{"id":205302,"date":"1996-08-12T00:00:00","date_gmt":"1996-08-11T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/city-of-nagpur-corporation-vs-ms-khemchand-khushaldas-sons-on-12-august-1996"},"modified":"2016-08-24T02:31:13","modified_gmt":"2016-08-23T21:01:13","slug":"city-of-nagpur-corporation-vs-ms-khemchand-khushaldas-sons-on-12-august-1996","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/city-of-nagpur-corporation-vs-ms-khemchand-khushaldas-sons-on-12-august-1996","title":{"rendered":"City Of Nagpur Corporation vs M\/S Khemchand Khushaldas &amp; Sons &amp; &#8230; on 12 August, 1996"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">City Of Nagpur Corporation vs M\/S Khemchand Khushaldas &amp; Sons &amp; &#8230; on 12 August, 1996<\/div>\n<div class=\"doc_citations\">Equivalent citations: JT 1996 (7),    156\t  1996 SCALE  (5)758<\/div>\n<div class=\"doc_author\">Author: M S.B.<\/div>\n<div class=\"doc_bench\">Bench: Majmudar S.B. (J)<\/div>\n<pre>           PETITIONER:\nCITY OF NAGPUR CORPORATION\n\n\tVs.\n\nRESPONDENT:\nM\/S KHEMCHAND KHUSHALDAS &amp; SONS &amp; ORS.\n\nDATE OF JUDGMENT:\t12\/08\/1996\n\nBENCH:\nMAJMUDAR S.B. (J)\nBENCH:\nMAJMUDAR S.B. (J)\nBHARUCHA S.P. (J)\n\nCITATION:\n JT 1996 (7)   156\t  1996 SCALE  (5)758\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n<p>\t\t      J U D G M E N T<br \/>\nS.B.Majmudar, J<br \/>\n     City of Nagpur Corporation has brought in challenge the<br \/>\norder passed  by the  High Court  of Bombay, Nagpur Bench in<br \/>\nWrit Petition  No.1224 of 1980 by obtaining special leave to<br \/>\nappeal against\tthe said  judgment. Respondents\t herein\t had<br \/>\nmoved  the  said  writ\tpetition  challenging  the  impugned<br \/>\nnotification dated 10th December 1979 issued by the State of<br \/>\nMaharashtra sanctioning\t the octroi  rates proposed  by\t the<br \/>\nappellant Corporation  under Section  115 read\twith Section<br \/>\n114(1)(e) of  the  City\t of  Nagpur  Corporation  Act,\t1948<br \/>\n(hereinafter referred  to as  &#8216;the said\t Act&#8217;) on the ground<br \/>\nthat as\t the State  of Maharashtra  had not framed any rules<br \/>\nfixing the  maximum rates  of octroi  tax under\t Section 114<br \/>\nsub-section (3)\t of the\t said Act, the impugned notification<br \/>\nwas of\tno legal  effect. The  aforesaid  challenge  to\t the<br \/>\nimpugned notification  was upheld by the High Court and that<br \/>\nis how the appellant Corporation is in appeal before us.<br \/>\nBackground facts<br \/>\n     A\tfew  relevant  background  facts  leading  to  these<br \/>\nproceedings  deserve   to  be\tnoted  at  the\toutset.\t The<br \/>\nrespondents, original writ petitioners before the High Court<br \/>\nare manufacturers  of  incense\tsticks\t(agarbatties).\tThey<br \/>\ncarry on their manufacturing activities within the limits of<br \/>\nthe appellant-Municipal\t Corporation. Through a notification<br \/>\ndated 10th  December 1979 issued by the State of Maharashtra<br \/>\nthe appellant  Corporation sought  to revise  the  rates  of<br \/>\noctroi duties on various items including aromatic chemicals,<br \/>\nperfumery and  natural oils  in which  the respondents\twere<br \/>\ndealing and  which were\t raw materials\tfor the\t purpose  of<br \/>\ntheir business\tof manufacturing  incense sticks They had to<br \/>\nimport within  the octroi limits the said raw materials from<br \/>\noutside.  According   to  the\trespondents   the   impugned<br \/>\nnotification sought  to revise\tupwards the  rates of octroi<br \/>\nduty on\t these articles which went beyond the  maximum rates<br \/>\nof octroi  fixed by  the State\tMadhya Pradesh\tunder C.P. &amp;<br \/>\nBerar municipalities  Act, 1922\t (hereinafter referred to as<br \/>\nthe 1972 Act&#8217;) and  was, therefore, ultra vires and illegal.<br \/>\nThis  contention of the respondents was accepted by the High<br \/>\nCourt. We  may now  have  a  look  at  the  relevant  events<br \/>\npreceding the issuance of the impugned notification.\n<\/p>\n<p>     The C.P.  &amp; Berar Municipalities Act came into force in<br \/>\n1922. On 5th September 1973 a notification was issued by the<br \/>\nthen local  Government under  Section 66  sub-Section (2) of<br \/>\nthe 1922  Act regulating  the imposition  of octroi and also<br \/>\nimposing maximum amounts of rates for the said tax. The said<br \/>\nnotification  applied\tto  the\t local\tarea  which  now  is<br \/>\ncomprised in the appellant-Corporation. On 3rd February 1926<br \/>\na further  notification was  issued framing Imposition Rules<br \/>\nfor Terminal Tax under Section 66(1)(o) of the 1922 Act. The<br \/>\nsaid terminal  tax was\timpossible  on\tthe  goods  imported<br \/>\nwithin the  limits of  the local  municipality which was the<br \/>\npredecessor  of\t  the  appellant-Corporation.