AKIL KURESHI, J.

1. These petitions arise out of common background. They have been heard together and are being disposed of by this common judgement. We may notice the facts as arising in Special Civil Application No.2834/1997.

2. Petitioner no.1 is a company registered under the Companies Act. Petitioner no.2 is the vice-president of the company. The petitioners have challenged the legality and validity of explanation 2(20) of the Surat City Municipal Corporation Octroi Rules, 1973(“the Octroi Rules” for short) introduced vide amendment dated 28.6.1996. To appreciate the challenge of the petitioners, background leading to such amendment be noted in brief.

3. The petitioners have a branch in the city of Surat. The petitioners deal in Viscose Filament Rayon Yarn. The petitioners bring such yarn within the city of Surat from their another branch located outside the city limits. Upon such goods entering the city limits, the Surat Municipal Corporation collects octroi duty in terms of the Octroi Rules. The dispute is with regard to valuation of the goods on the basis of which such octroi should be calculated. The case of the petitioners is that the octroi can be collected at the prescribed rate on the total value of the goods at the time of entry in the city limits and any further expenditure incurred by the petitioners after the goods enter the city cannot be taken into consideration for ascertaining their octroi liability. When such issues resulted into disputes between the petitioners, other companies and agencies dealing in the similar products and the Surat Municipal Corporation, Writ Petition came to be filed before this Court being Special Civil Application No.1812/1978. Eventually, such petition came to be disposed of by a consent order. There was compromise between the petitioners and the Surat Municipal Corporation. The formula was worked out through consensus under which the petitioners agreed to pay octroi on 89% of the sales value of the goods. In such consent terms arrived at between the parties on 9.10.1980, the term “sales value of goods” was defined as value as shown in sales invoices either to wholesalers or retailers or consumers in Surat for a calender month plus the value of closing stock less the value of opening stock. For such sales value, “cost of goods” was to be worked out as 89% of the sales, invoice value as defined in the earlier clause i.e. “sales value of goods”. In simple terms, the parties agreed that the petitioners shall pay octroi on the 89% of the value of the sales of goods made by the branches within the city of Surat on monthly basis. Such consent terms were presented before this Court and the Court disposed of the petition by order dated 9.10.1980 in terms of such consent terms.

4. In the consent terms it was agreed that “the company will continue to pay octroi on the above basis so long the present Municipal Octroi Rules remains in force.”

5. Surat Municipal Corporation subsequently desired to modify such basis of collection of octroi. For such purpose, Corporation desired that explanation should be added to existing Rule 2(20) of the Octroi Rules providing for collection of octroi on yarn being brought within the city at 100% of the sales value. For such purpose as required under the Bombay Provincial Municipal Corporation Act(“BPMC” for short) and the Rules, objections were invited from the members of the public. In response to such invitation, objections were received from several parties. Such objectors were heard on 21.9.1989 by the committee constituted by the Municipal Corporation. Such objections were not found valid. After disposing of the objections, the Municipal Corporation in the General Board meeting dated 13.6.1996 adopted a resolution to amend the rules by inclusion of explanation to Rule 2(20).

6. The State Government took into consideration the proposal of the Corporation to amend the Octroi Rules and ultimately issued notification dated 2.1.1997 amending the Rule i