# 1.962 Th6 Commissioner of /ncot111-tizx, Bombap Cit'JI 1, Bombay v. Amarchand N. Skroj} - **Citation:** [1963] Supp. 1 S.C.R. 710 - **Court:** Supreme Court of India - **Decided:** 1963 - **Bench:** S. K. Das, J. L. Kapur, A. K. Sarkar, M. Hidayatullah, Raghubar Dayal - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1-962-th6-commissioner-of-ncot111-tizx-bombap-cit-ji-1-bombay-v-amarchand-n-2741 - **Pages:** 20 ## Headnote 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. /· l S.C.R. SUPREME COURT REPORTS 711 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 Uyla\V referred to the municipal district as existin~ \\'lien the bylaw \\'as frarnccs 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. 1902 Baga/kot Oity Afunitipality v. Balalkot Cement Co. Sarkar, J. 1962 Ba:alkot Cit.1 Municipality v. BatMl.kot Cement Co. Sarkar, J. 716 SUPREME COURT REPORTS [1963] SUPP. 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 ofcourse 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 1 S.C.R. SUPREME COURT REPORTS 717 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 bylaw 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 exception 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 1962 BqaJkol CilJ Municipality v. Batalkot Cement Ci Sarkar, J, 1962 &gD/kot City Municipality v. Bagalkot Cemeat Co. S1;1kilr, J. tl.a:hubar Do;·al, J. 718 SUPREME COURT REPORTS [1963] SUPP. 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 .. 1 S.C R. SUPREME COURT REPORTS 719 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 llfonicipal 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 1962 Bnttzlkot GitJ Municipality v. Uagalkot Cement Co. Raghubar Dayali J. 1962 Bll/l•IMI City Monicipality v. lago/kot Canml Co. -1/aghuhar Dayal, J. 720 SUPREME COURT REPORTS [1963] SUPP. 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<'.rythat subsequent to the extension, contraction or alteration of the limits there does not come into existence a new municipal district. The erstwhile muni- i s.c.:k. SUPREME COURT RE.Pok ts 721 cipal district continues with this modification that its area is either extended or reduced or its limits are altered. Sub-sections (2) and (3) provide, inter alia., for the setting forth clearly of the local limits included or excluded from existing municipal districts by noti· fication and for erection and maintenance of boundary marks defining the altered limits of the municipal district. The municipal district, as defined in s. 3(5) of the Act, therefore means the local area within its limits as fixed for the time being. ln view of s. 20 of the Bombay General Clauses Act, the expression 'municipal district' in the by-law will have the same meaning as that expression has in the Act, unless there be anything repugnant in the subject or context. We do not find any such repng· nancy in the context of the by-law which would make the definition o[ the municipal district in tht Act not applicable to the expression 'municipal district' in octroi by-law no. 3. The octroi duty is, by nature, a duty which is realised on goods entering certain limits oyer which the municipality charging the octroi has control. There is no reason why octroi duty, which is levied solely for the purpose of raising funds, and not w afford protection to trade in any particular area, be not charged from the same goods entering a certain part of the municipality, that is to say, there is no good reason why the limits within which goods on entry from beyond should pay octroi duty be different from the limits of the municipal district over which the municipality has control. The question then arises, why cl. (iv) of sub·s. (l)(b) of s. 59 uses the expression 'octroi limits' instead of 'municipal district', an expression which is used with reference to some other taxes which the municipality can impose. The answer is found in the provisions. of ss. 39 and SJ ,.f the Act. , I 1962 Haga(kot City Munidpa·ity v. Bagalkot Cement Co Raghubar Dayal, J. f L ' 1962 Bagatkot City J,f unicipalit)I v. --IJ!lga/kot Cem1td Co, Raghubar Da~al, J, 722 SUPREME COURT REPORTS (1963] SUPP. Clause (b) of s. 39 empowers a municipality tci enter into an agreement with another municipality, cantonment authority, local board, panchayat or committee appointed for an area under Chapter XIV regarding levy of octroi duty whereby the octroi duties respectively leviable by the contracting bodies may be levied together, instead of separately, within the limits of the area, subject to the control of the said bodies. Section 81 authorises any one of the contracting bodies to establish such octroi limits and octroi stations as may be deemed necessary for the entire area in which the octroi is to be collected. The limits of any such two contracting parties will not be common throughout and will not be identical with the limits of either of the municipal districts and therefore it would be necessary for the municipality, which is to collect octroi duties under the agreement, to fix the octroi limits for the entire area for the purpose of collecting octroi duties. Sub-section (2) of s. 77 provides for penalty for the evasion of octroi in cases of goods liable to the payment of octroi and passing into a municipal district without payment of such octroi. It is noticeable that it does not use the expression 'passing into the octroi limits of a municipal district', but uses the expression 'passing into a municipal district'. The use of the expression 'octroi limits' in cl. (iv) of s. 59 (l )(b) therefore need not lead to the conclusion that a municipality can pick and choose between its parts and exempt any part of it from the l('vy of octroi duty. It follows therefore that ordinarily octroi duty must be imposed on all goods entering the limits of the municipal district controlled by the municipality. This is what by-law No. 3 framed by the appellant Municipality provides for. It is contended for the respondent that the Municipality cannot make a by-law fixing such octroi I S.C.R. SUPREME COURT REPORTS 7.23 limits as vary from time to time. We see no good reason why it cannot do so. Further, the by-law No. 3(1) fixed the limits of the municipal district 10 be the octroi limits. These are definite limits and vary only when an alteration is made by the Government in the limits of the municipal district and then too, on account of the content of the expression 'municipal district'. The definition of 'municipal