NAGAR PANCHAYAT,UNA versus UNA TALUKA SAHAKARI KHARID VECHAN SANGH LTD.

NAGARPANCHAYAT,UNA

UNA 'fALUKA SAHAKARI KHARID VECHAN SANGH LTD.

September 17, 1970

[J. c. SHAH, AND A. N. G1lOVU, JJ.]

G11jarat Panclrayat Act, 1961, s. 307(e) and (k}-NalJ<Ir Pa11chay<1t contl1'1dng to collect occrol under Sauraslttra Termllllll Tax and Octrol Ordinance, 1949, previously collected by Municipality for the 6llme ar'ea conatituted under Bombay Municipal Act, 1901-i/ competent to do so.

The Appellant. Nagar Pancbayat, Una, local body, was constituted under the Gujarat Panchayat Act, 1961, which came into force from April 1, 1963. Prior to this enactment, the Bombay Municipal Act, 1901, as applied to Saurashtra, was in force in that region of the present State of Gujarat and under its provisions the Una Municipality was constituted. This Municipality was collecting octroi on commodities imported into the municipal limits of Una under the Saurashtra Terminal Tax· and Octroi Ordinance 1949. Section 3 of that Ordinance empowered the State Govemment to impose the tax mentioned thereunder in the cities and towns specified or included later in Schedule I. One of these taxes was terminal tax on goods imported into or exported from the terminal tax limits. Section 4 gave powers to the Government to make rules by notification foe the purpose df carrying out the purposes of the Ordinance. Rule 4, which was framed in Gujarati language, provided that collection of octroi and terminal tax would be done through the "Sudhrai" of the area entered in the schedule to the Ordinance.

Aftu the Act of 1961 came into force and the Nagar hnchayat replaced the Municipality, it continued to collect the octroi till 1967, when the respondent filed petition under Article 226 challenging the ccimpe-tence of the Nagar Panchayat to collect the octroi. The High Court held that since in the Rules promulgated under' the Ordinance in Gujarati the collectinc Agency had been descnDed as "Sudhrai" which means Munici-.,.i;ty, the Napr Pancbayat waa not competent to collect the octroi under the Ordinance as it did not fall within the meaning or definition of the term "Municipality".

On appeal to this Court,

HELD : Allowing the appeal : The High Court -was in err<>r in coming to the conclusion that the Nagar Panchayat was not entitled to carry on the work of collection of octroi under the Ordinance even though the Ordinance which imposed liability to pay remained in force.

Section 307 of the Act leave$ no room for doubt that Wl!Jlrever Napr Panchayat was constituted in place Qf the municipality, the muni-cipality disappeared and all its funds including the ·right to realise taxes etc. \-elted in the Nagar Panchayat. In other words it was the Nagar Panchayat which was to function as the local body in the area previously coaatitiited as municipality. Clause (k} of s. 307 clearly saved all laws or rules which were applicable to the local area which fonned municipality '1Ud they were to continue to apply and to remain in force in the area for which the Nagar Pancbayat came to be constituted. There waa no force In the contention that the Ordinance did not become appli-cable to the cities .and towns specified in Schedule I which came to be constituted as Grams or Nagars under the Act. [ 410 CJ

Even if in the ruJes framed under the Ordinance certain expressioh created difficulty that could not defeat the right and the power con-ferred on the Nagar Pancbayat by the Act of realising and collecting the octroi which was being done under the Ordinance as saved by clause (k) of s. 307. [4!0 HJ

CIVIL APPELLATE JURISDCCTION: Civil Appeal No. 1059 of 1970.

Appeal from the judgment and order dated February 18, 19.70, o{ the Gujarat· High Court in Special Civil Application No. 387 of 1968. . .

D. V. Patel and Vineet Kumar .. for the appellant.

I. N. Shroff, for the respondent.

The Judgment of the Court was delivered by

Grover, .J. This appeal by certificate arises out of writ petition filed by the respondent which is Society registered under the Bombay Cooperative Societies Act 1925 challenging the col-lection of octroi by the appellant which is the Una Nagar Panchayat.

The appellant is local body constituted under the Gujarat Panchayat Act 1961, hereinafter called the "Act, which came into force with effect from April I. 1963. Prior to its enactment the Bombay Municipal Act 1901, as applied to Saurashtra, 'was in force in that region of the present State of Gu.iarat. Under its ·provisions Una Municipality was constituted. It was collecting octroi on commodities which were imported into the municipal limits of Una under the Saurashtra Terminal Tax and Octroi Ordinance 1949. Under s. 3 of that Ordinance the Government could impose the tax mentioned thereunder in the cities and towns specified or included later in Schedule I. One of these taxes was terminal tax on goods imported into or exported from the tenn.i-nal tax limits. Octroi as defined by s. 2(-2) included tenninal tax. Section 4 gave the power to the Government to make rules by notification for the purpose of carrying out the purposes of the Ordinance. 'Rules were framed under s. 4 in the Gujarati l!ID-guage. It was provided thereir. that the collection of Octroi and terminaitax would be done through the Sudhrai (1I1t-m) of the area entered in the schedule to the ordinance. It is apparent :.hat under the Ordinance it was the State Government which imposed 'the octroi or the tenninai tax in the cities and towns specified in the Schedule and the Sudhrai was only an agency for collection thereof.

