JUDGMENT
S.H. Sheth, J.
1. Saurashtra Cement and Chemical Industries Ltd. have filed this petition in which they challenge the order of the State Government fixing a sum of Rs 1,20,000/- payable annually as lump sum contribution in lieu of taxes payable by them to Adityana Gram Panchayat. It appears that for the period commencing from 1st January 1974 the Gram Panchayat was not willing to enter into an agreement fixing lump-sum contribution payable b the petitioners to it in lieu of taxes payable by them. The petitioners, therefore made an application to the State Government for the purpose under the Gujarat Panchayats (Payment of Lump-sum Contribution by Factories in lieu of Taxes) Rules, 1964 (hereinafter referred to as ‘the lump sum rules’ for the sake of brevity). The State Government asked the petitioners to furnish to it data in relation to the goods imported by them into the limits of the Gram Panchayat during the preceding three years. The petitioners if rinsed to the State Government details in a statement. A copy of that statement is at Annexure ‘A’ to the petition. It shows that according to the petitioners they had imported goods during the year 1970-71 in respect of which Rs. 95,052.71 p. Were payable to the Gram Panchayat for octroi duty. For 1971-72, according to the petitioners, a sum of Rs. 1,30,609.70 was payable by them to the Gram Panchayat in respect of goods imported by them within the limits of the Gram Panchayat and for 1972-73, according to the petitioners, a sum of Rs. 1,43,057.39 p. was payable by them to the Gram Panchayat for a similar purpose. The State Government took into account those figures, found out their annual average, deducted out of it certain amounts to which the petitioners were entitled and fixed a sum Rs. 1,20,000/- as annual lump sum contribution by the petitioners to the Gram Panchayat in lieu of taxes which would become due and payable by them to the Gram Panchayat for future years.
2. Mr. Patel, appearing for the petitioner, has raised before me three contentions. His first contention is that in principle the State Government was in error in taking into account the annual average of the taxes which had become payable during the preceding three years for the purpose of fixing the annual lump sum contribution payable in future. In support of his contention, he has invited my attention to Sub-section (1) of Section 179 of the Gujarat Panchayats Act, 1961 which provides as follows:
Subject to any rules that may be made under this Act., and regard being had to the fact that a factory itself provides in the factory area all or any of the amenities which such panchayat provides, a Gram Panchayat or as the case may be nagar panchayat may arrive at an agreement with any factory with the sanction of the State Government to receive a lump-sum contribution in lieu of all or any of the taxes levied by the panchayat.
Since Sub-section (1) of Section 179 opens with the expression “subject to any rules that may be made under this Act” it is necessary to turn to the rules in order to inject into Sub-section (1) the substance. Sub-rule (2) of Rule 4 of the lump sum rules is material for the purpose of the present case. It reads thus.
The amount of lump-sum contribution may not be disproportionately less than the amount receivable by the panchayat in respect of taxes levied by it at the normal rates during any financial year, after deducting cost of amenities, if any, provided by the occupier.
Therefore, one of the guide-lines which Sub-rule (2) of Rule 4 provides for the purpose of fixing lump sum contribution for future is “the amount receivable by the panchayat in respect of taxes levied by it at the normal rates during any financial year….” In order to fix the lump sum contribution under the lump sum rules for future years it is difficult for anyone to precisely and exactly imagine or find out that quantity of goods liable to pay octori duty would be imported by a factory within the limits of the panchayat. However, the quantity and value of goods which a factory would import in future and which would be liable to payment of octroi duty can be assessed by taking into account what the factory imported during any financial year” in the past and such other circumstances, if any, as can be taken into account for the purpose. An analysis of Sub-rule (2) of Rule 4 leaves no doubt in my mind that the lump sum contribution to be made by a factory to a panchayat in future must necessarily be fixed on the basis of figures of imports made by a factory in the past. In other words, the scheme of Sub-rule (2) of Rule 4 appears to me to provide that the past should be the guide-line for the future.
3. The question, however which Mr. Patel has raised before me is whether the expression “any financial year” used in Sub-rule (2) of Rule 4 means any particular financial year or whether it is so and elastic as to include within its sweep annual average of more than one. Year in the past. In that context it is necessary to remember that the expression “financial year” has been defined by Clause (c) of Rule 2. That definition is as follows:
“financial year” means the year commencing on the 1st day of April.
