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High Court Of Madhya Pradesh
U. L. Bhat, M. V. Tamaskar, P. P. Naolekar
SINDHI SAHITI MULTI PURPOSE AND TRANSPORT CO-OPERATIVE SOCIETY LTD, BHOPAL - Appellant
Versus
VERSUS STATE OF MADHYA PRADESH - Respondents
Misc. Petn. 2002 Of 1993
Decided On : 04/15/1994
MUNICIPAL CORPORATION - TAXATION - TERMINAL TAX - COLLECTION BY AUCTION - VALIDITY - BYELAWS FRAMED BY MUNICIPAL CORPORATION - WHETHER ULTRA VIRES - INTERPRETATION OF SECTIONS 86, 87, 88 AND OTHER CONNECTED PROVISIONS UNDER THE M. P. MUNICIPAL CORPORATION ACT, 1956.
Fact of the Case:
Petitioners challenged the validity of the Bhopal Municipal Corporation Terminal Tax, Assessment and Collection Bye-laws, 1970, as amended in 1988, which permitted the auction of the right to collect terminal tax by open bid and authorized the contractor and his employees to collect the tax. The petitioners contended that the right to collect tax is a sovereign function and cannot be delegated, that the bye-laws are ultra vires of Article 265 of the Constitution, that the scheme of the Act does not authorize direct payment to anyone of any tax collected without the same being deposited in the treasury under Section 87 of the Act, and that the bye-laws are in excess of the authority conferred on the Corporation by law and are against the specific legislative intendment.
Finding of the Court:
The Court held that the right to collect tax is a sovereign function, but it can be delegated by the legislature. The Court further held that the bye-laws framed by the Municipal Corporation are not ultra vires of Article 265 of the Constitution, as the levy and collection of tax have been authorized by law. The Court also held that the scheme of the Act does not prohibit the direct payment of tax to the contractor, as long as the amount collected is ultimately credited to the municipal fund. Finally, the Court held that the bye-laws are not in excess of the authority conferred on the Corporation by law and are not against the specific legislative intendment.
Issues: 1. Whether the right to collect tax is a sovereign function and cannot be delegated? 2. Whether the bye-laws framed by the Municipal Corporation are ultra vires of Article 265 of the Constitution? 3. Whether the scheme of the Act authorizes direct payment to anyone of any tax collected without the same being deposited in the treasury under Section 87 of the Act? 4. Whether the bye-laws are in excess of the authority conferred on the Corporation by law and are against the specific legislative intendment?
Ratio Decidendi: 1. The right to collect tax is a sovereign function, but it can be delegated by the legislature. 2. The bye-laws framed by the Municipal Corporation are not ultra vires of Article 265 of the Constitution, as the levy and collection of tax have been authorized by law. 3. The scheme of the Act does not prohibit the direct payment of tax to the contractor, as long as the amount collected is ultimately credited to the municipal fund. 4. The bye-laws are not in excess of the authority conferred on the Corporation by law and are not against the specific legislative intendment.
Final Decision: The Court upheld the validity of the Bhopal Municipal Corporation Terminal Tax, Assessment and Collection Bye-laws, 1970, as amended in 1988, and dismissed the petition.
( 1 ) THIS petition stands referred to the Full Bench, by Hon. the Chief Justice, to consider, whether the decisions given in case of Indore Bhed Bakra Vikreta Sangh and others v. Municipal Corporation, Indore and others, 1992 MPLJ 781 and Indore Nagar Nigam Karmachari Congress, Indore v. State of M. P. and others, 1993 MPLJ 847, lay down correct law, in interpreting the provisions of Sections 86, 87, 88 and other connected provisions under the M. P. Municipal Corporation Act, 1956. It was also noted that in regard to similar provisions under Sections 105, 127 and 160 under the M. P. Municipalities Act, a contrary view has been taken to in M. P. No. 1316/93 and M. P. No. 890/92.
( 2 ) SINCE important questions of law are involved, notice was given to the Bar Association that all counsel who desire to address the Court on the questions arising in the case will be heard. We heard Shri Sudhir Rawat, learned counsel for the petitioners, Shri Anoop Choudhary, Additional Advocate General, counsel for respondent No. 2 Municipal Corporation of Bhopal and also for the State of M. P. respondent No. 1. Shri Nirmal Chand Jain, Advocate, made useful contribution.
( 3 ) SHRI Nirmal Chand Jain, supported Shri Sudhir Rawat, in his submissions that the decisions reported in Indore Bhed-Bakra Vikreta Sangh and others v. Municipal Corporation, Indore and others (supra) and Indore Nagar Nigam Karmachari Congress, Indore v. State of M. P. and others (supra) lay down correct law and deserve to be affirmed by the Full Bench.
( 4 ) FOR understanding the real controversy, we refer to following salient facts : the petitioner No. I is a Co-operative Society registered nnder M. P. Co-operative Societies Act, 1960 and petitioner No. 2 is a travel agency, booking passenger buses for hire or reward to carry passengers to various destinations from Bhopal. The petitioner No. 1 operates buses on regular permits granted to it under the Motor Vehicles Act, 1988. The respondent No. 2 Municipal Corporation, Bhopal has framed Bye-laws, known as Bhopal Municipal Corporation Terminal Tax, Assessment and Collection Bye-laws, 1970. The said byelaws were amended vide notification published in M. P. Gazette, Part II, dated 27th January 1988, Page 82, which is reproduced below :"bhopal, the 27th January, 1988 no. 39-5063-XVIII-III-88. In exercise of the powers conferred by sub-section (1) of Section 430 of the Madhya Pradesh Municipal corporation Act 1956 (No, 23 of 1956), the State government under sub-sections (2) and (3) of Section 427 of the said Act, hereby confirms the following amendments in the Bhopal Municipal Corporation Terminal Tax. (Assessment and Collection) Bye-laws, 1970, the sama having been previously published as required by clause (a) of Section 429 of the said Act and are now published as required by Section 434 of the said Act: amendments 1. The byelaw No. 2 (e) and (f) may be substituted with the following : (e) "nakedar or Collection Clerk" means the official or any other. who is authorised by the Corporation for Collection of Terminal Tax, on the places established for the Collection of Terminal Tax ; (f) "naka" means a place established by the Corporation for collection of Terminal Tax. 2. In byelaw No. 4 the words "octroi Nake" may be substituted with the word "nake". 3. In byelaw No. 6 the word "octroi" before the word "naka" may be omitted' 4. Tn byelaw No. 11 after the word "employee" "or any other person" may be added. 5. After byelaw No. 12 the following byelaw may also be added (12-A) For the recovery of Terminal Tax, the Municipal Corporation, Bhopal may auction the Naka by open bid and authorise the contractor and his employees under byelaw No. 2 (c)-any byelaw No. 11 for the recovery of Terminal Tax. The Commissioner, Municipal Corporation, Bhopal shall have the power to prescribe the terms and conditions of the auction of Nakas. By order and in the name of the Governor of Madhya Pradesh. R. K. KASHYAP, Spl. Secy. "
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