Full Judgment Text
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PETITIONER:
MUNICIPAL COUNCIL, RAICHUR
Vs.
RESPONDENT:
AMAR CHAND PRASANNA ETC.
DATE OF JUDGMENT:
01/08/1967
BENCH:
SHAH, J.C.
BENCH:
SHAH, J.C.
SIKRI, S.M.
CITATION:
1968 AIR 255 1968 SCR (1) 87
ACT:
Mysore Municipalities Act, 1964, ss. 57, 80(5), 94, 95, 96,
97, 123(1), 824(4) and (5)--Resolution levying octroi
whether can be adopted by confirmation of resolution passed
by Standing Committee--Modification in resolution whether
can be adopted by circulation among members and subsequent
confirmation by general body--Modification in model bye-laws
must comply with s. 324(4) and (5)--Defect in some of the
bye-laws does not make the rest of the bye-laws
unenforceable.
HEADNOTE:
On June 11, 1965, the Standing Committee of the Raichur
Municipal Council resolved to levy octroi duty according to
Sch. II under s. 94 of the Mysore Municipalities Act, 1964.
It was recited in the resolution that the confirmation of
the general body be obtained. The general body unanimously
approved the resolution of the Standing Committee. On
October 27, 1965 the notification under s. 95 of the Act
inviting objections from the public was published; no
objections were received. On February 26, 1966 there was a
special general body meeting and it was. resolved to levy
octroi with effect from April 1, 1966. This resolution was
however amended by modification of its second paragraph on
March 25, 1966. Approval to this modification was obtained
at first by circulation to the members on March 31, 1966 the
minutes of the meeting dated February 26, 1966 and the
adoption of the resolution modifying the second paragraph by
circulation on March 25, 1966, were read, heard and
confirmed unanimously. As required by s. 123 of the Act the
model bye-laws framed by Government were adopted but the
table of rates in model bye-law 16 relating to the levy of
storage fee and charges on goods placed in the bonded
warehouses was, left blank. The rates were fixed by the
Council by its resolution of March 31, 1966. On April 16,
1966 sanction of the Government under s. 96 of the Act to
the levy of octroi and the adoption of model by-laws was
given and on May 3, 1966, the notification under s. 97 of
the Act imposing octroi duty under Sch. II and adopting the
bye-laws was published. The respondents who were dealers in
cloth in Raichur moved the High Court of Mysore under Art.
226 of the Constitution. The High Court held that though
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octroi had been properly levied its collection wag unau-
thorised owing to defects in the bye-laws adopted. The
municipality appealed. The following questions fell for
consideration: (i) whether the resolution levying the octroi
and the subsequent modification of the said resolution were
procedurally valid (ii) whether the fixation of rates for
the purpose of model bye-law 16 was validly made, the
procedure in s. 324(4) and (5) not having been followed-,
(iii) whether the bye-laws were unenforceable for the reason
that they did not fix the time for the purpose of bye-laws
23, 27 and 28 and did not give a list of articles for the
purpose of bye-laws 33 to 36.
HELD:(i) The resolution of the Standing Committee
selecting octroi tax for imposition expressly stated that
confirmation of the general body would be obtained, and such
confirmation was actually obtained. It could not in the
circumstances be contended that
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there was no valid resolution by the Municipal Council under
S. 94 selecting octroi duty for imposition. [92F-H]
The resolution modifying the original resolution dated
February 26, 1966 was no doubt passed by circulation but
later the said circulation was "read, heard and confirmed
unanimously" by the general body. Under s. 80(5) any
irregularity not affecting the merit of the case can be
cured and s. 97(2) prohibits enquiry into the regularity of
the procedure by which a tax has been imposed after a notice
under s. 97 (1) is published. No material had been placed
before the Court to show that in making the modification s.
57 had not been complied with. [93A-D]
Municipal, Board, Hapur v. Raghuvendra Kripal & Ors., [1966]
1 S.C.R. 950, relied on.
(ii)If bye-laws in respect of the matters specified in cl.
