JUDGMENT
Sadasivayya, J.
1. The Corporation of the City of Bangalore (hereinafter referred to as the Corporation) who is the contesting respondent in all these petitions, issued a notification as per Exhibit A dated 4-4-1967, in which it was stated that the Administrator of the Corporation, exercising the powers of the Standing Committee (Taxation and Finance) and the Corporation and in exercise of the powers under Section 130 of the City of Bangalore Municipal Corporation Act, had decided that the Articles noted in the Schedule of the notification should be subjected to levy of octroi at the rates noted against each with effect from the 1st day of May, 1967, the said articles being included under Clause VIII, Par V, Schedule III of the City of Bangalore Municipal Corporation Act, 1949. In the Schedule of that Notification, 48 items of goods, together with the rates of octroi imposed on them, have been specified. The petitioners in these writ petitions are all dealers in one or more of the articles specified in that schedule. In these writ petitions, they have challenged the validity of the levy of Octroi and have prayed that the Corporation be restrained from collecting Octroi under the said notification.
The main contention of the petitioners is that the procedure prescribed by Section 98(1) of the City of Bangalore Municipal Corporation Act 1949 (hereinafter referred to as the Act) has not been followed, that the levy of Octroi under the notification as per Exhibit A has not the authority of law and that any collection under such a notification would be illegal. In the counter-affidavit which has been filed on behalf of the Corporation (vide the counter) in W. P. 994 of 1967, the stand taken by respondents 1 and 2 (namely, the Administrator and the Corporation) is stated as follows at para 2:–
“(2) Respondents 1 and 2 do not propose to file any counter as the point raised is a pure question of law. It will be the contention of respondents 1 and 2 that the levy is legal even though the procedure prescribed in Section 98 is not followed with respect to the goods covered under the Notification dated 4-4-1967.”
2. Before proceeding to examine the merits of the rival stands taken by the contesting parties in these writ petitions, it would be advantageous to set out the material portions of Exhibit A and the relevant provisions of the Act.
Exhibit A:–
“Corporation of the City of Bangalore
Office of the Commissioner
Corporation Offices
Bangalore, Dated 4-4-1967.
NOTICE
Whereas the levy of the octroi on animals and the goods brought within the Octroi Limits of the Corporation has been determined by the resolutions dated 26th September, 1950 of the Corporation and whereas it is necessary to extend the levy of octroi on some more goods for augmenting the resources of the Corporation and also and also bring under Octroi, goods which are similar to the goods that have already been subjected to octroi, the Administrator of the Corporation of the City of Bangalore, exercising the powers of the Standing Committee (Taxation and Finance) and Corporation under S. 47(A) of the City of Bangalore Municipal Corporation Act 1950 as amended from time to time and in exercise of the powers under Section 130 of the said Act, had decided that the articles noted hereunder should be subjected to levy of Octroi at the rates noted against each with effect from the 1st day of May 1967, the said articles being included under Clause VIII, Part V. Schedule III of the City of Bangalore Municipal Corporation Act, 1949.
SCHEDULE
Sl. No. Particulars of Items Tax of Octroi to be levied
1 * *
* * *
* * *
* * *
48 * *
K. S. N. Murthy Commissioner
Corporation of Bangalore, Bangalore.”
Section 98(1) of the Act reads as follows:–
“98(1) Before the Corporation passes any resolution imposing a tax or duty for the first time it shall direct the Commissioner to publish a notice in the official Gazette and in the local newspapers of its intention and fix a reasonable period not being less than one month from the date of publication of such notice in the official Gazette for submission of objections. The Corporation may, after considering the objections, if any, received within the period specified, determine by resolution to levy the tax or duty. Such resolution shall specify the rate at which, the date from which and the period of levy, if any, for which such tax or duty shall be levied.”
Section 130 of the Act is as follows:
“130. If the Corporation by a resolution determines 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.”
Clause VIII in Part V Schedule III of the Act is as follows:–
“Par V:
Octroi on Animals and Goods.
[See Section 97, Clause (a) and Section 130]
18. The octroi on animals and goods shall levied at the rate not exceeding the following:–
Octroi Maximum rate
* * * * * *
Clause VIII. Other articles which are not specified above and which may be approved by the Corporation by an order in this behalf 2-0-0 per cent ad valorem.”
