Oil Company & Ors
[1989] INSC 370 (4
December 1989)
Fathima
Beevi, M. (J) Fathima Beevi, M. (J) Saikia, K.N. (J)
CITATION:
1990 AIR 548 1989 SCR Supl. (2) 376 1990 SCC (1) 311 JT 1989 (4) 453 1989 SCALE
(2)1269
ACT:
U.P.
Municipalities Act 1916/U.P. Municipal Account Code 1925/U.P. Octroi Rules,
1925: Section 128/Chapter X/Rules 13123 I--Octroi--Levy Or'on mineral
oil--Permissibility of.
HEAD NOTE:
The
appellant is a Municipal Board governed by the provisions of the U.P.
Municipalities Act, 1916. Section 128 of the Act provides for imposition of
taxes by the Board. In exercise of the powers under Sections 131 to 135 and 296
of the Act, the Government of the United Provinces framed octroi rules. The
said rules were included in the Municipal Account Code (Chapter X rules 131 to
231). The proviso to Rule 131 provided that octroi shall not be levied on
certain articles which included mineral oil. The rule was amended vide
notification dated the 2nd November 1953 and for the words "the mineral
oil" in the proviso, the words "mineral oils classified as motor
spirit, kerosene or diesel oil" were substituted.
Separate
rules for the assessment and collection of octroi in the Bareily Municipality were framed by the Govt. of U.P. The draft rules were
notified vide notification dated the 16th February 1963. Final rules were notified vide notification dated the 7th May 1963 and published in U.P.
Gazette
dated the 11th May 1963. By a notification dated the 24th July 1963, published in U.P. Gazette dated the 3rd August, 1963, the appellant Board imposed octroi
duty on goods and animals brought within the octroi limits of Bareily Municipality for consumption, use and sale at the rates shown in the
Schedule subject to certain exceptions mentioned therein. The said notification
came into operation from November
16, 1963 and
thereafter the levy of octroi in Bareily Municipality was governed by 1963 rules. The
amendments were made in the octroi schedule both in the rates as well as in the
exemption and as a result whereof motor spirit, kerosene and diesel oil were
removed from the exemption clause and were subjected to the octroi duty @ 1
paisa per liter vide notification dated August 27, 1969.
The
respondents challenged the validity of the notification dated 377 the 27th
August 1969 by means of a writ petition before the High Court on the ground
that 1925 rules took away the power from all Municipal Boards to impose octroi
duty on mineral oils and until such power is restored under a contrary
notification issued under section 128 of the Act, the Board did not have any
justification to assess or collect octroi duty on mineral ohs. The appellant
Board contended that Rule 131 was superseded by the 1963 rules which now
governed the imposition of octroi by the appellant Board. The single Judge of
the High Court who heard the petition came to the conclusion that Rule 131
restricted the power of the Board to impose the octroi and the subject-matter
of the rule was not covered by the 1963 rules. The appellant's appeals
preferred before the Division Bench were dismissed which took the view that the
bar under Rule 131 regarding the imposition of octroi duty on mineral oils
continued notwithstanding the 1963 Rules. Hence these appeals by the Municipal Board.
Allowing
the appeals, this Court,
HELD:
The rule making power under section 296 read with Section 300(2) of the Act
enables the State Government to except any one municipality from the operation
of the general rule by express provision in that behalf. When the identical
authority in exercise of its rule making power duly frames the rules in respect
of the same matter expressly providing that the new rules shah apply to a
particular municipality in supersession of the existing rules, it must be deemed
that existing rules are repealed to that extent.
[384C-D]
The 1963 rules had been framed under Section 296 of the Act in supersession of
the existing rules after the publication by the State Government, in the
Gazette as provided under Section 300 and therefore rule 131 in the 1925 rules
ceased to have any operation in respect of the matters dealt with therein so
far as the Bareilly municipality is concerned. [384D] M/s Central Distillery
Chemicals Works Ltd. & Anr. v. State of U.P. & Ors., [1980] All L.J.
62, approved.
Municipality of Anand v. State of Bombay, AIR 1962 SC 988; Municipal Board, Hapur v. Raghuvendra Kripal & Ors.,
[1966] 1 SCR 950; Mool Chand v. Municipal Board, Banda, AIR 1926 All. 517; Zaverbhai
Amaidas v. The State of Bombay, [1955] 1 SCR 799 and The Municipality or Anand
v. State of Bombay, [1962] 2 Supp. SCR 366, referred to
CIVIL
APPELLATE JURISDICTION: Civil Appeal Nos. 993 & 994 of 1976.
