Municipal Corporation for City of Pune
& Anr Vs. Bharat Forge Co. Ltd. & Ors  INSC 178 (10 March 1995)
B.L. (J) Hansaria B.L. (J) Kuldip Singh (J) Majmudar S.B. (J) Hansaria, J.:
1995 SCC (3) 434 JT 1995 (3) 312 1995 SCALE (2)245
jouney to decide the fate of these appeals has to start from 1881 as it was on
314 12th March of that Notification No. 165 was gazetted starting inter alia
that octroi duties in the Cantonment of Poona would be, imposed at the rates
"for the time being" leviable and in respect of the several articles
"for time being" dutiable in the Municipality of Poona, when such
articles would enter in to the cantonment from any place situate without the
limits of the said Municipality, The Poona Cantonment Bowl authorised the
Municipality to collect the octroi which had become so leviable and thereafter
to divide the proceeds as agreed upon. The Municipality of Poona having become a Corporation under
the Municipal Corporation 1950, it continued to collect octroi on the strength
of the aforesaid Notification and agreement.
respondents challenged the legality, of the collection of the octroi made as
per 1963 Schedule to the Octroi Rules framed by the appellant This was done by
approaching the Bombay High Court by filing petitions under Article 226 of the
Constitution which have come to be allowed by the impugned judgment. Hence
these appeals by the Municipal Corporation for the City of Pune, hereinafter referred as the Municipal Corporation.
challenge to the collection was broadly on two counts:
1881 Notification does not in fact permit the collection; and
if factually the Notification were to so permit, the appellant could not have
done so in law..
High Court accepted both the contentions, the correctness of which has been
assailed in these appeals.
Poona Cantonment (the Cantonment) came into existence in 1817. The Bombay
Municipal Act, 1872, provided for levy of taxes including octroi. Similar was
the provision in Bombay District Municipal Act, 1873. Poona City Municipality started levy and recovery of octroi
from 1875- 76. The Cantonments Act, 1880 was enacted on 5th February, 1980. Section 21 of this Act permitted
imposition by the Local Government, with the previous sanction of the
Governor-General in Council, by notification in the Official Gazette, any tax
which could be imposed in a Municipality.
22 of this Act permitted the Local Government by notification in Official
Gazette to apply and adapt to any cantonment provisions and rules in force
under any enactment for assessment and recovery, of any tax in Municipality.
Government of Bombay by its Resolution No. 234 adopted
on 26.1.1881 approved the levy of octroi in the Cantonment on the same articles
and the same rate as in Poona City; and it approved the proposal to divide the proceeds on
some terms, the details of which are not required to be noted. The Government
of India conveyed its sanction to the levy of octroi in the Cantonment by its
telegram dated 4.3.1881. Thereafter came the aforesaid Notification of 12th March, 1881 and the Municipality started
collection of octroi duties for the Cantonment from that year itself.
aforesaid arrangement smoothly continued till 1912 by which year the Cantonment
Act of 191 0 had come into force. The Cantonment then wanted a new method of
apportionment as it thought that 315 the existing agreement relating to
apportionment was unjust to it, The State Government did not, however, agree
and the disagreement was conveyed to the Cantonment. The Municipality proposed
to revise its Schedule of Octroi Rules in 1917 by enhancing the same, which was
opposed by the Cantonment Committee. On the matter being examined by the
Government it approved the revised Octroi Schedule as mentioned in its Order
No.6649 dated 25th
Order required the General Officer Commanding of the Cantonment to be informed
that the Government saw no reason to modify its earlier decision.
the meantime, the Government had issued four notifications bearing Nos. 4160 to
4163 dated 17th June, 1918 which were gazetted on June 20, 1918. Notification No- 4160 had been issued in exercise of
powers conferred by section 15(1) of the Cantonments Act, 1910 and it imposed
taxes mentioned in this Notification in the Cantonment of Poona "in supersession
of the notifications of the Government noted on the margin and all other
notifications on the same subject." Notification No. 4162 had also been
issued in exercise of the same power and it dealt inter alia with octroi
duties. Notification No. 4163 was, however in exercise of powers conferred by
section 15(2) of the aforesaid Act and applied to the Cantonment of Poona in an
adapted form the rules of the Poona City Municipality
mentioned in Notification relating to assessment collection and recovery of octroi
After the aforesaid Notifications had bean issued Cantonment Act. 1924 was
enacted. Chapter V of this Act is on the subject of 'Taxation'; and sections 60
to 63 of this Chapter set out the power and procedure of imposition, of any tax
in any cantonment. (A part of this Act was repealed in 1927).
1963 new Octroi Ruts were tamed by the appellant which enhanced the rates of octroi
and included new articles in the schedule and it started collecting octroi
accordingly from all concerned.
the backdrop of aforesaid broad facts, the respondents challenged the
collection of octroi by the appellant as per revised Rules of 1963 contending
that nei- ther in fact nor in law the appellant had 'authority of law' required
by Article 265 of the Constitution to carry on the work of collection of octroi
from them as per 1963 schedule which enhanced the rates of octroi and included
new articles in the schedule.
