PETITIONER: BANGALORE WOOLLEN, COTTON AND SILK MILLS CO. LTD., Vs. RESPONDENT: CORPORATION OF THE CITY OF BANGALORE, BY ITS COMMISSIONER, DATE OF JUDGMENT: 05/04/1961 BENCH: KAPUR, J.L. BENCH: KAPUR, J.L. AIYYAR, T.L. VENKATARAMA DAS, S.K. HIDAYATULLAH, M. SHAH, J.C. CITATION: 1962 AIR 562 1961 SCR Supl. (3) 707 CITATOR INFO : D 1966 SC1686 (9) RF 1981 SC 991 (10) RF 1987 SC1059 (18) ACT: Municipality--Octroi--Constitutionality of--Final resolution for levying not published in Official Gazette--Defect, if can be validated--City of Bangalore Municipal Corporation Act, 1949 (69 of 1949), ss. 38(1)(b), 98, 1O3, Sch. III, Part V, Classes I to VIII--Constitution of India, Arts. 276, 301--Government of India Act, 1935 (26 Geo. V, Ch. 2), s. 142--A. HEADNOTE: The appellants in the two appeals and petitioners under Art. 32 of the Constitution challenged the constitutionality of the imposition of octroi duty on cotton and wool on the grounds that (1) the failure to notify the final resolution of the imposition of the tax in the Government Gazette as required by s. 98(2) of the City of Bangalore Municipal Corporation Act was fata I to the tax, and that (2) the imposition of the tax offended Art. 276 or 301 of the Constitution. Held, that the impugned octroi duty did not contravene the provisions of Arts. 276 and 301 of the Constitution. Hamdard Dawakhana (Wakf) v. The Union of India [1960] 2 S.C.R. 671, held inapplicable. Atiabari Tea Co. Ltd. v. The State of Assam [1961] 1 S.C.R. 809, referred to. section 38(1)(b) of the Act validated any defect or irregularity in proceedings taken under the Act which did not affect the merits of the case. The failure to publish the final resolution did not affect the merits of the imposition of the tax and was therefore not fatal to it. The mere fact that S. 38(1)(b) occurred in a chapter dealing with Municipal Authorities or the other parts of the Section dealt with another subject was no reason for confining its operation to those subjects only. Harla v. State of Rajasthan [1952] S.C.R. 110 and State of Kerala v. P. J. Joseph A.I.R. 1958 S.C. 296, referred to. The contention that the impugned tax contravened the pro- visions of Art. 276 of the Constitution was not sustainable. Entry 52 in List II of the Constitution and entry 49 in the Government of India Act, 1935, which relate to taxes on entry of goods into a local area are not affected by Art. 272 of the Constitution and 708 s. 142-A of the Government of India Act, which are similar to each other and relate only to a distinct head of taxation i.e., taxes on professions, trades and callings etc. The Municipality of Chopda v. Motilal Manekchand I.L.R. [1958] Bom, 483, Gajadhar Hiralal Ginning and Pressing Factory v. The Municipal Committee, Washim I.L.R. [1958] Bom. 628 and Secretary, Municipal Committee, Karanja v. The New East India Press Co. Ltd., Bombay A.I.R. 1949 Nag. 215, distinguished. Classes I to VII in Schedule III of Part V make certain specified articles taxable and Class VIII makes " other articles which are not specified" taxable if approved by the Corporation The combined effect of ss. 97 and 130 and Part V of Schedule III including Class VIII is that the words used are of very general nature and would have the same effect as if all articles were intended to be and were included. Anwarkhan Mahboob Co. v. The State of Bombay [1961] 1 S.C.R. 709, followed. JUDGMENT:
CIVIL APPELLATE JURISDICTION :Civil Appeals Nos. 448 and 449
of 1957
with
Writ Petitions Nos. 97 and 107 of 1961.
Appeals from the judgment and order dated September 27,
1956, of the Mysore High Court in Writ Petitions Nos. 44 and
45 of 1955.
M. C. Setalvad, Attorney-General for India,’ N. C.
Chatterjee, D. N. Mukherjee and B. N. Ghose, for the
appellant in C. A. No. 448/57 and Petitioner in Writ
Petition No. 97/1961.