(m) of S. 324(1) are made and submitted for sanction or
model bye-laws framed by the Government for those purposes
are adopted, the requirements of s. 123(1) will be
satisfied, and if Government sanctions the resolution of the
Municipal Council imposing octroi duty under S. 97(1) and
the notice is duly published. octroi duty may be collected
by the Municipal Council. Defect in ’the bye-laws will not
affect the authority of the Municipal Council to collect the
tax for the authority arises under s. 94(3) from Act and the
Rules. [94C-D]
The Municipal Council by fixing a tariff for storage fee
under bye-law 16 modified the model bye-laws, and since the
modification was made without the Procedure prescribed in s.
324(4) and (5) the said bye-law was invalid. As a result
the Municipal Council was not entitled to levy any charge
for storage under bye-law 16. But the validity of other
bye-laws was not thereby affected. [94H-95C]
(iii)The time contemplated to be fixed for the purposes
of byelaws 23(e), 27 and 28 need not be fixed in the bye-
laws. If time is fixed by resolution of the Municipal
Council after the bye-laws are sanctioned, there would be no
defect in the bye-laws. [95E-F]
Bye-laws 33 to 36 depend for their operation upon the list
of articles being effectively incorporated in bye-law 32.
Failure to incorporate the list of articles would result in
the Municipal Council I being unable to enforce compliance
with the requirement of taking out a licence. The rest of
the by-laws did not threby become ineffective. [95G-H]
JUDGMENT:
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CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2382- 2384
of 1966.
Appeals from the judgment and orders dated October 6, 1966
of the Mysore High Court in Writ Petitions Nos. 1056, 1607
and 1298 of 1966,
S. T. Desai, S. C. Javali and Vineet Kumar, for the
appellant (in all the appeals).
M. M. Ramamurthi and Shyamala Pappu, for respondent No. 1
(in all the appeals) and respondent No. 2 (in C. A. No. 2382
of 1966).
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The Judgment of the Court was delivered by
Shah, J.-On May 3, 1966 the Municipality of Raichur imposed
octroi duty on goods specified in Sch. 11 to the Mysore.
Municipalities Act 22 of 1964, entering the municipal limits
for consumption, use or sale. The respondents who are
traders in cloth at Raichur moved the High Court of Mysore
by-petitions under Art. 226 of the Constitution challenging
the levy and collection of octroi duty on goods described in
Sch. II of the Act in pursuance of the notification dated
May 3, 1966. The High Court of Mysore held that the tax was
properly imposed, but in their view collection of the tax
was not authorised by law. The High Court accordingly
issued a writ of mandamus restraining the Municipal Council,
Raichur from recovering the octroi duty levied in pursuance
of the notification dated May 3, 1966. The Municipal
Council, Raichur, has appealed to this Court against the
orders passed by the High Court.
The relevant provisions of the Mysore Municipalities Act 22
of 1964 and the Bye-Laws may be summaried. By s. 94 the
Municipal Council is authorised, subject to the general or
special orders of the Government, and after observing the
preliminary procedure prescribed by s. 95, to levy, among
other taxes, octroi on goods specified in Sch. II entering
the municipal limits for consumption, use or sale therein.
By sub-s. (3) of S. 94 it is provided that the taxes
specified in sub-s. (1) shall be assessed, levied and
collected in accordance with the provisions of the Act and
the rules made by the Government under s. 323. Section 95
prescribes the procedure preliminary to imposition of tax.