The factual aspects of the submission were:-
The 1881 Notification having stated that octroi duties at the rates "for
the time being" dutiable, are imposed, the rates which were prevailing on
12th March, 1881 and the articles on which octroi was leviable on that date
alone could be collected by the appellant; and not at the rates mentioned in
the Schedule of 1963 Octroi Rules, nor on articles added by those Rules.
The 1881 notification in any Case, stood superseded by the fasiculus of
Notifications dated June
18, 1918 which had
been duly gazetted.
the, later Notifications did not supersede the 1881 Notification, the same, in
any case, impliedly repealed the former.
The legal affirmity of the collection was assailed on these counts :- (1) The
appellants not having entered into an agreement with the Cantonment as required
by Section 45(1)(b) of the Cantonments Act, 1924, so also by section 32(4) of
the Bombay Provincial Municipal Corporations Act, 1949, after new Octroi Rules
were framed in 1963, it had no authority to collect octroi on behalf of the
the Notification of 1881 were to be held to permit levy and collection of octroi
not only on the rates and articles as prevailing on 12th March, 1881 but on articles other than those and/or at rates higher
than those, the notification is unsustainable being a product of impermissible
The procedure contemplated by section 62 of the Cantonments Act, 1924 having
not been followed while enhancing the rates of octroi duties by 1963 Rules, col-
lection of the same at the enhanced rate would be against 'authority of law.'
13. We propose to deal with the submissions seriatim.
of the 1881 Notification
The basic point which would need our consideration to answer this question is
to find out what was meant by the expression "for die time being"
used twice in the aforesaid Notification. According to S/Shri Shanti Bhusan and
Anil Divan learned Senior Advocates appearing for the respondents, this
expression refers to the rates of octroi which were prevailing at the time when
the notification was issued; and octroi on the articles or at the rates which
became effective after the Notification saw the light of day cannot be imposed or
collected with the aid of this no- tification.
support of this submission, reliance has been placed on a judgment of this
Court, to which one of us (Kuldip Singh, J.) was it pang, in Jivendra Nath Kaul
v. Collector/District Magistrate and another, 1992 (3) SCC 576.
that case, this Court was concerned to find out the purport of this expression
used in section 28(1) of the concerned provisions, which dealt with the
question as to when a motion of no confidence can be said to be carried out.
The section required support of more than half of the total number of members
"for the time being." The contention advanced was that as the Zila Parishad
was constituted of 62 members, but as 31 valid votes had been cast in favour of
the no-confidence motion, which number was not was not more than half of 62,
the motion could not be said to have been carried out as required by the
statutory provision. This Court stated that die expression "for the time
being " meant "at the moment or existing position"; and as at
the time no- confidence motion was taken up, the total number of members of the
Zila Parishad was 56, it was held that the requirement of law was satisfied.
Learned Advocate General of Maharastra appearing for the appellant, however,
contends that the aforesaid ex- pression has no fixed connotation and is
capable of different interpretation accord- 317 ing to the context. This is was
what been stated at page 257 of Volume 2 of "Words and Phrases"
to the statement made there, this expression in one context may point to
"one single period of time"; and in another context to
"succession of periods."
That the aforesaid expression means, as is the contention on behalf of the
appellant receives support from what was pointed out by a Constitution Bench in
the case of Madhav Rao Scindia Bahadur v. Union of India, 1971 (1) SCC 85. In
that case, to which our attention has been invited by the learned Advocate
General, while dealing with be meaning of the word "Ruler" as defined
by Article 366 (22) of the Constitution, which had stated at that time that it
included any person "for the time being" recognized by the President
as the successor of the Ruler with whom any agreement had been entered into and
who had been so recognized by the President it was observed in paragraph 112
that the expression "for the time being" predicates that there shall
be a Ruler of Indian State and that if the first recognised Ruler dies, or
ceases to be a Ruler, a successor shall be appointed, and that there shall not
be more Ruler than one at a given time. This observation indicates that the
recognition given by the President is not one time recognition, but the same
could be bout time to time.
That die intention of the concerned authorities while issuing the Notification
at hand was not confined to the rates prevailing or articles subjected to octroi
on the date of Notification is apparent, according to the learned
Advocate-General, from what has been recorded contempora- neously in the
Government file, a zerox copy of relevant nothings of which has been made
available to us by him. At page 13 of this collection we find mention of the
fact that rates of octroi duties to be imposed and the articles on which octroi
is to be imposed in the Cantonment were to be so as enforced in the
Municipality "from time to time", There is also enough material on
record to show that octroi at rates prevailing subsequent to the date of
aforesaid notification had come to be collected by the Municipality on behalf
of the Cantonment for a sufficient long period after the issuance of 1881
Notification. Thus, all concerned persons had accepted the aforesaid
Notification to mean that the rates (so also the articles) need not be those
which prevailed when the Notification was issued.