It is true that the definition of “financial year” given in Clause (q) of Rule 2 appears to suggest and indicate any particular financial year commencing from 1st April and ending on 31st March immediately following thereafter. However, the expression “any financial year” has not been defined. The ticklish question which, therefore, has beep raised for my, consideration is whether the expression “any” prefixed to the expression “financial year” in Sub-rule (2) of Rule 4 authorises the State Government to take a step further and fix the annual average of rnpre than one financial year in the past. In my opinion, the expression “any financial year” used in Sub-rule (2) of Rule 4, not only means any. Particular financial year commencing on 1st April and ending on 31st March immediately following thereafter but it also means the annual average of more than one financial year in the past. The construction placed on Sub-rule (2) of Rule 4 is in greater consonance with the 2 of Section 179 of the Gujarat Panchayats Act and the scheme of die sum rules. A factory which is engaged in the production of goods ordinary course supposed to make progress, from year to year. If in, any course it goes on making progress from year to year and goes o producing more and more goods it would be importing more and more, raw materials and semi-finished goods for the purpose of production of its finished goods. Therefore, the value of the imports made by a factory, during the year immediately preceding the year in respect of which arrived at would be more than the value of the more sum agreement is to be arrive at would be more than the value of the goods or raw materials imported by it during the year preceding year. Now, if the amount of taxes levied by a Gram Panchayat receding year is taken into account for at normal rates during the last preceding year is taken into account for the purpose of fixing the amount of lump sum contribution for the future, much greater than the amount of lump sum contribution which would be fixed if the average of two or three years preceding the year of lump sum agreement is taken into account because the amount of taxes levied by a gram panchayat during the year or years preceding the last preceding year would ordinarily be less than the amount of taxes levied by it at normal rates during the last preceding year. Therefore, if the amount of taxes levied by a gram panchayat at the normal rates during the last preceding year is alone taken into account for the purpose of fixing the lump sum contribution for future year it would be more than average of the last two or three years and would work to the detriment of the factory itself. The object of Section 179 of the Gujarat Panchayats Act and the lump sum rules is to confer benefit upon a Gram Panchayat but is not to hit a factory. Therefore, I do not think the rule-making authority would have thought that lump sum contribution to be made by a factory to a panchayat in future should be fixed on the basis of the amount of taxes levied by it at the normal rates during the last preceding year. To adopt such a basis would be to unduly hit a factory, the existence and operations of which confer a large number of economic benefits on the village within the limits of which it is situate. Similarly, it also cannot be the object of the rule-making authority which has used the expression “any financial year” to unduly cause an injury to the interests of a Gram Panchayat which would be the case if the amount of taxes levied by a Gram Panchayat at the normal rates during a financial year – not the last preceding financial year but any financial year prior thereto is taken into account because the amount of taxes levied by a Gram Panchayat during any such year is likely to be less than the amount of taxes levied by it during the last preceding year. It appears that by using the expression “any financial year” the rule-making authority has avoided both the extremes and has introduced a well-balanced concept of taking into account the annual average of the amounts of taxes levied by a Gram Panchayat at the normal rates during more than one financial years preceding the year of lump sum agreement. The concept of annual average is one which avoids-undue injury both to a Gram Panchayat as well as to a factory and enables the State Government to fix a fair lump sum amount. To illustrate this proposition, I refer to the facts of the present case. The petitioner furnished to the State Government figures of taxes levied by the Gram Panchayat at normal rates in 1970-71, 1971-72 and 1972-73. The amount of octroi levied by the Gram Panchayat on the petitioner’s during the year 1970-71 was Rs. 95,052-71 p. During 1971-72 the Gram Panchayat levied on the petitioner’s octroi duty amounting to Rs. 1,30,609.70 p. During the year 1972-73 it levied on the petitioners octroi duty amounting to Rs. 1,43,057.39 p. Now, if the State Government had taken into account only the amount of octroi duty levied on the petitioners by the Gram Panchayat during the year 1972-73, it would have worked to the detriment of the petitioners because the amount of lump sum contribution on that basis would have been higher than one which has been fixed by the State Government in the instant case on the basis of the annual average of the aforesaid three years. If, on the their hand, the State Government had taken into account the amount of octroi duty levied by the panchayat on the petitioners only during 1970-71 or during 1971-72, the amount of lump sum contribution payable by the petitioners to the Gram Panchayat would have been less than what the State Government has fixed by the impugned order. It is, therefore, clear that the principle of annual average of the taxes paid by a factory to a Gram Panchayat during three years preceding the year of lump sum agreement is a well-balanced concept and is just and fair. It does justice both to a Gram Panchayat as well as to a factory and does not unduly harm or benefit one or the other. In may opinion, therefore, the principle of annual average amount of taxes levied by a panchayat on a factory which the State Government has applied in the instant case for fixing future lump sum contribution is an eminently just and sound principle a id no exception can be taken to it. I, therefore, find no substance in the first contention which Mr. Patel has raised before me. I, therefore, reject it.