378
From the Judgment and Order dated 16.9.1974 of the Allahabad High Court in Spl.
Civil Appeal Nos. 622 & 623 of 1972.
R.K. Virmani
for the Appellant.
M.V. Goswami
and S.S. Khanduja for the Respondents.
The
Judgment of the Court was delivered by M. FATHIMA BEEVI, J. 1. These two
appeals by special leave are filed by the Municipal Board, Bareilly, against the judgment of the
Allahabad High Court quashing the Gazette Notification dated August 27, 1969 amending the octroi schedule of the
Bareilly Municipality so as to impose octroi on "mineral oil".
2. The
respondents Bharat Oil Company and others filed writ petitions under Article
226 of the Constitution of India challenging the notification on the ground
inter alia that the appellant, the Municipal Board Bareilly (hereinafter
referred to as 'the Board') had no authority to impose octroi on mineral oil in
view of the proviso to Rule 13 1 of the octroi Rules contained in the U.P.
Municipal Account Code, 1925. This was countered by the appellant stating that
the R. 13 1 was superseded by the 1963 rules which govern the imposition of octroi
by the appellant Board. The Single Judge in allowing the Writ Petitions took
the view that R.131 restricted the power of the Board to impose the octroi and
the subject-matter of the rule is not covered by the 1963 rules. The appeals
preferred were dismissed by the Division Bench of the High Court agreeing that
the bar under R. 131 'regarding the imposition of octroi duty on mineral oils
continued notwithstanding the 1963 rules.
3. The
appellant is a Municipal Board governed by the provisions of the U.P. Municipalities
Act, 1916 (hereinafter referred to as 'the Act'). Section 128 of the Act
provides for imposition of taxes by a Municipal Board. The relevant part of the
said section reads as under:
"128.
Taxes which may be imposed (1) Subject to any general rules or special orders
or' the State Government in this behalf, the taxes which a board may impose in
the whole or any part of a municipality are-(i) x x x 379 (viii) an octroi On
goods or animals brought without the municipality for consumption, use or sale
therein."
4.
Sections 13 1 to 135 of the Act contain provisions relating to the framing of
proposals for the imposition of taxes by the Municipal Board, inviting
objections to the said proposal, the approval of the said proposal by the State
Government, the framing of rules by the State Government on the basis of such
proposals, under Section 296 of the Act and for the issue of a notification
about the imposition of tax from the appointed date.
5.
Section 153 of the Act provides that assessment and collection of taxes and
other matters relating to taxes may be regulated by Rules. Section 296 empowers
the State Government to make rules in respect of matters described in Section
153.
6. In
exercise of the powers under Sections 13 1 to 135 and 296 of the Act, the
Government of the United Provinces framed octroi rules which were published
vide notification dated the 25th October, 1925. The said rules are included in
the Municipal Account Code (Chapter X Rules 13 1 to 23 1) published by the
Government of U.P.
7. Rule
13 1 provided that subject to the exceptions contained in the proviso octroi
may be ordinarily levied on commodities included in the list set-out in the
said rule.
The
proviso to this rule stated that octroi shall not be levied on certain articles
which included mineral oil. Rule 131 was amended vide notification dated the
2nd November, 1953 and for the words "the mineral oil" in the proviso
the words "mineral oils classified as motor spirit, kerosene or diesel
oil" were substituted.
8.
Separate rules for the assessment and collection of octroi in the Bareilly Municipality were framed by the Government of U.P. in exercise of the
powers conferred by Section 296 of the Act. The draft rules were notified vide
notification dated the
16th February, 1963 and
published in the U.P. Gazette dated 23rd February, 1963. The said notification reads as
under:
"No..89-B/XI-C-129-60.
The following draft of the rules for the assessment and collection of octroi in
the Bareilly Municipality, in supersession of the existing octroi rules
contained in the Municipal Account Code in so far as they apply to the said
municipality, which the Governor of Uttar 380 Pradesh proposes to make, in
exercise of the powers conferred by Section 296 of the U.P.
Municipalities
Act, 1916 (U.P. Act No. II of 1916), is published as required by subsection (1)
of section 300 of the said Act, for the information of all concerned with a
view to invite objections and suggestions in respect thereof".
9.
Final Rules were notified vide notification dated the 7th May, 1963 and published by the Government in the U.P.
