PETITIONER:
MUNICIPAL BOARD, BAREILLY
Vs.
RESPONDENT:
BHARAT OIL COMPANY AND ORS.
DATE OF JUDGMENT04/12/1989
BENCH:
FATHIMA BEEVI, M. (J)
BENCH:
FATHIMA BEEVI, M. (J)
SAIKIA, K.N. (J)
CITATION:
1990 AIR 548 1989 SCR Supl. (2) 376
1990 SCC (1) 311 JT 1989 (4) 453
1989 SCALE (2)1269
ACT:
U.P. Municipalities Act 1916/U.P. Municipal Account Code
1925/U.P. Octroi Rules, 1925: Section 128/Chapter X/Rules
13123 I--Octroi--Levy Or'on mineral oil--Permissibility of.
HEADNOTE:
The appellant is a Municipal Board governed by the
provisions of the U.P. Municipalities Act, 1916. Section 128
of the Act provides for imposition of taxes by the Board. In
exercise of the powers under Sections 131 to 135 and 296 of
the Act, the Government of the United Provinces framed
octroi rules. The said rules were included in the Municipal
Account Code (Chapter X rules 131 to 231). The proviso to
Rule 131 provided that octroi shall not be levied on certain
articles which included mineral oil. The rule was amended
vide notification dated the 2nd November 1953 and for the
words "the mineral oil" in the proviso, the words "mineral
oils classified as motor spirit, kerosene or diesel oil"
were substituted.
Separate rules for the assessment and collection of
octroi in the Bareily Municipality were framed by the Govt.
of U.P. The draft rules were notified vide notification
dated the 16th February 1963. Final rules were notified vide
notification dated the 7th May 1963 and published in U.P.
Gazette dated the 11th May 1963. By a notification dated the
24th July 1963, published in U.P. Gazette dated the 3rd
August, 1963, the appellant Board imposed octroi duty on
goods and animals brought within the octroi limits of Barei-
ly Municipality for consumption, use and sale at the rates
shown in the Schedule subject to certain exceptions men-
tioned therein. The said notification came into operation
from November 16, 1963 and thereafter the levy of octroi in
Bareily Municipality was governed by 1963 rules. The amend-
ments were made in the octroi schedule both in the rates as
well as in the exemption and as a result whereof motor
spirit, kerosene and diesel oil were removed from the exemp-
tion clause and were subjected to the octroi duty @ 1 paisa
per liter vide notification dated August 27, 1969.
The respondents challenged the validity of the notification
dated
377
the 27th August 1969 by means of a writ petition before the
High Court on the ground that 1925 rules took away the power
from all Municipal Boards to impose octroi duty on mineral
oils and until such power is restored under a contrary
notification issued under section 128 of the Act, the Board
did not have any justification to assess or collect octroi
duty on mineral ohs. The appellant Board contended that Rule
131 was superseded by the 1963 rules which now governed the
imposition of octroi by the appellant Board. The single
Judge of the High Court who heard the petition came to the
conclusion that Rule 131 restricted the power of the Board
to impose the octroi and the subject-matter of the rule was
not covered by the 1963 rules. The appellant's appeals
preferred before the Division Bench were dismissed which
took the view that the bar under Rule 131 regarding the
imposition of octroi duty on mineral oils continued notwith-
standing the 1963 Rules. Hence these appeals by the Munici-
pal Board.
Allowing the appeals, this Court,
HELD: The rule making power under section 296 read with
Section 300(2) of the Act enables the State Government to
except any one municipality from the operation of the gener-
al rule by express provision in that behalf. When the iden-
tical authority in exercise of its rule making power duly
frames the rules in respect of the same matter expressly
providing that the new rules shah apply to a particular
municipality in supersession of the existing rules, it must
be deemed that existing rules are repealed to that extent.
[384C-D]
The 1963 rules had been framed under Section 296 of the
Act in supersession of the existing rules after the publica-
tion by the State Government, in the Gazette as provided
under Section 300 and therefore rule 131 in the 1925 rules
ceased to have any operation in respect of the matters dealt
with therein so far as the Bareilly municipality is con-
cerned. [384D]
M/s Central Distillery Chemicals Works Ltd. & Anr. v.
State of U.P. & Ors., [1980] All L.J. 62, approved.
Municipality of Anand v. State of Bombay, AIR 1962 SC
988; Municipal Board, Hapur v. Raghuvendra Kripal & Ors.,
[1966] 1 SCR 950; Mool Chand v. Municipal Board, Banda, AIR
1926 All. 517; Zaverbhai Amaidas v. The State of Bombay,
[1955] 1 SCR 799 and The Municipality or Anand v. State of
Bombay, [1962] 2 Supp. SCR 366, referred to
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 993 &
994 of 1976.