4. If the State Government had levied on the petitioners the amount of lump sum contribution on the basis of the amount of taxes levied on them by the Gram Panchayat during the last preceding year it would have unnecessarily injured the interests of the petitioners. The petitioners in their own interests therefore ought not to have raised this contention.
5. The second contention which Mr. Patel has raised before me requires me to decide what are the factors which should be taken into account for the purpose of determining a just and fair amount of lump sum contribution. So far as this contention is concerned, he has concentrated his attention only on Clause (d) of Sub-rule (3) of Rule 4 of the lump sum rules. He has argued that the costs of all the amenities provided by the petitioners to its employees within the limits of the Gram Panchayat should be deducted from the amount of taxes payable by the petitioners to the Gram Panchayat as and by way of lump sum contribution. The argument which Mr. Patel has advanced is so wide that it is difficult to accept it. A Gram Panchayat may not have as much economic and financial resources as a factory has. A factory ordinarily has very large resources at its command. It may provide to its employees residing within the Gram Panchayat area a number of amenities some of which the Gram Panchayat may not be providing to the other residents of its village. The deduction to which a factory is entitled from the amount of taxes payable by it to a Gram Panchayat has, therefore, to be computed in terms of the provisions of Clause (d) of Sub-rule (3) of Rule 4. Three sub-clauses of Clause (d) of Sub-rule (3) of Rule 4 lay down a fairly well-balanced scheme for the purpose of computing the deductions to be made from the amount of taxes which a factory is otherwise liable to pay to a Gram Panchayat. Sub-clause (i) of Clause (d) requires the panchayat or the State Government, as the case may be, to find out what amenities a panchayat provides to the other residents of the village. The employees of a factory residing within the territory of a panchayat cannot claim from the panchayat more amenities than the panchayat provides to its other residents in the village. Therefore, while computing the cost of amenities which should be deducted from the amount of taxes payable by a factory to a panchayat it is necessary to find out that amenities a panchayat provides to its other residents in the village and what would be the cost of those amenities if provided by the panchayat to the employees of the factory residing within its limits. Now, if a factory does not provide to its employees within the area of a Gram Panchayat all or any of the amenities which the panchayat provides to its other residents, the factory is not entitled to any deduction from the amount of taxes payable by it to the panchayat. The next factor which a panchayat or the State Government has to find out is the cost of amenities provided by a panchayat to the employees of the factory within the limits of the village. If a panchayat provides to the employees of a factory all the amenities which it provides to the other residents of its village then also the factory is not entitled to any deduction on that account from the amount of taxes payable by it to the Gram Panchayat if a panchayat does not provide any of the amenities to the employees of a factory within its limits and if the factory at its own cost provides them to its employees, the factory is entitled to deduction of the cost of the amenities provided by it subject to the fact that the amount of such cost would be the amount which the panchayat would have otherwise spent if it had provided the amenities to the employees of the factory within its limits if the factory provides some of the amenities which a panchayat provides to the other residents of. The village, then the factory is entitled to deduction from the amount of lump sum contribution of such amount as it spends on providing some of the amenities. In other words, the scheme of Clause 1(d) of Sub-rule (3) of Rule 4 appears to be that if a factory provides all amenities to its employees residing within the limits of a panchayat which the panchayat would have otherwise provided, then it would be entitled to the deduction of such cost from the amount of lump sum contribution.” If the factory provides not all but some of the amenities to its employees it is entitled to deduction of such amount as it spends on them. The next factor which is required to be taken into account is the likelihood of a panchayat providing in future some or all of the amenities to the 1 employees of the factory residing within its limits. Though a panchayat may not be providing any of the amenities to the employees of the factory residing within its limits and though the factory may be spending on providing all such amenities to its employees residing within the limits of the panchayat the factory would not be entitled to any deduction of cost of such amenities as the panchayat is likely to provide during the period of agreement the object of Sub-clause (iii) of Clause (d) of Sub-rule (3) of Rule 4 is not only to enable a Gram Panchayat to undertake in future a project of providing amenities to the employees of the factory but to save it from any deduction of any cost which the factory may incur infutures on providing amenities to its employees if the panchayat has planned to provide them.