M. C. Setalvad, Attorney-General for India, V. L.
Narasimhamoorty, S. N. Andley, J. B. Dadachanji, Rameshwar
Nath and P. L. Vohra, for appellant in C. A. No. 449157 and
Petitioners in W. P. No. 107 of 1961.
A. V. Viswanatha Sastri and K. R. Choudhri, for
respondents in C. As. Nos. 448 and 449 of 57 and W. Pa.
Nos. 97 and 107/1961.
1961. April 5. The Judgment of the Court was delivered by
KAPUR., J.-A Divisional Bench of this, Court made a
reference* under the proviso to Cl. (3) of Art. 145 on the.
following two points:-
(1) Whether the imposition in the present caw offends Art.
276 or 301 of the Constitution ?
*See p. 698 ante.
709
(2) Whether the failure to notify the final resolution of
the imposition of the tax in the Government, Gazette is
fatal to the tax ?
The facts of the case are set out in the order of the
Divisional Bench and it is unnecessary to restate them. The
appellants in the two appeals and in the two petitions under
Art. 32 are challenging the constitutionality of the octroi
duty on cotton and wool imposed by the respondent
Corporation within its octroi limits. The procedure for
levying municipal taxes and the power of control of
Government in regard to those taxes is laid down in s. 98 of
the City of Bangalore Municipal Corporation Act (Act 69 of
1949) hereinafter termed the Act. The procedure is that a
resolution intending to impose a tax has to be passed by the
Corporation and that resolution is required to be published
in the Official Gazette and in the local newspapers. The
rate payers can then submit objections and after considering
such objections received during the specified time the
Corporation may by resolution determine to levy the tax or
duty. When such a resolution has been passed the
Commissioner is required to publish forthwith a notification
in the Official Gazette and in the newspapers as set out in
sub-s. (1) of s. 98 of the Act. This notification is to
specify the date from which, the rate at which and the
period of levy, if any, for which such tax is levied.
As has been stated in the order of the Divisional Bench all
other requirements of s. 98 were complied with except that
the notification in the Government Gazette as required by
sub-s. (2) was not published. This, it was submitted, was a
defect which was fatal to the legality of the imposition of
the tax. To support this submission reliance was placed on
two judgments of this Court in Harla v. State of Rajasthan
(1) and State of Kerala v. P. J. Joseph (2). In the former
case the-Jaipur Opium Act was enacted by a resolution of the
Council of Ministers appointed by the then Crown
Representative but this law was neither promulgated nor
published in the Gazette nor made known to the public. The
mere passing of the resolution by the
(1) [1052] S.C.R. 110,
(2) A.I.R. 1958 S.C. 296,
710
Council of Ministers without publication was held not to be
sufficient to make the law operative. At p. 114, it was
observed that reasonable publication of some sort was
necessary and that natural justice required that before a
law could operate it had to be promulgated or published and
it must be broadcast in some recognizable way. Similarly in
the latter case there was no publication in the Gazette of
the Order of the Government made in the exercise of the
power conferred by an Act nor was there any communication of
the order to the person affected thereby and it was held
that not having been published in the Gazette it was not
valid and could not have the force of law. But the
respondent relied upon s. 38(1)(b) of the Act which cures
defects or irregularities not affecting the merits of the
case. That section provides:-
S. 38(1). ” No act done, or proceeding
taken under this Act shall be questioned
merely on the ground-
(a)…………………………………………….
(b) of any defect or irregularity in such act or proceeding,
not affecting the merits of the case. ” Thus under that
provision any defect or irregularity not affecting the
merits of the case saves any act done or proceeding taken
under the Act on the ground of such irregularity or defect.