view of all the above, we hold that the 1881 Notification was meant to impose octroi
duties, not only at the rates prevailing when the Notification was issued, nor
was confined to the articles on which octroi was lien leviable, but these could
be collected at rates higher than those prevailing at the time of issuance of
the Notification, or could be levied on articles then not subject to octroi.
of 1881 Notification
The submission relating to supersession is advanced on the strength of what was
stated in Notifications Nos. 4160- 4163 dated 17th June, 1918. Shri Divan was very emphatic that if these four
notifications are read as a whole, as they are required to be, there would be
no manner of doubt that the 1881 Notification relating to octroi stood
superseded. This contention is equally emphatically challenged by the learned
have closely perused the aforesaid Notification and we do agree with Shri Divan
that they form a complete scheme in themselves relating to tax in the
Cantonment of Poona;
what has been stated in these Notifications would prevail insofar as taxes to
be imposed in the Cantonment is concerned, in preference of earlier
Notifications on the subject. Question, however, is whether I can be said on
the language of the 1918 Notifications, that the 1881 Notification relating to octroi
stood superseded. 'it deserves mention that Notification No. 4160 alone, of the
four Notifications, expressly stated about supersession of the-Notifications
mentioned in the margin of this Notification. Shri Divan draws our attention
that of the four Notifications mentioned in the margin, one is Government
Notification No, 481 dated 18th September, 1891, which had superseded Government Notification No. 574 of 5th December, 1883, which in its turn had superseded
Notification No. 165 of 2th
March, 1881. Relying
on this historical setting, it is urged that Notification No. 4160 must be held
to have superseded the Notification of 12th March, 1881 relating to octroi also.
The learned Advocate General joins issue and submits that Notification No. 4160
having not dealt with the subject octroi, what can reasonably be said to have
been superseded by this Notification qua the Notification of 12th March, 1881
which had dealt not only with the octroi duties but Property Rates also, I that
die supersession of which Notification No. 4160 mentioned, is of those taxes
which Were the subject of that Notification. It is contended that this
Notification stated about suppression of notifications "on the, same
subject", which, according to learned Advocate, General, means the subject
dealt with by that Notification.
do find sufficient force in this submission and, according to us, it would not
be a correct reading of Notification Nos. 4160 to hold that it superseded Noti-
fication on 12th March,
1881 in its entirety.
In our view, the supersession has to be confined to taxes mentioned in
Notification No.4160. Octroi being not one of these taxes, we hold that Notification
did not supersede 1881 Notification qua octroi. This conclusion of ours
receives support from what has been stated in Notification No.4162 which has
specifically dealt with imposition of octroi duties and trade registration
repeal of 1881 Notification relating to octroi
The alternative submission of Shri Divan in this context is that, in any case,
Notification No. 4162 has to be read to have impliedly repeated 1881
Notification re- lating to octroi duties. We find no difficulty in accepting
this submission, because Notification 14a 4162 which is on the subject of
imposition of octroi duties has been supplemented by Notification No. 4163
dealing with assessment collection and recovery, of octroi duties. This aspect
has been dealt with by section 15(2) of the Cantonments Act, 1910; the
imposition being covered by sub- section (1) of this section. As these
Notifications were issued with the previous sanction of the Governor-General in
Council, we have no hesitation in stating that by issuing Notifications No.4162
and 4163, the issuing authority did impliedly repeal Notification of 1881
dealing with octroi.
The learned Advocate General does not really contest the legal position, What,
however, has been urged by him that the Notification No. of 1918 dealing with
the imposition of octroi and rates thereof had not been acted upon and a
decision had in act been taken to formally cancel these Notifications, which,
however, did not actually happen. Despite non-cancellation of these Notifications
as required by section 21 of the General Clauses Act, as per which provision
any addition, amendment, variation or rescission of any notification has to be
"in the like manner" and "subject to the like sanction" as
the issuance of notification, the contention is that if we were to bear in mind
the practical construction given to these Notifications, it would be apparent
that they were not sought to be acted upon. Another related submission is that
these Notifications should be deemed to have good effaced because of disuse for
almost 50 years by 1963, as permitted by the legal process known as
Divan and Shri Shanti Bhushan would not agree with the learned Advocate
General, because, according to them a statutory notification could not be set
at naught any executive decision, which is the basis of the first submission of
the learned Advocate General relatable to practical construction. The learned
counsel for respondents submit that the Local Government knew that even an amendment
of these Notifications could be made only by publication in official gazette,
because of which the little omission which had occurred in the Notification
No.4163 had been supplied by a corrigendum published in official gazette, Our
attention is invited to what was stated on this subject in Mahender Lal Jaine
v. State of Uttar Pradesh, 1963 (Suppl) 1 SCR 912 at page 951. In the written
submissions of the respondent-:, filed on 31st January, it has been mentioned,
and rightly, that administrative practice (and for that matter, administrative
order) cannot supersede or override statutory rule or Notification. Some
decisions have also been mentioned in this regard to which we are not
adverting, because this legal proposition is well settled.