6. I shall now illustrate how the scheme of Sub-clause (iii) of Clause (4) of Sub-rule (3) of Rule 4 works. I am assuming that a gram panchayat within the limits of which factory is situate provides to the residents of the village four amenities: (1) water supply, (2) sanitation, (3) roads and (4) streetlights. If a gram panchayat does not provide them to the employees of a factory residing within its limits but if a factory provides them to the employees, the factory is entitled to deduction of such amount as the panchayat would have spent ob providing these amenities to the employees of the factory. Secondly, if a factory does not provide any of these amenities to its employees residing within the limits of a gram panchayat it is not entitled to any deduction on that account from the amount of lump sum contribution payable by it to the gram panchayat. Thirdly, if a factory provides some of the amenities, say, water supply and street-lights, it is entitled to deduction of such amount as it spends on providing these two amenities to its employees residing within the limits of the gram panchayat from the amount of lump sum contribution payable by it to the gram panchayat. Fourthly the factory may be providing to its employees the amenities of water supply, street light and sanitation and spending thereon. If however the State Government is of the opinion that out of the three amenities which the factory provides to its employees and if the panchayat is likely to provide one of them resulting into cessation of provision of that amenity by the factory to its employees, the amount of deduction to which the factory would have been otherwise entitled to from the amount of lump sum contribution would be reduced to that extent, hi my opinion, the scheme which emerges out of the provisions of three Sub-clauses of Clause (d) of Sub-Rule (3) of Rule 4 of the lump sum rules is a perfect scheme which not only avoids duplication of expenditure under the same head by a factory and by a panchayat but enables a factory to claim benefit in financial terms which it has conferred upon its employees by providing certain amenities which the panchayat otherwise would have been required to provide on account of the fact that it provides them to its other residents in the village. It also enables the panchayat to undertake the provision of an amenity to the employees of a factory even if the factory has been providing it to its employees and to have the amount of deduction to which the factory would have been otherwise entitled proportionately reduced in my opinion, this is so because the provision of public amenities is an obligation which a public authority like a panchayat has to discharge. A factory in the interest of industrial efficiency may undertake it only if the panchayat is not otherwise able to discharge that obligation. If the panchayat is able to discharge its primary obligation it is not for the factory to undertake it. If the panchayat is not able to discharge such an obligation, the factory should undertake it so that the industrial efficiency may not suffer. In my opinion, therefore, the second contention which Mr. Patel has raised before me is devoid of any substance and must be rejected. So far as the impugned order is concerned, it suffers from no infirmity which can be linked to the provisions of Sub-rule (3) of Rule 4 of the lump sum rules.
7. The last contention which Mr. Patel has raised is that while arriving at the amount of lump sum contribution payable by the petitioners to the gram panchayat annually during the period covered of the impugned order, the State Government has failed to exclude from its consideration the octroi duty which was levied on the petitioners during the past three years in respect of certain goods which were during those years imported only for a specific purpose and which were not likely to be imported in future because there was no likelihood of any such purpose arising during the period of the impugned agreements. In other words, what he has argued is that during 1970 and 1971 the petitioners had installed one more unit of production in their factory and for that purpose they had imposed a large quantity of goods and articles which were necessary only for the purpose of installing that new unit. Such goods and articles were not likely to be imported during the period of the impugned agreement because no further unit of production is likely to be installed.
