BAGALKOT CITY MUNICIPALITY v. BAGALKOT CEMENT CO.
Citation: [1963] SUPP. 1 S.C.R. 710; 1962 INSC 297
Court: Supreme Court of India
Bench: S.K. DAS , J.L. KAPUR, A.K. SARKAR, M. HIDAYATULLAH, RAGHUBAR DAYAL
Judgment date:
Case summary
1962 INSC 297. Supreme Court of India judgment dated 1962-10-23. BAGALKOT CITY MUNICIPALITY v. BAGALKOT CEMENT CO. Read the judgment and case details on...
Judgment text
710 SUPREME COURT REPORTS [1963] SUPP. of the deceased Amarchand and are not liable to be taxed in the hands of the heirs and legal representa-tives who cannot be deemed to be assessees for the purpose of assessment in regard to those years. In our view the High Court rightly answered the question in the negative and against the Commissioner of Income-tax. The appeals therefore fail and are dismissed with costs. Appeals dismissed. BAGALKOT CITY MUNICIPALITY v. BAGALKOT CEMENT CO. (S. K. DAS, J. L. KAPUR, A. K. SARKAR, M. HIDAYATULLAH and RAGHUBAR DAYAL, JJ. ) Octroi Duty-Municipal District, connotation of-Octroi limits equatd with municipal district-Extension of municipal di-strict-Whether octroi limifll also extended-If extended area liable to octroi duty-Bombay District Municipal Act, 1901 (Bom. 3 of 1901), 88. 3(5), 4, J8, 59-Bombay General Ohuses Act, 1904 (Bom. 1of1904), s. 20. The appellant nmnicipality imposed octroi duty on certain goods brought within the octroi limits.
The by-laws fixed the octroi limits to be the same as the Municipal District. Section 4 of the Bombay District Municipal Act 1901, under which the municipality was constituted, empowered the Government to declare any local area to be a municipal district. At the time of the imposition of the octroi duty the respondent's factory was situated outside the municipal district and was not subject to the octroi duty. Subsequently, the Government extended the municipal district so that the factory came to be included within that district. The appellant contended that upon such extension its octroi lim~ts also stood extended to include the factory and the respondent became liable to pay octroi duty in respect of goods brought into the factoty. Held (per Das, Kapur and Sarkar,JJ. , Hidayatullah and Dayal,JJ. , dissenting), that octroi duty was not leviable on the respondent.
'l'he expression "1nunicipal distric(' in the Uy-la\V referred to the municipal district as existin~ \\'lien the by-law \\'as frarnc cs Act. Now under that section, expressions used in by-laws arc to have the same meaning as they have in the Act unless there is anything repugnant in the context. If there is any such repugnancy, the definition in the Act cannot be resorted to for interpreting a by-law. It seems to us that there is such rcpugnancy in the present case and this we now proceed to show. As we have earlier said, a by-law is made under s. 48. That section provides that a by-law can be made only with the sanction of the Government. Sub-section (2) of that section requires that "Every Municipality shall, before making any by-law under this section, publish ..................... for the information of the persons likely to be affected thereby, a draft of the proposed by-law".
There are provisions enabling persons to make objectiom to, or suggestions regarding a proposed byclaw and for these being considered by the municipality before it makes the by-law and thereafter by lhe Government before it gives its sariction. It is therefore, not open to much doubt that a by-law made without the previous publication of its draft to the persons mentioned would be an invalid bv-law. Now who are these persons ? They must be· "persons likely to be affected thereby", that is, by the by-law, they must be persons whom the by-law when made is likely to affect by its own terms. Since however anyone can send goods to places within. the octroi limits, all the world ~ay in a sense be said to be affected by a by-law fixmg those limits. If. all such persons were contemplated bys. 48 (2), then a by-law . fixing octroi limits to be valid, would have to be published to all the world. l S. C. R. SUPRE1\1E COURT REPORTS 715 This would be an impossibility and was clearly not intended.
Qpite obviously publication to persons residing outside the municipal district as constituted when the by-law was made or who were not the rate-payers of the municipality was not contemplated. The present by-law must therefore have been made without publication to such persons. It is not said that the respondent was not one of them. Now suppose the appellant municipality's contention was right. Then the by-law would now bring within the octroi-limits of the appellant municipality the respondent's factory and some other premises though the by-Jaw had not been published to the respondent or the owners of the premises. The respondent and all other such persons would then be affected by the by-law th0ugh the by-law had not been published to them before it was made. Such a by-law would be invalid under the Act. It would be invalid from the beginning and not only on the extension of the municipal district for it would be a by-law not made in compliance with the provisions of s.