A municipal council has by resolution passed at a general
meeting to select for the purpose one or more of the taxes
specified in s. 94 and in such resolution to specify the
classes of persons or of property or of both which the
municipal council proposes to make liable and to prescribe
exemptions which it proposes to make, the amount or rate at
which the municipal council. proposes to assess any such
class, and in the case; of octroi, the octroi stations. The
resolution must be published in the official Gazette and in
such other manner as may be prescribed. Any inhabitant of
the municipality may within one month from the publication
of the notice submit his objection to the imposition of the
tax or to the amount or rate proposed, or to the classes of
persons or property to be made liable, or to any exemptions
proposed. The municipal council must take into
consideration the objections and submit to the Government of
the State such objections with its opinion thereon and any
modifications proposed in accordance therewith together with
a copy of the notice. A resolution sanctioned by the
Government together with a notice reciting the sanction and
the date and number thereof may then be published by the
,municipal council in the official Gazette, and the tax as
prescribed by the, resolution shall be imposed accordingly.
Sub-section (2) of
"The publication of a notice under this
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section shall be conclusive evidence that the
tax has been imposed in
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accordance with the provisions of this Act and
the rules made thereunder".
Section 123 provides that every municipal council when
submitting for sanction a proposal for the imposition of
octroi, shall submit therewith for sanction bye-laws for the
purposes of cl. (m) of sub-s. (1) of s. 324 or adopt model
bye-laws made for the said purposes. Section 124 deals with
"non-liability for octroi and refund of octroi on goods in
transit". Section 125 invests the municipal council with
power to exempt articles liable to octroi duty, and S. 126
relates to the presentation of bills for octroi and
prescribes penalties for evasion of payment of octroi.
Section 127 prescribes the penalty for selling articles
liable to octroi without a licence, or for being in
possession of any such article on which octroi has not been
paid. Section 323 authorises the Government to make rules
for carrying out all or any of the purposes of the Act and
to prescribe forms for any proceeding for which it considers
that a form shall be prescribed. Exercising the authority
conferred by s. 323 the Government of Mysore published on
September 2, 1965, the Mysore Municipalities Taxation Rules,
1965. Rules 25 to 32 deal with the collection of octroi.
Rule 25 deals with the mode of collection; r. 26 with pay-
ment of octroi, r. 27 with assessment and collection of
octroi at octroi station; and r. 28 with the procedure in
case where octroi is leviable ad valorem. Rule 3.1 requires
the municipal council to maintain a list of traders and
public bodies allowed to have an account current, and r. 32
requires a trader or public body allowed, to have an account
current to present a declaration in Form VII. Section 324
authorises the municipal council to make, alter or rescind
bye-laws, subject to the provisions of the Act and the rules
made thereunder. Clause (m) provides, insofar as it is
material:
" providing for the exhibition of tables of
octroi, requiring a licence to be obtained for
the sale of any article liable to octroi and
prescribing the, conditions on or subject to
which such licence may be granted, refused,
suspended or withdrawn, regulating, subject to
any general or special orders which the
Government may make in this behalf, the system
under which refunds are to be made on account
thereof when the goods on which the octroi has
been paid, or article manufactured wholly or
in part from such goods, are again exported
and the custody or storage of goods declared
not to be intended for use or consumption or
for sale within the
municipality;..................
Section 325(2) provides that a municipal council may by
resolution adopt in respect of any matter the model bye-laws
made by the Government under sub-s. (1) of s. 325 in respect
’of matters specified in S. 324. Sub-section (3) of s. 325
provides:
"If a municipal council proposes to adopt the
model bye-laws in respect of any matter
subject to any modifications, the procedure
specified in sub-sections (4), (5) and (6)
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of section 324 shall be followed as if the
modifications were bye-laws proposed to be
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made by the municipal council. The
modifications as approved by the Government
shall be published in the prescribed manner
and the model bye-laws shall subject to such
modifications come into force from such date
as may be specified by the municipal council
and where no date is specified on the date of
such publication". .
Sub-sections (4) & (5) of s. 324 set out the procedure to be
followed by the municipal council in the making and
publication of bye-laws. Sub-section (6) authorises the
local Government while approving the bye-laws to make any
changes therein which appear to it-to be necessary.