3. Section 97 of the Act enumerates the taxes and duties which the Corporation may levy, Clause (e) of that section provides that the Corporation may levy octroi on animals or goods or both brought within the octroi limits for consumption or use therein. While section 97 provides the competence for the Corporation to levy taxes and the duties enumerated therein. Section 98(1) and (2) prescribes the procedure to be followed by the Corporation for imposing the tax or duty. The procedure prescribed in sub-section (1) of section 98 is intended to serve a very real purpose. The public are afforded an opportunity of putting forward such objections as they may desire, within the period set out in the public notice published in the official Gazette and the local newspapers. Under Section 98(1), the Corporation is required to consider those objections and then determine by resolution to levy the tax of duty specifying the rate at which and the date from which and the period of levy, if any, such tax or duty shall be levied. No doubt, the Corporation is not bound by any of those objections; but still it is required to consider those objections. Part of the purpose of this provision appears to be that there must be an opportunity for all aspects of the matter being placed before the Corporation for its consideration, before it finally determined to levy the tax or duty and at any particular rate and for any particular period, if any, Compliance with this provision is necessary, before the Corporation could levy the tax and duties.
In , Raza Buland Sugar Co, Ltd. v. Municipal Board, Rampur, the Supreme Court, dealing with a somewhat similar provision in the U. P. Municipalities Act, has stated as follows in para 9 at page 900:–
“We shall first deal with what we have called the first part of S. 131(3). This provision deals with taxation. The object of providing for publication of proposals and draft rules is to invite objections from the inhabitants of the municipality, who have to pay the tax. The purpose of such publication obviously is to further the democratic process and to provide a reasonable opportunity of being heard to those who are likely to be affected by the tax before imposing it on them. It is true that finally it is the Board itself which settled the proposals with respect to taxation and submits them to Government or the prescribed authority, as the case may be, for approval. Even so we have no doubt that the object behind the publication is to find out the reaction of tax-payers generally to the taxation proposals and it may very well be in a particular case that the Board may drop the proposals altogether and may not proceed further with them, if the reaction of the tax payers in general is of disapprobation. Further the purpose served by the publication of the proposals being to invite objections, in particular from the tax payers to the tax proposed to be levied on them, the legislature in its wisdom thought that compliance with this part of S. 131(3) would essentially carry out that purpose. In the circumstances if we are to hold that his part of S. 131(3) was merely directory, the whole purpose of the very elaborate procedure provided in Ss. 131 to 135 for the imposition of tax would become meaningless, for the main basis of that procedure is the consideration of objections of tax-payers on the proposals of the Board.”
We find no warrant or justification for the contention that it would be within the competence of the Corporation to levy the taxes and duties enumerated in Section 97, totally ignoring the provisions of Section 98 and in particular, sub-section (1).
4. In the impugned notification as per Exhibit A, section 130 of the Act has been cited. But, that is not a charging section and the infirmity resulting from total non-compliance with the procedure prescribed by sub-section (1) of Section 98, is not in any way cured by the citation of section 130. It has been pointed out by the Supreme Court in Bangalore Woollen, Cotton and Silk Mills Co. Ltd. v. Corporation of the City of Bangalore, that Section 130 is not a charging section but imposes a limitation on the power of the Municipality as to the rate at which a tax can be imposed. Further, it appears from that judgment, that the Supreme Court proceeded on the basis that in that case there was compliance with the provisions of Section 98(1) of the Act. The contention that there was not sufficient compliance with the provisions of Section 98(1) was not accepted.
5. Mr. Subramanyam, the learned Advocate appearing for the Corporation argued, in the alternative, that Section 97 of the Act sets out the heads of taxation and that if the Corporation had followed the procedure prescribed under Section 98(1) in imposing a tax or duty for the first time under any particular head of taxation, then, it would not be necessary to follow that procedure again when the Corporation subsequently wanted to levy tax or duty on new objects under the same head of taxation. Following up this argument, the learned Advocate stated that under clause (e) of Section 97 an octroi on animals or goods or both (brought within the octroi limits for consumption or use therein), was a head of taxation and that as the procedure prescribed under Section 98(1) had already been followed when the Corporation passed the imposing octroi for the first time on certain animals and goods, it was not necessary to follow that procedure again when the Corporation subsequently wanted to levy octroi on the additional goods specified in the schedule to the impugned notification as per Exhibit A. In support of this argument, the learned Advocate wanted to rely on certain observations made in (1964) 1 Mys. LJ 401, A. Srinivasa Murthy v. Corporation of the City of Bangalore and in S. P. No. 704 of 1966 Spencer & Co. Ltd. v. State of Mysore and the Corporation of the City of Bangalore, reported in (1968) 1 Mys LJ 524 and connected W. P. Nos. 711, 712, 713, 1873, 2025 and 2027 of 1966 and 591 and 592 of 1967.