The appellants contended that the section has no application
to defects in regard to procedure under s. 98 of the Act for
the imposition of taxes because s. 38 read as a whole refers
to a different situation and that there was internal
evidence in the section itself to show that it has no
relevance to the objection taken by the appellants. The
section, it was argued, is in Chapter 11 dealing with
Municipal Authorities and this particular provision is in
that Part of the Chapter which deals with provisions common
to the Corporation and its Standing Committees and the
marginal note shows that the object of enacting it was the
validation of proceedings of the Corporation and its
Standing Committees and that the whole section should be
read in that context. So read, it was submitted, the
section must be taken to be.,% saving provision for the
validity of proceedings
711
of the Municipal Authorities which was clear from cl. (a) of
sub-s. (1) which deals with defects on the B ground of
vacancy or defect in the constitution of the Corporation or
of any Standing Committee and subs. (2) of that section also
has reference to the meetings of the Corporation and
therefore, it was contended, I the defect or irregularity
mentioned in cl. (b) of sub,section (1) in any act done or
proceeding taken also must have reference to that kind of
defect which is referred to in other parts of the section.
It was further submitted that the words ” not affecting the
merits of the case ” showed that the reference was not to
any defect in regard to the procedure for imposition of
taxes but defects etc. which might arise in the proceedings
of the Corporation and which have reference to a defect in
the constitution of the Corporation or its Standing
Committees. Reference was also made to the marginal note in
the section.
It is unnecessary in this case to discuss the relevance of
marginal notes in the construction of s. 38(1)(b) because in
our opinion the language is unambiguous and clear and it
validates any defect in any act done or proceedings taken
under the Act and makes it immune from being questioned on
the ground of any defect or irregularity in such act or
proceedings not affecting the merits of the case and merely
because it is in a chapter dealing with Municipal
Authorities or other parts of the section dealing with
another subject is no reason for confining its operation to
the defects con. tended for by the appellants.
The resolution was published in newspapers and was also
communicated to those affected by it and thus it was well
known. The failure to publish it in the Government Gazette
did not affect the merits of its imposition. The answer to
question No. 2 referred therefore is that the mere failure
to notify the final resolution of the imposition of the tax
in the Government Gazette is not fatal to the legality of
the imposition.
The other question referred is whether the imposition
offends Art. 276 or 301 of the Constitution,
712
Article 276 as far as it is relevant for the purposes of
this case provides:-
Art. 276(1) ” Notwithstanding anything in
article 246, no law of the Legislature of a
State relating to taxes for the benefit of the
State or of a municipality, district, board,
local board or other local authority
therein in respect of professions, trades,
callings or employments shall be invalid on
the ground that it relates to a tax on income.
(2) The total amount payable in respect of
any one person to the State or to any one
municipality, district board, local board or
other local authority in the State by way of
taxes on professions, trades, callings and
employment shall not exceed two hundred and
fifty rupees per annum.”
It was contended that the imposition of the impugned tax
contravenes the provision of Art. 276(2) as it is of a sum
more than Rs. 250 and is therefore unconstitutional. This
contention is not well founded. There ‘was a similar
provision in the Government of India Act, 1935, i.e., s.
142-A but there the amount mentioned in sub-s. (2) was Rs.
50 per annum and this limitation was placed as from after
the 31st day of March, 1939. A reference to the legislative
lists will show that neither the Article 276 nor s. 142-A of
the Government of India Act, 1935, has any reference to the
tax now impugned. In the Devolution Rules under the
Government of India Act, 1915, taxes which could be levied
for the purpose of local bodies were the following:-
” Item No. 7. An octroi.
Item No. 8. A terminal tax on goods imported
into or exported from, a local area save where
such tax is first imposed in a local area in
which an octroi was not levied on or before
the 6th July 1917.
Item No. 9. A tax on trades, professions and
callings. ”
In the Government of India Act, 1935, the
relevant entries in the Legislative List–List
II-were 46 and 49 which were as follows:
46. ” Taxes on professions, trades, callings
and employments, subject, however, ‘to the
provisions
713
of section one hundred and forty-two A of this
Act.”
49. ” Cesses on entry of goods into a local
area’ for consumption, use or sale therein.