By notific'ation dated Deeember 12, 1949 issued under the Ordinance the Government of the erstwhile State of Saurashtra included the town of Una in the Schedule to the Ordinance. · Thus

octroi and terminal tax became levrable in that town on certaiIL commodities imported there. Section 9 of the Ordinance must also be noticed. According to it the Gavernment was to maintain separate fund in respect of all monies received by it on account of any of the taxes specified in s. 3 for every city or .town or. local area specified in Schedule I and such fund after deducting there-B from the expenditure incurred in connection with the levy and collection of such tax was to be applied for the benefit of the inhabitants of the city or town or local area for which it was main·· talnod. The purpose of levying the octroi duty or terminal tnx under the Ordinance clearly waa to add to the revenue of the locnl bod:y for the benefit of the people residing within the jurisdiction of that particular local body. ·

So long as Una Mu,nicipality r~mained, municipality as con· stituted under the Act of J 901, there was 110 difficulty in the matter of collection of the octroi. After the Act came into force the Na~ Panchayat replaced the Municipality in Una. · It continued to collect the octroi till 1967 when the respondent, for the first time, raised an objection that it waS' not entitled to do so. As the Nagar Panchayat persisted in making the collection petition. under Art. 226 of the Constitution was filed in the Gujarat High Court. It has been held by the High Court that since in the Rules promulgated under the Ordinance in Gujarati the collecting agency has been described as Sudhrai which means municipality the Nagar Panchayat was not competent to collect the octroi under the Ordinan9e as it did not fall within the meaning or definition of the term "municipality"I'll our judgment the High Court was in error in coming to the conclusion that the Nagar Panchayat was not entitled to carry on the work of collection of octroi under the Ordinance even though the Ordinance which imposed liability to pay remained in force. Under s. 307 of the Act where any local area was declared to !><' gram or nagar under s. 9 and if that area was .:o-extensive with the limits of municipal district or municipal borough the muni-cipality functioning in such local area was to cease to exist and in its place an Interim Grart1 Panchayat was to be constituted. According to clause ( c) of that section the unexpended balance of the municipal fund and property including arrears ·of rates. ta~es and fees belonginl'? to the municipality and all rights and powers which vested in the municipality were to vest in the Interim Gram or Nagar Panchayat fund until new panchayat was constituted in accordance with the provisions of s. 308 ( 1). Clause ( g) provid-ed that all officers and servants in the employ of the municipality were to become officers and servants of the Interim Panchavar under the Act. Clause (k) was in the following terms :-

"Any law (other than the municipal law) or any rule, by-law, notification or order issued under such Jaw, which was applicable to and in force in the local area immediately before it was declared as gram or nagar Ullder section 9, shall continue to apply to and to be in force in the local area until it is superseded".

·:section 308 dealt with the term of office of an Interim Panchay11t . .and the steps to be taken to hold election for new Gram or Nagar Panchayat. The appellant in the present case is indisputably the .duly coastituted Nagar Panchayat.

Section 307 of the Act leaves no room for doubt that wherever .a Nagar Panchayat was constituted in place of the municipality· the municipality disappeared and all its funds including the right .to realise taxes etc., vested in the Nagar Panchayat. In. other · words it was the Nagar Panchayat which was to function as the local body in the area previously constituted. as municipality. <Clause (k) of s. 307 clearly saved all laws or rules which were .applicable to the local area which formed municipality and they ·were to continue to apply and to remain jn force in the area for ·which the Nagar Panchayat came to be constituted. By no stretch ':'of reasoning could ii be said that the Ordinance did not become :lipplicable to the cities and towns spe'"afied ion Schedule I which ..came to be cons'tituted as Grams or Nagars under the Ar!. It is :true that no fresh rules were promulgated under the Ordinance .adapting the new terminology but even about the word Sudhrai 'it is moot point whether it means only municipality as consti-tute4 under the Act of 1901.

A~ argument was raised before the High Comt that .the Guja-rati expression "sudhrai" meant any local-self governing authority. 'The High Court observed that this expression as used in the Octroi rules could not . have wider CODIIOtati<?n than the expression ·"municipality" in s. 9 of the Ordinance. When s. 307 (k) of the Act saved the opcratioo: of all laws and rules etc., other than the "municipal law the intention of the legislature was precise and ·definite and it is futile to suggest that the Ordinance was not ·covered by this saving clause. The object underlying clause ( c) of s. 307 was to vest in the Nagar Panchayat the entire municipal · fund mcluding the arrears of taxes and fees as also the powers and rights relating thereto which previously vested in the municipality. The octroi which w·as being collected under the Ordinanee clearlv fell within the ambit of clause ( c). The pQ.wer and the right. ·therefore, had passed to the Nagar panchayat add it was fully entitled to exercise it. Even if in the rules framed µJide!' the ·Ordinance certai·n expression created difticultv that c<*d aot clefeat the right and the power COllferred on the Nagar Plllldlayat

· by the Act of realising and collecting· the octroi which was being: done under the Ordinance as saved by clause (k) of s. 307.

If on account of the abseru:e of proper adaptation in the rules made under the Ordinance any difficulty is being experienced in · the collection of octroi iu is always open to the State Government. . to mako those clarifications and adaptations and indeed it would be expedient and desirable to do so. So long as the n\lW rules. are not framed under the Ordinance or adaptations are not made: thereunder the Nagar Panchayat can certainly make the r,ollection and through the officers who discharge the same duties as were· being performed by their counterparts mentioned in the rules •. This is what seems to have been done uptill 1967 without any objection by any one.

In the result the appeal succeeds and it is allowed with costs. in this Court as also in the High Court.

R.K.P.S.

Appeal al/owed ..