we are agreeing with the learned counsel for the respondents on the legal
aspect we do not propose to burden the judgment with the long factual facts,
highlighted by the learned Advocate General by referring to Government Order
No. 6649 dated 25th September, 1918 (at pages 472 to 482 of Part-II of the
Paper Book) that die Notifications of June 1918 relating to octroi duties were
not acted upon. We would not be justified in allowing the Local Government, or
even the Governor-in Council, to undo a notification issued with the previous
sanction of Governor-General in Council.
to us, the only legal way in which Notifications No.4162 and 4163 could have
been reminded was by issuance of another Notification in the like manner and
subject to like sanction prevailing as when those were issued. It would also be
hazardous to allow an executive authority to obliterate a statutory
Notification. We would take this view, more so, being concerned with a subject
which fell, not within the domain of the Provincial Government, but the Central
Government, as did the subject of cantonment.
What has been stated relating to "executive construction" or
"practical construction" in Crawford's 'Interpretation of Laws at
pages 393 to 401, watch has been 320 relied on by the learned Advocate General,
would not persuade us to agree with him in this submission, though it may be
permissible to take note of post-enactment history to find out as to how an
enactment was understood on the principle of "contemporanea expositio",
of which mention have been made at pages 551 et. seq. of Francis Bennions'
"Statutory Interpretation" (1984). The learned Advocate General is
not relying on the statements made in the aforesaid Government Order for the
purpose of interpreting the two Notifications, but for contending that the
Notifications had stood effaced because of what had been stated therein.
the principle of 'contemporanea expositio' also, which is available to find out
how a statutory provision has been understood by those whose duty it is to
construe, execute and apply, as mentioned at pages 659-60 of Polestar
Electronics (P) Ltd. v. Addl. Commissioner, Sales Tax, 1978-1 SCC 636 and at
page 383 of Deshbandhu Gupta v. Delhi Stock Exchange, 1979-3 SCR 373 (to which
our attention has been invited by the Advocate General through his written
Arguments filed on 21 1 A 995), we have two observations to make. First, this
principle is not decisive or controlling of the question of construction; it
has only persuasive value. If occasion arises, such interpretation may be even
disregarded and in a clear case of error court would without hesitation refuse
to follow such construction. (See obser- vations of Mukherji J. in Balaeswar v.
Bhagirathi, ILR 35 al.701 noted in Deshbandhu's Case). Secondly, as already
stated, reliance is being placed on the nothings in the file not to interpret
the Notifications in question, but to declare then as dead. This is not
permissible. Not only this, Shri Divan has objection to the reliance on the notings
made in the file even for the purpose of interpretation of the Notifications,
in support of which submission he has referred to what was stated in para 39 of
Doypack Construction Pvt. Ltd. v. Union of India, 1988 (2) SCC 299. As to the
reliance on the decision in Polestar Electronics' case, it has been mentioned
in the written submissions filed on behalf of the respondents that in that case
itself it was stated at page 660 that the view of the Department as to the
meaning of a statute administered by it is not admissible as an aid to
construction because "wrong practice does not make the law." It has
been further argued that the present was, in any case, not a case of a
statutory provision being interpreted by, the Department, in which case it may
be that the interpretation put upon it has some sanction, if there be long
acquiescence by the legislature,, as mentioned in Maxwell's Interpretation of
the Statutes, noted in the aforesaid decision at page 660.
of 1918 Notifications due to desuetude.
Learned Advocate-General's another submission relating to implied repeal is
that the 1918 Notifications having not been acted upon must be taken to have
become a dead letter because of its long disuse and the same stood repealed
because of the legal process known as desuetude. He draws our attention to what
has been stated in this regard in Francis Bennion's 'Statutory Interpretation'
where this matter has been dealt at pages 441 and 442 of 1984 Edition.
stated there that desuetude is a legal process by which, through disobedience
and lack of enforcement over a long period, a statute may loose its force with-
321 out express or implied repeal. This doctrine has not however, been accepted
in United Kingdom for the reason that otherwise an inquiry would be needed
before the subject could know whether or not an enactment would bind him.
Scots Law, however, this doctrine has been applied.
the English Law the further commentary is that though this doctrine has no
application, an Act may in practice be 'dead letter', which would be so if the
Act falls into disuse or is not applied as intended. In this connection Bacon's
dictum: ' .............let penal laws, if they had been sleepers for long be
confined in the execution' is quoted. Reference has also been made to what
happened to the Limitation Act, 1623, apart from mentioning about the refusal
to act according to Sex Disqualification (Removal) Act, 1919, despite which
enactment a peeress was denied the right to sit in the House of Lords, Vide
Committee of Privileges, Viscountess Rhonddas' Claim, 1922-2 AC 3 39, (HL). The
judicial emasculation of the first act had caused Lord Sumner to lament the
difficulty of extracting'...anything that deserves to be called a principle
from the decisions of three centuries, which have been directed to what is
after all the task of decorously disregarding an Act of Parliament'.
