The levy of octroi is not an infringement of the freedom of trade and commerce guaranteed by Article 301 of the Constitution of India if it is reasonable and in the public interest.

ORDER :

1. These three Writ Petitions and the Civil Revision Petition raise common questions of law. They can, therefore be disposed of by a common judgment. Since the facts of W.P. No. 163/65 if stated would cover all the points raised. I will briefly narrate the facts of that writ petition.

2. The petitioner is a business man doing business at Adilabad in groundnut oil and other commodities. The respondent, City Municipality Adilabad, issued a letter No. 40, dated 31-7-1963 informing the petitioner that Octroi is leviable on the articles, list of which was appended to it. Of 52 items ground-nut oil is one such item. The petitioner thereupon took objection that no octroi can be levied on groundnut oil. But the Municipality maintained that octroi was legally leviable and started levying it from 1-5-1963. The petitioner carried the matter in appeal to the District Judge Adilahabad the learned District Judge allowed the appeal and held that groundnut oil and some other articles mentioned in the judgment are not subject to levy of octroi. He, however, held other articles to be chargeable in his judgment dated 7-10-1963. It is this judgment which is sought to be quashed in W.P. Nos. 107/64 and 40/64 by the City Municipality, Adilabad. W.P. No. 163/65 and C.R.P. No. 1661 of 1963 dispute the very levy of octroi as that was held against the petitioners by the learned District Judge.

3. The principal contentions raised by Mr. K. Jagannadha Rao, the learned Counsel for the Writ Petitioner in W.P. No. 163/65 are that the levy of octroi offends Article 301 of the Constitution of India and that, since the Municipality failed to prove that octroi, which puts restriction on the freedom of trade, is reasonable and that it is in the interest of public, the relevant provisions authorising the Municipality to levy octroi ought to be struck down as unconstitutional. In the alternative, it was contended that the groundnut oil is not “food” within the meaning of the Act and that no octroi can be levied.

4. Although the term “octroi” is not used in the Constitution, the tax itself which goes by that name, is covered by entry 52 of the State List, which mentions “Taxes on the entry of goods into a local area for consumption, use or sale therein”. The peculiar requirement of levy of octroi is that the goods must not only enter the local area, but must be for the purpose of consumption, use or sale therein.

5. Bearing in mind the above special feature of octroi, its effect on the freedom of trade, commerce and intercourse conferred by Article 301 of the Constitution of India, requires to be considered. Two questions arise for determination in this respect. The first is whether the levy of octroi per se is an infringement of freedom of trade and commerce conferred by Article 301 and secondly, if it is an infringement of such freedom of trade and commerce, is the tax reasonable and required in public interest as required by Article 304(b) of the Constitution.

6. Considering the first question, the larger problem, which has to be necessarily answered is whether the freedom provided in Article 301 for trade, commerce and intercourse is merely freedom from restrictions, partial or total, on the free-flow of commodities or does it include freedom from taxation also, which may indirectly or incidentally affect the freedom of trade and commerce by reason of the financial burden, it necessarily imposes. It is clear that, if a tax is not regarded as amounting to infringement of the freedom of trade, commerce and intercourse at all, there would be no question of the tax having to be justified as reasonable or is in the public interest as is visualised by Article 304(b).

7. It must also be remembered in this connection that both Articles 301 and 304(b) contemplate the freedom not only of inter-State trade, but also of intrastate trade. No decision was brought to my notice, which determines as to what will amount to infringement of the freedom conferred by Article