\tOne  further<br \/>\nnotification under  Section 66(2)(e)  of the  1922  Act\t was<br \/>\nissued by  the then  local Government  on  29th\t April\t1950<br \/>\nlaying down  the  maximum  rates  of  octroi  tax.  On\t21st<br \/>\nFebruary 1951  rules were promulgated under Section 66(1)(c)<br \/>\nof 1922\t Act for  levy of octroi as per Section 66(e) of the<br \/>\n1922 Act.  These octroi rules came into force from 1st March<br \/>\n1951 in\t the local  area then comprising the Nagpur city. On<br \/>\n2nd March 1951 the City of Nagpur Corporation Acts 1948 came<br \/>\ninto force.  It is  not in  dispute between the parties that<br \/>\nthe  said   Act\t governs  the  controversy  raised  in\tthis<br \/>\nlitigation. In\tsupersession of\t the octroi  rules framed on<br \/>\nlist February  1951 a  fresh notification  was issued by the<br \/>\nappellant-Corporation framing  Octroi Imposition Rules under<br \/>\nSection 114(1)(e)  of the said Act and the said rules having<br \/>\nobtained  the\trequisite  sanction   from  the\t  State\t  of<br \/>\nMaharashtra came into force from 1st June 1966. Octroi -duty<br \/>\ns thereafter  being levied  by the  appellant-Corporation as<br \/>\nper the\t rates imposed\ton the notified goods covered by the<br \/>\nsaid rules  of 1.6.1966. These rules were further amended by<br \/>\nnotification dated 20th April 1974. These amended rules came<br \/>\ninto  force   from  15th  May  1974.  Upto  that  stage\t the<br \/>\nrespondents writ  petitioners had  no grievance. However the<br \/>\nsaid rules  came to be further amended by notification dated<br \/>\n10th December  1979 by\twhich original\toctroi rules  framed<br \/>\nunder Section  114(1)(e) in the year 1966 came to be further<br \/>\namended. These\tamended\t rules\tcame  into  force  from\t 1st<br \/>\nJanuary 1980. The respondent-writ petitioners felt aggrieved<br \/>\nby this\t latter amendment  to the  octroi rules\t brought  in<br \/>\nforce pursuant\tto the said notification dated 10th December<br \/>\n1979.\n<\/p>\n<p>     The  High\t Court\ttook  the  view\t that  the  impugned<br \/>\nnotification of\t 10th December\t1979  issued  under  Section<br \/>\n114(e).\t read\twith  Section\t115  of\t the  said  Act\t was<br \/>\ninoperative as\tit  sought  to\timpose\toctroi\ton  the\t raw<br \/>\nmaterial imported  by the  respondents at  rates which\twent<br \/>\nbeyond the  ceiling posed  on these  rates by the then local<br \/>\nGovernment under  1922 Act  and which  ceiling had  remained<br \/>\noperative even\tafter the  repeal of  the  1922\t Act.  Rival<br \/>\nContentions.\n<\/p>\n<p>Rival Contentions<br \/>\n     Mr. Mohta,\t learned senior\t counsel appearing  for\t the<br \/>\nappellant submitted that the High Court had erred in holding<br \/>\nthat the  imposition of\t maximum rates of octroi by the then<br \/>\nlocal Government  being the  Madhya Pradesh Government under<br \/>\nSection 66(2)  of the  1922 Act\t enured beyond its repeal by<br \/>\nvirtue of Section 3 sub-Section (2) of the said Act at least<br \/>\nfrom 1966  when the appellant Corporation in exercise of its<br \/>\nstatutory powers  had imposed  new rates  of octroi  as\t per<br \/>\nSection 114(1)(e)  read with  Section 115  of the  Act after<br \/>\ngetting them sanctioned by the State Government. That as the<br \/>\nsaid imposition\t was under  the said  Act unless any ceiling<br \/>\nwas imposed  qua such imposition by the State in exercise of<br \/>\nits powers  under Section  114 sub-Section (3), the rates as<br \/>\nimposed by  the appellant-Corporation from time to time from<br \/>\n1966 onwards  held the\tfield without being subjected to any<br \/>\nceiling. That  the  High  Court\t had  wrongly  assumed\tthat<br \/>\nimposition of  ceiling of such rates by the State Government<br \/>\nunder Section  114 sub-Section (3) was a condition precedent<br \/>\nto the\texercise of  statutory powers of the Corporation and<br \/>\nthe State  Government under Section 114(e) read with 115. It<br \/>\nwas also contended that the Division Bench of the High Court<br \/>\nin &#8220;Pare  Brothers&#8221;, Nagpur  v. Corporation  of the  City of<br \/>\nNagpur and  others  1975 Mh.L.J. 86 had taken the view which<br \/>\nsupported the  appellant&#8217;s contention  and the said decision<br \/>\nwas  wrongly   not  followed   by  the\tHigh  Court  on\t the<br \/>\nsupposition that  it no\t longer remained good law in view of<br \/>\nthe decision of this Court in Municipal Corporation Jabalpur<br \/>\nand another  v. Shri  Soorji Bhanji Keniya (1973) 3 SCC 519.<br \/>\nMr. Mohta  submitted that  in the case before this Court the<br \/>\nimposition of  octroi tax  rates was  under  1922  Act\tand,<br \/>\ntherefore, the\tceiling imposed\t under Section\t66(2) of the<br \/>\n1922 Act  remained inoperative\tqua those rates. That such a<br \/>\nsituation did  obtain in the present case as the Corporation<br \/>\ndid exercise  its statutory  powers under  the said  Act  by<br \/>\ngetting issued\tthe notification  of 1966  which  later\t got<br \/>\namended in  1974 and  then in  1979. Mr.  