JUDGMENT

K.N. Singh, J. - This is a petition under Article 226 of the Constitution filed by Messrs Geep Flashlight Industries Ltd. Allahabad, challenging the validity of imposition and collection of octroi from the petitioner Company. The petitioner has claimed issue of a writ, order or direction in the nature of mandamus directing the Nagar Mahapalika, respondent No. 1 not to impose and collect the tax in question.

2. The petitioner is a public limited company having its registered office at Allahabad. It has got its factory within the limits of Allahabad Nagar Mahapalika, where it manufactures tourches, bulbs and dry-cells from the raw material imported by it from outside. Such raw materials are mostly imported by rail but some times they are, imported by road also. The material which according to the petitioner are imported are brass, aluminium, zinc, carbon rod, acetye lene black, managenese dioxide ore, chemicals and lubricants, glass tubes, glass beeds filament wire, sealing wax etc. Besides, these raw materials, the petitioner-company imports machinery and spare parts also by rail. The Allahabad Nagar Mahapalika has imposed tax in the shape of non-refundable octroi, the rates of which were enhanced with effect from 2nd February, 1969. Prior to 1959 the erstwhile Municipal Board, Allahabad ; used to charge refundable octroi from the petitioner and, therefore, when the petitioner exported its goods and the machineries, it used to get the benefit of refund. The petitioner has asserted that by the change of refundable octroi into a non-refundable octroi, the petitioner-company has been put to great loss. Th petitioner has challenged the legislative competence of the State Government and the Nagar Mahapalika to levy octroi to increase the rate of the tax or to include the new items of goods for imposition and collection tax. The petitioner has, further asserted that the Nagar Mahapalika is a new body and ; the protection conferred by Article 277 of the Constitution is not available to it.

3. Prior to the Constitution of the Nagar Mahapalika for the town of Allahabad, Municipal Board Allahabad was the body constituted under the U.P. Municipalities Act, 1916, which carried on the civil administration of the town. The erstwhile Municipal Board, Allahabad had imposed an octroi tax on goods brought within the municipality for consumption or sale therein. The system of octroi was refundable under certain circumstances enumerated in the Rules. In 1957, however, the erstwhile Municipal Board Allahabad changed the system of octroi from refundable to non-refundable. The new system of non-refundable octroi tax was imposed by a notification published in the Gazette on January 25, 1957 issued under Section 135 of the U.P. Municipalities Act, 1916. The incidence of tax was on the entry of goods and animal into the limits of the Allahabad Municipality for use, consumption or sale therein. The schedule appended to the Octroi Rules framed by the Municipal Board, Allahabad contained rates and the items on which octroi was levied. This schedule has been amended from time to time. Subsequently. Municipal Board, Allahabad was replaced by Nagar Mahapalika, Allahabad constituted under the provisions of U.P. Nagar Mahapalika Allahabad Adhiniyam 1959 and the non-refundable octroi continued to be in force. The Nagar Mahapalika, however, framed new proposals for the non-refundable octroi, which were finally enforced with effect from 20th February, 1969. The validity of this tax has been challenged by the petitioner-company.

4. Learned counsel for the petitioner, Mr. Ansari has urged that the non-refundable octroi is in effect and substance a terminal tax, which cannot be imposed by the Nagar Mahapalika, as the State Legislature has no legislative competence to enact any law relating to imposition of terminal tax, He has urged that the tax in question is not saved by Article 277 of the Constitution and, therefore, the imposition of non-refundable octroi