In the present case the Municipal Council adopted the model
bye-laws framed by the Government. It appears, however,
that the table of rates in model bye-law 16 relating to the
levy of storage fee and charges on goods placed in the
bonded warehouses was left blank. The Municipal Council has
however by resolution prescribed a, table of rates of
storage fee and charges in respect of different classes of
articles stored in the bonded warehouses.
The respondents challenge in this Court the validity of the
imposition of octroi duty on two grounds: (i) that there was
no valid resolution by the Municipal Council under s. 94 of
the Act selecting the octroi duty for imposition, and (ii)
that the model bye-laws having been altered by adding a
tariff of storage fee in the bonded warehouses without
following the procedure prescribed under s. 324(4) & (5),
the model bye-laws could not be deemed to have been validly
adopted by the Municipal Council. They also submit that the
Municipal Council has no authority to collect octroi duty,
and support the judgment of the High Court, on that
question.
Before considering the arguments advanced at the Bar, the
steps taken by the Municipal Council for imposing the tax
and for adoption of the model bye-laws may be briefly set
out. On June 11, 1965 the Standing Committee of the Raichur
Municipal Council resolved to levy octroi duty according to
Sch. 11 under s. 94 of the Mysore Municipalities Act,’ 1964,
at the maximum rates at the octroi barriers specified
therein. It was recited in the resolution that confirmation
of the general body be obtained. By resolution dated June
28, 1965 the general body resolved unanimously to confirm
the recommendations of the Standing Committee dated June 11,
1965. On October 27, 1965 the notification under s. 95 of
the Act by the Municipality inviting objections to the
proposals to impose octroi tax was published. No Objections
were received from any resident of the Municipality against
the proposal to levy octroi. On February 26, 1966 there was
a special general body meeting of the, Municipal Council and
it was resolved to levy
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octroi with effect from April 1, 1966. The resolution was
in the following terms:
"After due decision and consideration it was
unanimously resolved to levy the octroi duty
on all the goods imported within municipal
limits of Raichur under the Schedule II of
Mysore Municipalities Act, 1964, from the
first day of April 1966. Further the
Committee resolved that the Hyderabad District
Municipalities Octroi Rules, 1959, will
continue till the new Octroi Rules and Bye-
laws are finalised under Mysore Municipalities
Act, 1964."
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But this resolution was amended on March 25, 1966, and the
second paragraph was substituted by the following
paragraph:-
"Further the Committee resolved that the
appended Bye-laws framed by the Municipality
in the light of Octroi Model Bye-laws 1965
published by the Government in the Mysore
Gazette dated 11th November, 1965, have been
fully approved."
Approval to the modification in the second paragraph was ob-
tained by circulation to the members and not in an open
general meeting. On March 31, 1966 the minutes of the
meeting dated February 26, 1966, and the adoption of the
resolution modifying the second paragraph by circulation on
March 25, 1966, were read, heard and confirmed unanimously.
The storage fee under bye-law 16 of the model bye-laws was
also adopted. On April 16, 1966 sanction of the Government
under s. 96 of the Act to the levy of octroi and the
adoption of model bye-laws was given, and on May 3, 1966,
the notification under S. 97 of the Act imposing octroi duty
under Sch. II to the Act and adopting the bye-laws was
published. Thereafter on various dates in the months of
July and August 1966, the writ petitions out of which these
appeals arise were filed.
There is no substance in the contention that the municipal
council had not passed a resolution selecting the octroi tax
for imposition. As stated earlier, on June 11, 1965, the
Standing Committee of the Municipal Council had "resolved to
impose octroi duty" under Sch. 11 to the Act. But the
resolution also stated that confirmation of the general body
meeting should be obtained. The Municipal Council at its
meeting dated June 28, 1965 treated the resolution of the
Standing Committee as a recommendation and confirmed the
recommendation. The resolution dated June 28, 1965, was
passed by the general body and thereby the Municipal Council
adopted the recommendations of the Standing Committee, and
resolved to select levy of octroi duty at the maximum rates
at the octroi barriers specified therein.
