Judgment

RANGANATH MISRA, J.:- These are appeals by special leave. Two of them being Civil Appeals 2255 and 2256 of 1979 are by the Municipal Board of Abu Road. The rest of the appeals are by assessees living within the municipal area of Sujangarh. The common question involved in these appeals is as to whether the levy of octroi by different municipalities within the State of Rajasthan on varying basis - some on weight of the material and others on the ad valorem basis of the price thereof at varying rates is valid in law. The High Court decided against the Abu Road Municipality while a different Bench of that Court in the case of Sujangarh Municipality decided in its favour on the same question.

2. Entry 52 of List II of Schedule VII read with Art. 246(3) of the Constitution authorises the State Legislature to raise a tax on the entry of goods into a local area for consumption, use or sale. The Rajasthan Municipalities Act, 1959 (hereinafter referred to as the Act) in Chap. VII makes provisions for imposition of taxes. Section 104 deals with obligatory taxes while S. 105 authorises imposition of other taxes. As far as relevant, S. 104 provides :-

"(1) Every Board shall levy, at such rate and from such date as the State Government may in each case direct by notification in the official gazette and in such manner as is laid down in this Act and as may be provided in the rules made by the State Government in this behalf, the following taxes, namely

(i) ...............................

(ii) an octroi on goods and animals brought within the limits of the municipality for consumption, use or sale therein; and

(iii) ......................................

(2) A direction under sub-s.(1) may provide for the levy of taxes at different rates in different municipalities having regard to their varying local conditions and needs, and on the same considerations and by a like direction, the State Government may from time to time-

(i) vary uniformly or differently in relation to different municipalities, the rates of taxes levied, or

(ii) ........................

3. Abu Road municipality prior to 1956 was a part of the State of Bombay and with effect from 1st November, 1956, as a result of the States Reorganisation Act of 1956, became a part of the State of Rajasthan. While within the State of Bombay the Abu Road Municipality had prescribed octroi duty on cloth at the rate of 1.9 annas per cent ad valorem and the rate continued till it was varied after promulgation of the Rajasthan Municipalities Act of 1959. The rates in cities like Jaipur were on the basis of weight. Judicial notice can be taken of the fact that the areas which now constitute the State of Rajasthan prior to independence of India were independent, States of different dimensions and the local conditions and needs of the people inhabiting those areas considerably varied. There were 13 different Acts then in vogue governing the municipalities within that State. The Rajasthan Municipalities Act was, therefore, introduced to consolidate and amend the law relating to municipalities in that State. In February, 1962, the State Government by notification dated 13th February, 1962 issued under S. 104 of the Act fixed the rate of octroi at 0.50 paise in place of 1.9 annas with effect from 15th February, 1962. By notification dated 10th of April, 1964, published in the Gazette on 20th of August, 1964, the State Government in exercise of powers under S. 104 of the Act revised the rates of octroi and so far as the Municipal Board of Abu Road was concerned, Item 62 of the Schedule provided the rate of 1 per cent ad valorem on cloth. This led to the challenge before the High Court. The learned single Judge who dealt with the writ petitions relied upon the provisions of S. 104 of the Act as it then stood and came to hold that the provisions of S. 104(1) of the Act were valid but the notification in respect of the Municipal Board of Abu Road relating to cloth was bad. During the pendency of the appeals