Gazette
dated the 11th May,
1963 as required under
S. 300 of the Act.
10. By
notification dated the
24th July, 1963
published in the U.P. Gazette dated the August 3, 1963 the appellant Board imposed octroi
duty on goods and animals brought within the octroi limits of Bareilly Municipality for consumption, use and sale at the rates shown in the
schedule to the said notification and subject to the exceptions contained
therein. Item 29 of the exceptions contained in the schedule related to
"mineral oils" classified as motor spirit, kerosene and diesel oil.
The said notification came into operation from November 16, 1963. Thereafter the levy of octroi in the Bareilly Municipality was governed by 1963 rules. The amendments were made in the
octroi schedule both in the rates as well as in the exemption and as a result
thereof motor spirit, kerosene and diesel oil were removed from the exemption
clause and were subjected to the octroi duty @ 1 paisa per litre vide
notification dated August 27, 1969.
11.
The validity of the notification dated the 27th August, 1969 was challenged
before the High Court in the Writ Petitions Nos. 1805 and 4696 of 1970 by
respondents on the ground that 1925 rules take away the power from all
Municipal Boards to impose octroi duty on mineral .oils and until such power is
restored under a contrary notification issued under Section 128 of the Act, the
Board did not have any justification to assess or collect octroi duty on mineral
oils.
12.
The impugned judgment proceeded on the basis that Rules 13 1 to 133 of the 1925
rules have been made by the State Government in exercise of the powers
conferred upon it by the opening words of Section 128(1) and they are not rules
under section 153 for the assessment and collection of octroi. It was also held
that the subject-matter of these rules is not covered by the 1963 rules and,
therefore, the 1963 rules cannot supersede R. 13 1 of the 1925 Rules. A Full
Bench of the Allahabad High Court in M/s Central Distillery Chemicals Works
Ltd. & Another v. State of U.P. & Others, [1980] All L.J. 62 following
the 381 decision of this Court in Municipality of Anand v. State of Bombay,
A.I.R. 1962 SC 988 overruled the impugned decision holding that the special
rules which are in relation to a particular tax and a particular Municipal
Board will override or supersede the general rules framed by State Government
under Section 153 read with Section 296. The appellant's learned counsel relied
on the Full Bench decision and maintained that the rules framed by the Board
prevail over the rules contained in the Municipal Account Code and the
notification is, therefore, valid. In our view the approach made by the Full
Bench of the High Court in M/s Central Distillery Chemicals Works Ltd. v. State
of U.P., (supra) is correct and has to be approved.
13. As
pointed out by this Court in Municipal Board, Hapur v. Raghuvendra Kripal and
Others, [1966] 1 SCR 950 taxes raised by a local authority are not imposed by it
as a legislature but as a delegate of the legislature. The tax is valid one if
it is one of the taxes the local authority can raise and the delegate imposes
it in accordance with the conditions laid down by the legislature. The taxes
that can be raised in exercise of delegated power are predetermined and
procedure is prescribed by the Municipal Act. Thus Section 128 of the U.P.
Municipalities Act confers on the municipalities in the State the power to levy
taxes enumerated thereunder. The power conferred is not absolute but is subject
to any general rules or special orders of the State Government in this behalf.
Section 128(1) does not confer any independent rule making power. The general
rules referred to in that Section can only be the rules in the matter of such
levy specified in Section 153 of the Act and framed in exercise of the power
under Section 296 of the Act. The State Government is empowered under Section
296 to make rules consistent with the Act in respect of matters described in
Section 153. Rules framed under Section 153 constitute the exclusive machinery
for assessment and collection of taxes. The relevant part of Section 153 reads
as under:
"153.
Rules as to assessment, collection and other matters. The following matters
shall be regulated and governed by rules except in so far as provision therefor
is made by this Act, namely:
(a) the
assessment, collection or composition of taxes, and, in the case of octroi or
toll, the determination of octroi or toll limit;
382
(f) any other matter relating to taxes in respect of which this Act makes no
provision or insufficient provision and provision, is, in the opinion of the
State Government necessary." In prescribing the procedure for the impositon
of taxes by the board, Section 13 1 of the Act requires the board while framing
the proposal to prepare a draft of the rules which it desires the State
Government to make in respect of the matters referred to in Section 153 and
publish the same.
When
the proposals have been sanctioned the State Government makes the necessary
rules in respect of the tax under Section 296. The rules referred to in Section
128(1) are rules thus framed by the State Government under Section 296 in
respect of matters referred to in Section 153. Section 300(2) expressly provides
that any rule or regulation made by the State Government may be general for all
municipalities or may be special for anyone municipality as it directs.
14.