48 and therefore not a by-law validly made. But then it may be said that when made, the by-law did not affect any one to who::n it had not been published and therefore it had been validly made. This argument seems to us to proceed on a misconception. The by-law would still be invalid as contingently affecting persons to whom it had never been published, namely, those who resided outside the municipal district as constituted when the by-law was made, the contingency being the extension of t~e municipal district. Those persons would be contmgently affected by the by-law itself because the limits mentioned in i~ were capable of being extended to include them. They are so affected because the by-law itself provided that the limits fixed by it would in a certain contingency stand extended. We, therefore, think that the expression "muni· cipal district" in the by-law must be understood as referring to the municipal district as existing when the by-law was framed.
The context would prevent the definition in the Act being applied to interpret the by-law. The by-law cannot, therefore, refer to the municipal district as from time to time existing. Now it is not in dispute that if the octroi limits fixed by the by-law are so understood, then the respondent's factory has all along been outside those limits and the respondent cannot be made liable to pay octroi duty. It makes no difference that its factory is now within the municipal district of the appellant municipality for it is ,still outside its octroi limits. It was said that if the view that we have taken is right, then no by-law can ever affect people to whom it had not been published before it was made, and if this is so, then on the extension of a municipal district, all the existing by-laws would have to be re-made for the added area for they could not affect the people there as to them, ex-hypothesis, the by-laws had not been published before they had been made.
It was contended that such a result could not have been intended by the Act and, therefore, the view that we have taken is erroneous. As regards this argument, we first observe that nothing has been brou~ht to our notice from which it can be gathered that it was not the intention of the legislature that on the extension of the municipal district the by-laws have not to be re-enacted. If that was not the intention of the legislature, then of-course the entire foundation of the present argument would fail and it would require no further discussion. Let us however assume that it was intended that the existing by-laws would apply to the added areas without fresh re-enactment. If such was the intention, that intention must necessarily be referrable to some provision in the Act. Jn such a case it would be because of that provision of the Act that the by-laws would be affecting people to whom they had not before their making been published and not by their own terms Or force.
From what we have said it does not follow that a by-law cannot under some provision in the Act other than s. 48 affect people to whom it had not been published before it was made. All that we have said is that a bv-law cannot be made under s. 48 so as to affect people by its own terms or force unless to thcrr:i it had been previously published. \Ve are concerned only with the initial validity of a by-law for interpreting the meaning of the words used in it. The argument for the appellant contemplates a situation where an existing valid by-law is by an independent statutory provision made to affect people to whom it had not been published before it was made. With such a situation we are not concerned.
We are unable to agree that if some provision of the Act exists which makes a valid by-law applicable to the newly added areas of a municipality and to the residents there, though to them the by-law might not have been published before it was made, it would follow that a by-law could be validly made under the Act without previous publication to persons likely to be affected thereby. We repeat that if it cannot be so made, the present by-law cannot be read as including within the octroi limits the municipal district as extended from time to time. To do that would be to give it a meaning against its context and this, the General Clauses Act does not warrant. It was contended on behalf of the appellant that since at the time the municipal district was extended an opportunity had been given to the respondent to object, it could not now take any excep-tion t? the imposition o~ th~ octroi duty on the ground that.
1t had no opportumty to object to the rule levymg the duty or the by-law fiiting the octroi limits when these were made. All this seems to us to be to no purpose. The respondent is not basing its objection to pay the octroi duty on this ground. All that it says is that it is not liable as its factory is not with· in the octroi limits. It raises a question of interpre· tation of the by· law. The fact that the respondent could have objected to the extension of the municipal district is wholly irrelevant in interpreting the by·law fixing the octroi limits and the only question in this case is of such interpretation. We may add that if a by-law is invalid because it had not been published to persons likely to be affected by it, it would not become valid when the municipal district of the municipality concerned was extended on notice to everyone entitled to object to the extension.
Then it was said that the by-law could not be amended for it could only be put in the same term in which it stands now as it is intended to put the entire municipal district within the octroi limits. The fallacy in this argument seems to us to be that even if a. by-law was framed in identical words now, the content of it would be different, the municipal district contemplated by the new by-law would. be different from that contemplated by the earlier one. Therefore, in substance, the by·law would be a changed one inspite of the identity of its form. It would be different in effect. In the view that we have taken we think it unnecessary to pronounce uport the contention of the respondent that the definition ins. 3(5) of the Act did not contemplate a municipal district as from time to time constituted. The appeal fails and is dismissed with costs. RAGHUBAR DAYAL, J. -We are of opinion that this appeal should be allowed.
Section 59(l)(b)(iv) of the Bombay Di~trict Municipal Act, 1901 (Bom. . '\ct3 of 1901), hereinafter .. called the Act, authorises any Municipality to impose an octroi on animals or goods, or both, brought within the octroi limits for consumption, use or sale therein. The Bagalkot Municipality imposed this tax and provided, under by-law No. 3 framed by it in the exercise of powers conferred under s. 48(l)(j), that "the octroi Emits of the Municipal District shall be the same as the Municipal District". This by-law was framed prior to the extension of the limits of the Bagalkot Municipal District over which the Bagalkot Municipality had jurisdiction. The necessary declaration extending the aforesaid limits was made by the State Government under s. 4 of the Act on August 25, 1959. After the extension of the limits of the Municipal District, the factory run by the respondent company came within the limits of the ;\funicipal District in which the Bagalk.