Craies's 'Statute Law' (7th Edition) it has been stated at page 7 that
desuetude is a process by which an Act of Parliament may lose its force without
express repeal. It does not, however, consist merely of obsolescence or disuse:
must also be a contrary practice, which must be of some duration and general
application. Lord Mackay's view in Brown v. Magistrate of Edinburgh, 1931 SLT
(Scots Law Times Reports) 456 (458) has also been noted, which is as below
"I hold it clear in law that desuetude re- quires for its operation a very
considerable period, not merely of neglect, but of contrary usage of such a
character as practically to infer such completely established habit of de
community as to set a counter of law or establish a quasi-repeal" A
perusal of this judgment shows that Lord Mackay ventured to prefer the Scottish
system to that of England regarding which Lord Eldon, as a member of House of
Lords, had stated thus in Johnstone v. Scott, (1802) 4 Pat 274 at p. 285: -
"The English lawyer feels himself much at a loss here; tie cannot conceive
at what period of time a statute can be held as commencing to grow in
desuetude, no when it can be held to be totally worn out. All he can do is to
submit to what great authorities have declared the Law of Scotland to be."
Lord Mackay thereafter enunciated the afore-quoted test of desuetude for it to
would be useful to note what has been stated in this regard in the chapter
headed 'Repeal and Desuetude of Statutes' by Aubrey L. Diamond, printed in
Current Legal Problems (1975), Volume 28 pages 107 to 124. Diamond has quoted
on this subject what Lord Denning M.R. observed in Buckoke v. Greater London
Council, 1971 Ch.655 at page 668, which reads:- "It is a fundamental
principle of our con- stitution, enshrined in the Bill of Rights, that no one,
not even the Crown itself, has 'the power of dispensing with laws or the execution
of laws'. But this is sub- 322 ject to some qualification. When a law has
become a dead letters the police need not prosecute, nor need the Magistrate
can give an absolute discharge"
Diamond has thereafter referred to the Scottish approach to desuetude at pages
122 and 123 and has noted some decisions wherein an Act of Scottish Parliament
was not enforced because of desuetude. It would be of interest to note that
when an argument was advanced that the particular Act (which was of 1606) had
been left unrepealed by the Statute Law (Repeals) Act, 1906, and must,
therefore, be regarded as still in force, the reply given by one of the law
Lords was that "it was for the Court and not for the Statute Law Revision
(sic Repeal) Act to determine whether Act of 1606 was or was not in desuetude.
Though in India the doctrine of desuetude does not appear to have been used so
far to hold that any statute has stood repealed because of this process, we
find no objection in principle to apply this doctrine to our statutes as well.
is for the reason that a citizen should know whether, despite a statute having
been in disuse for long duration and instead a contrary practice being in use,
he is still required to act as per the 'dead letter'. We would think it would
advance the cause of justice to accept the application of doctrine of desuetude
in our country also Our soil is ready to accept this principle: indeed, there
is need for its implantation, because persons residing in free India, who have
assured fundamental rights including what has been stated in Article 21, must
be protected from their being, say, prosecuted and punished for violation of a
law which has become 'dead letter'. A new path is, therefore, required to be
laid and trodden.
written submissions filed on behalf of respondents, it has been stated that the
theory, of desuetude can have no application to the facts of the present case,
since the challenge by the respondents is to the levy and calculation under the
1963 schedule, and not to the rates enforced since 1918. This submission has
been characterised as "most important". As to this -we would observe
that if Notification of 1818 were to prevail despite 1918 No- tifications, the
fact that some changes were made in the schedule in 1963 has no legal bearing
on the question under examination. The theory or desuetude has been pressed
into service by the appellant only to take can: of relevant 1918 Notifications.
If those Notifications can be said to stand eclipsed, the fact that changes
were made in the rates etc. in 1963 cannot stand in the way of application of
the theory of desuetude.
Coming to 1918 Notifications, we find materials on record to show that it has
not been implemented till date; and in fact what has been done was contrary,
and that too for long period. So, we hold that Notification Nos. 4162 and 4163
dated 17th June 1918 had stood repealed 'quasily' by the time new Octroi Rules
came to be framed in 1963, which were applied to realise octroi from the respondents.
Statement made in the written submissions filed on behalf of the respondents
that this cowl had treated Notification No.416O as operative in the case of
western India Theatres v. Cantonment Board, Pune, 1959 Suppl. (2) SCR 63, does
not affect the view taken by us relating to quasi-repeal of Notification Nos.
4162 and 4163 inas- 323 much as the field of operation of Notification No.4160
is different from that of later Notifications, as already noted.
