The impugned Acts violate the mandate of the Constitution by depriving Municipalities of their primary source of revenue, failing to provide alternative sources, and causing financial hardship.

JAWAHAR LAL GUPTA, J.

1. Is the action of the State of Punjab in abolishing Octroi illegal and arbitrary? Do Act Nos. 1 and 2 of 2002 as promulgated by the legislature conform to the mandate of Art. 14 and Part IX-A of the Constitution? This is the core of the controversy in these petitions.

2. The Municipal Councilors, past and present; the contractors and the employees appointed to collect Octroi, are the petitioners. They complain that the action of the State of Punjab in abolishing Octroi without providing for any alternative source of revenue is arbitrary, illegal and unconstitutional. Part IX-A of the Constitution requires the State to strengthen the Municipalities as instruments of local Government. The impugned Acts violate this mandate. Thus, these should be annulled.

3. The relevant facts may be noticed. The elections to the Punjab Legislative Assembly were held in the year 1997. At that time, the Akali-BJP alliance had made a promise to abolish Octroi. It was a part of its election manifesto. The petitioners allege that the purpose was "to woo the trading community". However, Octroi was a major source of revenue. Thus, the promise was not kept.

4. In the year 2001, when the Government was about to complete the term, it started making statements regarding abolition of octroi. These were reported in the Press. A committee was constituted to consider the question of abolition of the levy. It submitted a report. It was inter alia suggested that in the event of abolition of octroi, an alternative source of revenue should be simultaneously provided. On September 17, 2001, the State Government had accepted the report.

5. The petitioners allege that octroi is a major source of income for the municipalities. To illustrate, it has been pointed out. that in the Budget of the Municipal Council, Bathinda. for the year 2001-02. out of a total collection of Rs. 2489.50 lacs the Octroi alone accounts for Rs. 2000 lacs. The House Tax yields Rs. 209 lacs; the water charges amount to Rs. 173 lacs and an amount of Rs. 92 lacs is received by way of rent etc. The Council has to spend Rs. 913 lacs on establishment and contingencies. The staff appointed by the Council for collection of pctroi gets a total salary of Rs.1,08,34,436/-. Thus, the Council earns more than Rs. 18 crores per year by lev of octroi alone.

6. In Sept. 2001, the Chief Minister and the Minister for Local Government announced that the Government had decided to abolish octroi with effect from October 1, 2001. These statements were reported in the Press. Apprehending that the State Government would implement its decision, certain Municipal Councilors had filed Civil Writ Petition No. 15058 of 2001. The matter was placed before the Bench on September 26, 2001. A direction for the issue of notice of motion was given. As an interim measure. the respondents were restrained from laking any further steps towards the abolition of octroi.

7. In October, other petitions viz. CWP No. 15873 of 2001 etc. were filed with the prayer that the Government be directed not to abolish octroi. It was inter alia averred that on September 12, 2001, a Bench of this Court was hearing CWP No. 19359 of 1997. During the course of the hearing, it was stated by the Advocate General that before "deciding to abolish octroi, the alternative mechanism for augmenting the revenue of the Local Bodies for the loss suffered due to abolition of octroi will be evolved". The Government had not found any alternative source of income but "date of abolition of octroi has been announced". This was contrary to the Constitutional mandate and the undertaking given to this Court. Thus, the decision deserved to be annulled.

8. The State of Punjab filed an application for vacation of stay. The miscellaneous petition along with the connected matters was posted for hearing before the Bench on November 19, 2001. On behalf of the State of Punjab, it was pointed out by the Advocate General that the matter regarding abol