” Terminal tax was taken to List I, i.e.,
Central List and is now entry 89 in the Union
List (List I). Corresponding entries to 46
and 49 of the Government of India Act, 1935,
in the Constitution in. List II are 52 and 60
which are as follows :-
52. “Taxes on the entry of goods into a
local area for consumption, use or sale
therein. ”
60. ” Taxes on professions, trades, callings
and employments. ”
The history of these taxes therefore shows that in the
Devolution Rules under the Government of India Act, 1915,
octroi, terminal tax and taxes on professions and callings
were three distinct heads of taxation. Similarly in the
Government of India Act, 1935, and in the Constitution the
two entries are separate. Therefore when s. 142-A was added
in the Government of India Act, 1935, its operation was
limited to entry 46 of List II and had no reference to entry
49 which deals with cesses on entry of goods. The position
under the Constitution is exactly the same and therefore
neither s. 142-A of the Government of India Act, 1935 nor
Art. 276 has any effect on entry 49 in the Government of
India Act, 1935 or entry 52 in the constitution. The
learned Attorney-General in support of his argument that the
impugned tax is a tax on trade, relied upon three judgments:
The Municipality of Chopda v. Motilal Manekchand (1) ;
Gajadhar Hiralal Ginning & Pressing Factory v. The Municipal
Committee, Washim (2 ); and Secretary, Municipal Committee,
Karanja v. The New East India Press Co. Ltd., Bombay (3 ).
None of these cases has any applicability to the tax now
impugned because the facts were different and the imposition
was of a different character. The attack on the
constitutionality of the impugned tax on the ground of
contravention of Art. 276 is therefore not sustainable and
must be rejected.
(1) I.L.R. [1958] Bom. 483.
(2) I.L.R. [1958] Bom. 625.
(3) A.I.R. 1949 Nag. 215.
714
The second ground of assault on the constitutionality of the
tax imposed is based on contravention of ‘Art. 301 which
provides:-
Art. 301. ” Subject to the other provisions of this Part,
trade, commerce and intercourse throughout the territory of
India shall be free.”
It was contended that the tax imposed directly affected the
movement of goods and therefore violates Art. 301 which
guarantees the freedom of trade throughout the territory of
India. In Atiabari Tea Co. Ltd. v. State of Assam (1),
Gajendragadkar, J., giving the opinion of the majority said
:-
“that the content of freedom provided for by
Art. 301 was larger than the freedom
contemplated by s. 297 of the Constitution Act
of 1935, and whatever else it may or may not
include, it certainly includes movement of
trade which is of the very essence of all
trade and is its integral part. If the
transport or the movement of goods is taxed
solely on the basis that the goods are thus
carried or transported that, in our opinion,
directly affects the freedom of trade as
contemplated by Art. 301. If the movement,
transport or the carrying of goods is allowed
to be impeded, obstructed or hampered by
taxation without satisfying the requirements
of Part XIII the freedom of trade on which so
much emphasis is laid by Art. 301 would turn
to be illusory.”
According to Shah, J., the content is wider. At page 241
the learned Chief Justice gave it a more restricted meaning.
Relying on these observations it was contended that the tax
which is affected by Art. 301 is one which is directly on
movement of trade, i.e., from one point to another. As
against this reliance was placed by the respondent on Art.
305 which at the relevant time was as follows:-
Art. 305. ” Nothing in articles 301 and 303
shall affect the provisions of any existing
law except in so far as the President may by
order otherwise direct;…”
According to this article the provisions of Art. 301 do not
affect the provisions of any existing law except in so far
as the President may otherwise direct and there
(1) [1961] x S.C.R. 809.
715
is no such direction by the President. ” Existing law has
been defined in Art. 366, clause (10), to mean:
” existing law’ means any law, Ordinance,
order, bye-law, rule or regulation passed or
made before the commencement of this
Constitution by any Legislature, authority or
person having power to make such a law,
Ordinance, order, bye-law, rule or regulation
; ”
and by Art. 372 all laws in force in the territory of India
immediately before the commencement of the Constitution
shall continue to be in force until altered or repealed or
amended by a competent legislature. It was these provisions
which were relied upon as an answer to the question of the
applicability of Art. 301. But the learned Attorney-General
argued that the action taken by the Municipal Corporation
was after the coming into force of the Constitution, being a
levy imposed as from January, 1955, that the imposition of
the tax was subordinate legislation which could not be saved
under Art. 305 and that the tax could only be imposed by
resorting to the provisions of Art. 304(b) which provides:
Art. 304. ” Notwithstanding anything in
article 301 or article 303, the Legislature of
a State may by law-
(a)…………………………………………….