:it lllunicipality exercises control. The Municipality did not frame any new by-law fixing afresh the octroi limits of the llfonici-pal District. It however demanded octroi duty from the respondent company on the goods which were brought to the factory. The respondent company objected to the demand on the ground that the factory to which the goods were brought was beyond the octroi limits fixed under the by-law framed by the Municipality and that the goods on which octroi was demanded were not brought within the octroi limits. It contended that, in the absence of the framing of any fresh by-law fixing· such octroi limits as would in. elude hie factory with;. 1 them, the Municipality could not claim octroi duty on the goods entering the factory.
This contention found favour with the High Court which issued a mandamus to the Municipality to forbear from collecting any octroi in respect of goods delivered by the railway administration at the factory premises and also directed the company to pay octroi on the goods carried by road at the point of entry and to get a refund of the octroi at the point where the goods left the octroi limits. Directions were also issued to the Municipality for such refund. The Municipality has appealed against the order of the High Court. It is contended on its behalf that the octroi limits fixed under the by-law framed by the Municipality extend up to the limits of the Municipal District as extended by the Government declaration of August 25, 1959, and that there was no necessity for framing any fresh by-law fixing new, octroi limits. We have to determine the extent of the octroi limits of the Municipality as fixed under by-law No.
3( 1) which reads : ' "The octroi limits of the Municipal District shall be . the sa~e as the Municipal District. " The octroi limits fixed were coterminous with the limits of the Municipal District, whatever they may be from time to time. If the limits of the Municipal District were extended, the octroi limits would be the extended limits of the Municipal District and, if the limits of the Municipal District were contracted, the octroi limits would be similarly con· tracted. Section 3( 5) defines 'municipal district' to mean 'any local area which is at present a municipal district, and any local area which may, hereafter, be constituted a municipal district under section 4, if such municipal district has not ceased to exist under the provisions of the said section. ' Section 4 empowers the State Government, subject to the provisions of ss. 6, 7 and 8, ·to extend, contract or otherwise alter the limits of any municipal district from time. to time.
It is clear therefore-and there is nothing in the section to indicate to the contr vern any local area in the municipality. It follows that under the present Act persons residing in an area to be included in the municipal district could file objections to tlie proposed inclusion of the area to the Municipal district on the ground that certain by-laws imposing taxes will affect them adversely. l municipality's obligations within tht: district under its authority. Residents within an area of the municipal district cannot therefore avoid the liability to pay a tax merely on the ground that when that lax was imposed the area in which they reside was not included within the municipal district.
The legislature could not have intended the exemp-tion of such persons from payment of the tax when it provided for the extension of the limits of a municipal district but did not expressly provide for the applicability of the rules and by-laws then in force to the newly added area or for the liability of the residents of the newly added area to the taxes then in force within the municipal district and for the re-imposition of such taxes and the re-making of such rules and by-laws in accordanc~ with the prescribed procedure. We are of opinion that the extension of the limits of the municipal district connotes that the area newly added to the . nunicipal district comes not only under the control of the municipality, but also becomes subject to such laws, rules and by-laws which be in force within the municipal district. Lastly, reference may be made to s. 191B in Chapter XIV-A.
It provides inter alia that when any local area is added to a municipal district, the' State Government may, notwithstanding anything contained in the Act or ·in any other law for the time being in force, by order published in the official gazette, provide for the extension and commencement of all or any taxes, rules, bv-Iaws or forms 1962 made, issued, imposed or granted under the Act by Baga'kot City any existing municipality and in force within its area Municipality v. immediately before the day from which the local Baga/kot Ctmtnl C area was included to the municipal district, to and Roghubar Dayal, J in all or any of the other areas of the successor district municipality, in supersession of corresponding taxes, rules, by-laws, if any, in force in such other areas immediate lY before the aforesaid day, until the matters so extended and brought into force are further superseded or modified under the Act.
No order under this provision seems to have been issued by the State Government. The provision, however, indicates that the compliance of the procedural provisions mentioned in su b-s. ( 2) of s. 48 of the Act is not a necessary condition for th~ existing by-laws of a municipality to apply to the areas included in it at a bter time. If such an order is issued by the Government, that clarifies the position. Its enact-ment, however, does not mean that in the absence of such an order, all the matters mentioned in cl. (x) of sub-s. (l) of s. 19IB will not be effective in the area induded in a municipal district under a notification under s. 4 of the Act. v\'e hold that the octroi limits fixed under by-law No. 3 include the area newly added to the municipal district by the notification of August 25, 1959, and that, consequentJy, the respondent company was liable to pay octroi duty on the goods entering its premises.
We would therefore allow this appeal with costs, set aside the order of the Court below and dismiss the writ petition of the respondent. BY C'ouRT : In accordance with the opinion of the majority, this appeal is dismissed with costs.
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