PETITIONER: VILLAGE PANCHAYAT OF KANHAN PIPRI Vs. RESPONDENT: STANDING COMMITTEE, ZILA PARISHAD, NAGPUR, AND ORS. DATE OF JUDGMENT: 17/08/1967 BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. SHAH, J.C. SHELAT, J.M. CITATION: 1968 AIR 183 1968 SCR (1) 213 ACT: Bombay Village Panchayat Act 1958 (Bombay Act 3 of 1958), s. 124(5)--Maharashtra Panchayats Taxes and Fees Rules 1960, rr. 3, 4, 5, 21, 22--Levy of octrai by Panchayat under r. 22--Procedure under rr. 3 & 4 followed--Collection of octroi commenced without Prior approval of octroi limits under r. 21 by Collector--such collection whether valid--subsequent approval by collector whether validates collection made earlier--Appeal under r. 124(5)--Limitation Rule 5 providing for appeal against levy of octroi within 60 days of notice under r. 4--Scope and validity of r. 5. HEADNOTE: The appellant Panchayat levied octroi duty on goods coming within its limits by following the procedure laid down in rr. 3 and 4 of the Maharashtra Village Panchayats Taxes and Fees Rules 1960. Although the resolution finally levying octroi was passed on February 25, 1963 and the octroi limits were fixed by resolution dated March 17, 1963 the approval of the Collector to the octroi limits as required by r. 21 was not obtained till January 14, 1964. When the Panchayat began collecting octroi on April 1, 1963 the respondent company appealed under s. 124(5) of the Bombay Village Panchayat Act, 1958 to the Panchayat Samita. The appeal was rejected as it was considered time-barred under r. 5 of the Taxes & Fees Rules which required an appeal under s. 124(5) of the Act to be filed within 60 days of the publication of the notice under r. 4. On further appeal the Standing Committee, Zila Parishad, Nagpur decided in favour of the respondent company on the ground that the Panchayat had not complied with r. 21. The Panchayat filed a writ petition under Art. 226 of the Constitution. The High Court upheld the findIng of the Standing Committee as to the effect of non-compliance with r. 21. It however further held that r. 5 in requiring all appeals under a. 124(5) of the Act to be filed within 60 days of the publication of the notice under s. 4 was arbitrary and destructive of the right of appeal and therefore ultra vires. The Panchayat appealed to this Court. Held: (i) Octroi can be validly levied under r. 22 after following the procedure in rr. 3 and 4 Rule 3 deals only with (i) selection of the tax and (ii) the rate at which it is to be levied. Rule 4 deals with final publication of the notice levying octroi. The levy of octroi under r. 22 read with rr. 3 and 4 does not require prior approval to the octroi limits by the Collector under r. 21. [219D-H; 220A- C]. (ii) However the octroi cannnot be validly collected before the octroi limits are approved by the Collector under r. 21. Collections made earlier cannot be regularised by subsequent approval. The plea on behalf of the appellant that the approval of the Collector on January 14, 1964 should relate back to April 1, 1963 could not be accepted. [220 D-E]. (iii) Rule 5 is not invalid as it does not apply to all appeals under, s. 124(5). The rule follows rr. 3 and 4 and is headed "appeal against levy of any tax or fee," and the period of sixty days of limitation commences from the date of the publication of the notice 214 under r. 4 i.e. the notice following the decision of a Panchayat to levy any tax or fee. This date shows that r. 5 is dealing only with appeals against levy of any tax and not with the assessment or imposition of a tax or any further appeals to the Panchayat Samiti under s. 124(5). In its context and setting the heading of r. 5 brings out the scope of the rule, [220 F-H]. Accordingly the appeal of the company to the Samiti was wrongly dismissed as time-barred. It followed from this that the Standing Committee was entitled to deal with the appeal on merits. [220 H]. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1375 of 1966.
Appeal from the judgment and order dated October 22, 1965 of
the Bombay High Court Nagpur Bench in Special Civil
Application No. 355 of 1964.