It is true that the resolution modifying the original
resolution dated February 26, 1966 was passed by circulation
on March 25,
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1966. But in view of the terms of s. 80(5) the validity of
the resolution was not liable to be questioned on the ground
of irregularity which manifestly did not affect the merit of
the case., It may be recalled that on March 31, 1966 the
"circulation dated 25-3-66 were read, heard and confirmed
unanimously."
The plea that a resolution passed by the Municipal Council
cannot, under the Act, be modified or cancelled within three
months is without force. Section 57 of the Act provides
that no resolution of a municipal council shall be modified
or cancelled within three months after the passing thereof
except by a resolution passed in the manner prescribed in
that behalf. There are no materials on the record to prove
that the requirements of s. 57 were not complied with, and
s. 97(2) prohibits an enquiry into the regularity of the
procedure for imposition of the tax after a notice under s.
97(1) is published. This Court in Municipal Board, Hapur v.
Raghuvendra Kripal & Ors.(1) in dealing with a similar
provision in s. 135 of the U. P. Municipalities Act 2 of
1916, held that s. 135(3) shuts out enquiry into the
procedure by which a tax had been imposed. Hidayatullah,
J., speaking for the majority observed (p. 958) .
"There is a difference between the tax and the
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imposition of the tax. The former is the levy
itself and the latter the method by which the
levy is imposed and collected. What the sub-
section does is to put beyond question
the procedure by which the tax is imposed,
that is to say, the various steps taken to
impose it."
Section 97(2) makes the publication of the notice under s.
97(1) conclusive evidence that the tax has been imposed in
accordance with the provisions of the Act and the rules made
thereunder. The expression "imposed in accordance with the
provisions of this Act", in our judgment, means "imposed in
accordance with the procedure provided under the Act". All
enquiry into the regularity of the procedure followed by the
Municipal Council prior to the publication of the notice is
excluded by s. 97(2). This is not a case in which the
Municipal Council had not selected a tax for imposition by a
resolution: nor is it a case in which the Municipal Council
was seeking to levy tax not authorised by law.
A Municipal Council when submitting for sanction a proposal
for the imposition of octroi has to submit under s. 123 with
the proposal for imposition of octroi, also’ bye-laws for
the purposes of cl. (m) of sub-s. (1) of s. 324, or to adopt
model bye-laws made for the said purposes. It is to be
noticed that under s. 94(3) of the Act the tax has to be.
assessed, levied and collected in accordance
(1)[1966] I S.C.R. 950.
94
with the provisions of the Act and the rules made by the
Government under s. 323. Bye-laws contemplated to be made
under s. 324(1)(m) and required to be adopted from the model
bye-laws or specially framed and submitted under s. 123 deal
with matters of details, such as the exhibition of tables of
octroi; requiring a licence to be obtained for the sale of
any article liable to octroi and prescribing the conditions
on or subject to which such licence may be granted, refused,
suspended or withdrawn-, regulating the system under which
the refunds are to be made when the goods on which the
octroi has been paid are again exported; for the custody or
storage of goods declared not to be intended for use or
consumption or for sale within the municipality; prescribing
a period of limitation after which no claim for refund of
octroi shall be entertained; and prescribing the minimum
amount for which any claim for refund may be made. If bye-
laws in respect of these matters specified in cl. (m) of s.
324(1) are made and submitted for sanction or model bye-laws
framed by the Government for those purposes are adopted, the
requirements of s. 123(1) will be satisfied, and if the
State Government sanctions the resolution of the Municipal
Council imposing octroi duty under s. 97(1) and the notice
is duly published, octroi duty may be collected by the
Municipal Council. Defect in the bye-laws will not affect
the authority of the Municipal Council to collect the tax,
for the authority arises under s. 94(3) from the Act and the
rules.
