1. This is a petition under Art. 226/227 of the Constitution of India, seeking quashment of the resolution (Annx. P3) dated 2.8.95 imposing terminal tax on country liquor u/s. 127 of the Municipalities Act.

2. The petitioner is a liquor contractor and carries on business of sale of country liquor in Badnawar, Distt. Dhar. He is required to send liquor from Badnawar to various parts of the tehsil. Respondent No.1 the Municipal Council, Badnawar in exercise of its powers u/s. 127 and 129 of the M.P. Municipalities Act, 1961 (for short, 'the Act') passed a resolution dated 4.7.95 (Annx. R-1) imposing terminal tax on various goods including country liquor exported from 'vithin the municipal limits of Badnawar. By a subsquent resolution dated 2.8.95 (Annx. R-2) the former resolution was made effective from 5.8.95. Under the resolution (Annx. R-1) the terminal tax on liquor was levied @ Rs. 2.00 per litre. Respondent No. 2 the Government of Madhya Pradesh in exercise of their powers u/s. 129 (1) of the Act issued a notification (Annx. P4) dated 15.11.95 specifying upper ceiling limits for imposition of terminal tax on various goods by the Municipalities throughout the State of Madhya Pradesh. The limit prescribed for all types of liquor was 1.00 per cent ad-valorem. Consequent to this'direction of the State Government the respondent No.1 municipality by its resolution dated 5.2.96 (Annx. R-4) amended its earlier resolution (Annx. P-3) so as to bring in conformity with the government order.

3. The petitioner has impugned the resolution (Annx. P-3) as contrary to the express and mandatory provision of sub-sec. (1) of Sec. 129 for two reason: one, that the resolution was not passed at the time of adoption of budget estimates for the next financial year, and; two, that the State Government had not then prescribed any limitations and conditions for levy of the tax as envisaged under sub-sec. (1).

4. The respondent No.1 has filed return in oppugnation and it is contended that the proviso to sec. 129 authorises the municipal council to impose a tax even during a financial year before or after adoption of the annual budget. Similarly, the imposition oflimitations and conditions by the State Government, it is further contended, is not a condition precedent to exercise powers of imposition of tax by the municipality u/Ss. 127 and 129 of the Act.

5. I have heard Shri S.S. Samvatsar, learned counsel for the petitioner and Shri Nimgaonkar, learned counsel for respondent No.1.

6. In order to appreciate rival contentions, it would be proper here to read Sec. 129 which is as follows:

"129./mposition of taxes and fees :

(1) That Council may, by a resolution, at the time of final adoption of the budget estimates for the next financial year, subject to the provisions of this Act and subject to such limitations and conditions, as may be prescribed by the State Government in this behalf(a) impose any of the taxes or fees specified in this Act; or (b) increase the rates of taxes or fees already imposed.

(2) The resolution as referred to in sub-sec. (1) shall contain-(a) in case of irriposition of any tax or fee, the provisions under which such tax or fee is being imposed, class of persons or description or property to be taxed, the amount or rate of tax or fee being imposed, system of assessment and collection to be adopted and the date from which imposition of such tax or fee shall take effect;

(b) in case of increase of rate of any tax on fee, the prevailing rate of such tax or fee, the proposed increased rate of such tax or fee and the date from which increase of rate or such tax or fee shall take effect.

(3) The resolution, as passed, shall be conclusive evidence of the imposition of a new tax or fee, or increase of rate of any tax or fee, as the case may be :

Provided that if the council decides to have supplementary taxation during the financial year, it may do so from such date as the council may resolve, subject to the provisions of this Act and subj