M. N. Phadke and Naunit Lal, for the appellant.
B. R. Agarwala and S. B. Nerkar, for respondent No. 1.
A. K. Sen, A. S. Bobde, G. L. Sanghi, and O. C. Mathur,
for respondent No. 2.
M. S. K. Sastri, R. N. Sachthey, S. P. Nayar for R. H.
Dhebar, for respondent No. 3.
The Judgment of the Court was delivered by
Sikri, J This appeal by certificate of fitness granted by
the High Court of Judicature at Bombay (Nagpur Bench) is
directed against the judgment of that Court dismissing the
petition filed under art. 226 of the Constitution by the
Village Panchayat of Kanhan Pipri, appellant before us. The
appellant had in this petition prayed for the issue of a
writ quashing the resolution dated April 6, 1964, passed by
the Standing Committee, Zila Parishad, Nagpur, and for a
writ of mandamus directing the Standing Committee not to
interfere with the right of the appellant to impose and
collect the octroi duty pursuant to its resolution dated
February 25, 1963.
In order to appreciate the points raised before us it is
necessary to give the relevant facts and statutory
provisions. The Village Panchayat of Kanhan Pipri,
hereinafter referred to as the Panchayat, was originally
constituted under the C.P. & Berar Panchayat Act, 1946 (C.P.
& Berar Act No. 1 of 1947). On June 1, 1959, the Bombay
Village Panchayat Act, 1958 (Bombay Act III of 1959)
hereinafter referred to as the Act came into effect in
Vidharba region, and by virtue of this Act the appellant was
deemed to be a Panchayat under the Act.
On July 14, 1961, the Panchayat passed resolution No. 2 with
a view to levy octroi duty. The resolution, after reciting
the need
215
for levying octroi duty and the relevant statutory
provisions, concludes:
“…….. it passes the resolution to levy minimum octroi
tax on the goods coming within its local limits as per the
Schedule No. 1 of the Rules.”
On November 17, 1962, resolution No. 5 was passed which
reads as follows:
“5. The meeting considered the question of
imposition of octroi duty. It has been
unanimously resolved that by virtue of
Grampanchayat Resolution No. 2, dated 14-7-61,
that octroi duty shall be imposed on the goods
coming into its local limits, the committee
accepts the same. The matter of levying
octroi duty shall be undertaken in accordance
with the Panchayat Act and its rules. There-
fore matter of Octroi Rules, calling for
objections for the tax and taking of decisions
thereon after the consideration, number of the
octroi posts and place etc. should be got
decided by the appropriate authority. This
matter may be taken into hand very urgently.
It is so decided, by the majority.”
On January 26, 1963, a public notice was issued under r.
3(b) of the Maharashtra Village Panchayats Taxes and Fees
Rules, 1960 hereinafter referred to as the Fees Rules. On
February 19, 1963, M/s Brooke Bond of India (Pr.) Ltd.-
hereinafter referred to as the Company-respondent before us,
preferred objections against the proposed levy of octroi. On
February 25, 1963, resolution No.3 was passed. After setting
out the previous resolutions and the publication of the
notice by beat of drum, and the various objections received,
it concludes:-
“Having considered all these above objections
and suggestions and having given a
satisfactory explanation for the same, this
Committee unanimously resolves that as per the
above resolution octroi should be levied on
all the goods coming into the limits of the
Panchayat,as per schedule I item 1,and levy
the minimum octroi as per the rules in
Schedule I item 2. This levy should come into fo
rce
from 1-4-1963 and its final publication be
done on 1-3-1963 as per rules and by public
notice and by announcement by beat of drums
(through loudspeakers.)”
On March 17, 1963, resolution No. 3 was passed fixing octroi
limits and number of octroi nakas and their places. On
March 18, 1963, the Panchayat wrote to the Collector,
Nagpur, seeking his approval to the octroi limits, number of
octroi nakas and their places.