Mohta,  therefore,<br \/>\nsubmitted that\tthe decision,  of this\tCourt  in  Municipal<br \/>\nCorporation Jabalpur  (supra) did  not in  any was adversely<br \/>\naffect the  ratio of  the decision  of the Division Bench of<br \/>\nthe High  Court in &#8220;Parekh Brothers&#8221; (supra). Even otherwise<br \/>\nthe latter  decision laid down correct law and ought to have<br \/>\nbeen followed by the High Court in the present case.\n<\/p>\n<p>     Mr.  Agarwal,   learned  counsel\tappearing  for\t the<br \/>\nrespondent-writ petitioners on the other hand submitted that<br \/>\nthis Court  in the  decision in\t Municipal  of\tCorporation,<br \/>\nJabalpur  (supra) had clearly ruled that the ceiling imposed<br \/>\non the\toctroi rates  by the then local Government being the<br \/>\nMadhya Pradesh\tGovernment under  Section 66 sub-Section (2)<br \/>\nof the\t1922 Act  remained operative  by virtue of Section 3<br \/>\nsub-Section (2)\t of the\t City of  Jabalpur  Corporation\t Act<br \/>\nwhich was in pari material with Section 3 sub-Section (2) of<br \/>\nthe said  Act and  consequently the High Court was justified<br \/>\nin following  the ratio\t of the\t said decision\tand that the<br \/>\ndecision of  the Division Bench of the High Court in &#8220;Parekh<br \/>\nBrother&#8221; (supra)  which took a contrary view was rightly not<br \/>\nfollowed by the High Court.\n<\/p>\n<p>     Having given  our anxious\tconsideration to these rival<br \/>\ncontentions we find that the High Court with respect was not<br \/>\njustified in  taking the view that the impugned notification<br \/>\nin any\tway conflicted\twith the  maximum  octroi  rates  as<br \/>\nprescribed by  the  rules  promulgated\tby  the\t then  local<br \/>\nGovernment being  the Madhya  Pradesh Government or that the<br \/>\nsaid maximum  rates still held the field after the advent of<br \/>\nthe said Act and the exercise of the statutory powers by the<br \/>\nCorporation and the State Government under the said Act.\n<\/p>\n<p>     In order  to appreciate  the correct  contours  of\t the<br \/>\ncontroversy raised for our decision, it will be necessary to<br \/>\nhave a\tlook at\t the statutory background governing the said<br \/>\ncontroversy.\n<\/p>\n<p>Statutory background<br \/>\n     The pre-cursor  of the  City of Nagpur Corporation Act,<br \/>\n1948 which governs the rights and obligations of the parties<br \/>\nin the present case was the C.P. &amp; Berar Municipalities Act,<br \/>\n1922.  The   local  area  within  the  jurisdiction  of\t the<br \/>\nappellant Corporation  was then\t governed by  the said\tAct,<br \/>\nChapter IX of the 1922 Act dealt with Imposition, Assessment<br \/>\nand Collection\tof Taxes&#8217;.  Section 66(1)  of the  1922 Act.<br \/>\namongst\t others,  authorised  and  empowered  the  Municipal<br \/>\nCommittee time\tto time and subject to the provisions of the<br \/>\nsalt Chapter  to impose\t in the\t whole or in any part of the<br \/>\nMunicipality, amongst  others, the  tax of octroi on animals<br \/>\nor goods  brought within  the limits of the municipality for<br \/>\nsale, consumption or use as laid down by Section 66(1)(e) of<br \/>\nthe said  1922 Act.  The said  Section also provided in sub-<br \/>\nSection (2)  that the  local Government\t may by\t rules\tmade<br \/>\nunder this  Act, regulate the imposition of taxes under this<br \/>\nsection and  impose maximum amounts or rates for and tax. It<br \/>\nis not\tin dispute  between the\t parties that the then local<br \/>\nGovernment being  the Madhya  Pradesh Government in exercise<br \/>\nof its\tstatutory powers under Section 66(2) of the 1922 Act<br \/>\nhad imposed such maximum rates of octroi duty which could be<br \/>\nlevied by the Municipal Committee which was then running the<br \/>\nmunicipal administration in the area which is now within the<br \/>\njurisdiction of\t the  appellant-Corporation.  These  maximum<br \/>\nrates as  imposed by  the then\tlocal Government  being\t the<br \/>\nMadhya Pradesh\tGovernment under  Section 66(2)\t of 1922 Act<br \/>\ndid hold  the field  till the  advent of the present City of<br \/>\nNagpur Corporation  Act, 1948,\tthat is,  the said  Act.  