The Municipal Manual published by the Government contains the general rules
made by the Government under the Act and general orders issued in Volume 1. The
second volume contains the Municipal Account Code. The General Rules and orders
are contained in Chapter I to XII of Part I. The Explanation in Chapter I reads
as under:
"The
Rules in this Manual, which are printed in pica type, together with their
explanations, illustrations and exceptions, have the force of law, having been
made by the Government in exercise of the powers conferred by section 296 of
the Act, and, except where otherwise stated, are applicable to all
municipalities. The notifications in which they were published are referred to
on the margins of the pages." Part II contains the model rules, bye laws
and regulations.
Section
A deals with Rules with reference to Section 153 of the Act thus:
"The
following model rules have been framed by the Government for the assessment and
collection of taxes other than octroi under section 153 and 296 of the Act.
It is
anticipated that they will be found generally applicable to the circumstances
of the municipalities of these provinces, and it is desirable that the model
forms 383 should be adhered to unless there are special reasons justifying any
divergence from them.
In
forwarding proposals for the imposition of additional taxation, boards are reminded
that the necessary rules for the assessment and collection of the taxes to be
imposed should be forwarded at the same time as the tax proposals, and it will
facilitate the disposal of such cases if any deviations from the model forms
printed below are specifically referred to in the proposals submitted.
Vol.
II contains the Municipal Account Code. Chapter X deals with octroi and
provides in R. 13 1 that subject to the exceptions contained in the proviso octroi
shall ordinarily be levied on commodities included in the list. In Mool Chand
v. Municipal Board, Banda, AIR 1926 All 5 17 it was held that the rules
contained in the Code have as much force of law as the Act itself. The octroi
rules contained in Chapter X of the Municipal Account Code are general rules
framed by the State Government in respect of matters referred to in Section 153
in exercise of power under Section 296 and refer to the levy and govern the
assessment, collection etc. The rules are general for all municipalities. The
1963 rules are framed for the appellant board expressly superseding the general
rules in so far as they apply to the appellant board. By framing the 1963 rules
the government evinced the intention to cover the field which was covered by
1925 rules in so far as the Bareilly Municipality was concerned. The
subject-matter dealt within 1963 rules is the same as that dealt with in 1925
rules. The intention to supersede the earlier rules is clearly expressed. The
rule has the force of law. Rule 13 1 of 1925 rules has no longer any
application in the matter of levying octroi by the appellant board.
That
rule stands repealed in so far as the appellant Board is concerned. The rule
cannot, therefore, be read as curtailing the power under Section 128(1)(viii)
of the Act to impose octroi. Rules do not enlarge or restrict the authority to
impose tax. Authority is conferred by the section.
Rules
are only regulating the exercise of that power. The imposition of the tax and
the regulation of its assessment and collections are totally different matters
and they are clearly distinguished. In Zaverbhai Amaidas v. The State of
Bombay, [1955] 1 SCR 799 this Court reiterated the rule of construction that if
a later statute deals with the same subject-matter and varies the procedure the
earlier statute is repealed by the later statute. In The Municipality or Anand
v. State of Bombay, [1962] 2 Supp. SCR 366 construing s. ,59 of the Bombay
District Municipal Act, 1901 which is in pari materia with 384 s. 128 of the
U.P. Municipalites Act, this Court said the word 'impose' in s. 59 meant the
actual levy of the tax after authority to levy it had been acquired by rules
duly made and sanctioned and this imposition was subject to the general or
special orders of the government. The opending words of S. 128 are capable of
similar construction and the imposition has to be understood as the actual levy
subject to the general rules and special orders contemplated under the other
provisions of the Act.
15.
The rule making power under Section 296 read with Section 300(2) of the Act
enables the State Government to except anyone municipality from the operation
of the general rule by express provision in that behalf. When the identical
authority in exercise of its rule making power duly frames the rules in respect
of the same matter expressly providing that the new rules shall apply to a
particular municipality in supersession of the existing rules, it must be
deemed that existing rules are repealed to that extent. The 1963 rules had been
framed under Section 296 of the Act in supersession of the existing rules after
publication by the State Government, in the Gazette as provided under Section
300 and therefor Rule 13 1 in the 1925 rules ceased to have any operation in
respect of the matters dealt with therein so far as the Bareilly municipality
is concerned.
16. In
this view of the matter, we hold that the appellant Board had authority to levy
octroi on mineral oils and challenge against the impugned notification is not
sustainable. The High Court was clearly in error in quashing the same and
restraining the Board from assessing and collecting the tax.
We
accordingly allow the appeal and set-aside the judgment of the High Court. In
the circumstances of these cases, we, however, make no order as to costs.
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