378
From the Judgment and Order dated 16.9.1974 of the
Allahabad High Court in Spl. Civil Appeal Nos. 622 & 623 of
1972.
R.K. Virmani for the Appellant.
M.V. Goswami and S.S. Khanduja for the Respondents.
The Judgment of the Court was delivered by
M. FATHIMA BEEVI, J. 1. These two appeals by special
leave are filed by the Municipal Board, Bareilly, against
the judgment of the Allahabad High Court quashing the Ga-
zette Notification dated August 27, 1969 amending the octroi
schedule of the Bareilly Municipality so as to impose octroi
on “mineral oil”.
2. The respondents Bharat Oil Company and others filed
writ petitions under Article 226 of the Constitution of
India challenging the notification on the ground inter alia
that the appellant, the Municipal Board Bareilly (hereinaf-
ter referred to as ‘the Board’) had no authority to impose
octroi on mineral oil in view of the proviso to Rule 13 1 of
the octroi Rules contained in the U.P. Municipal Account
Code, 1925. This was countered by the appellant stating that
the R. 13 1 was superseded by the 1963 rules which govern
the imposition of octroi by the appellant Board. The Single
Judge in allowing the Writ Petitions took the view that
R.131 restricted the power of the Board to impose the octroi
and the subject-matter of the rule is not covered by the
1963 rules. The appeals preferred were dismissed by the
Division Bench of the High Court agreeing that the bar under
R. 131 ‘regarding the imposition of octroi duty on mineral
oils continued notwithstanding the 1963 rules.
3. The appellant is a Municipal Board governed by the
provisions of the U.P. Municipalities Act, 1916 (hereinafter
referred to as ‘the Act’). Section 128 of the Act provides
for imposition of taxes by a Municipal Board. The relevant
part of the said section reads as under:
“128. Taxes which may be imposed (1) Subject
to any general rules or special orders or’ the
State Government in this behalf, the taxes
which a board may impose in the whole or any
part of a municipality are–
(i) x x
x
379
(viii) an octroi On goods or animals
brought without the municipality for consump-
tion, use or sale therein.”
4. Sections 13 1 to 135 of the Act contain provisions
relating to the framing of proposals for the imposition of
taxes by the Municipal Board, inviting objections to the
said proposal, the approval of the said proposal by the
State Government, the framing of rules by the State Govern-
ment on the basis of such proposals, under Section 296 of
the Act and for the issue of a notification about the impo-
sition of tax from the appointed date.
5. Section 153 of the Act provides that assessment and
collection of taxes and other matters relating to taxes may
be regulated by Rules. Section 296 empowers the State Gov-
ernment to make rules in respect of matters described in
Section 153.
6. In exercise of the powers under Sections 13 1 to 135
and 296 of the Act, the Government of the United Provinces
framed octroi rules which were published vide notification
dated the 25th October, 1925. The said rules are included in
the Municipal Account Code (Chapter X Rules 13 1 to 23 1)
published by the Government of U.P.
7. Rule 13 1 provided that subject to the exceptions
contained in the proviso octroi may be ordinarily levied on
commodities included in the list set-out in the said rule.
The proviso to this rule stated that octroi shall not be
levied on certain articles which included mineral oil. Rule
131 was amended vide notification dated the 2nd November,
1953 and for the words “the mineral oil” in the proviso the
words “mineral oils classified as motor spirit, kerosene or
diesel oil” were substituted.
8. Separate rules for the assessment and collection of
octroi in the Bareilly Municipality were framed by the
Government of U.P. in exercise of the powers conferred by
Section 296 of the Act. The draft rules were notified vide
notification dated the 16th February, 1963 and published in
the U.P. Gazette dated 23rd February, 1963. The said notifi-
cation reads as under:
“No..89-B/XI-C-129-60. The following draft of
the rules for the assessment and collection of
octroi in the Bareilly Municipality, in super-
session of the existing octroi rules contained
in the Municipal Account Code in so far as
they apply to the said municipality, which the
Governor of Uttar
380
Pradesh proposes to make, in exercise of the
powers conferred by Section 296 of the U.P.
Municipalities Act, 1916 (U.P. Act No. II of
1916), is published as required by subsection
(1) of section 300 of the said Act, for the
information of all concerned with a view to
invite objections and suggestions in respect
thereof”.
9. Final Rules were notified vide notification dated the
7th May, 1963 and published by the Government in the U.P.
Gazette dated the 11th May, 1963 as required under S. 300 of
the Act.
