CHANDURKAR, J. :- The short ques­tion which arises in this appeal filed by the Union of India is whether goods im­ported within the limits of municipality by the Railway Administration are liable to Octroi Duty which the respondent Bhusawal Municipal Council is seeking to recover under a Notification issued under Section 135 of the Railways Act, 1890, on 29th November, 1907.

2. Facts in this case are not in dis­pute. The Catering Department of the Railway Administration admittedly brought within the limits of the Bhusawal Municipal Council certain articles required by them for catering admin­istration at the Bhusawal Railway Sta­tion during the period from 2nd Novem­ber 1963 to 1st November 1966. The Railway Administration not having paid the necessary Octroi Duty which, ac­cording to the Municipal Council, the Railway Administration was liable to pay for those articles brought within the municipal limits, a suit came to be filed for the recovery of the amount of Octroi Duty to the tune of Rs. 7,766.14 along with interest amounting to Rs. 2,611.21. Thus, in the suit filed on 6th February 1969 a sum of Rs. 10,377.35 was claimed from the Union of India. The plaint it­self does not refer to the Notification dated 29th November 1907 but it is com­mon ground that liability to pay Octroi Duty is fastened on the Union of India, according to the Municipal Council, by the Notification dated 29th November 1907 (Exhibit 86). This Notification reads as follows :

"In pursuance of Clause (i) of Sec­tion 135 of the Indian Railways Act, 1890 (IX of 1890) and in supersession of the notifications of the Government of India in the Public Works Department, No.270, dated the 12th June, 1890, and No.136, dated the 5th April, 1893, the Governor General in Council is pleased to declare that every railway admin­istration in British India shall hereafter be liable to pay, in respect of property within any local area, every tax which may lawfully be imposed by any local authority in aid of its funds, under any law for the time being in force."

Two defences were raised by the Union of India to this claim. According to the Union of India, it was not liable to pay any Duty in the absence of any Notifi­cation in the Official Gazette declaring the Railway Administration to be liable to pay such taxes and that the Union of India was further protected under the provisions of Section 3(1) and Section 4 of the Railways (Local Authorities' Taxation) Act, 1941 (hereinafter referred to as the 1941 Act). According to the Union of India, the provisions of the 1941 Act will be saved by Article 372 of the Constitution of India. The issue of limi­tation was also raised. It appears that the plea that a Notification under Sec­tion 135 of the Railways Act relating to Octroi tax was not issued was not speci­fically taken probably because in the plaint no such Notification was disclosed. The questions involved in the suit were essentially questions of law, the facts having been admitted. The oral evidence in the case, therefore, does not become very material.

3. The trial Court took the view that Section 135 of the Railways Act regulat­ed the levy of taxes by a Local Auth­ority and unless a Notification was issu­ed under Section 3 of the 1941 Act, the property of the Railway Administration cannot be subjected to tax by the Local Authority. The trial Court further took the view that Exhibit 86 indicates that the Railway Authority was liable to pay taxes connected with immovable pro­perties such as house tax, water tax, conservancy tax, latrine tax, wheel tax and water rate, etc. and that there was no Notification in respect of Octroi on goods brought within the Municipal limits. With reference to the provisions of Article 285 of the Constitution of India, the trial Court took the view that under the Bombay Municipal Borough Act, 1925, when the Bhusawal Munici­pality had approved and levied Octroi since 1932 and the Octroi Rules were in force even before the Constitution