The Municipal Council of Raichur-adopted the model byelaws
made by the Government. None of the bye-laws "for the
purposes" of cl. (m) of s. 324 in the model bye-laws was
defective or incomplete. The model bye-laws undoubtedly did
not prescribe the storage fee, and the resolution of the
Municipal Council levying storage fee at the rates set out
in the bye-laws and submitted to the Government was not made
in conformity with the terms of
S. 324(4) & (5).
The High Court held that the bye-laws adopted by the Muni-
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cipal Council were invalid because (1) the resolution dated
February 26,1966 could not have been modified by
circulation; and (2) that it was not shown that the
Municipal Council had complied with the requirements of s.
57 when modifying the resolution dated February 26, 1966;
and (3) that the State Government had not fixed the time
prescribed by bye-laws Nos. 23(e), 27, 28 and 32, and since
no decision was taken on those bye-laws by the Municipal
Council, the enforcement of the octroi levy was "rendered
difficult".
It is clear that under s. 325(3) modifications to the model
bye-laws alone require compliance with sub-ss. (4) & (5) of
s. 324. It may be assumed that fixing a tariff for storage
fee under bye-law 16 which is not prescribed under the model
bye-laws amounts to
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modification of the bye-laws, but even on that assumption
only bye-law 16 may be deemed to be invalid, and the power
to collect the storage fee may not be lawfuly exercised by
the Municipal Council: that does not affect the validity of
the other bye-laws. If without a particular bye-law, the
scheme of the. rest of the bye-laws may be unworkable, it
may follow by necessary implication that the other bye-laws
have also become ineffective. But that cannot be said of
the defect in adopting the table of fees for the purpose of
bye-law 16. The Municipal Council may not be entitled to
levy any charge for storage under bye-law 16, but that is
the only effect of non-compliance with the terms of sub-ss.
(4) and (5) of s. 324. The other bye-laws remain valid and
operative, for they are plainly severable.
Bye-law 23(e) of the model bye-laws provides that no refunds
shall be allowed in respect of goods which are transported
outside the municipal limits within one month of their being
brought into the municipal limits, but regarding which the
intimation has not been given to the Municipal Commissioner
or Chief Officer within such time as may be fixed by the
Municipal Council. Bye-law 27 provides that the
application for refund with the goods to which it relates
shall be presented at the Octroi Station through which it is
transported outside the municipal limits within such
interval from the hour of examination as the municipal
council may determine. Similarly bye-law 28 provides that
the Octroi Official-inCharge of the Octroi Station shall
satisfy himself that the goods produced for transport
outside the municipal limits as covered by the refund
application correspond with the entries in the refund
application form and that they are presented within the time
fixed by the Municipal Council under bye-law 27. In our
judgment, the time contemplated to be fixed for the purposes
of bye-laws 23(e), 27 & 28 need not be fixed by the bye-
laws. If time is fixed by resolution of the Municipal
Council even after the bye-laws are sanctioned, there would
be no defect in the bye-laws.
Bye-law 32 provides that no person shall sell articles men-
tioned therein without obtaining a licence granted in that
behalf. The model bye-law is silent as to the articles
which may not be sold without obtaining a licence. Bye-laws
313 to 36 depend for their ’operation upon the list of
articles being effectively incorporated in bye-law 32.
Failure to incorporate the list of articles would result in
the Municipal Council being unable to enforce compliance
with the requirements of taking out a licence. But we are
unable to hold that because of the failure to fix the time
under bye-laws 23(e), 27, 28, or for failure to incorporate
the list of articles in bye-law 32, the rest of the bye-laws
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became ineffective. We are of the view that even without
these bye-laws and bye-law 16, octroi duty may be levied by
the Municipal Council. In our view, the High Court was in
error in holding that the model byelaws which were adopted
by the Municipal Council were unenforceable.
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The appeals must therefore be allowed and the petitions
filed by the respondents dismissed with costs in this Court.
One hearing fee. The order passed by the High Court
regarding the costs is maintained.
G.C. Appeals
allowed.
97