2001 Supreme(SC) 429

2001(2) Supreme 246
SUPREME COURT OF INDIA
(From Rajasthan High Court)
V.N. Khare & Doraiswamy Raju, JJ.
Municipal Council, Kota, Rajasthan -Appellant
versus
The Delhi Cloth & General Mills Co. Ltd. etc. etc. -Respondents
Civil Appeal No. 4152 of 1991
With
Civil Appeal Nos. 4153/1991, 2994/1984 and 2842/1989)
Decided on 2-3-2001
Counsel for the Parties :
For the Appearing Parties : Altaf Ahmed, Additional Solicitor General, Dr. A.M. Singhvi, Shanti Bhushan, Sr. Advocates, Sushil Kumar Jain, A.P. Dhamija, Ms. Anjali Doshi, Saif Mahmood, Prashant Bhushan, Sanjeev Kapoor, Narinder Kr. Verma, P.S. Sudheer, K.J. John, Advocates.

IMPORTANT POINT
Levy of "Dharmada" in the form of an octroi by the Municipal Council, Kota in Rajasthan State is neither unauthorised nor without the sanction of law. High Court wrongly assumed it to be "Double Taxation" and held it bad and illegal. It is valid and legal on facts and law.

Headnote:(i) Rajasthan Municipalities Act, 1959-Section 104(2)-State Govt. s Notification under, authorising Municipal Council, Kota to levy octroi under three heads (1) Octroi proper (2) Dharmada and (3) Nirkhi on goods and animals brought within limits of the Municipality for consumption, use or sale therein-Whether "Dharmada" is "Octroi" covered buy Entry 52 of List II of the Seventh Schedule of Constitution? (Yes) AIR 1962 All 83 approved relying AIR 1930 PC 129.

       Held : It is obvious that the subject-matter of water tax is not water. Though it is called water, tax, it is not levied on its production. As explained by their Lordships of the Judicial Committee in Governor-General in Council v. Province of Madras, AIR 1945 P.C. 98, it is not the name of the tax but its real nature, its pith and substance as it has sometimes been said, which must determine into what category it falls." [Emphasis supplied]. (Para 17)

       We affirm the statement of law thus made above to be correct and in our view it is not the nomenclature used or chosen to christen the levy that is really relevant or determinative of the real character or the nature of the levy, for the purposing of adjudging a challenge to the competency or the power and authority to legislate or impose a levy. What really has to be seen is the pith and substance or the real nature and character of the levy which has to be adjudged, with reference to the charge viz., the taxable event and the incidence of the levy. We are convinced on the indisputable facts on record that the levy sought to be imposed and recovered as Dharmada being only on the goods brought within the municipal limits of Kota for consumption, use or sale therein the same in truth, reality and substance is only an octroi for the purpose of carrying out the several public charitable objects statutorily enjoined upon the Municipal Board and enumerated in Sections 98 and 99 and those undertaken pursuant to the stipulations contained in Sections 101 and 102 of the Act. The mere fact that it is called by a different name (all the more so when the word octroi itself is not found used in Entry 52 of List-II of the Seventh Schedule) for historical reason and administrative needs or exigencies by the draftsmen of the notification does not in any manner either undermine the nature and character of the levy or render it any the less a levy envisaged under Entry 52 of List-II of the Seventh Schedule. The various charitable objects and ameliorative schemes and projects for which the taxes realised under the classified head of Dharmada are claimed to be spent cannot as the provisions of the Act stand enacted be said to be either unauthorised or without the sanction of law. That, apart, the irregularity or illegality, if any involved in spending the sum after collection cannot have any impact on or adversely affect, the otherwise competency of the Authority concerned to impose a levy, well within its legislative competence and further not shown to be violative of any provisions of the Constitution of India. Neither the High Court has gone into any such question of illegality in the matter of spending the tax realised nor are there any materials on record placed before us to substantiate any such claim by the respondent-companies in this regard. (Para 18)

       (ii) Rajasthan Municipalities Act, 1959-Section 104(2)-State Govt. s Notification under authorising Municipal Council, Kota to levy Octroi in three heads including "Dharmada" -High Court of Rajasthan striking it down on the assumption that it amounted to vice of double Taxation-Whether proper? (No)-Appeals allowed-Case Law referred.

       Held : Though taxation of the same thing under different names is nonetheless double taxation in popular sense, the expertise exposition of the topic seem to also lean in favour of the revenue, in that the legislature has been considered to possess the power to levy one or more tax or rates of tax on the same taxable event and since in these areas large latitude and wide discretion has always been allowed to the State to choose its own method or kind of tax or mode and purpose of levy and recovery, unless there is any prohibition in the Constitution or the very law enacted by the legislature itself prevents such a thing happening no infirmity can be said to vitiate such a levy. Wherever the taxes are imposed by different legislatures or authorities or where one of the two alone is a tax or where it is for altogether different purposes or when it is indirect rather than direct, there is no scope even for making any grievance of double taxation, at all. In the absence of any impediment specifically created in the Constitution of a country or the legislative enactment itself, the desirability or need otherwise to avoid such levies has been held to pertain to areas of political wisdom of policy making and adjusting of public finances of the State, and not for the Law Courts, though Courts would unless there is clear and specific mandate of law in favour of such multiple levies more than once, in construing general statutory provisions lean in favour of an interpretation to avoid double taxation. So much are the principles or statement of law governing a challenge to any levy on the ground of Double Taxation. (Para 22)

       Now coming to the facts and circumstances of the cases before us, we find that the levy is specific, definite and positive in terms, with a definitely disclosed object leaving no room for any doubt or any exercise to clear such assumed doubts. We have carefully gone through the original Notification in vernacular published in the Gazette dated 13.5.1968, noticed supra, and we find that the rates of the levy under challenge have been notified as part and parcel of one and the same Schedule to the said Notification and not by any different more than one Schedule and that too by means of a simultaneous exercise of powers under Section 104(2) of the Act and not on different occasion or time. Though it is seen that some of the classified items or commodities enumerated in various Entries overlap those found in the other Entries under different captions including Dharmada, they are not mere mechanical repetitions in toto, viewed either from their classification, enumeration or determination of the rates as well as the measure or quantity with reference to which the actual levy is to be made and collected. Therefore, the mere stipulation of plurality of rates in respect of some or the other of the commodities/goods under different classified groups for different purpose by itself will not render it to be dubbed or castigated as Double Taxation for spearheading a challenge on them. The Notification under consideration cannot, in our view, be said to involve the imposition of any double tax and the High Court has gone wrong in proceeding upon such an erroneous assumption and declaring thereby the levy for Dharmada purposes to be bad and illegal. (Para 23)

       Held finally : For all the reasons stated above, the appeals are accepted and allowed. The judgments of the High Court allowing the claims of the respondent companies by granting injunction and refund are hereby set aside. The suits filed by the respondent-companies shall stand dismissed. But in the circumstances of the case, there will be no order as to costs. (Para 24)