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SUPREME COURT OF INDIA
D/- 1-8-1967
J.C. SHAH AND S.M SIKRI, JJ.
The Municipal Council, Raichur (In all the Appeals), Appellant
Versus
Bohar Amarchand Prasanna and others, Respondents.
Civil Appeals Nos. 2382 to 2384 of 1966, D/- 1-8-1967
Advocates Appeared
Mr. S. T. Desai, Senior Advocate, (M/s. S. C. Javali and Vineet Kumar, Advocates, with him), for Appellant (In all the Appeals); Mr. M. K. Ramamurthi and Mrs. Shyamala Pappu, Advocates for Respondent No. 1 (In all the Appeals) and Respondent No. 2 (In C. A. No. 2382 of 1966).
OCTROI DUTY - IMPOSITION - VALIDITY - RESOLUTION BY MUNICIPAL COUNCIL - ADOPTION OF MODEL BYE-LAWS - DEFECTS IN BYE-LAWS - EFFECT ON VALIDITY OF TAX IMPOSITION - MYSORE MUNICIPALITIES ACT, 1964 (22 OF 1964), SS. 94, 95, 96, 97, 123, 323, 324, 325.
Fact of the Case:
The Municipal Council of Raichur imposed octroi duty on goods specified in Sch. II to the Mysore Municipalities Act 22 of 1964, entering the municipal limits for consumption, use or sale. The respondents, traders in cloth at Raichur, challenged the levy and collection of octroi duty on goods described in Sch. II of the Act in pursuance of the notification dated May 3, 1986. The High Court of Mysore held that the tax was properly imposed, but in their view collection of the tax was not authorised by law.
Finding of the Court:
The Supreme Court held that the Municipal Council had validly imposed the octroi duty and that the defects in the bye-laws did not affect the validity of the tax imposition. The Court held that the bye-laws were severable and that even without the defective bye-laws, octroi duty could be levied by the Municipal Council.
Issues: 1. Whether the Municipal Council had validly imposed the octroi duty? 2. Whether the defects in the bye-laws affected the validity of the tax imposition?
Ratio Decidendi: 1. The Court held that the Municipal Council had validly imposed the octroi duty because: a. The Municipal Council had passed a resolution selecting the octroi tax for imposition in accordance with the requirements of S. 94 of the Act. b. The resolution modifying the original resolution dated February 26, 1966 was passed in accordance with the requirements of S. 80 (5) of the Act. c. The Municipal Council had adopted the model bye-laws made by the Government, which were valid and operative. 2. The Court held that the defects in the bye-laws did not affect the validity of the tax imposition because: a. The defects were only in respect of bye-law 16, which dealt with the storage fee, and the other bye-laws were severable. b. The time contemplated to be fixed for the purposes of bye-laws 23 (e), 27 and 28 need not be fixed by the bye-laws themselves, and could be fixed by resolution of the Municipal Council. c. The failure to incorporate the list of articles in bye-law 32 did not render the rest of the bye-laws ineffective.
Final Decision: The appeals were allowed and the petitions filed by the respondents were dismissed with costs.
Judgement
SHAH, J :- On May 3, 1966 the Municipality of Raichur imposed octroi duty on goods specified in Sch. II to the Mysore Municipalities Act 22 of 1964, entering the municipal limits for consumption, use or sale. The respondents who are traders in cloth at Raichur moved the High Court of Mysore by petitions under Art. 226 of the Constitution challenging the levy and collection of octroi duty on goods described in Sch. II of the Act in pursuance of the notification dated May 3, 1986. The High Court of Mysore held that the tax was properly imposed, but in their view collection of the tax was not authorised by law. The High Court accordingly issued a writ of mandamus restraining the Municipal Council, Raichur from recovering the octroi duty levied in pursuance of the notification dated May 3, 1966. The Municipal Council, Raichur, has appealed to this Court against the orders passed by the High Court.
2. The relevant provisions of the Mysore Municipalities Act 22 of 1984 and the Bye-Laws may be summarised. By S. 94 the Municipal Council is authorised, subject to the general or special orders of the Government, and after observing the preliminary procedure prescribed by S. 95, to levy among other taxes, octroi on goods specified in Sch. II entering the municipal limits for consumption, use or sale therein. By sub-sec. (3) of S. 94 it is provided that the taxes specified in sub-s. (1) shall be assessed, levied and collected in accordance with the provisions of the Act and the rules made by the Government under S. 323. Section 95 prescribes the procedure preliminary to imposition of tax. A municipal council has by resolution passed at a general meeting to "elect for the purpose one or more of the taxes specified in S. 94 and in such resolution to specify the classes of persons or of property or of both which the municipal council proposes to make liable and to prescribe exemptions which it proposes to make, the amount or rate at which the municipal council proposes to assess any such class, and in the case of octroi, the octroi stations. The resolution must be published in the official Gazette and in such other manner as may be prescribed. Any inhabitant of the municipality may within one month from the publication of the notice submit his objection to the imposition of the tax or to the amount or rate proposed, or to the classes of persons or property to be made liable, or to any exemptions proposed. The municipal council must take into consideration the objections and submit to the Government of the State such objections with its opinion thereon and any modifications proposed in accordance therewith together with a copy of the notice. A resolution sanctioned by the Government together with a notice reciting the sanction and the date and number thereof may then be published by the municipal council in the official Gazette, and the tax as prescribed by the resolution shall be imposed accordingly. Sub-section (2) of S. 97 Provides :
"The publication of a notice under this section shall be conclusive evidence that the tax has been imposed in accordance with the provisions of this Act and the rules made thereunder."
Section 123 provides that every municipal council when submitting for sanction a proposal for the imposition of octroi, shall submit therewith for sanction bye-laws for the purposes of Cl. (m) of sub-s. (1) of S. 324 or adopt model bye-laws made for the said purposes. Section 124 deals with "non-liability for octroi and refund of octroi on goods in transit". Section 195 invests the municipal council with power to exempt articles liable to octroi duty, and S. 126 relates to the presentation of bills for octroi and prescribes penalties for evasion of payment of octroi. Section 127 prescribes the penalty for selling articles liable to octroi without a licence, or for being in possession of any such article on which octroi has not been paid. Section 323 authorises the Government to make rules for carrying out all or any of the
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