10. By notification dated the 24th July, 1963 published
in the U.P. Gazette dated the August 3, 1963 the appellant
Board imposed octroi duty on goods and animals brought
within the octroi limits of Bareilly Municipality for con-
sumption, use and sale at the rates shown in the schedule to
the said notification and subject to the exceptions con-
tained therein. Item 29 of the exceptions contained in the
schedule related to “mineral oils” classified as motor
spirit, kerosene and diesel oil. The said notification came
into operation from November 16, 1963. Thereafter the levy
of octroi in the Bareilly Municipality was governed by 1963
rules. The amendments were made in the octroi schedule both
in the rates as well as in the exemption and as a result
thereof motor spirit, kerosene and diesel oil were removed
from the exemption clause and were subjected to the octroi
duty @ 1 paisa per litre vide notification dated August 27,
1969.
11. The validity of the notification dated the 27th
August, 1969 was challenged before the High Court in the
Writ Petitions Nos. 1805 and 4696 of 1970 by respondents on
the ground that 1925 rules take away the power from all
Municipal Boards to impose octroi duty on mineral .oils and
until such power is restored under a contrary notification
issued under Section 128 of the Act, the Board did not have
any justification to assess or collect octroi duty on miner-
al oils.
12. The impugned judgment proceeded on the basis that
Rules 13 1 to 133 of the 1925 rules have been made by the
State Government in exercise of the powers conferred upon it
by the opening words of Section 128(1) and they are not
rules under section 153 for the assessment and collection of
octroi. It was also held that the subject-matter of these
rules is not covered by the 1963 rules and, therefore, the
1963 rules cannot supersede R. 13 1 of the 1925 Rules. A
Full Bench of the Allahabad High Court in M/s Central Dis-
tillery Chemicals Works Ltd. & Another v. State of U.P. &
Others, [1980] All L.J. 62 following the
381
decision of this Court in Municipality of Anand v. State of
Bombay, A.I.R. 1962 SC 988 overruled the impugned decision
holding that the special rules which are in relation to a
particular tax and a particular Municipal Board will over-
ride or supersede the general rules framed by State Govern-
ment under Section 153 read with Section 296. The appel-
lant’s learned counsel relied on the Full Bench decision and
maintained that the rules framed by the Board prevail over
the rules contained in the Municipal Account Code and the
notification is, therefore, valid. In our view the approach
made by the Full Bench of the High Court in M/s Central
Distillery Chemicals Works Ltd. v. State of U.P., (supra) is
correct and has to be approved.
13. As pointed out by this Court in Municipal Board,
Hapur v. Raghuvendra Kripal and Others, [1966] 1 SCR 950
taxes raised by a local authority are not imposed by it as a
legislature but as a delegate of the legislature. The tax is
valid one if it is one of the taxes the local authority can
raise and the delegate imposes it in accordance with the
conditions laid down by the legislature. The taxes that can
be raised in exercise of delegated power are predetermined
and procedure is prescribed by the Municipal Act. Thus
Section 128 of the U.P. Municipalities Act confers on the
municipalities in the State the power to levy taxes enumer-
ated thereunder. The power conferred is not absolute but is
subject to any general rules or special orders of the State
Government in this behalf. Section 128(1) does not confer
any independent rule making power. The general rules re-
ferred to in that Section can only be the rules in the
matter of such levy specified in Section 153 of the Act and
framed in exercise of the power under Section 296 of the
Act. The State Government is empowered under Section 296 to
make rules consistent with the Act in respect of matters
described in Section 153. Rules framed under Section 153
constitute the exclusive machinery for assessment and col-
lection of taxes. The relevant part of Section 153 reads as
under:
“153. Rules as to assessment, collection and
other matters. The following matters shall be
regulated and governed by rules except in so
far as provision therefor is made by this Act,
namely:
(a) the assessment, collection or composition
of taxes, and, in the case of octroi or toll,
the determination of octroi or toll limit;
382
(f) any other matter relating to taxes in
respect of which this Act makes no provision
or insufficient provision and provision, is,
in the opinion of the State Government neces-
sary.”
In prescribing the procedure for the impositon of taxes by
the board, Section 13 1 of the Act requires the board while
framing the proposal to prepare a draft of the rules which
it desires the State Government to make in respect of the
matters referred to in Section 153 and publish the same.
When the proposals have been sanctioned the State Government
makes the necessary rules in respect of the tax under Sec-
tion 296. The rules referred to in Section 128(1) are rules
thus framed by the State Government under Section 296 in
respect of matters referred to in Section 153. Section
300(2) expressly provides that any rule or regulation made
by the State Government may be general for all municipali-
ties or may be special for anyone municipality as it di-
rects.