In the case reported in (1964) 1. Mys LJ 401, the question was whether, when a new area was included in the Corporation limits and that area became subject to all the laws of the Corporation, the procedure laid down under Section 98 had to be followed again for the levy of property tax on buildings and lands in the newly included area. it was held that it was not necessary.
In W. P. No. 704 of 1966 = (1968) 1 Mys LJ 524 and connected petitions, the ground on which it was considered unnecessary to follow the procedure under section 98(1), was that the impugned levy on vacant land merely provided for a new basis for computation of the tax on vacant land which has already been subjected to property tax which was being levied since a number of years both on buildings and vacant land, though the computation had been on a different basis. It was in those circumstances that the impugned tax on vacant land was not considered as a new tax imposed for the first time. In (1968) 1 Mys LJ 524 at p. 547, this Court has stated as follows:–
“The tax, which we are concerned in these cases, is undoubtedly the property tax. It is not disputed that the property tax had been imposed long ago by a resolution and that it has since been levied for a number of years. Before the amendments, the property tax was a tax levied both on buildings as well as on lands although in the case of both the basis of computation was the annual value. The only question therefore is whether a change brought about by its amendment in the basis of the computation of the tax, so far as it relates to vacant lands, may be regarded as a change in the nature of the tax itself in such a way as to make it necessary to hold that the tax in respect of land is anew tax altogether.
Prima facie, it appears to us that the amendments cannot have the effect of converting the property tax in respect of lands into quite an new tax altogether. It continues to retain its character as property tax. Only the basis of calculation and the rate of tax have been changed, both by the statute itself, without the Corporation being called upon to effect any such change by a resolution.”
Thus, they were all case pertaining to property tax and not the levy of octroi; the question did not arise there, for consideration as to whether compliance with the requirements of Section 98(1) was not necessary when the Corporation wanted to impose octroi on certain goods, merely because on a previous occasion when octroi was imposed on certain other goods there had been compliance with Section 98(1); any observations made in those decisions were only in the context of examining the contentions pertaining to the validity of the property tax; therefore, they cannot be of any assistance in the present case. It may also be stated that the Corporation had not taken such a stand in the case (pertaining to the levy of Octroi) which went up to the Supreme Court and which was decided in the judgment reported in AIR 1962 SC 1963; in that case, as already stated there was compliance with the provisions of Section 98(1) of the Act. The construction which Mr. Subramanyam seeks to place on the expression ‘imposing a tax or duty for the first time’ occurring in section 98(1), is imposing for the first time one of the new heads of taxes enumerated in clauses (a) to (h) of Section 97 and not imposing for the first time the same head of tax on a fresh object which was not hitherto subjected to tax. If the construction proposed by Mr. Subramanyam is accepted, it would lead to the following results. Once the Corporation has imposed octroi on a few articles, it can extend the imposition of octroi to hundreds of new articles without following the procedure under Section 98(1). Such a construction would greatly diminish, if not render nugatory, the efficacy of Section 98(1) which requires notice to be given to the public of the proposal to impose a tax and the objections of the public to be considered before the Corporation decides to impose a tax. A construction which leads to such results should not be accepted unless the language of the section is clear and compels such a construction.
6. Mr. Subramanyam has filed copies of the resolution of the Corporation of September 1950 which has been referred to in the impugned notification as per Exhibit A. That resolution does not purport to levy octroi on all goods entering the octroi limits. The relevant part of that resolution refers to levy of octroi, only on certain specified goods. The fact that there was compliance with the provisions of section 98(1) at the time when octroi was levied on those specified goods, cannot free the Corporation from its obligation to comply with the requirements of Section 98(1) when it subsequently wants to levy octroi on other totally different goods like those mentioned in the schedule of Exhibit A. On the strength of the resolution of September 1950, the Corporation cannot extend the levy of octroi to the goods specified in the schedule of Exhibit A, totally ignoring the requirements of section 98(1) of the Act. The important point to be noted is that in respect of the particular goods set out in the schedule of Exhibit A, the public did not have any opportunity of submitting their objections or the Corporation considering the same, as is required under Section 98(1) of the Act. The result is that in the present case, so far as the goods specified in the schedule of Exhibit A are concerned, there has been total disregard of the provisions of section 98(1). Any levy of octroi in total disregard of Section 98(1) cannot be said to be a levy which has the authority of law and the same would be violative of Article 265 of the Constitution.
7. In the result, the impugned notification as per Exhibit A is quashed and the respondent Corporation is ordered not to collect any octroi from the petitioners on the basis of the said notification. The petitioners will get their costs from the respondent Corporation. Advocate’s fee Rs. 100/- in each of these writ petitions.
8. Petition allowed.
