A deduction from octroi duty refunds authorized as a tax under a previous Act cannot be continued under a new Act that does not authorize such a tax.

Headnote:
OCTROI - REFUND - DEDUCTION - VALIDITY - BOMBAY PROVINCIAL MUNICIPAL CORPORATION ACT, 1949, SECTIONS 127, 147, 466, 487, 493, APPENDIX IV, CLAUSE 5(A) - BOMBAY DISTRICT MUNICIPAL ACT, 1901, SECTION 59(B)(XI) - BOMBAY MUNICIPAL BOROUGHS ACT, 1925 - A deduction of 10% from octroi duty refunds made by the Municipal Corporation of Poona was challenged as invalid after the Bombay Provincial Municipal Corporation Act, 1949 came into force. The High Court held that the deduction was invalid, the plaintiff was entitled to sue, and the suit was not barred by limitation. The Supreme Court upheld the High Court's decision.
Fact of the Case:

The Municipal Corporation of Poona deducted 10% from octroi duty refunds made to the plaintiff, who represented principals entitled to the refunds. The plaintiff claimed that the deduction was invalid under the Bombay Provincial Municipal Corporation Act, 1949, which came into force on February 15, 1950. The Corporation defended the deduction, arguing that it was valid under the Bombay District Municipal Act, 1901, and the Bombay Municipal Boroughs Act, 1925, which were in force before the 1949 Act. The trial court held that the deduction was valid, but the High Court reversed that decision.
Finding of the Court:

The Supreme Court held that the deduction of 10% from octroi duty refunds was invalid after the Bombay Provincial Municipal Corporation Act, 1949 came into force. The Court found that the deduction was previously authorized as a tax under section 59(b)(xi) of the Bombay District Municipal Act, 1901, but that the 1949 Act did not authorize such a tax. The Court also rejected the Corporation's argument that the deduction could be justified as a fee under section 466 of the 1949 Act, as no standing order had been made prescribing any fees. The Court further held that the plaintiff was entitled to sue for the refund of the deducted amount, as he was the person who produced the receipted import bill and the corresponding export certificate, as required by the Poona City Municipality's Octroi Rules and Bye-Laws. Finally, the Court held that the suit was not barred by limitation under section 487 of the 1949 Act, as the deduction was not an act done in pursuance or execution of the Act.
Issues: 1. Whether the deduction of 10% from octroi duty refunds was valid under the Bombay Provincial Municipal Corporation Act, 1949? 2. Whether the plaintiff was entitled to sue for the refund of the deducted amount? 3. Whether the suit was barred by limitation under section 487 of the Bombay Provincial Municipal Corporation Act, 1949?
Ratio Decidendi: 1. The deduction of 10% from octroi duty refunds was invalid under the Bombay Provincial Municipal Corporation Act, 1949, as the Act did not authorize such a tax. The deduction was previously authorized as a tax under section 59(b)(xi) of the Bombay District Municipal Act, 1901, but the 1949 Act did not authorize such a tax. The Court also rejected the Corporation's argument that the deduction could be justified as a fee under section 466 of the 1949 Act, as no standing order had been made prescribing any fees. 2. The plaintiff was entitled to sue for the refund of the deducted amount, as he was the person who produced the receipted import bill and the corresponding export certificate, as required by the Poona City Municipality's Octroi Rules and Bye-Laws. 3. The suit was not barred by limitation under section 487 of the Bombay Provincial Municipal Corporation Act, 1949, as the deduction was not an act done in pursuance or execution of the Act.
Final Decision: The Supreme Court dismissed the appeal, upholding the High Court's decision that the deduction of 10% from octroi duty refunds was invalid, the plaintiff was entitled to sue, and the suit was not barred by limitation.

JUDGMENT

DAS GUPTA J. -The appeal is by the defendant, the Municipal Corporation for the City of Poona, in a suit for recovery of money. The Poona Municipality Was formerly a municipality under the Bombay District Municipal Act of 1901 (Act 3 of 1901). In 1925 it became a Municipal Borough under the Bombay Municipal Boroughs Act of 1925 (Act XVIII of 1925). Later, under the Bombay bay Provincial Municipal Corporation Act, l949, the Municipal Authority for the City of Poona became a Corporation kno,,", by the name of Municipal Corpora.tion for the City of Poona.

2. It appears that from the time when the City was a Municipality under Act 3 of 1901, an octroi duty was being levied on goods imported within the Municipal limits of the City. When such goods were exported out of the City Municipal limits within specified periods, refund used to be given in respect of the duty so recovered.

3. The respondent has for many years been carrying on business of securing. refund of octroi duty on behalf of persons who had paid the duty and were entitled to refund. In respect of the period from the 15th February 1950 to the 14th September 1950, the respondent made a: claim on behalf of his principals, for the refund of Rs. 73,650 to which, according to him, they were entitled. - The Municipality however paid to him only 90 per cent. of this amount. The remaining 10 per cent. was deducted in accordance with rule 18 (3) of the• Octroi Rules which had been framed by the Municipal Authorities.

4. The respondent then represented to the Corporation that with effect from the 15th February 1950, the date from which the Corporation me into existence under the Provincial Municipal Corporation Act, 1949, this deduction of 10 per cent. had become invalid in law and claimed that this amount should be paid to him. The Corporation however refused to concede this claim. The respondent then brought this suit for recovery of Rs. 7,364 -15 -0 (being 10 per cent. of Rs. 73,650 the amount alleged to have been illegally withheld) with interest.

5. The main defence raised by the Corporation to the plaintiffs claim was that the deduction of 10 per cent •. was legally valid. It was further urged that, in any case, the plaintiff who was not the person who paid the amount, was not entitled to bring the suit. Lastly, it was contended that the suit was barred by limitation.

6. The trial Court held that the plaintiff was entitled to bring the suit and also that it was not barred by limitation. It held however that the deduction of 10 per cent. from what was paid as tax was valid. Accordingly, it dismissed the suit.

7. On appeal by the plaintiff, the District Court, Poona, held, disagreeing with the trial Court, that the deduction of 10 per cent of what had been realised was not valid in law. It was however of opinion that the plaintiff was not entitled to bring such a suit. It was also of opinion .that. the suit was barred by limitation. In this view, it dismissed the appeal.

8. The plaintiff then appealed to the High Court of Judicature at Bombay. The High Court has found in favour of the plaintiff on all the three points raised. It held that the deduction of 10 per cent. Was invalid in law, that the plaintiff was entitled to sue and that the suit was not barred by limitation. Accordingly, the High Court allowed the appeal, and made a decree in favour of the plaintiff for Re.7,364 -15 -0 with interest thereon at 4 per cent. from the date of the suit. and interest at the same rate from the date of the judgment, with costs throughout.

9. The appellant -Corporation challenges the correctness of the High Court, decision on all the three points.

10. The principal question for decision in this appeal is whether the deduct. ion of 10 per cent. as provided for in rule 18(3) is invalid at least from the 16th February 1950. The Rule runs thus: -

"A deduction of 10 per cent.Shall in all cases be made before refunding the amount of octroi duty on exportation of goods either

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