Terminal tax levied by a municipal committee under S. 127 (1) (xvi) of the M. P. Municipalities Act, 1961, is valid and constitutional if it is covered by Entry 56 of List II of the Seventh Schedule to the Constitution and does not violate Articles 301 and 304 (b) of the Constitution.

( 1 ) THE petitioners are doing business of grain and of manufacturing Dal at Vidisha. By this writ petition they have challenged the imposition of terminal tax by the Municipal Committee, Vidisha. A copy of the relevant notification where by this tax has been levied and which has been published in Part 2 of the Madhya Pradesh Rajpatra dt. 10th Aug. 1984 has been attached as Annexure-B to the writ petition. It indicates that tax on export of various kinds of food grains and oil-seeds from within the limits of Municipal Committee, Vidisha, has been levied at rates mentioned in the said notification. The said tax has been levied under S. 127 (1) (xvi) of the M. P. Municipalities Act, 1961 (hereinafter referred to as the Act) which contemplates a terminal tax on goods or animals imported into or exported from the limits of the municipality.

( 2 ) IT has been urged by learned counsel for the petitioners that Cl. (xvi) of Sub-Sec. (1) of S. 127 of the Act was ultra vires inasmuch as it was not covered by any entry either in List II or in List III of the Seventh Schedule to the Constitution. According to counsel for the petitioners, terminal tax could be levied only by Act of Parliament in view of Entries 89 and 97 of List I of the Seventh Schedule to the Constitution. Entry 89 refers to terminal taxes on goods or passengers, carried by Railway, sea or air, taxes on railway fares and freights; whereas Entry 97 is the residuary entry. For the respondents on the other hand, it was urged by the learned Advocate General that the impugned terminal tax was covered by Entry 56 of List II which refers to taxes on goods and passengers carried by road or on inland waterways.

( 3 ) IN our opinion, the impugned tax cannot fall under Entry 89 of List I inasmuch as the said entry contemplates only such goods or passengers which are carried by railway, sea or air. It does not contemplate any terminal tax on goods or passengers carried by road or on inland waterways. The petitioners do not assert to export their goods by railway, sea or air. The impugned tax is clearly covered by Entry 56 of List II. This being so, the residuary Entry 97 of List I will not be attracted. It is true that in Entry 89 of List I the nature of tax has been referred to as terminal tax whereas Entry 56 of List II refers to "taxes". This, in our opinion, is of not much significance inasmuch as the term "taxes" is apparently wider than terminal tax. The term "taxes" used in Entry 56 would obviously include terminal tax if the goods or passengers are carried by road or on inland waterways. Cl. (xvi) of Sub-Section (1) of S. 127 of the Act uses the words "imported into or exported from the limits of the Municipality". The impugned tax as seen above is on export of goods outside the municipal limits Vidisha. In Empress Mills v. Municipal Committee Wardha, AIR 1958 SC 341, it was held in para. 24 of the report that the word "export" has reference to taking out of goods which had become part and parcel of the mass of the property of the local area and will not apply to goods in transit i. e. brought into the area for the purpose of being transported out of it. In para. 32 of the report on the other hand, it was pointed out that terminal tax on goods imported or exported is similar in its incidence and is payable on goods on their journey ending within the municipal limits or commencing therefrom and not where the goods were merely in transit through the municipal limits and had their terminus elsewhere. In this case as also in three subsequent decisions, namely The Bangalore Woollen, Cotton and Silk Mills Co. Ltd. Bangalore, AIR 1962 SC 562, Burma Shell Co. v. Belgaum Municipality, AIR 1963 SC 906 and Man Mohan Tuli v. Delhi Municipality, AIR 1981 SC 991 the Supreme Court has traced the legislative history of terminal tax and has also pointed out the distinction between 'octroi' and 'terminal tax'. In Man Mohan Tuli's case (supra) it was further held that the po