It appears that the Panchayat started collecting octroi from
April 1, 1963. On May 29, 1963, the Company filed an appeal
216
under s. 124(5) of the Act before the Panchayat Samiti,
Parseoni. The Panchayat Samiti, however, rejected the
appeal by its resolution dated September 4, 1963. This
decision was communicated to the Company by letter dated
September 19, 1963, stating that the appeal “has been
rejected by the Samiti as per its resolution dated 4th
September, 1963, because the same was not filed within
limitation as per the provisions of Bombay Village Panchayat
Act and Rule 5 of Taxes and Fees Rules of 1960.”
The Company thereupon filed an appeal before the Standing
Committee, Zila Parishad, Nagpur-hereinafter, referred to as
the Standing Committee-on October 22, 1963. While the
appeal was pending, the Tehsildar Ramtek on January 14,
1964, approved the octroi limits and the number and location
of octroi nakas within the limits of the jurisdiction of the
Panchayat under r. 21 of the Fees Rules. On April 6, 1964,
the Standing Committee allowed the appeal of the Company on
two grounds; first, that it was necessary for the Panchayat
to have the octroi limits fixed with the approval of the
Collector before levying octroi under r. 21; and secondly,
that the Company was not importing tea within the limits of
the Panchayat for consumption, use or sale. Thereupon, the
Panchayat, as already stated, filed an application under
art. 226 of the Constitution before the High Court.
The High Court held that the Panchayat Samiti could not
dismiss the appeal of the Company as being barred by
limitation because r. 5 of the Fees Rules was ultra vires
the powers of the rule-making authority. The High Court
further held that the octroi duty was not validly levied by
the Panchayat as it had failed to fix the octroi limits in
accordance with law. The High Court did not deal with the
question whether the company’s tea was imported into the
limits of the Panchayat for consumption, use or sale because
it felt that sufficient facts had not been found by the
Standing Committee. The High Court felt that it would not
be proper to determine facts for itself.
The learned counsel for the appellant contends before us (1)
that r. 5 of the Fees Rules was intraviress (2) that the
Standing Committee had no jurisdiction to decide the appeal
on merits as the appeal to the Panchayat Samiti was barred
by limitation; (3) that the octroi duty has been levied in
accordance with law; (4) that, at any rate, the levy was
good after the octroi limits were fixed on January 14, 1964;
(5) that the approval of the octroi limits on January 14,
1964, relates back to April 1, 1963; and (6) that the tea
was imported into the Panchayat limits for consumption, use
or sale.
Before we deal with these points it is necessary to set out
the relevant statutory provisions. Section 3(13) of the
Bombay Village Panchayat Act, 1958 (Bombay Act III of 1959)
defines “octroi” or “octroi duty” to mean “a tax on the
‘entry of goods into a village
217
for consumption, use or sale therein”. Section 124(1)
empowers Panchayats to levy all or any of the taxes and fees
mentioned therein, and reads as follows:
“124(1). It shall be competent to a panchayat
to levy all or any of the following taxes and,
fees at such rates as may be decided by it
(but subject to the minimum and maximum rates
which may be fixed by the State Government)
and in such manner and subject to such
exemptions as may be prescribed, namely:-
…………………………………………..
(ii) octroi………………”
Section 124(5) provides for appeals in these terms:
“Any person aggrieved by the assessment, levy
or imposition of any tax or fee may appeal to
the Panchayat Samiti. A further appeal
against the order of the Panchayat Samiti
shall lie to the Standing Committee, whose
decision shall be final.”
Section 176(1) enables the State Government to make rules
for carrying into effect the purposes of the Act. Section
176(2)(xxvi) provides:
“176(2) In particular but without prejudice to
the generality of the foregoing provision, the
State Government may make rules-
(xxvi)under section 124 laying down the
maximum and the minimum rates and the manner
in which and the exemption subject to which
taxes and fees specified in the section shall
be leviable;………….”
