1950 Supreme(SC) 4

SUPREME COURT OF INDIA
14th March 1950
H.J. KANIA C.J.I., FAZL ALI, PATANJALI SASTRI, MAHAJAN, B.K. MUKHERJEA AND S.R. DAS, JJ.
 Firm Ram Krishna Ramnath Agarwal, Kamptee -Appellants
Versus
The Secretary, Municipal Committee, Kamptee - Respondent.
Case No. 3 of 1948.
Advocates appeared
Shri T. J. Kedar and B. B. Tawakley, Senior Advocate, Supreme Court (Mr. Sri Narain Andley, Advocate, Supreme Court, with them) - for Appellants. Mr. Lobo, Advocate, Supreme Court - for Respondent. Mr. M. C. Setalvad, Attorney- General for India (Mr. S. M. Sikri, Advocate, Supreme Court, with him) - for the Union of India.

Headnote:Central Excises and Salt, Act, 1944, S. 3; Sch. I, Item 9-Excise duty on tobacco-Whether inconsistent with octroi duty on tobacco by Municipality under S. 66 (I) (e) of the Central Provinces Municipalities Act (II of 1922)-Government of India

       1. Abdul Samad v. Corporation of Calcutta (1905) I.L.R. 33 Cal. 287 approved. Central Provinces and Berar Municipalities Act (11 of 1922) S. 66 (I) (e)-levy of octroi duty on tobacco by Municipality -whether contrary to the provisions of the Central Excises and Salt Act, 194f, S. 3; Sch. I, Item 9-Government of India Act, 1935, Ss. 100; 143, 292, Sch. VII, List I, Item 45, List II, Item 49.

       The municipality of Kamptee in Central Provinces levied octroi duty on 254 bags of tobacco brought within the limits of the municipality for conversion into bidis. This octroi duty was levied under the provisions of S. 66(1) (e) of the Central Provinces Municipalities Act, 1922 which runs as follows :-

       "An octroi on animals, or goods brought within the limits of the municipality for sale, consumption or use within the limits."

       It was contended that the municipality claimed to levy the duty under S. 66(1)(e) of the said Muunicipal Act, but they had no right to do so as under S. 3 of the Central Excises and Salt Act, 1944, that excise duty was levied on tabacco by the Central Government and the levy of the octroi duty on the tobacco in question was covered by the Excise Duty and therefore not permissible.1 The argument on behalf of the appellant (who brought tobacco to Kamptee) was this: As under the Central Excises and Salt Act, I of 1944, tobacco became excisable goods under items 9 in schedule I to that Act and continued to be so tiU it got converted into bidis, the Central Government alone was entitled to levy excise duty on it till then. According to the definition of manufacture in the Excise Act that duty could be levied at any stage in the manufac~ure of bidis and therefore any tax imposed, while tobacco was b~ing converted into bidis, was excise duty. Legislation in connection with excise duty is within the exclusive province of Central Legislature as shown by Entry

       1.Section 3 of the Central Excises and Salt Act, 1944, reads: "There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in British India, and a duty on salt manufactured in, or imported by land into ahy part of British India as, and at the rates, set forth in the first schedule ..............••

       Entry 9 to the first Schedule of the Excise Act is in these terms :-

       "9. Tobacco, Cured-

       "Tobacco means any form of tobaccoo, whetber cured or uncured, and whether manufactured or not, and includes the leaf, stalks and stem of the tobacco plant but does not include any part of a tobacco plant while still attached to the earth."

       (Then follows a list of various articles into which tobaceo con be converted, like bidis, cigarettes, snuff, etc. with different rates of duty mentioned against each article.)" section 2 of the Act defines "Excisable Goods" "Manufacture" as follows :-

       1. Cd) "excisable goods" means goods specified in the First schedule as being subject to a duty of excise and includes salt ;"

       2. (f) "manufacture" includes any process incidental or ancillary to the completion of a manufactured product; and

       (i) in relation to tobacco includes the preparation of cigarettes, cigars, cherots bidis, cigarette or pipe or hQkJ;;ah toba,C~9. ~ht:wjng tobacco or snuff; and

