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1992 Supreme(SC) 1054
SUPREME COURT OF INDIA
Lalit Mohan Sharma, S. Ratnavel Pandian, S. Mohan, B.P. Jeevan Reddy, S.P. Bharucha, JJ.
Atlas Cycle Industries Ltd. - Petitioner
Versus
State of Haryana - Respondent
WITH
Milton Cycle Industries Ltd. - Petitioner
Versus
State of Haryana - Respondent
Writ Petition (Civil) Nos. 1 and 52 of 1972
Decided On : 17-12-1992
Headnote:
Punjab Municipal Act, 1911 - Section 5 - Constitution of India - Article 32 - Challenge the constitutionality – Claim of compensation - Such additional taxes would add considerably to the cost of production of the petitioners bicycles and the octroi alone would be Rs. 1.30 per bicycle manufactured. The petitioner was "already groaning under the heavy Central and State taxes. If saddled with additional local taxes, the burden will become unbearable." The petitioner therefore asked that the proposed inclusion of the industrial area within the municipal limits of Sonepat should be dropped. On 11th August, 1967 a notification was issued under Section 5(3) of the said Act by the Governor of Haryana. (This was because the State of Haryana had been created on 1st November, 1966 by bifurcation of the State of Punjab). The notification under Section 5(3) included within the municipal limits of Sonepat the area upon which the factories of both the petitioners stood. On and from 18th August 1967 octroi was levied upon materials imported by them into the municipal limits of Sonepat – Held, For the State, however, reliance was placed in that case on Section 3(4) of the Act to contend that the inclusion of the two villages within the municipal area attracts of its own force every provision of the Act with effect from the date on which the final notification is published by the Government under Section 3(3). In support of this contention it cited the decision of this Court in Atlas Cycle Industries Ltd. v. State of Haryana, 1972 (1) SCR 127 . This argument on behalf of the State was, however, repelled and the Court observed - Far from supporting the argument, we consider that the decision shows how a provision like the one contained in Section 3(4) cannot have the effect contended for by the appellant. In the Atlas Cycle case, Section 5(4) of the Punjab Municipality Act, 1911 provided that when any local area was included in the municipality, this Act and .. all rules, bye-laws, orders, directions and powers made, issued or conferred under this Act and in force throughout the whole municipality at the time, shall apply to such areas - But this Court took the view that since Section 5(4) of the Punjab Act did not significantly refer to notifications and since Section 62(1) of the Punjab Act spoke of "notification" for the imposition of taxes it was not competent to the municipality to levy and collect octroi from the company on the strength merely of the provision contained in Section 5(4) of the Punjab Act. That case, however, is distinguishable and cannot be of much assistance for solving the problem before us. Section 5 of the Orissa Municipal Act makes all the provisions of the Act and of any rules, bye-laws, notifications, or orders made thereunder, which immediately before such inclusion were in force throughout such municipality application to such area unless the State Government in and by the notification otherwise direct. This section, therefore, includes not only the provisions of the Act, rules and bye-laws but also includes notifications. This distinguishes the present case from the Visakhapatnam Municipalitys case - Petition dismissed
ORDER :
S.P. Bharucha, J. - These writ petitions under Article 32 of the Constitution of India challenge the constitutionality of Section 5(4) of the Punjab Municipal Act, 1911, as amended by the Punjab Municipal (Haryana Amendment and Validation) Act (Haryana Act No. 41 of 1971), in so far as it has the effect of imposing octroi upon that area of the local limits of the municipality of Sonepat in which the petitioners' factories are situated.
2. The relevant facts of the first writ petition may be noted. On 3rd November 1942 a notification was issued under Section 62(10) of the Punjab Municipal Act (hereinafter called "the said Act") which stated that the Municipal Committee of Sonepat had imposed a tax called 'Octroi' on the articles mentioned in the Schedule to the notification when imported into the octroi limits of Sonepat municipality. On 11th February 1948 it was notified that the limits of Sonepat municipality for the purpose of collection of octroi would be the boundaries of the municipality as fixed from time to time. On 15th September, 1966 a notification was issued in pursuance of the provisions of Section 5(1) of the said Act whereby the intention of including the areas specified in the Schedule thereto within the municipal limits of Sonepat was declared and the inhabitants of the municipality and of the local area in respect of which the notification was published were invited to submit objections in writing to the proposed inclusion. The area upon which the factories of the petitioners are situated was proposed to be included within the municipal limits of Sonepat. On 3rd November, 1966 the petitioner filed objections to the inclusion of the proposed areas within the municipal limits of Sonepat. The petitioner stated that it understood that the proposed inclusion was intended to increase the income of the Sonepat municipality by bringing the different industries around Sonepat within its limits thereby making them pay all municipal taxes. Such additional taxes would add considerably to the cost of production of the petitioner's bicycles and the octroi alone would be Rs. 1.30 per bicycle manufactured. The petitioner was "already groaning under the heavy Central and State taxes. If saddled with additional local taxes, the burden will become unbearable." The petitioner therefore asked that the proposed inclusion of the industrial area within the municipal limits of Sonepat should be dropped. On 11th August, 1967 a notification was issued under Section 5(3) of the said Act by the Governor of Haryana. (This was because the State of Haryana had been created on 1st November, 1966 by bifurcation of the State of Punjab). The notification under Section 5(3) included within the municipal limits of Sonepat the area upon which the factories of both the petitioners stood. On and from 18th August 1967 octroi was levied upon materials imported by them into the municipal limits of Sonepat.
3. In 1968 the Manufacturers' Association of Sonepat, of which the petitioners were members, made a representation, consequent upon which the Sonepat municipality reduced the rate of octroi chargeable upon cycles, tyres, tubes and parts imported, inter alia, by the petitioners.
4. In 1967 the petitioners filed writ petitions in the High Court of Punjab and Haryana for writs of mandamus restraining the municipality of Sonepat from levying against and collecting from them any octroi in respect of raw materials, components and parts imported by them into their factories situated in the industrial area of Sonepat. The High Court having dismissed the writ petitions, appeals were filed in this Court. This Court based its judgment Atlas Cycle Industries Ltd. v. State of Haryana, 1972(1) SCR 127 upon the provisions of Section 5(4) of the said Act, as it then read. Section 5(4), as it then read, spoke of rules, bye-laws, orders, directions and powers. It did not mention notifications. Notifications under the said Act were the only authority and mandate for