In exercise of the powers under s.176 of the Act, the State
Government made the rules called the Maharashtra Village
Panchayat Taxes and Fees Rules, 1960. Part I of the Fees
Rules is headed “General”, and apart from definitions it
consists of three rules, which read as follows:
“3. Procedure for levying tax or fee.-Every
panchayat before deciding to levy a tax or fee
shall observe the following procedure,
namely:-
(a) The Panchayat shall, by resolution
passed at its meeting, select a tax or fee
which it proposes to levy and in such
resolution shall specify the rate at which it
is to be levied.
(b) The Panchayat shall then notify to the
public the proposal together with that Part of
these rules
218
which relates to that tax or fee by beat of
drum in the village and by means of a notice
affixed in the office of the panchayat and, at
the village chavdi or chora, specifying a
date, not earlier than one month after the
date of such publication, on or after which
the panchayat shall take the proposal into
consideration.
(c) Any inhabitant of the village objecting
to the levy of the tax or fee proposed by the
panchayat may send his objection or suggestion
in writing on or before the date specified in
the notice, published under clause (b).
(d) On or after the date fixed under clause
(b), the panchayat shall consider all
objections and suggestions made under clause
(c) and may finally select a tax or a fee and
decide the rate at which it is to be levied.
4. Final publication of rules relating to tax or fee to be
levied.-Where a panchayat finally decides to levy any tax or
fee the rules in that Part, of these rules which relate to
such tax or fee, together with a notice stating the tax or
fee to be levied and the rate thereof, shall be published by
the panchayat by affixing a copy thereof in the office of
the panchayat. It shall also announce by beat of drum in
the village the fact of such publication.
The tax or fee shall accordingly be levied from. the date
which shall be specified in the notice and which shall not
be earlier than one month after the date of publication of
the notice.
5. Appeal against levy of any tax or fee-A person desiring
to make an appeal under sub-section (5) of section 124,
shall do so within sixty days from the date of publication
of the notice under rule 4.
The scheme of the Fees Rules is first to prescribe general
rules and then to deal individually with various taxes.
Part II deals with tax on Buildings and Lands; Part III with
Octroi; Part IV with Pilgrim Tax; Part V with tax on Fairs,
Festivals and Entertainments; Part VI with taxes on Bicycles
and on Vehicles drawn by Animals; and so on. We are
concerned with Part ITT. This Part consists of rules 21 to
35, and two Schedules. The important rules are rules 21, 22
and 23, and may be set out in full:
“21. Fixing of octroi limits and nakas.-A Panchayat shall,
with the approval of the Collector or of any officer
authorised by the Collector not below the rank of Mamlatdar
Tehsildar, Naib Tehsildar or Mahalkari, fix octroi limits
and the number and location of octroi Nakas within
219
the limits of its jurisdiction.
22. Rate of octroi-Octroi may be levied by a
panchayat, after following the procedure
prescribed in rules 3 and 4, on all or any of
the goods specified in column 1 of Schedule 1,
annexed, to this Part, which are imported into
the octroi limits for consumption, use or sale
therein and at such rates as may be decided by
it but not below the minimum and not exceeding
the maximum rates specified in columns 2 and
3, respectively, of that Schedule.
23. Payment of octroi on introduction of
goods, etc.-The octroi shall be paid at the
octroi Naka at the time when the articles in
respect of which it is leviable are imported
into the octroi limits of a panchayat.”
Rules 30, 31, 32 and 33 deal with refund of
octroi.
