The power of the State Government under Section 59 of the Bombay District Municipal Act, 1901, to issue general or special orders is limited to the power of the municipality to impose a tax, and does not extend to the power of the municipality to collect a tax that has already been lawfully levied.

Headnote:
MUNICIPAL TAXATION - BOMBAY DISTRICT MUNICIPAL ACT, 1901 - SECTION 59 - POWER OF STATE GOVERNMENT TO ISSUE GENERAL OR SPECIAL ORDERS - SCOPE AND EXTENT - COLLECTION OF TAXES - SECTION 174 - POWER OF COLLECTOR TO SUSPEND EXECUTION OR PROHIBIT DOING OF ANY ACT BY MUNICIPALITY - CONDITIONS PRECEDENT.
Fact of the Case:

The petitioner, Vijapur Municipality, imposed octroi duty on certain articles brought within its municipal limits by the second opponent company, which was under a contract with the Government to supply tube wells. The second opponent company failed to pay the octroi duty, and the petitioner attached its articles to recover the tax. The State Government intervened and issued an order under Section 59 of the Bombay District Municipal Act, 1901, prohibiting the petitioner from levying octroi tax on the articles in question and from recovering any amounts due or outstanding on account of such tax. The petitioner challenged the validity of this order, contending that it was beyond the powers of the State Government under Section 59.
Finding of the Court:

The court held that the order of the State Government was valid insofar as it prohibited the petitioner from levying octroi tax on the articles in question in the future. However, the court held that the order was invalid insofar as it prohibited the petitioner from recovering the amounts due or outstanding on account of the tax that had already been levied. The court held that the power of the State Government under Section 59 to issue general or special orders was limited to the power of the municipality to impose a tax, and did not extend to the power of the municipality to collect a tax that had already been lawfully levied.
Issues: 1. Whether the State Government had the power under Section 59 of the Bombay District Municipal Act, 1901, to prohibit the petitioner from levying octroi tax on the articles in question in the future? 2. Whether the State Government had the power under Section 59 of the Bombay District Municipal Act, 1901, to prohibit the petitioner from recovering the amounts due or outstanding on account of the tax that had already been levied?
Ratio Decidendi: 1. The court held that the State Government had the power under Section 59 of the Bombay District Municipal Act, 1901, to prohibit the petitioner from levying octroi tax on the articles in question in the future. The court held that the power of the State Government to issue general or special orders under Section 59 was a wide and unrestricted power, and that this power could be used to control the power of the municipality to impose a tax. 2. The court held that the State Government did not have the power under Section 59 of the Bombay District Municipal Act, 1901, to prohibit the petitioner from recovering the amounts due or outstanding on account of the tax that had already been levied. The court held that the power of the State Government to issue general or special orders under Section 59 was limited to the power of the municipality to impose a tax, and did not extend to the power of the municipality to collect a tax that had already been lawfully levied.
Final Decision: The court issued a direction against the Government from preventing the petitioner from collecting the tax levied by the petitioner upon the second opponent company in respect of the goods which were imported within the jurisdiction of the Vijapur Municipality.

JUDGMENT - Chagla, C.J.

1. The second opponent company is under a contract with Government to supply to it a certain number of tube wells. These tube wells are to be constructed in various districts including the district of Mehsana, and for the purpose of the construction of these tube wells the second opponent company brought within the municipal limits of the Vijapur Municipality, which is the petitioner, certain articles like engines, pumps, pulleys, fly-wheels, accessories, spare parts, etc., and the petitioner Municipality imposed octroi duty upon these articles.

The second opponent company failed to pay the octroi duty so imposed and the petitioner proceeded to attach the articles belonging to the second opponent company in order to recover the tax which had been imposed. The State of Bombay, which is opponent No. 1 before us, stepped in and issued an order on April 8, 1953, purporting to be an order issued in the exercise of the powers conferred upon it by Section 59 of the Bombay District Municipal Act, to the effect that--

"No octroi or terminal tax shall be levied on any article imported within the octroi or terminal tax limits of a municipality and no amount due or outstanding on account of such tax on the date of this order shall be recovered if--

(a) such article is imported in pursuance of or for the purpose of fulfilling a contract with the Government, and

(b) the Government certified that the contract is entered into by it for carrying out or executing any work relating to irrigation schemes and that the carrying out or execution of such work is in the national or State interest."

It is not disputed that the articles in question do fall within Clause (a) of this order of Government, and it is also admitted that the Government has Issued the necessary certificate under Clause (b) of the order. The contention of the petitioner is that this order issued by Government is invalid and beyond the powers of the State under Section 9 and the State should be prevented from enforcing this order, and therefore the necessary writ or direction is sought by this petition.

2. Now, it will be noticed that the order of April 8, 1953, which is challenged clearly falls into two parts. It prevents the Municipality from levying octroi tax on articles mentioned in that order in future and it also prevents the Municipality from collecting amounts which are due or outstanding in respect of tax which has already been levied. So that the order seeks to prevent the Municipality not only from imposing the octroi tax in future on certain articles, but it also seeks to prevent the petitioner from recovering arrears of tax due to the Municipality by a person who has imported articles which were liable to the payment of octroi duty.

3. The power of the Municipality to impose tax is to be found in Chapter VII of the Bombay District Municipal Act, and Section 59 provides that subject to any general or special orders which the State Government may make in this behalf, any municipality may impose the taxes which are enumerated, and one of the taxes is an octroi on animals or goods or both, brought within the octroi limits for consumption or use therein. Before this tax can be imposed, the conditions laid down in Clauses (a) and (b) of Section 59 are to be satisfied, and those are (a) the procedure required by Section 60 is to be followed, and (b) the levy or imposition of impost has to be with the sanction of the State Government in the case of City Municipalities.

But It must also be borne in mind -- and chat is the most important feature of this section -- that the power of the Municipality to impose a tax is subject to the overriding condition which is that any general or special order issued by the State Government may regulate, limit and control the power of the Municipality to impose a tax. Section 60 lays down the procedure which the Municipality has to follow preliminary to imposing a tax. It provides for a resolution being passed by the Municipal

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Judicial Analysis