JUDGMENT - PATIL G.D., J.:---The petitioner-Federation, the Co-operative Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 is having its Head Office at Bombay and various Zonal and Sub-Zone Offices at different places in Maharashtra. The petitioner society has been appointed as the Chief Agent for the Government of Maharashtra under the provisions of section 42 of the Maharashtra Raw Cotton (Procurement, Processing and Marketing) Act, 1971 and under the said agency business the petitioner federation purchases raw cotton and also gets the same processed by way of gaining and pressing and further sells the cotton bales, cotton seeds etc. as envisaged under the said Act.

2. The respondents are the Municipal Councils duly constituted under the Maharashtra Municipalities Act, 1965 (hereinafter referred to as the "Municipalities Act") respectively for the townships of Dhamangaon and Daryapur.

3. The petitioner for the purpose of its agency business under the Raw Cotton Act, engages various sub-agents as processing agents of the petitioner for ginning and pressing of raw cotton or pressing of lint. The petitioner-Federation has various collection centres at which raw cotton is purchased from agriculturists. The said processing centres are either facility centres as non-facility centres, a facility centre being one wherein the facility of ginning and/or pressing is available in the centre itself and a non-facility centre is one wherein the facility of ginning and pressing is not available. In case of non-facility centres, the raw cotton purchased by the petitioner-federation is transported to another place/centre at which there is a ginning and pressing factory or a ginning factory, as the case may be, where the said raw cotton is processed by way of separation into lint and cotton seed. In case where the facility centres have the provision only of ginning, the lint produced has to be transported to another centre or factory where the lint can be pressed into full pressed bales. In the aforesaid process, the cotton is transported for processing i.e. either ginning and pressing of raw cotton or for pressing of lint into bales, as the case may be. In many of the cases, the ginning and pressing factories where the raw cotton is transported for ginning and pressing or where the lint ginned at one place is sent for processing to another are within the municipal limits of various municipalities.

4. Under the provisions of section 105 of the Municipalities Act, the Municipalities are empowered to levy an octroi on the entry of goods into municipal area for consumption, use or sale thereof. The relevant extracts of section 105(1) are as under:---

"105(1). Subject to any general or special orders which the State Government may make in this behalf, a Council shall impose, for the purposes of this Act, the taxes listed below:---

(a) ********* ********** **********

(b) an octroi;

(c) ********* *********** **********

(d) ********* *********** **********

(e) ********* ************ **********

Provided that, the maximum and minimum rates at which the taxes aforesaid shall be levied in different classes of municipal areas and other matters relating to imposition, assessment, collection and exemptions thereof shall be such as may be prescribed by Rules."

The provisions of section 321 of the Maharashtra Municipalities Act also vests the State Government with powers to make Rules under the Act. In exercise of these powers under section 321 as also under the provisions of section 105(1) the State Government has framed rules known as the Maharashtra Municipalities (Octroi) Rules, 1968 (hereinafter referred to as the Octroi Rules). Under proviso to sub-section (1) of section 105 of the State Government can frame Rules about imposition, assessment of the octroi and also for exemption and other matters relating to it. The term "octroi" has been defined in the Municipalities Act in section 2(28) and "Octroi" means a tax o

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