Being satisfied that 1881 Notifications held the field even by 1963, the legal
objections relating to its applications may ,now be dealt with. These
objections, as already noted, are
of agreement as required by law,
with the procedure mentioned in section 62 of the Cantonments Act, 1924.
shall deal with these objections as well seriatim Lack of agreement as required
That such sawn agreement is required is not disputed by the learned Advocate
General. His stand is that such an agreement had in fact been entered into
between the Poona Cantonment Board and Poona City Municipality in 1881 and the same was being renewed from time to time,
as would appear from the resolutions of the Cantonment Board, copies of which
have been printed in Appeal Paper Book (ii) at pages 245-428. As we have held
that the 1881 Notification held the field by 1963, the fact that no agreement
was entered into after the Octroi Rules of 1963 were framed by the appellants
as had been done between Poona Municipal Corporation and Kirkee Cantonment
Board, is not relevant We. There fore, do not find any legal infirmity in
enforcement of 1963 Octroi Rules on the ground of lack of agreement with the
Poona Cantonment Board after these ruts came into force.
Shanti Bhushan has taken pains to impress upon us that if we were to read the
expression "for the time being,, finding place in 1881 Notification to
mean "from time to time", that notification has to be struck down
because of the delegation of an essential feature of the statute, which is not
permissible in law.
the question of permissible extent of delegation the leading judgment is one
rendered by a 7-Judge Bench of this Court in In re Delhi Laws Act, 1951 SCR
747. The ratio of that decision came to be applied to a taxing statute in Rajnarain
Singh V. Chairman, of Patna Demonstration Committee, 1955-1 SCR, 290. It was
held there by the majority that a delegatee has no power to change a policy of
the statute; and imposition of tax without observing the formalities prescribed
by the statute was held to be a change in the legislature policy. The statute
which had came to be examined in that case had required an opportunity to be
given to raise objection; but the notification issued by the delegate which had
the effect of levying tax had been done without inviting objection. The same
was, therefore struck down as ultra vires.
Shanti Bhushan contends that the octroi collected by the appellant being from
persons residing in Poona Cantonment, opportunity was required to be given to
them to have their say if they have objection to the enhancement of rate of octroi
or for imposition of octroi on new articles as the 1963 Rules purported to do.
It is urged that because of the special importance of Cantonment the Central
Government has been conferred with the power to control 324 these areas; and it
is because of this that the Cantonments Act of 1924 required by its section 62
to seek objection before imposing any taxation which had admittedly not been
done in the present case; and so, octroi could not have collected by the
appellant at least after coming into force of The 1924 Act. (As we would point
out later, section 62 has not application to the facts of the present case. The
non-inviting of objection has therefore introduced no legal infirmity).
support of his submission, Shri Shanti Bhushan has further referred to Bagalkot
State Municipality v. Bagalkot Cement Company, (1963 (Supp.) (1) SCR 710
wherein the stand of the municipality that octroi duty had become automatically
realisable from that area which had come to be included within the municipal
limits following the enlargement of Be limit, was held to be not sustainable.
had been stated in that case has no application, be- cause here the appellant
is not trying to realise octroi from the residents of the Poona Cantonment
because of enlargement of the limit of Poona Municipality.
Shanti Bhushan than places reliance on B. Sharma Rao v. Union Territory of pondicherry,
(1967 (2) SCR 650.
the particular Act of Pondicherry Legislative Assembly was held to be an
abdication or effacement by the law making authority inasmuch as it had by the
Act in question allowed the amendments to be made in the parallel Madras
statute to prevail in Pondicherry without knowing that those amendments would
be. Shri Shanti Bhushan contends that same would be the position here if the
1881 Notification were to permit changes in the rates of octroi, without
knowing what the same would be, to prevail in the Cantonment area also.
Advocate General has contended that the case of Sharma Rao was distinguished in
Gwalior Rayon Silk Mfg. (Wvg.). Company Ltd. v. The Assistant Commissioner of
Sales Tax, (1974 (2) SCR 879. In this connection what was stated by Khanna, J.
at pages 885-6 and by Mathew J. at pages 908-9 has been brought to our notice.
In that case the validity of section 8(2)(b) of the Central Sales Tax, Act,
1956 was assailed on the ground that it suffered from the vice of excessive
delegation inasmuch as it stated that the rate of central sales tax in case of
goods other than declared goods shall be calculated at the raw of 10%, or at
the rate applicable to the sale or purchase of such goods inside the
appropriate State,, whichever is higher. The Constitution Bench rejected the
contention because of clear legislative policy being discernible in what has
been provided in the impugned section. This shows that merely because the matter
of rate at which tax is required to be imposed is left to be determined by some
authority other than the one which imposesit, the same would not be
impermissible in law.
Still another decision pressed into service by Shri Shanti Bhushan in this context
is that of Atlas Cycle Industries v.State of Haryana, 1971 (2) SCC 564. A
perusal of this decision shows dud A too was on a different point.
the effort of the Municipality of Sonipat to realise octroi on the force of
Notification which had been issued earlier was not upheld, because the relevant
section did not take care, of Notification, but had mentioned about rules,
bye-laws, orders, directions and powers.
47.To buttress his submission, the learned Advocate General brings to our notice
the decision in MK Papaiah v. Excise Commissioner, 1975 (1) SCC 492, in which
it was held that if the legislature retained its control over its delegate by
exercising its power of repeal, the same would meet the objection relating to
excessive delegation, for which purpose the test to be applied is not whether
the legislature has delegated any matter relating to essraial policy. It is
contended what was stated in Papiah's case by a three-Judge Bench through
Mathew, J. was accepted, as correct by a Constitution Bench in A.K. Roy v.