As<br \/>\nnoted earlier  the said\t Act came  into force  on 2nd  March<br \/>\n1951. By  that time  the notification  issued under  Section<br \/>\n66(2) dated 29th April 1950 by the then local Government was<br \/>\nholding the  field. After coming into force of the said Act,<br \/>\nthe aforesaid  notification imposing maximum rates of octroi<br \/>\nleviable   on various  goods brought within the local limits<br \/>\nof the\tappellant Corporation continued to operate by virtue<br \/>\nof Section  3 sub-Section (2) of the said Act which reads as<br \/>\nunder:\n<\/p>\n<p>     &#8220;3. (1) &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;<\/p>\n<blockquote><p>     (2) Every appointment, rule, bylaw,<br \/>\n     form,  notification,  notice,  tax,<br \/>\n     scheme,\torder,\t   licence    or<br \/>\n     permission made,  issued,\timposed,<br \/>\n     sanctioned\t or   given  under   the<br \/>\n     Central   Provinces    and\t   Berar<br \/>\n     Municipalities Act, 1992, shall, so<br \/>\n     far   as\t it   relates\tto   the<br \/>\n     Municipality of  Nagpur and  so far<br \/>\n     as\t it   is   in\tforce\tat   the<br \/>\n     commencement   of\t  and\tis   not<br \/>\n     inconsistent  with,  this\tAct,  be<br \/>\n     deemed to\thave been  made\t issued,<br \/>\n     imposed, sanctioned  or given under<br \/>\n     the provisions  of\t this  Act;  and<br \/>\n     shall  unless  previously\taltered,<br \/>\n     modified,\t cancelled,   suspended,<br \/>\n     surrendered or  withdrawn,\t as  the<br \/>\n     case may  be, under this Act remain<br \/>\n     in force for the periods if any for<br \/>\n     which  it\t was  so  made,\t issued,<br \/>\n     imposed, sanctioned  or given under<br \/>\n     the provisions  of\t this  Act,  and<br \/>\n     shall  unless  previously\taltered,<br \/>\n     modified,\t cancelled,   suspended,<br \/>\n     surrendered or  withdrawn,\t as  the<br \/>\n     case may  be, act\tremain in  force<br \/>\n     for the  period, if  any, for which<br \/>\n     it was  so made,  issued,\timposed,<br \/>\n     sanctioned or given. &#8220;<\/p><\/blockquote>\n<p>Statutory power\t to impose  octroi tax\tis conferred  on the<br \/>\nappellant-Corporation by  Section 114  of the said Act. That<br \/>\nSection\t is  found  in\tPart  IV  Chapter  XI  dealing\twith<br \/>\n&#8216;Taxation&#8217;. Section 114(1)(e) of the said Act. reads under:\n<\/p>\n<blockquote><p>     &#8220;114. (1)\tFor the purposes of this<br \/>\n     Act, the Corporation shall impose &#8211;\n<\/p><\/blockquote>\n<blockquote><p>     (a) &#8230; &#8230; &#8230;\n<\/p><\/blockquote>\n<blockquote><p>     (b) &#8230; &#8230; &#8230;\n<\/p><\/blockquote>\n<blockquote><p>     (c) &#8230; &#8230; &#8230;\n<\/p><\/blockquote>\n<blockquote><p>     (d) &#8230; &#8230; &#8230;\n<\/p><\/blockquote>\n<blockquote><p>     (e) a  cess  on  animals  or  goods<br \/>\n     brought within  the City  for sale,<br \/>\n     consumption or use therein.&#8221;<\/p><\/blockquote>\n<p>     This  imposition\tis  compulsory\t imposition  by\t the<br \/>\nCorporation.  Sub-section   (3)\t of   Section  114  is\talso<br \/>\nrelevant. It reads as under :\n<\/p>\n<blockquote><p>     &#8220;114. (1) &#8230; &#8230; &#8230; &#8230;\n<\/p><\/blockquote>\n<blockquote><p>     (2) &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.<br \/>\n     (3) The  State Government\tmay,  by<br \/>\n     rules made under this Act, regulate<br \/>\n     the  imposition,\tassessment   and<br \/>\n     collection\t of   taxes  under  this<br \/>\n     section and specify maximum amounts<br \/>\n     of rates  for  any\t tax  and    for<br \/>\n     preventing\t evasion  of  assessment<br \/>\n     and payment of taxes.&#8221;\n<\/p><\/blockquote>\n<p>The procedure for imposing the taxes as envisaged by Section<br \/>\n114 is\tlaid down by Section 115 which with its sub-sections<br \/>\nreads as under :\n<\/p>\n<blockquote><p>     &#8220;115. The\tCorporation  may,  at  a<br \/>\n     special meeting,  bring  forward  a<br \/>\n     resolution\t   to\t  propose    the<br \/>\n     imposition of any tax under section\n<\/p><\/blockquote>\n<blockquote><p>     114.<\/p><\/blockquote>\n<blockquote><p>     (2) When such a resolution has been<br \/>\n     passed   the    Corporation   shall<br \/>\n     publish  in   accordance  with  the<br \/>\n     rules  made   under  this\t Act,  a<br \/>\n     notice,  defining\t the  class   of<br \/>\n     persons or\t description of property<br \/>\n     proposed to  be taxed,  tile amount<br \/>\n     or rate  of the  tax to be imposed,<br \/>\n     and the  system of assessment to be<br \/>\n     adopted.\n<\/p><\/blockquote>\n<blockquote><p>     (3) Any  person resident within the<br \/>\n     City and  objecting to the proposed<br \/>\n     tax may,  within thirty  days  from<br \/>\n     the publication of the said notice,<br \/>\n     submit his\t objection in writing to<br \/>\n     the Corporation and the Corporation<br \/>\n     shall at a special meeting take his<br \/>\n     objection into consideration.<br \/>\n     (4) If  the Corporation decides, to<br \/>\n     amend it  proposals or any of them,<br \/>\n     it shall publish amended proposals,<br \/>\n     along with a notice indicating that<br \/>\n     they are  in modification\tof those<br \/>\n     previously published for objection.