We may first deal with the question of the validity of the
levy of octroi duty. It seems to us that the octroi duty
has been levied in accordance with law. It would be noticed
that the rule which authorises the levy is r.22, but it
enjoins that the procedure prescribed in rr.3 and 4 should
be followed before the octroi duty can be levied. When we
turn to rr.3 and 4, it would be noticed that these rules
prescribe the procedure for levying tax or fee and are not
confined to octroi duty only. Rule 7 which deals with tax
on buildings and lands also prescribes that the panchayat
shall follow the procedure prescribed in rr.3 and 4 before
levying a tax on buildings and lands. Similarly, r.37 which
deals with tax on pilgrims provides that the procedure
prescribed in rr.3 and 4 should be followed. Again, in
r.53, which deals with tax on vehicles, a reference is made
to rr. 3 and 4. Rule 71 which deals with tax on professions
also contains a reference to rr. 3 and 4. Rule 84 which
deals with fee on markets and weekly bazars has a reference
to rr.3 and 4. Rule 93 which deals with fee on cartstands
and tonga-stands makes the procedure in rr.3 and 4 appli-
cable. The scheme of the Fees Rules accordingly seems to be
that the general procedure for levying taxes or fees is laid
down and then this procedure is made applicable to the levy
of various taxes mentioned in the other parts of the Rules.
Viewed in this background, it seems to us that r.3(b) does
not require the Panchayat to fix the octroi limits in the
resolution passed under r.3(a). It only deals with two
items; (1) selection of the tax and the rate at which it is
to be levied. Rule 3(c) has to be similarly read. The
inhabitants of the village would be entitled to object only
to these two matters, namely, (1) the tax or fee imposed and
the rate at which it is levied. Under r.3(d) what the
panchayat does is to consider objections and suggestions and
then finally make the choice as regards two things, i.e.,
the tax or fee to be imposed and the rate at which it is to
be levied.
220
This interpretation is reinforced by a proper reading of r.
4. Rule 4 requires a notice stating two things; (1) the tax
or fee to be levied and (2) the rate. But the learned
counsel for the Company, Mr. Ashok Sen, argues that this
interpretation is not correct because para 2 of r.4 says
that the tax shall accordingly be levied from the date which
shall be specified in the notice, and he says that if the
octroi limits had not been approved of by the time the
resolution is passed, how could the tax be levied from the
date specified in the notice. But r.4 has to be read
alongwith r.21, and if so read, it would mean that before
the octroi duty can start being levied, r.21 must be
complied with. In other words, para 2 of r.4. must be read
to mean that the octroi will be levied from that date
provided r.21 had been complied with.
We are, however, unable to agree with the learned counsel
for the appellant that before the octroi limits are approved
octroi can be collected. We consider that the fixing of the
octroi limits with the approval of the Collector is an
essential condition precedent to the levy of octroi duty.
The learned counsel for the appellant says that the approval
of the Collector on January 14, 1964, relates back and,
therefore, the levy of octroi from April 1, 1963, was
regularised. We are unable to agree with this submission.
Apart from the fact that it may in certain circumstances
lead to illegal levies, there is nothing in the language of
r.21 which indicates that the Collector can regularise an
imposition made without the authority of law. The Collector
may in particular cases enlarge the octroi limits or reduce
the octroi limits and it would lead to great confusion if
either of the things happens after the Panchayat had been
collecting octroi duty within the octroi limits submitted by
it to collector for approval.
We may here deal with a minor point which was mentioned in
the course of arguments. The High Court held that “r.3(b)
must therefore be interpreted as requiring the Panchayat to
notify to the public not only the the proposal about the tax
selected by it for levy, but also the rules relating to that
tax which must mean the action taken under the Act and the
rules.” On the language of r.3(b) we are unable to
appreciate how action taken under the Act and the rules is
required to be notified to the public. There is nothing in
the language to warrant such a construction.
In conclusion we hold that the octroi duty was validly
levied and that it could be imposed and collected with
effect from January 14, 1964.