Union of India, 1982 (1) SCC 27 1.
What was held in Brij Sunder Kapoor v. First Addl. District Judge, 1989 (1) SCC
561 is more relevant for our purpose, because in that case a two-Judge Bench of
this Court had upheld the delegation as contained in section 3 of Cantonment (Extention
of Rent Control Laws) Act, 1957, by which the Central Government by a
notification in official gazette could extend to any cantonment any enactment
relating to control of rent which was in force in the State in which the
cantonment is situated. The Bench distinguished Shama Rao's case and held that
the delegation was valid, including that part of it by which amendments in the
concerned State legislation were allowed to become effective in the cantonment
area as well.
What was stated in Brij Sunders'case about the typical situation of cantonment
in para 25 is more important for our purpose. The same is as below:-
"These cantonments were located in the heart of various cites ha the
different States and unlike the position that prevailed in early years, had
ceased to be a separate and exclusive colony for army personnel. It was,
therefore, but natural for Parliament to decide, as a matter of policy, that
there should be no difference, in the matter of housing accommodation, between
persons residing in cantonment areas of a State and those residing in other
parts of the State and it is this policy that was given effect to..... Having
decided upon this policy, it was open to Parliament to do one of two things:
pass a separate enactment in respect of the cantonment areas in each State or
to merely extend the statutes prevalent in other parts of the respective States
by a single enactment. The second course was opted upon 50.What was stated
relating to cantonments in the aforesaid excerpt qua housing accommodation
should apply, according to us, to levy of taxes as well on persons residing in
cantonment areas. It can well be said that as a matter of policy there should
be no difference in taxing the residents of cantonment areas and those residing
in municipal areas, in view of the fact that the former have ceased to be a
separate and exclusive colony. for armed personnel, as pointed out in the
being the legal position, we hold that the 1881 Notification cannot be assailed
on the ground of impermissible delegation. -Me second legal infirmity also, as
canvassed by the learned counsel for the respondents, therefore, does not
with the procedure mentioned in section 62 of the Cantonments Act, 1924 52.That
the procedure contemplated by section 62 has not been followed is not in
disputes The stand of the appellant is that 326 procedure was not required to
be followed. The respondents have serious objection to this stand of the
appellant 53.The objection is founded on the legal proposition that enhancement
of rates by the Octroi Rules of 1963 have to be taken as imposition of octroi,
which would have required invitation of objections, of which mention has been
made in section 62. The question for determination is whether en- hancement of
rates of octroi can be said to be imposition of octroi, in which case alone
section 62 would get attracted, because of what has been stated in sections 60
and 6 1. That this is so is very strenuously contended by Shri Anil Divan by
placing reliance on two decisions of this Court, one of which is of
Constitution Bench: The Amalgamated Coal Fields Ltd. v. Janapada Sabha Chhindwara
1963 Sup, (1) SCR 172; and another by a two-Judge Bench:in Dhrangadhara
Chemicals Works Ltd. v. State of Gujarat, 1973 (2) SCC 345.
Amalgamated Coal Field's case the legality of levy of the tax imposed on coal
at 9 pies per ton by the Janapada Sabha of Chhindwara was assailed on the
ground that die same was in violation of section 51(2) of the concerned Act
(noted at page 191 of the Report) which had laid down that the 'first
imposition' of any tax shall be the subject to the previous sanction of the
Provincial (Government The tax on coal had not, however, been imposed for the
first time on the residents of the Janapada Sabha. What the Janpadha had done
was that the tax which was earlier being levied by a Mining Board (whose
successor the Sabha was) at the rate of 3 pies per ton had been enhanced to 9 piece.The
appellant took a stand that though the Janpadha Sabha had on, enhanced be rate
of tax, the same could have been done only with the previous sanction of the
Provincial Government, as laid down in section 5 1(2), despite the section
having required this for 'first imposition'. The Constitution Bench upheld this
contention. Mr. Divan, therefore, contends that enhancement of rate of octroi
duties by 1963 Rules could have been done only in accordance with the
provisions contained in sections 60 to 63 of the Cantonments Act 1924.
Learned Advocate General, however, submits that what was held by the
Constitution Bench in the aforesaid case may not be taken to mean that every
case of enhancement of rate would be first or fresh imposition of tax.
