Judgment

CHANDRACHUD, J. - The Andhra Pradesh Municipalities Act, VI of 1965, (hereinafter called "the Act") came into force on April 2, 1965. Section 3 (1) (a) of the Act empowers the State Government to constitute a local area as a Municipality. Section 3 (1) (b) empowers the Government, by notification in the Gazette "to include within a Municipality any local area in the vicinity thereof and defined in such notification". Section 3 (1) (c) confers power on the Government to exclude from a Municipality any local area comprised therein and defined in such notification. Under Section 3 (2), any resident of a local area, or tax payer of a Municipality, in respect of which a notification under Section 3 (1) is published, may, if he desires to object to anything therein contained, submit his objection in writing to the Government within six weeks from the publication of the notification and the Government is under an obligation to take all such objections into consideration. Under Section 3 (3) after the expiry of the aforesaid "period of six weeks and on considering the objections, the Government may by notification in the Gazette declare to be a Municipality or include in or exclude from a Municipality, the local area or any portion thereof. By Section 3 (4), the provisions of the Act come into force in or cease to apply to any Municipality or part thereof, as the case may be, on the date of publication of notification under sub-section (3) if such date is the first day of April, or in any other case, on the first day of April immediately succeeding the date of publication of such notification.

2. Respondents 1 to 36 are residents of two villages called Ramakrishnapuram and Sriharipuram Prior to the year 1966, the area comprised in these villages was not included within the Municipal limits of the Visakhapatnam Municipality. Most of these respondents own properties situated within the limits of the two villages but they were not assessed to property tax under the Andhra Pradesh (Andhra Area) District Municipalities Act, 1920 which was in force until the introduction of the Act. They used to pay taxes to the village Panchayat.

3. In exercise of the powers conferred by the corresponding provision of the District Municipalities Act, 1920, namely Section 4 (1) (c), the Government of Andhra Pradesh declared its intention to include within the limits of Visakhapatnam Municipality the local area comprised in the villages of Ramakrishnapuram and Sriharipuram. The District Municipalities Act, 1920 was repealed by section 391 (1) of the Act which, as stated earlier, came into force on April 2, 1965. On March 24, 1966 the Government of Andhra Pradesh acting in the exercise of powers conferred by Section 3 (3) of the Act issued a notification including within the limits of the Visakhapatnam Municipality the area comprised in the villages of Ramakrishnapuram and Sriharipuram with effect from April 1, 1966.

4. On March 24, 1970 and June 10, 1970 the Municipal Council declared its intention to levy property tax in the areas newly included within the Municipal limits. After considering the objections, the Council passed a resolution on August 28, 1970 confirming the levy of property tax on buildings and lands situated within the Municipal limits, with effect from October 1, 1970. However, the Municipality issued notices to respondents 1 to 36 demanding property tax from them not from October 1, 1970 but from April 1, 1966, that is to say, with effect from the date when the villages of Ramakrishnapuram and Sriharipuram were included within the Municipal limits. These notices would appear to have been issued on the supposition that taxes leviable under the District Municipalities Act, 1920 could be levied under clause 12, Schedule IX of the Act, unless the Government directed otherwise.

5. On January 24, 1971 respondents 1 to 36 filed writ petition 442 of 1971 in the High Court of Andhra Pradesh against the State of Andhra Pradesh and the Vhakhapa