<br \/>\n     (5) Any  objections  which\t may  be<br \/>\n     received to  the amended  proposals<br \/>\n     within thirty  days shall\tbe dealt<br \/>\n     with in  the manner  prescribed  in<br \/>\n     sub-section (3)<br \/>\n     (6) The  Corporation shall\t forward<br \/>\n     its final\tproposals to  the  State<br \/>\n     Governments  which\t  shall\t  either<br \/>\n     refuse to\tsanction them  or return<br \/>\n     then for  further consideration, or<br \/>\n     sanction them  without modification<br \/>\n     or\t with\tsuch  modification   not<br \/>\n     involving an  increase of\tthe rate<br \/>\n     to be proposed as it thinks fit.<br \/>\n     (7) Such sanction, if- any shall be<br \/>\n     published in  the Gazette\tand  the<br \/>\n     tax shall\tthen cone  into force on<br \/>\n     such date\tas may\tbe specified  in<br \/>\n     that notification.\n<\/p><\/blockquote>\n<blockquote><p>     (8)   A\tnotification   of    the<br \/>\n     imposition\t of  a\ttax  under  this<br \/>\n     section   shall\tbe    conclusive<br \/>\n     evidence  that  the  tax  has  been<br \/>\n     imposed  in   accordance  with  the<br \/>\n     provisions of this Act.&#8221;<\/p><\/blockquote>\n<p>     In the  background of  the aforesaid relevant statutory<br \/>\nprovisions we may now proceed to consider the question posed<br \/>\nfor our decision.\n<\/p>\n<p>Consideration of the question<br \/>\n     A mere  look at  the provision  of Section\t 3(2) of the<br \/>\nsaid Act  shows that so long as the appellant Corporation in<br \/>\nexercise of  its independent  statutory powers under Section<br \/>\n114(1)(e) of  the said\tAct had\t not imposed  fresh rates of<br \/>\noctroi duty on various articles brought within its municipal<br \/>\nlimits for  consumption, sale  or use,\tthe maximum rates as<br \/>\nimposed under  Section 66(2)  of the 1922 Act could continue<br \/>\nto operate. but once the field was occupied by the appellant<br \/>\nCorporation&#8217;s exercise\tof statutory  powers  under  Section<br \/>\n114(1)(e) read\twith Section  115 of  the said Act and their<br \/>\nsanction by  the State Government, the earlier maximum rates<br \/>\nfixed by  the then  local Government  being  Madhya  Pradesh<br \/>\nGovernment under  Section 66(2)\t of 1922 Act would obviously<br \/>\nbecome inconsistent  with the  rates that  would be fixed by<br \/>\nthe Corporation\t under the  said  Act  in  exercise  of\t its<br \/>\nindependent powers  under Section  114( e)  and also  by the<br \/>\nrates as  amended  from\t time  to  time\t by  the  appellant-<br \/>\nCorporation in\texercise of  the very  same power. Hence the<br \/>\nold maximum  rates would  go  out of the protective coverage<br \/>\nof Section  3 (2) of the said Act. That actually happened in<br \/>\n1966 when  for\tthe  first  time  the  appellant-Corporation<br \/>\nimposed new  octroi rates  on various articles under Section<br \/>\n114(1)(e) of  the said\tAct. A\tconjoint reading  of Section<br \/>\n114(1)(e) and  Section 115  with it  sub-sections leaves  no<br \/>\nroom for  doubt\t that  the  appellant-Corporation  had\tfull<br \/>\nstatutory authority  empowering it  to impose octroi duty at<br \/>\nappropriate rates after following the procedure laid down by<br \/>\nSection 115  and that  could be\t done after  considering the<br \/>\nobjections to  be invited against the proposed imposition of<br \/>\nrates of  octroi,  It  is  not\tin  dispute  that  the\tsaid<br \/>\nprocedure was  followed by  the appellant-Corporation before<br \/>\nthe 1966  notification imposing\t new octroi rates was issued<br \/>\nand which  rates were  later amended  in the  years 1974 and<br \/>\n1979. In  this connection it is profitable to have a look at<br \/>\nthe notification  issued by  the  State\t of  Maharashtra  in<br \/>\nexercise of  its powers\t conferred  by\tsub-Section  (6)  of<br \/>\nSection 115  of the said Act sanctioning the proposal framed<br \/>\nby the appellant-Corporation as detailed in the notification<br \/>\nfor imposition\tof a cess on animals or goods brought within<br \/>\nthe City  of Nagpur  for sale,\tconsumption or\tuse therein,<br \/>\nunder clause  (e) of  sub- section  (1) of  Section 114 read<br \/>\nwith section  115 of  the City of Nagpur Corporation Act and<br \/>\nin supersession of those sanctioned under the Madhya Pradesh<br \/>\nGovernment Notification\t No.886-871 &#8211;  MXIII, dated the 21st<br \/>\nFebruary  1951.