Judgment

VAIDIALINGAM, J. : In this appeal, by special leave, the short question, that arises for consideration, is as to whether the appellant railway is entitled to claim exemption from payment of terminal tax, under Item 2 of Sch. B of the rules framed by the Municipal Board of Saharanpur The appellant will be so entitled, if it is held to be a railway, as contended, on behalf of the appellant.

2. The High Court of Allahabad, in its order and judgment, under appeal, has held that the appellant is not a railway, but only a tramway encl. as such, not eligible for exemption, from the tax, in question. The short facts, leading to this appeal, may now be briefly set out. The appellant is a limited liability company, and it runs railway, between Sahadara, in Delhi and Saharanpur, in the State of Uttar Pradesh-a distance of about 95 miles or 148.865 kilo meters. The appellant company also operates within the municipal area of Saharanpur. The company was, originally, registered as a tramway, under the Indian Tramway Act, 1886 (Act 11 of 1886) (hereinafter galled the Tramways Act), on November 20, 1905. By Notification No. 5752, dated July 5, 1907, the Governor-General in Council extended to the appellant company, the whole of the Indian Railways Act, 1890 (Act 1 of 1890) (hereinafter called the Railways Act), excepting the provisions of S. 135

3. The Municipal Board of Saharanpur, the first respondent herein imposes a terminal tax, under the provisions of S. 128(1) (xiii) of the United Provinces Municipalities Act 1916 as amended by Act I of 1918. Under the said Act, the first respondent has prohibited the importation of goods, within the local limits of the Saharanpur Municipality, by rail, until the tax leviable thereon, or in respect thereof, has been paid, in accordance with the provisions of the Act and the Rules. The Board has also framed rules for the assessment and collection of Terminal Tax, as authorized by the (government Notification No. 856/XI-D.T. 3, dated May l, 1919. The rules have been amended, as per another notification No. 5965 /XI-D.T. 3, dated September 21, 1939.

4. Item 2 of Sch. B of these rules, provides for a list of articles being exempted from payment of Terminal Tax. The said item is as follows:-

"Railway stores and materials, which are required for use on Railway whether in construction, maintaining or working the same and which are not removed outside the Railway land boundaries but not stores imported into Municipal limits for purchase and consumption by Railway employees nor stores with which Railway Co-operative Stores are stocked for sale to Member."

It is the claim of the appellant that, till 1961., the first respondent has never imposed any terminal tax, on railway stores and materials required for use on the railway of the appellant company, for the purposes mentioned in Item 2 of Sch. B. But, for the first time, in January 1962, according to the appellant, the first respondent imposed tax on such stores and attempted to make the appellant liable. The appellant company protested against this levy, on the ground that, it being a railway, was entitled to the exemption provided in respect of railway stores and materials, which are required for use on railways . But, the first respondent, by its order, dated October 11, 1962, overruled the appellant s objections in this regard. An appeal, taken by the appellant company, to the Additional District Magistrate. Saharanpur, under S. 160 of the Municipalities Act, read with the relevant Rules, did not meet with success, as the said Magistrate rejected the appeal, by his order, dated May 25, l965.

5. The appellant company filed Civil Miscellaneous Writ No. 3567 of 1965, in the High Court of Allahabad challenging the levy of terminal tax and claimed exemption, under Item 2 of Sch. B, referred to earlier. The learned Judges of the Allahabad High Court, by their judgment, dated September 10, 1965, dismissed the writ petition. They were of the view that the appe