Back
1996 Supreme(SC) 859
1996(5) Supreme 209
SUPREME COURT OF INDIA
M.M. Punchhi and Sujata v. Manohar, JJ.
Fertilizer Corporation of India Ltd. Gorakhpur -Appellant
versus
Nagar Mahapalika, Gorakhpur -Respondent
Civil Appeal Nos.61-62 of 1989
Decided on 24-4-1996
Headnote:U.P. Municipalities Act, 1916-U.P. Nagar Mahapalika Adhiniyam 1959-Section 3(1)-Levy and recovery of octroi-Area in which factory of appellant is situated came under the jurisdiction of Nagar Mahapalika of Gorakhpur city-Recovery of octroi from appellant for period 7.4.1979 to 22.12.1982-Challenged-Whether octroi was validly collected from appellant for these periods?-Held, Notified Area Committee had no power to levy and collect octroi from appellant from 7.4.1979 to 14.6.1982 by virtue of ordinance 6 of 1979-With effect from 15.6.82, Gorakhpur Mahapalika has validly levied octroi on appellant. (U.P. Local Self-Government Laws (Amendment) Ordinance, 1979).
Held : Section 338 of the U.P. Municipalities Act, 1916 deals with the extension of certain enactments to and imposition of taxes in and constitution of committees for notified areas. It provides that the State Government may by notification apply or adopt to a notified area the provisions of any Section of this Act or impose in the whole or a part of such notified area any tax which might be imposed under the provisions of the U.P. Municipalities Act, 1916 as if the notified area were a municipality. To this the Ordinance has made an amendment by carving out an exception. It has provided that the taxes which can be so imposed on a notified area shall be taxes other than those taxes referred to in clauses (vii) and (viii) of sub-section (1) of Section 128. These two clauses deal with toll and octroi. The amendment thus, takes away the right to impose octroi in any notified area. Notified area is described in Section 337 as an area other than a municipality, town area or agricultural village which may be so notified by the State Government by a notification as set out therein. In such a notified area octroi cannot be imposed under Section 338 as amended by the Ordinance. Section 338 has no application to a municipality constituted under the U.P. Municipalities Act, 1916. Such a municipality has and continues to have the power to impose octroi under Section 128(1) (viii) of the said Act. The contention, therefore, that the Gorakhpur municipality prior to 16.4.1981 had no power to levy octroi must be rejected. Octroi was validly levied and imposed in Gorakhpur city under the U.P. Municipalities Act, 1916 and it continued to be validly levied when Gorakhpur city came to be governed by the U.P. Adhiniyam of 1959. Hence octroi was leviable in the extended area which became a part of Gorakhpur city with effect from 15.6.1982. (Para 14)
JUDGMENT
Delay in filing supplementary affidavit is condoned.
2. The appellant, Fertilizer Corporation of India, carries on the business of manufacturing fertilizers. It has a factory situated at Gorakhpur. Prior to 1982, the area in which the factory of the appellant is situated, was outside the city limits of Gorakhpur. This area was governed by the U.P. Town Areas Act, 1914 and it had a Notified Area Committee constituted under this Act to discharge the functions specified under this Act. The city of Gorakhpur, prior to 16.11.1981, had a municipality constituted under the U.P. Municipalities Act, 1916. With effect from 16.11.1981, by reason of a notification issued under Section 3(1) of the U.P. Nagar Mahapalika Adhiniyam, 1959, the city of Gorakhpur ceased to be governed by the U.P. Municipalities Act of 1916 and became a Nagar Mahapalika governed by the Uttar Pradesh Nagar Mahapalika Adhiniyam, 1959.
3. Thereafter the area in which the appellant s factory is situated was brought within the limits of Gorakhpur city with effect from 15th of June, 1982, by a notification issued under Section 3(2) of the U.P. Nagar Mahapalika Adhiniyam, 1959 (hereinafter referred to as the Adhiniyam of 1959 ). As a result, the area in which the factory of the appellant is situated, which was previously under the jurisdiction of the Notified Area Committee, came under the jurisdiction of the Nagar Mahapalika of Gorakhpur city.
4. The dispute in these appeals relates to the levy and recovery of octroi from the appellant for the period 7.4.1979 to 22.12.1982. A sum of Rs. 2.19 lakhs was recovered from the appellant by the Notified Area Committee by way of octroi for the period 7.4.1979 to 14.6.1982, and an amount of Rs.4.78 lakhs was recovered by the Nagar Mahapalika of Gorakhpur city by way of octroi from 14.6.1982 to 22.12.1982. It is the contention of the appellant-Corporation that it is not liable to pay octroi for the period 7.4.1979 to 15.6.1982 or for any period thereafter. The appellant made a representation to the Administrator of the Mahapalika claiming refund of the octroi paid for the said periods but the Administrator rejected the representation. The appellant thereafter filed petitions in the Court of Small Causes under Section 472 of the said Adhiniyam of 1959. These petitions were allowed on 30.8.1982 and the appellant was granted refund of the octroi paid as also a permanent injunction restraining the Nagar Mahapalika from recovering octroi. The Nagar Mahapalika of Gorakhpur preferred two appeals against these orders. The District Judge, however, dismissed these appeals by his order dated 4.10.1986. The order of the District Judge was challenged by the Nagar Mahapalika of Gorakhpur city by filing two writ petitions before the Allahabad High Court. The High Court by its judgment and order dated 7.12.1987 allowed these writ petitions. Hence the present appeals have been filed by the appellant before us.
5. We have to examine whether octroi was validly collected from the appellant for the aforesaid periods.
I. 7.4.1979 to 14.6.1982
6. Prior to 7.4.1979 the Notified Area Committee had the power to levy octroi under the U.P. Town Areas Act, 1914.
On 7th of April, 1979, the Uttar Pradesh Urban Local Self-Government Laws (Amendment) Ordinance, 1979 was promulgated which has been subsequently replaced by an Act. This Ordinance 6 of 1979 made amendments to the U.P. Municipalities Act, 1916 as also the U.P. Town Areas Act, 1914. By reason of Section 3 of the said Ordinance, the U.P. Town Areas Act, 1914 was amended. As a result, the power of a Notified Area Committee under the U.P. Town Areas Act, 1914, to levy, inter alia, octroi was taken away.
7. Prior to the said Ordinance, the Notified Town Area Committee, under Section 14(1) (g) of the U.P. Town Areas Act, 1914 had the power to impose any tax mentioned in Section 128(1) of the U.P. Municipalities Act, 1916. This included the power to levy octroi which was provided for under Section 128(1)
