1999 Supreme(MP) 672

High Court Of Madhya Pradesh
A. K. MATHUR, S. K. KULSHRESTHA
CHIEF MUNICIPAL OFFICER, NAGAR PANCHAYAT, KYMORE (MP) - Appellant
Versus
ETERNIT EVERESTLIMITED - Respondents
L. P. A. 375 Of 1998
Decided On : 09/10/1999

The legislative enactments cannot be subjugated or superseded by exercise of power by the State Government under the statutory provision or by executive instructions.

Headnote:

MUNICIPAL TAXATION - EXPORT TAX - LEVY AND COLLECTION - POWER OF MUNICIPAL COUNCIL - STATE GOVERNMENT'S CIRCULAR - EFFECT - LEGISLATIVE FUNCTION OF MUNICIPAL COUNCIL - SUBORDINATION TO EXECUTIVE INSTRUCTIONS - TERMINAL TAX (ASSESSMENT AND COLLECTION) ON THE GOODS EXPORTED FROM MADHYA PRADESH MUNICIPAL LIMITS RULES, 1996 - REPEAL OF EARLIER RULES - APPLICABILITY.

Fact of the Case:

The Kymore Municipality, in exercise of its powers under Section 127(1) read with clause (16) of the M.P. Municipalities Act, 1961, resolved to impose export tax on cement and other commodities exported from the limits of Kymore Municipality. A notification was issued on 2-5-1991, which was published in M.P. Rajpatra dated 12-7-1991, levying terminal tax on cement at the rate of half per cent of the price of the cement. The State Government issued a general circular/directions on 15-12-1995 in exercise of powers under Section 127 read with Section 129 of the 1961 Act, laying down a uniformity in the rates of export taxes all over the State of M.P. The rate prescribed was 0.20% export tax on the price of the cement. The respondent, a cement manufacturing company, received a notice on 6-8-1996 followed by a letter dated 23-8-1996 requiring him to pay the export tax at the rate of 0.50% on the price of the cement, which was prescribed rate as per the earlier Notification dated 2-5-1991 published in M.P. Rajpatra dated 12-7-1991. The respondent filed a writ petition challenging the demand raised by the Municipality and it was contended that the Municipality cannot impose tax on its own as impost is always subject to the approval of the State Government and the State Government in order to bring a uniformity all over the State of M.P., has issued a notification dated 15-12-1995 @ 0.20% of price of cement. Therefore, the Kymore Municipality cannot recover the tax at the old rate.

Finding of the Court:

The learned single Judge, after considering the matter, came to the conclusion that the Municipality cannot recover the tax at the old rates as prescribed by the Notification dated 2-5-1991, as published in M.P. Rajpatra dated 12-7-1991 and they can only recover the tax in pursuance of the rates prescribed by the State Government by Notification dated 15-12-1995 and accordingly allowed the petition and directed the Municipality to recover the tax at the rate of 0.20% as fixed by the State Government.

Issues: 1. Whether the Municipality can recover the export tax at the old rates as prescribed by the Notification dated 2-5-1991, as published in M.P. Rajpatra dated 12-7-1991? 2. Whether the State Government's circular dated 15-12-1995 reducing the rate of export tax to 0.20% on cement has the effect of retrospectively taking away the power of the Municipal Council to levy tax at the rate of 0.50% by Notification dated 12-7-1991?

Ratio Decidendi: 1. The tax cannot be levied except under the authority of law and the Municipal Council in exercise of its legislative function under Sec. 127 read with 129, levied the export tax by Notification dated 12-7-1991. Therefore, it was a legislative function of the Municipal Council and no legislative function can be undermind or be superseded by issuing of any circular or exercising the statutory power by any authority under the Rules. The legislative power can only be undone by the Legislative Act and not by the subordinate authority. 2. The State Government having realised that by executive fiat, they could not nullify the notification issued by the Municipalities, they withdrew the notification dated 15-12-1995 on 2-5-1997 and framed the Rules known as 1996 Rules, which were published in the gazette dated 7-3-1997 as aforesaid. Therefore, the contention of the learned counsel for the appellant is that the view taken by the learned single Judge on the facts of the present case that the notification dated 15-12-1995 amounts to reducing the rates of export tax from 15-12-1995 in the case of notification dated 12-7-1991, does not appear to be correct approach in the matter.

Final Decision: The appeals were allowed. The Municipality was entitled to charge export tax at the old rate upto 6-3-1997 and thereafter at reduced rate w.e.f. 7-3-1997 i.e. at the rate of 0.20%.