\t  The  said  notification  recites  that  in<br \/>\nexercise of  the powers\t conferred  by\tsub-section  (7)  of<br \/>\nSection 115  of the  City of  Nagpur Corporation  Act, 1948,<br \/>\nGovernment also\t directs that  the said\t tax shall come into<br \/>\nforce with  effect from\t 1st day of June 1966. Clause (2) of<br \/>\nthe said  notification lays  down that\ta cess\tthereinafter<br \/>\ncalled as  &#8220;Octroi Duty&#8221;  shall be  levied  on\tanimals\t and<br \/>\ngoods, specified  in the  Schedule thereto  annexed, brought<br \/>\nwithin the  octroi limits  of the  City of  Nagpur for sale,<br \/>\nconsumption or\tuse at\tthe rates  mentioned against each in<br \/>\nthe  Schedule\tannexed\t subject   to  conditions  specified<br \/>\nthereinafter. Clause  (5) thereof  lays down  that  when  an<br \/>\narticle is  mentioned in  the Schedule\tspecifically and  is<br \/>\nalso included  in a  general category,\tthe  duty  shall  be<br \/>\nlevied at the rate mentioned for the specific item. When any<br \/>\narticle is not specifically mentioned and may come under two<br \/>\nor more\t headings in  the schedule, the duty shall be levied<br \/>\nat the highest rate fixed for such heading.\n<\/p>\n<p>     In view  of the  aforesaid, octroi\t rules sanctioned by<br \/>\nthe State  of Maharashtra  under Section 115 of the said Act<br \/>\nit becomes  obvious that  all earlier rules regarding octroi<br \/>\nas sanctioned by the erstwhile State of Madhya Pradesh along<br \/>\nwith the  ceiling as imposed by the said State under Section<br \/>\n66(2) of  the 1922 Act got eclipsed and ceased to operate as<br \/>\nthey obviously became inconsistent with the new octroi rules<br \/>\nframed by  the appellant-Corporation  and sanctioned  by the<br \/>\nState of Maharashtra under the said Act. In other words the<br \/>\nfield of  octroi imposition  got completely  occupied by the<br \/>\nstatutory exercise  availed of\tunder the  new\tAct  by\t the<br \/>\nappellant-Corporation as  well as  the State of Maharashtra.<br \/>\nSo far\tas this\t aspect\t is  concerned\tthere  is  not\tmuch<br \/>\ncontroversy between  the parties.  However it  is vehemently<br \/>\ncontended by  the learned  counsel for\tthe respondents that<br \/>\nunder such-Section  (3) of  Section 114\t of the said Act the<br \/>\nState is enjoined to impose maximum rates of tax which could<br \/>\nbe levied  by the  Corporation and as that has not been done<br \/>\nby the\tState, the  earlier imposition of maximum amounts of<br \/>\nrates of  tax as done by the then local Government being the<br \/>\nMadhya Pradesh Government under the corresponding provisions<br \/>\nof Section 66(2) of the predecessor Act of 1922 continued to<br \/>\noperate. It  is not  possible to  agree. A  mere  glance  at<br \/>\nSection 114(3) shows that imposition of maximum rates of tax<br \/>\nby the\tState Government  is an enabling provision and it is<br \/>\nnot a condition precedent to the exercise of taxing power by<br \/>\nthe Corporation\t under Section 114(1) read with Section 115.<br \/>\nBoth these  powers and\tfunctions are  independent  of\teach<br \/>\nother and  operate in  their own fields subject to the rider<br \/>\nthat if\t the State  Government\tchooses\t to  impose  maximum<br \/>\namounts of  rates of  any tax  imposed\tby  Corporation,  in<br \/>\nexercise  of  State&#8217;s  powers  under  Section  114(3),\tthat<br \/>\nceiling would  get engrafted  on the rates of tax as imposed<br \/>\nby the\tCorporation under  Section 114 read with Section 115<br \/>\nof the\tAct. But  so long  as that ceiling is not imposed by<br \/>\nthe State  Government the  rates of  taxes  imposed  by\t the<br \/>\nCorporation would  operate unrestricted\t and uninhibited  by<br \/>\nany such  ceiling. The\tHigh Court with respect was in error<br \/>\nwhen it\t took the  view that  imposition of  such ceiling of<br \/>\nrates of  taxes under  Section 114(3)  by the  State  was  a<br \/>\ncondition precedent  to the exercise of powers of imposition<br \/>\nof taxes  by the Corporation under Section 114 (e) read with<br \/>\nSection 115.  For coming  to the  said conclusion  the\tHigh<br \/>\nCourt had  equally erred in reading too much in the judgment<br \/>\nof this\t Court in Municipal Corporation, Jabalpur (supra) as<br \/>\nwe will\t presently point out. It is difficult for us to read<br \/>\nthe provisions\tof Section 114(3) as mandatory requiring the<br \/>\nStates\tGovernment   to\t necessarily   regulate\t impositions<br \/>\nassessment and collection of all the taxes impossible by the<br \/>\nCorporation under  Section 114, of the said Act. The several<br \/>\nclauses in  sub-Section (3)  must be  read distinctively and<br \/>\nthe powers  which are  given to\t the State  Government under<br \/>\nsub-Section (3)\t must be  read\tas  independent\t powers\t for<br \/>\nmaking rules with regard to the assessment and collection of<br \/>\nthe taxes,  A power  to make rules prescribing maximum rates<br \/>\nof taxes  could be  independently  exercised  by  the  State<br \/>\nGovernment but\tthere is  nothing in the Section which would<br \/>\nmake it\t obligatory for\t