The main legal point established in the judgment is that the petitioners, as dealers subject to Local Body Tax (LBT), failed to demonstrate any cause of action or injury to their legal rights, and the issues presented were only of academic interest.

B.P. Dharmadhikari, J.

1. Considering the nature of controversy and as requested by the parties, matters have been heard finally at the stage of admission by issuing Rule, and making it returnable forthwith.

2. Briefly stated, the petitioners before this Court are dealers within the meaning of said term as defined in Section 2[16A] of the Maharashtra Municipal Corporation Act, (Act No. LIX of 1949) (hereinafter referred to as “the Corporation Act” for short). The Local Body Tax (LBT) is being charged on goods imported by them within city limits of respondent no.2 Nagpur Municipal Corporation. The tax is assessed on goods imported by them for use, consumption or sale within the city limits. As they are dealers whose annual turnover exceeds Rs. 50 Crores, the tax is being recovered from them. Other dealers whose annual turnover is less than Rs.50 Crores, are exempted from paying any tax on such goods.

3. Petitioners state that they are required to pay the local body tax at 8.5% and hence, their cost of production goes up proportionately. Other dealers who are not required to pay that tax, can therefore, legitimately sell their goods at lesser price, thereby creating unhealthy competition.

4. Prayers in both the petitions are identical. Main thrust is to urge that petitioners and other dealers are similarly situated and on the basis of annual turnover, classification cannot be made between them. That classification therefore, should be quashed and set aside. The provisions of Sub-rule (1) of Rule 3 of the Maharashtra Municipal Corporation (Local Body Tax) Amendment Rules, 2015 should be declared as unconstitutional as they are ultravires the provisions of Articles 14 and 19[1][g] of the Constitution of India, as also ultravires of the provisions of Section 152P and 152Q of the Maharashtra Municipal Corporation Act. There is also a prayer to quash and set aside the notification dated 01.08.2015, issued by the respondent no.1State of Maharashtra effecting said amendment.

Petitioners also seek a declaration that respondent no.2 Nagpur Municipal Corporation cannot impose and recover or collect from it any such tax. Petition has been amended on 24.08.2015 to seek a declaration that Rule 3 of Maharashtra Municipal Corporation (Local Body Tax) Rules, 2010 is ultravires.

5. We have heard Senior Counsel Shri S.P. Dharmadhikari and Senior Counsel Shri Sunil Manohar, for petitioners. Senior Counsel Shreehari Aney, Advocate General and Government Pleader Smt. B.H. Dangre, argued the matter on behalf of respondent no.1 State Government. Shri J.B. Kasat, learned Counsel represented respondent no.2.

6. Inviting attention to provisions of the Corporation Act, Shri Manohar, learned Senior Counsel submits that LBT needs to be imposed by respondent no.2 Nagpur Municipal Corporation. In absence of any such decision by Nagpur Municipal Corporation, the direction of State Government to levy and collect LBT in its municipal limits to respondent no.2 is, without jurisdiction and unsustainable. He further submits that Rules prescribing modalities for levy, collection or recovery of said tax can be framed only by the Nagpur Municipal Corporation, as contemplated in Section 127[3]. He invites attention to provisions of Section 152R to state that as per that Section, Sections 152B, 152D, 152E, 152F, 152I, 152J, 152K, 152K, 152L, 152M, 152M, 152O in Chapter XIA mutatis mutandi apply to levy and collection of LBT in Chapter XIB. Thus, levy of LBT has to be as per Section 152A on entry of goods. The same is to be paid by dealer, in terms of Section 152A[2]. The dealer whose turnover exceeds the prescribed limit in terms of Section 152B has to pay the tax, and purpose of this provisions is to grant exemption to dealers, but, to facilitate its imposition and recovery. Entry of goods cannot cease to be a taxable event and turnover of all dealer cannot substitute it. By way of abundant precaution he adds that the respondents could have thought of a tapering ra