8. Mr. Patel has also invited my attention to the notification issued by the State Government on 18th March 1965 under Section 178 of the Gujarat Panchayats Act, 1961 by which they have exempted from payment of octroi duty certain goods for a certain period of time. That notification is annexed to the petition. Item No. 3 in schedule ‘A’ refers to buildings and lands belonging to a new industry. They have been exempted from tax for a period of five years from the date of the establishment of the new industry. So far as the present petition is concerned, nothing turns upon that item. I have referred to it because it is an item of immoveable property which relates to a new industry. Item No. 2 in schedule ‘B’ is relevant for the purpose of the present case. That item says that the State Government has exempted “building materials, plants, machinery, stores, spare parts, raw materials, semi finished goods, or any other articles brought within the limits of gram or nagar not for sale but for use in the manufacture of any goods or in erecting any factory by a new industry” for a period of seven years from the date of the establishment of the new industry or for a period of five years from the date on which the first lot of manufactured goods is produced by such industry whichever is earlier. Mr. Patel has argued that for the purpose of establishing a new unit of production in 1970-71 the petitioners had imported quite a good quantity of such goods and materials. Mr. Shah who appears on behalf of the State Government and Mr. Vyas who appears on behalf of the Gram Panchayat have very vehemently and strenuously argued before me that the two aspects which Mr. Patel has raised before me were not canvassed by the petitioners before the State Government. If the petitioners has canvassed them before the State Government and furnished to the State Government details in respect thereof, the State Government would have examined them, scanned evidence before it and arrived at a conclusion whether under these two heads the amount of octroi duty which was levied on the petitioners by the Gram Panchayat during the preceding years should be ignored for the purpose of arriving at a just and fair amount of lump sum contribution payable by the petitioners to the Gram Panchayat. The argument which Mr. Shah and Mr. Vyas have raised before me is indeed a correct argument. If the petitioners had raised these two aspects before the State Government, the State Government would have examined that part of the case and come to a proper conclusion. Mr. Patel has however strenuously argued before me that if there was an error or an Act of inadvertence on the part of the petitioners and if on that account the petitioners did not produce all those things before the State Government, the petitioners should be given an opportunity now to have their case re-examined by the State Government. So far as the notification of exemption is concerned, the State Government could have found out in light of the said notification whether any of the goods or articles which were stated by the petitioners in their statement (Annexure ‘A’ to the petition) were exempted from the payment of octroi duty.
9. It was not done by the State Government because not only the State Government was not conscious of that notification at the time when it decided the petitioners’ application but also the petitioners were not conscious of such an exemption. So far as the goods imported by the petitioners for a specific purpose during the preceding three years were concerned, the petitioners did not state any facts to the State Government and the State Government did not examine them from that angle. However, in my opinion, for such an omission on the part of the petitioners it is not necessary to unduly penalize the petitioners. It is always necessary in matters of taxation to work out a fair and just formula which neither unduly harms one party, nor unduly benefits another. In my opinion, therefore, it is necessary to direct the State Government to find out from the statements submitted by the petitioners to it what were the goods which the petitioners had imported during the preceding years and, in light of the exemption notification to which I have referred, what were the exempted goods which they had imported during the three preceding years. It is also necessary to direct the State Government to find out what were the goods which the petitioners had imported during the preceding three years for the purpose of establishing a new unit of production and which goods were not likely to be imported in future during the period of agreement. The amount of taxes which were levied in the past by the Gram Panchayat on two sets of goods referred to above should be deducted from the total amount of taxes which the petitioners have shown by their statement to have been levied upon them by the Gram Panchayat. Having done so the State Government would arrive at a net figure of the amount of taxes for three years which the Gram Panchayat levied on the petitioners and on the basis of such figures for the preceding three years it would work out the annual average amount which the petitioners should pay to the Gram Panchayat every year during the period of the impugned agreement.
10. In the view which I have taken, I partly allow the petition, issue a writ of madamus directing the State Government to cancel the impugned order and to decide a fresh and de novo the petitioners’ application for lump sum contribution in light of the directions which I have given in this Judgment and in accordance with law. Rule is made partly absolute with no order as to costs. It is not necessary for me to add that while deciding the petitioners’ application for lump sum contribution afresh the State Government shall give reasonable opportunity to both the sides of being heard. The State Government shall also decide the petitioners’ application as expeditiously as it can.