it to\tfirst  specify\tthe  maximum<br \/>\namounts of  rates of  tax before  it exercises\tits  another<br \/>\nindependent power  of making  rules for\t imposition of a tax<br \/>\nunder Section  115 of  the said\t Act read  with Section\t 114<br \/>\nthereof. We  cannot agree  with the  contention\t of  learned<br \/>\ncounsel for  respondents that  the power  to make  rules for<br \/>\nimposition of tax conferred on the Corporation and the State<br \/>\nGovernment under Section 114(1) and Section 115 must be read<br \/>\nas being  subject to  the imposition of maximum rates of any<br \/>\ntax  under  Section  114(3)  or\t that  the  two\t powers\t are<br \/>\ninterlinked intertwined\t or interdependent. If Mr. Agarwal&#8217;s<br \/>\ncontention was\tright Section  114(1) would  have been\tmade<br \/>\nexpressly subject  to Section  114 sub-Section\t(3). But the<br \/>\nlegislature in its wisdom has not done so. If the contention<br \/>\nof Mr.\tAgarwal, learned  counsel  for\tthe  respondents  is<br \/>\naccepted it  would amount  to rewriting\t Section 114(1)\t and<br \/>\nSection 115  and making\t them subject  to sub-Section (3) of<br \/>\nSection 114. Such an exercise is clearly contra-indicated by<br \/>\nthe aforesaid  statutory settings  and is  impermissible. We<br \/>\nmay in\tthis connection mention that a Division Bench of the<br \/>\nBombay High  Court in  the case of &#8220;Parekh Brothers&#8221; (supra)<br \/>\nhad taken the same view which we are inclined to take on the<br \/>\nconstruction of\t the aforasaid\trelevant provisions  of\t the<br \/>\nsaid Act. We wholly concur with the said view.\n<\/p>\n<p>     Now  remains   the\t question   whether  this  Court  in<br \/>\nMunicipal  Corporation,\t  Jabalpur  (supra)  had  taken\t any<br \/>\ncontrary view  on this\taspect. In  the\t case  of  Municipal<br \/>\nCorporation, Jubalpur (supra) this. Court was concerned with<br \/>\nthe question  whether the  rates of  octroi as\tfixed by the<br \/>\nmunicipality  under   the  Central   Provinces\t and   Berar<br \/>\nMunicipalities Act,  1922 could\t go beyond the maximum rates<br \/>\nas prescribed  under the  very same-Act\t by the\t State under<br \/>\nSection 66(2). The answer of the High Court in that case was<br \/>\nthat the ceiling of maximum rates as prescribed by the State<br \/>\nunder  the   very  same\t  Act  would  govern  the  rates  of<br \/>\nCorporation under  the same  Act. The  said decision  of the<br \/>\nHigh Court  was confirmed  by this Court. It is obvious that<br \/>\nif the\tMunicipal Corporation  functioning  under  that\t Act<br \/>\nimposed rates  of octroi  which went  beyond the  prescribed<br \/>\nmaximum rates  imposed by the State under the very same Act,<br \/>\nthe ceiling  of maximum\t rates as  fixed by the State had to<br \/>\noperate and  would restrict  within that limit, the rates of<br \/>\noctroi fixed  by the Corporation. If in the present case the<br \/>\nState of Maharashtra had fixed maximum rates of octroi under<br \/>\nSection 114(3)\tthen obviously\tthe rates of octroi as fixed<br \/>\nby  the\t Corporation,  under  Section  114(1)(e)  read\twith<br \/>\nSection 115 had to be restricted to the said maximum ceiling<br \/>\nbut in\tthe present  case admittedly  no  such\tceiling\t was<br \/>\nimposed by  the State  of  Maharashtra\tprescribing  maximum<br \/>\noctroi rates  for the  appellant-Corporation in\t exercise of<br \/>\nthe  States   powers  under   Section  114(3).\tWe  fail  to<br \/>\nappreciate how\tthe aforesaid,\tdecision of  this  Court  in<br \/>\nMunicipal  Corporation;\t Jabalpur  (supra)  can\t be  of\t any<br \/>\nassistance to  the respondents\tin the present case. In this<br \/>\nconnection it is pertinent to note that this Court had noted<br \/>\nthat in\t the case  before it the Corporation had not imposed<br \/>\ndirectly any  tax under\t Section 120(1) of the 1948 Acts but<br \/>\nland purported\tto impose the tax as authorised by the rules<br \/>\nmade by\t the Municipality  on May  14, 1943.  under the 1922<br \/>\nAct. These  rules prescribed the ad valorem rate of Rs.2\/5\/6<br \/>\nper cent  and continued\t to remain  in force  by  virtue  of<br \/>\nSection 3(2)  of the 1948 Act. But even as the taxes imposed<br \/>\nunder  1922   Act  would   continue  to\t be  in\t forces\t the<br \/>\nnotification issued  by the  State Government  under Section<br \/>\n66(2) of  1922 Act  would also continue to be in force under<br \/>\nSection 3(2),  read with  Section 120(3) of the 1948 Act. It<br \/>\nwas also  noted\t that  the  said  notification\thad  clearly<br \/>\nprescribed the\tmaximum octroi\tfor these goods at two annas<br \/>\nper maund.  