14. The Municipal Manual published by the Government
contains the general rules made by the Government under the
Act and general orders issued in Volume 1. The second volume
contains the Municipal Account Code. The General Rules and
orders are contained in Chapter I to XII of Part I. The
Explanation in Chapter I reads as under:
“The Rules in this Manual, which are printed
in pica type, together with their explana-
tions, illustrations and exceptions, have the
force of law, having been made by the Govern-
ment in exercise of the powers conferred by
section 296 of the Act, and, except where
otherwise stated, are applicable to all munic-
ipalities. The notifications in which they
were published are referred to on the margins
of the pages.”
Part II contains the model rules, bye laws and regulations.
Section A deals with Rules with reference to Section 153 of
the Act thus:
“The following model rules have been framed by
the Government for the assessment and collec-
tion of taxes other than octroi under section
153 and 296 of the Act.
It is anticipated that they will be
found generally applicable to the circum-
stances of the municipalities of these prov-
inces, and it is desirable that the model
forms
383
should be adhered to unless there are special
reasons justifying any divergence from them.
In forwarding proposals for the
imposition of additional taxation, boards are
reminded that the necessary rules for the
assessment and collection of the taxes to be
imposed should be forwarded at the same time
as the tax proposals, and it will facilitate
the disposal of such cases if any deviations
from the model forms printed below are specif-
ically referred to in the proposals submitted.
Vol. II contains the Municipal Account Code. Chapter X deals
with octroi and provides in R. 13 1 that subject to the
exceptions contained in the proviso octroi shall ordinarily
be levied on commodities included in the list. In Mool Chand
v. Municipal Board, Banda, AIR 1926 All 5 17 it was held
that the rules contained in the Code have as much force of
law as the Act itself. The octroi rules contained in Chapter
X of the Municipal Account Code are general rules framed by
the State Government in respect of matters referred to in
Section 153 in exercise of power under Section 296 and refer
to the levy and govern the assessment, collection etc. The
rules are general for all municipalities. The 1963 rules are
framed for the appellant board expressly superseding the
general rules in so far as they apply to the appellant
board. By framing the 1963 rules the government evinced the
intention to cover the field which was covered by 1925 rules
in so far as the Bareilly Municipality was concerned. The
subject-matter dealt within 1963 rules is the same as that
dealt with in 1925 rules. The intention to supersede the
earlier rules is clearly expressed. The rule has the force
of law. Rule 13 1 of 1925 rules has no longer any applica-
tion in the matter of levying octroi by the appellant board.
That rule stands repealed in so far as the appellant Board
is concerned. The rule cannot, therefore, be read as cur-
tailing the power under Section 128(1)(viii) of the Act to
impose octroi. Rules do not enlarge or restrict the authori-
ty to impose tax. Authority is conferred by the section.
Rules are only regulating the exercise of that power. The
imposition of the tax and the regulation of its assessment
and collections are totally different matters and they are
clearly distinguished. In Zaverbhai Amaidas v. The State of
Bombay, [1955] 1 SCR 799 this Court reiterated the rule of
construction that if a later statute deals with the same
subject-matter and varies the procedure the earlier statute
is repealed by the later statute. In The Municipality or
Anand v. State of Bombay, [1962] 2 Supp. SCR 366 construing
s. ,59 of the Bombay District Municipal Act, 1901 which is
in pari materia with
384
s. 128 of the U.P. Municipalites Act, this Court said the
word ‘impose’ in s. 59 meant the actual levy of the tax
after authority to levy it had been acquired by rules duly
made and sanctioned and this imposition was subject to the
general or special orders of the government. The opending
words of S. 128 are capable of similar construction and the
imposition has to be understood as the actual levy subject
to the general rules and special orders contemplated under
the other provisions of the Act.
15. The rule making power under Section 296 read with
Section 300(2) of the Act enables the State Government to
except anyone
municipality from the operation of the general rule by
express provision in that behalf. When the identical author-
ity in exercise of its rule making power duly frames the
rules in respect of the same matter expressly providing that
the new rules shall apply to a particular municipality in
supersession of the existing rules, it must be deemed that
existing rules are repealed to that extent. The 1963 rules
had been framed under Section 296 of the Act in supersession
of the existing rules after publication by the State Govern-
ment, in the Gazette as provided under Section 300 and
therefor Rule 13 1 in the 1925 rules ceased to have any
operation in respect of the matters dealt with therein so
far as the Bareilly municipality is concerned.
16. In this view of the matter, we hold that the appel-
lant Board had authority to levy octroi on mineral oils and
challenge against the impugned notification is not sustain-
able. The High Court was clearly in error in quashing the
same and restraining the Board from assessing and collecting
the tax.
We accordingly allow the appeal and set-aside the judg-
ment of the High Court. In the circumstances of these cases,
we, however, make no order as to costs.
Y. Lal
385