(b) impose such reasonable restrictions on
the freedom of trade, commerce or intercourse
with or within that State as may be required
in the public interest:
Provided that no Bill or amendment for the
purposes of clause (b) shall be introduced or
moved in the Legislature of a State without
the previous sanction of the President.”
The argument therefore was this that the Act being an ”
existing law ” might be saved under Art. 305 but that would
operate on and save the taxes on articles specified in
Schedule III of Part V, item 18, i.e., octroi on animals and
goods set out in Classes I to VII of that Part but would not
save the octroi on other articles under Class VIII imposed
after the Constitution because that would be an addition of
a bye-law, rule or order and would not fall within the term
” existing
716
law “. The impugned tax was levied under class VIII set out
in part V which is as follows :-
Octori Maximum rate
Class VIII-Other articles
which are not specified above
and which may be approved
by the Corporation by an Rs. 2-0-0 percent.
order in this behalf………… ad valorem.
Octroi is to be levied by referenceto s. 130 of the Act
which provides:-
S. 130. ” If the corporation by a
resolution deter. mines that an octroi should
be levied on animals or goods brought within
the octroi limits of the city, such octroi
shall be levied on such articles or goods
specified in Part V of Schedule III at such
rates not exceeding those laid down in the
said Part in such manner as may be determined
by the corporation.”
Therefore under this section if the Corporation resolved to
levy octroi on animals or goods brought within the octroi
limits of the city then this octroi was to be levied at
rates not exceeding those laid down in that section. This,
it was submitted, was subordinate legislation and therefore
was not saved by Article 305 because” existing law” as
defined means any law, ordinance, order, by-law, rule or
regulation passed before the Constitution and as the
impugned tax was a new regulation passed after the
Constitution it was not saved by Art. 305. In support of
this reliance was placed on the observations of this Court
in Hamdard Dawakhana (Wakf) v. The Union of India(1); but as
was observed by the Divisional Bench that case does not
apply to the facts of the present case.
For the respondent it was argued that (1) goods and animals
were specified in the Act and therefore there was no making
or passing of new regulations and (2) it is not a case of
delegated legislation but is a case of conditional
legislation. It was firstly submitted that there is
sufficient specification in the Act itself of the articles
on which the octroi duty could be levied. Section 97 of the
Act gives the power to levy octroi duty on animals or goods
without any exception which are brought within the octroi
limits. Sections 98
(1) [1960] 2 S.C.R. 671.
717
and 130 lay down the procedure for the levying of taxes and
impose a limitation on the extent of the tax to be levied
and Classes I to VII make certain articles taxable and Class
VIII makes other articles and goods taxable if they are
approved by the Corporation. This approach to the subject
has the support of a decision of this Court in Anwarkhan
Mahboob Co. v. The State of Bombay (1), where the facts were
that the assessee was subjected to a purchase tax under s.
14(6) of the Bombay Sales Tax Act, 1953 (Act III of 1953)
The contention of the assessee was that the goods had not
been specified in the Sales Tax Act. In that Act in the
schedule were mentioned the goods the sale or purchase of
which was subject to tax and the last entry was of ” all
goods other than those specified from time to time in
Schedule A (and section 7A) and in the preceding entries.”
The question for decision was whether that entry amounted to
specification of goods for the purposes of Sales Tax and it
was held that it was. This case was sought to be
distinguished on the ground that the words there were ” all
goods other than……….. and those words would comprise
every article which was not specifically mentioned in the
Schedule. We are unable to accept this distinction because
even though the words used in the present statute are
different the combined effect of ss. 97 and 130 and Part V
of Schedule III including Class VIII which have been set out
above is that the words are of ‘very general nature and
would have the same effect as if all articles were intended
to be and were included. In view of this it is unnecessary
to discuss the second contention.
Therefore the answer to the first question referred is that
the impugned octroi duty does not contravene the provisions
of Arts. 276 and 301. In view of our decision on the two
questions referred these appeals fail and are dismissed with
costs. One hearing fee.
Consequently Writ Petition Nos. 97 and 107 are dismissed.
There will be no order as to costs in those petitions.
(1) [1961] 1 S.C.R. 709.
Appeals dismissed.
Petitions dismissed,
718