Mr. Sen raised another point not dealt with by the High
Court. He urges that there was no proper publication under
r.4. We are unable to allow him to raise this point at this
stage. He says that this point was raised before the High
Court but it has not been
221
A dealt with by it. He points out a passage in the
judgment of the High Court but we are unable to agree with
him that the High Court has implied that this point was
raised before it. He further says that this point was taken
in the return filed on behalf of the Company. Para 2 of the
return only alleged:
“This respondent says that at that time
no copy of the Rules required to be published
by Rule 4 of the Rules was exhibited along
with the said Notice. This respondent is not
aware and, does not admit that the fact of
publication of the Notice under Rule 4 was
announced by beat of drum in the village.”
This allegation is reiterated in para 9 of the return.
No such specific point was taken in the grounds of appeal to
the Panchayat Samiti. It was broadly stated that the
procedure required to be followed for imposing octroi had
not been followed in imposing the same. Similarly, in the
grounds of appeal to the Standing Committee, vague
allegations were made “that the village Panchayat has erred
in law in not following the procedure contemplated by law in
the matter of imposing the octroi and has acted contrary to
the principles of natural justice on an assumption that the
formalities contemplated by law were complied with.” He
relies on the notice which is on the record to show that as
a matter of fact the publication was not in accordance with
law. In the circumstances noted above we are unable to
allow him to raise this point at this stage.
Coming to the question of the vires of r.5,- it seems to us
that the High Court has placed a wrong interpretation on
r.5. The High Court has held that as r. 5 applies to all
appeals under s.124(5) of the Panchayat Act, the fixing of
the commencement of the period of limitation as the date of
publication of the notice under r.4 for all appeals is
arbitrary and destructive of the right of appeal. But this
interpretation, with respect is not correct, if r.5 is read
in the setting in which it occurs. Rule 5 follows imme-
diately rr.3 and 4 and is headed “Appeal against levy of any
tax or fee”, and the period of sixty days of limitation
commences from the date of the publication of the notice
under r.4, i.e., the notice following the decision of a
Panchayat to levy any tax or fee. This date shows that r.5
is dealing only with appeals against levy of any tax and not
with the assessment or imposition of a tax or any further
appeals to the Panchayat Simiti under s. 124(5). It is true
that the opening sentence makes a reference to an appeal
under sub-s. (5) of s. 124, and this opening sentence would
cover all II appeals under sub-s. (5) of s. 124, but in the
context and setting, the heading of r. 5 brings out the
scope of the rule. Accordingly. the appeal of the Company
to the Samiti was wrongly dismissed as time-barred. It
follows from this that the Standing Committee was entitled
to deal with the appeal on merits.
222
The only point that remains is whether the Company brought
tea into the octroi limits of the Panchayat for consumption,
use or sale, therein. As we have pointed out, the High
Court felt difficulty in dealing with the question because
neither the Panchayat Samiti nor the Standing Committee had
found sufficient facts to enable it to deal with the
question. Mr. Sen says that he is willing to take the facts
as stated at the bar by the learned counsel for the
appellant. But we consider that it is an unsatisfactory way
of dealing with questions of fact. Before this question can
be dealt with satisfactorily, all the relevant facts must be
found by the Standing Committee, It is true that the
Standing Committee inspected the premises of the Company but
in their order they have given very scanty facts, They do
not say whether the tea is crushed, processed or treated
chemically to convert it into a marketable commodity. The
learned counsel for the Panchayat contends that these things
are done and that the resultant product is completely
different from the tea imported into octroi limits. It is
also not quite clear whether the tea which is imported by
the Company is known in trade circles as a different
commodity from the tea actually sent out in boxes. In the
circumstances we must also decline to deal with this point.
In the result the appeal is allowed, and it is declared that
the Panchayat could validly impose octroi duty from January
14, 1964, in accordance with the resolutions dated February
25, 1963, and March 17, 1963. The case is remanded to the
High Court to deal with the question whether the Company
imported tea for the purpose of consumption, use or sale
within the octroi limits of the Panchayat. The High Court
may either remand the case to the Panchayat Samiti or deal
with it as it may consider best in accordance with law.
Under the circumstances there will be no order as to costs
in this appeal.
G.C. Appeal allowed.
223