According to the learned counsel, the Constitution Bench had regarded the
imposition of the levy at the altered rates as 'first imposition' only in the
context (this word has been used at page 193 of the Report) of what had
happened; and it is because of this that the altered rates were 'deemed' (page
194) to have been included in the expression 'first imposition'. The context,
as per the learned counsel was that the Janpada Sabha had levied the tax for
the first time and it is because of this that it was taken to be first
imposition qua the Sabha residents. Learned Advocate General submits that if
what was held by the. Constitution Bench were to be taken literally, even if
the rate of any tax were to be enhanced, say, even by 1% the same would require
the procedural aspect relating to imposition of tax to be gone through whole
hog, which could not have been the intention of the constitution Bench.
have duly considered the rival submission. Nothing really turns on the 327 rate
of change, according to us. It cannot be that if the change be significant
(say, 10051) then only the same would be a case of fresh imposition, but if it
be insignificant (say, 1% as mentioned by the Advocate General), die same would
not be a case of fresh imposition. Even so, what has been contended by the
learned Advocate General seems to have force, as in Amalgamated Coal Field's
case this Court did deal with a levy which had been imposed for the first time
by the Janpada Sabha.
Divan urges that what was held by the two-Judge in.Dharangadhra Chemicals' case
(supra) would not leave any- thing to doubt that increase in rate of tax has to
be taken to be a case of imposition of tax. But in that case also the
Municipality's increase of octroi was in first act, because of which what has
been urged by the learned Advocate General qua Amalgamated Coal Field's case
would apply to this case also.
case of Visakhapatnam Municipality v. Nukaraju, 1976(1) SCR 544, which was cited by shri Shanti
Bhusan in some other context, is more relevant in the present context.
what happened Was that no opportunity to object was given to the persons of the
area, which had come to be included in the municipality subsequently, before
calling upon the residents to pay tax in question. Though the mu- nicipality in
that case lost on some other ground, what had been stated about the need to
call for objections is relevant inasmuch as it was stated that even for
imposition of tax at new rate objection is required to be invited.
stand was taken according to us, because the proviso to Section 81(2) of the
concerned Act (noted at page 548) had stated that before passing a resolution
imposing a tax for the first time or increasing the rate of an existing tax the
council shall publish a notice in the prescribed manner declaring the requisite
intention. It is because of this requirement that the need for calling
objections for increased rate as well was held obligatory.
This is not all that we propose to say on this important facet of the appeals.
We think that if sections 60 to 63 of the 1924 Act are read closely it would
appear that for change in the rate of tax already in operation, objections are
not required to be invited. To bring home this, let sections 60 to 63 of the
Act, which together form a chain, be noted:- "60. General power of
taxation- (1) The Board may, with the previous, sanction of the Central
Government, impose in any Cantonment any tax which under any enactment for the
time being in force, may be imposed in any municipality in the State wherein
such cantonment is situated:
Any tax imposed under this section shall take effect from the date of its
notification in the official Gazette, or where any later date is specified in
this behalf in the notification from such later, date.
Framing of preliminary proposals- When a resolution has been passed by the
Board proposing to impose a tax under section 60, the Board shall in the manner
prescribed in section 255 publish a notice specifying - (a) the tax which it is
proposed to impose;
(b)the persons or classes of persons to be made liable and the description of
the property or other taxable thing or circum- stance in respect of which they
are to be mode liable; and (c)the rate at which the tax is to be levied.
Objections and disposal thereof- (1) Any inhabitant of the cantonment may,
within thirty days from the publication of the notice under section 61, submit
to the Board an objection in writing to all or any of the proposals contained
therein and the Board shall take such objection into consideration and pass
orders thereon by special resolution.
Unless the Board decides to abandon its proposals contained in the notice
published under section 61, it shall submit to the Central Government through
the Officer Commanding in-Chief, the command, all such proposals alongwith the
objections, if any, received in connection therewith together with its opinion
thereon and any modifications proposed in accordance with such opinion an d the
note published under the said section.
Imposition of tax - (1) The Central Government may authorise the Board to
impose the tax either in the original form or, if any objection has been
submitted in that form or any such modified form as it thinks fit. "
The aforesaid shows that the notice required to be published by Section 61
specifying, inter alia, "the rate at which the tax is to be levied",
of which mention has been made in clause (c), refers to the tax to be levied,
and not which has already been levied. Clause (a) makes it clear that the
publication required by Section 61 is about the tax which is proposed to be
imposed. These provisions would show that the objection which is to be
solicited, pursuant to the mandate of section 62, has to be regarding the tax
proposed to be imposed and the rate at which it is to be levied. The opening
sentence of section 61 mentions about the proposal of the Board "to impose
a tax" ; and so, the imposition of which section 60 speaks of, is of a tax
proposed to be imposed by the Board, and not a tax which had already been
imposed by the time the Act came to be enforced.
We, therefore, do not find any infirmity in the collection of octroi by the
appellant at the enhanced rates, mentioned in the schedule of 1963 Rules,
without there having been compliance of what was required by section 62 of the:
For the reasons aforesaid, we hold that the 1881 Notification did in fact
permit the appellant to collect octroi duties at the rates specified in 1963 Octroi
Rules framed by the appellant; and there was no obstacle in law in allowing the
appellant to do so.
The appeals are allowed accordingly by setting aside the impugned judgment,
with the result that the writ petitions filed in the High Court by the
respondents stand dismissed. On the facts and circumstances of the case, we do
not make any order as to costs.