Hence side\tby side\t there were  two orders with<br \/>\nregard to  the imposition  and levy  of octroi\ton the\tsame<br \/>\ngoods. In  the case  of conflict  between  the\ttwo,  it  is<br \/>\nobvious that  the maximum  rates  prescribed  by  the  State<br \/>\nGovernment would  hold the  field. As  noted earlier  on the<br \/>\nfacts  of   the\t present   case\t there\tare  no\t two  orders<br \/>\nsimultaneously operating  in the  same field  in  connection<br \/>\nwith levy  of octroi. The notification of 1966 under Section<br \/>\n115 read with Section 114(1)(e) as amended from time to time<br \/>\nhas operated  on its own without being in any way cut across<br \/>\nor superimposed\t by any\t maximum rates of octroi as fixed by<br \/>\nthe State of Maharashtra in exercise of its statutory powers<br \/>\nunder Section  114(3). Consequently in the absence of such a<br \/>\nstatutory ceiling operating in the field, the rates as fixed<br \/>\nby the\tCorporation and\t as sanctioned\tby the\tState  under<br \/>\nSection 115  remained fully  operative\twithout\t having\t any<br \/>\nceiling\t overhead.  Such  was  not  the\t case  in  Municipal<br \/>\nCorporation, Jabalpur&#8217;s\t case (supra)  as noted\t earlier. In<br \/>\nfact in\t the very  same judgment in para 15 of the Report it<br \/>\nhas been  clarified by\tthis Court that if after 1965 octroi<br \/>\nwas levied  at a  higher rate,\tmerchants would be liable to<br \/>\npay octroi  at that  rate, meaning  thereby if\tafter coming<br \/>\ninto operation\tof the\tMadhya Pradesh Municipal Corporation<br \/>\nAct, 1956 the City of Jabalpur Corporation had exercised its<br \/>\npowers of  levy of  octroi under the said latter Act of 1956<br \/>\nthat would have operated on its own subject to imposition of<br \/>\nany ceiling  of maximum\t rate if  at all  fixed by the State<br \/>\nunder the  1956 Act.  Consequently it  must be held that the<br \/>\nratio of  this Court&#8217;s\tdecision in  the case  of  Municipal<br \/>\nCorporation, Jabalpur (supra) is not at all attracted on the<br \/>\nfacts of the present case. On the other hand the decision of<br \/>\nthe Division  Bench of\tthe Bombay High Court in the case of<br \/>\n&#8220;Parekh Brothers&#8221;  (supra) which meets our approval squarely<br \/>\ngot attracted  for resolving  the controversy in the present<br \/>\ncase. The High Court was, therefore, with respect wrong when<br \/>\nit took the view that the aforesaid decision of the Division<br \/>\nBench in  &#8220;Parekh Brothers&#8221;  (supra) was not longer good law<br \/>\nin view\t of this  Court&#8217;s decision  in the case of Municipal<br \/>\nCorporation, Jabalpur  (supra), In  view  of  the  aforesaid<br \/>\ndiscussion the\tconclusion is inevitable that the appellant-<br \/>\nCorporation  was  fully\t justified  in\timposing  octroi  on<br \/>\narticles at  the rates specified in the notification of 1966<br \/>\nas subsequently\t amended in  1974 and  1979 and the impugned<br \/>\nnotification of\t 10th December\t1979 issued  by the State of<br \/>\nMaharashtra under  Section 115\tof the\tsaid Act operated on<br \/>\nits own without having any ceiling imposed about the maximum<br \/>\nrates under  Section 114(3).  The said\tprovision about\t the<br \/>\nimposition of  maximum rates by the State being directory in<br \/>\nnature and  not mandatory  or compulsory  for the  State. So<br \/>\nlong as\t the State  did not  choose to\texercise its  powers<br \/>\nunder Section 114(3), there was no whittling down or cutting<br \/>\nacross of  the rates  of octroi\t as imposed by the very same<br \/>\nState by  the impugned notification of 1979 and the rates of<br \/>\noctroi as  mentioned therein  could be\tlegally and  validly<br \/>\nenforced by the appellant-Corporation.\n<\/p>\n<p>     In the  result this  appeal is  allowed.  The  impugned<br \/>\njudgment of  the Division  Bench of  the High  Court is\t set<br \/>\naside and  the writ  petition filed  by the  respondents  is<br \/>\ndismissed in  the  facts  and  circumstances  of  the  case,<br \/>\nhowever, there will be no order as to costs all throughout.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India City Of Nagpur Corporation vs M\/S Khemchand Khushaldas &amp; Sons &amp; &#8230; on 12 August, 1996 Equivalent citations: JT 1996 (7), 156 1996 SCALE (5)758 Author: M S.B. Bench: Majmudar S.B. (J) PETITIONER: CITY OF NAGPUR CORPORATION Vs. RESPONDENT: M\/S KHEMCHAND KHUSHALDAS &amp; SONS &amp; ORS. DATE OF JUDGMENT: 12\/08\/1996 BENCH: [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-205302","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>City Of Nagpur Corporation vs M\/S Khemchand Khushaldas &amp; Sons &amp; ... on 12 August, 1996 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/city-of-nagpur-corporation-vs-ms-khemchand-khushaldas-sons-on-12-august-1996\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"City Of Nagpur Corporation vs M\/S Khemchand Khushaldas &amp; 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