       (ii) .45 of List I in Schedule VII of the Constitution Act. The import of octroi duty in pursuance of the Municipal Act, before tobacco was made into bidis is in conflict with the legislative power of the centre. Under S. 100 of the Government of India Act, octroi duty levied on tobacco under the legislative powers of the Provincial Government was invalid. Regarding the argument that S. 2921 of the Government of India Act kept alive the old provincial legislation, namely, the Central Provinces Municipalities Act, any the right to levy octroi ciuty was saved under S. 143 of the Consttution Act, it may be said that the provisions of the Excise Act were contrary to the right to levy octroi duty and as that Act was passed in 1944 the right to levy octroi duty saved by section 1432 of the Constitution Act had lapsed.

       Held: Excise duty and octroi were taxes essentialIy different in their nature and the power of the province to levy octroi was not inconsistent with the power of the centre to levy excise duty on the same goods. The municipality was, therefore, quite competent to levy an octroi duty on such tobacco under S. 66( I) (e) of the Central Provinces Municipalities Act, 1922.

       (2) There was no express provision in the Excise Act contrary to the provisions of the Municipal Act. Unless, therefore, it was necessarily implied under the Excise Act, the levy of the octroi duty under the Municipal Act continued to be valid. This was, however, not the case and it is wrong to think that two independent imports arising from two different sets of circumstances were not permitted in law. S. 143 of the Government of India Act preserved the right of the municipality to levy octroi duty under the Act of 1922. Registration Act (1908), S 17 (2) (iv) , as amended by T.P. (Amendment) Supplementary Act, (1929)-Does not apply to compromise decree before amendment-Compromise decree containing contingent agreement for perpetual under-lease-Registration Act S. 17 (1) (b) (d) and 2 (vi)-Applicability-Civil Procedure Code, (1908) O. 23, R. 3.

       A granted a permanent lease of the right to the underground coal in certain land belonging to him to Band C by a registered patta stipulating for a salami of Rs.8000/- and royalty. Subsequently A executed another

       1. A.I.R. 1931 P.C. 36; A.I.R. 1939 P.C. 167 applied

       permanent patta leasing the right in coal in a certain part of this land to D. Band C brought a suit for a declaration of their title and for possession of the 500 bighas leased to D. K. was also made a party as defendant. The suit was however compromised by all the parties and a decree based on the compromise was also passed on the same day. The interest of B and C was brought to sale in 1938 in execution of a decree obtained against them and was purchased by the plaintiff who instituted a suit on 3.10.1942 claiming the royalty and leases payable under the compromise decree from the representatives of D. It was pleaded that the compromise decree not having been registered was inadmissible in evidence.

       Held: (1) "Sub-section (1) of S. 17 Registration Act enumerates five categories of documents of which registration is made compulsory which include (d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent. Sub-section (2) however provided nothing in CIs. (b) and (c) of sub-section (i) applies to ..... .. (vi) any decree or order of Court. It may be mentioned in passing that this clause was amended with effect from 1.4.1930 by the Transfer of Property (Amendment) Supplementary Act, 1929, so as to exclude from the scope of the exception compromise decrees comprising immovable property, other than that which is the subject matter of suit. But the amendment cannot affect the document here in question which came into existence in 1923. Before the amendment, the clause was held to cover even compromise decrees comprising immovable property which was not the subject-matter of the suit: vide Hemanta Kumari Devi v. Midnapur Zamindari Co., 47 Cal. 485 :o(A.I.R. 1919 P.C. 79). That decision applies to the present case and obviates the objection that because the compromise in question covered also the remaining 5,300 bighas which were not the subject-matter of the title suit of 1921, it was outside the scope of the exception in sub-section (2), clause (vi)." (per Patanjali Sastri J.)

       (2) Though the legal effect of the decree was to create perpetual under lease between Band C on the one side and D on the other, yet it did not fall under S. 17 (1) (d) as the creation of that partnership was made contingent on Band C paying A the specified amount within date; and that the decree although was covered by sub-section (i) (b) was excepted by sub-section 2 (vi) from compulsory registration.