district' will be read into the definition of 'octroi limits' as required by the General Clauses Act and they will vary with that definition. :rhe municipality does not exceed its jurisdiction to frame the by-law fixing the octroi limits to vary from time to time according to the limits of the municipal district. No question of extending its jurisdiction arises in case the limits of the municipal district are contracted. No question of exceeding its jurisdiction arises if the limits are extended, as at the time the· by-law would be applicable to the extended limits, the municipality will have jurisdiction to make a by-law applicable for that area. If it frames a by-law in such a way as to be immediately effective in the area newly added to its limits, it cannot be said to be exceeding its jurisdiction. Just as the Act contemplates the extension of the limits of the municipal district and the application of its various provisions therein, the by-laws made applicable within the area of the municipal district will be applicable to the extended area the moment any fresh area is added to the municipal district. We do not find anything· in the Act or rules which disables the municipality to fix the octmi limits in this wav, or, in other words, which makes it incumbent ·on the Municipality to fix the octroi limits as frequently as the area of the municipal district is altered bv a notification of the Government und~r s. +. · There is nothing in the Act that the by-laws rlulv framed by a municipality become null and void 1962 Bugalkot Citv Afunicipalitl' "" Btlgalkot Cement Co. Raghubar Da1al, J. 1962 B1tt6lkot City Munici~alil)' v. /Jaga,kot Ctm1nt Co. Hllghub111 Dayal, J. 724 SUPREME COURT REPORTS [1963]SUPP. and ineffective when the limits of the municipal district for which they were framed are extended. Such is not the contention for ihe respondent either. It is not contended that those bv-laws do not continue to be in force within the old limits of the municipal district. What is contended by the respondent is that they cannot apply to the new area added to the old municipal district, until the requisite procedure laid down for the framing of the by-laws under subss. (2) and (3) of s. 48 has been followed; as, otherwise, the persons residing in the newly added area would have no occasion to object to the by-laws which are sought to be made applicable to them. The sub.sections are : "( 2) Every Municipality shall, before making any by-law under this section, publish in such manner as shall in their opinion be sufficient, for the information of the persons likely to be affected thereby, a draft of the proposed bylaw, together with a notice specifying a date on or after which the draft will be taken into consideration, and shall, before making the bylaw receive and consider any objection or suggestion with respect to the draft which may be made in writing by any person before the date so specified. (3) When any by-law made by a Municipality is submitted to the Central Government, State Government or Commissioner for sanction, a copy of the notiee published as aforesaid and of every objection or suggestion so made, shall be submitted for the information of the Central Government, State Government or Commissioner along with the said by.Jaw." The respondent's contention is met for .the appellant bv reference to s. 8 of the Act which affords an opport~nity to the perso:is whc;i entertain any objection to the proposal for mcludmg the proposed area -; 1 S.C.R. SUPREME COURT REPORTS 725 in the existing municipal district to file objections with reasons therefor within the specified period. It is urged for the respondent that no objection with respect to any particular by-law or rule can be made at the time when the Government notifies objections against the proposal to extend the limits of a municipal district. There is nothing to bar such an objection. The objector can say that he would not like that area to be included in the municipality as it would make him and others liable to certain taxes, which, in the circumstances prevailing in that area, would not be right and would be prejudicial to the residents of that area. This is the view taken by this Court in Rajn1/, J. 1962 Bagalkol City Municipality v. Ba1afkot Olmtnt Co. Raghubar Dayal, J. 726 SUPREME COURT REPORTS [1963] SUPP. terms, and there was some divergence of view about this in the former case, but this much is clear from the opinions set out above·: it cannot include a change of policy. Now coming back to the notification of 23rd April, 105 l. Its vires was challenged on many grounds but it is enough for the purposes of this case to hold that the action of the Governor in subjecting the residents of the Patna Village area to municipal taxation without observing the formalities imposed by sections 4, 5 and G of the Bihar and Orissa Municipal Act of 1922, cuts across one of its essential features touching a matter of policy and so is bad." It was further observed,- "The notification of 23rd April, 1951, does in our opinion, effect a radical change in the policy of the Act. Therefore it travels beyond the authority which, in our judgment, section 3 (l)(f) confers and consequently it is nltm !!ires." The change in policy was in the sense that the scheme of the Bihar & Orissa Municipal Act 1922, was that the people would not be made subject to the liability of municipal taxation without being afforded an opportunity to object against such a proposal. The provisions of the 1922 Act referred to as guaranteeing this right to the people were stated to be ss. 4, 5 and 6 of that .Act. Section 4 empowers the State Govern· ment to declare its intention to constitute or alter the limits of the municipality. · Section 5 provides for taking into consideration objections submitted within the specified time after the aforesaid declaration and s. 6 empowers the State Government by notification to constitute the municipality and to extend to it all or any of the provisions of that Act or to w>vern any local area in the municipality. " 1 S.C.R. SUPREME COURT REPORTS 727 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<'urthcr, sub·s.(2) of s.48 of the Act provides the publication of the by-law proposed to be made for the information of the persons likely to be affected thereby. The persons to be affected by the bylaw fixing octroi limits arc not only the inhabitants of the municipality, but include persons who bring goods into the municipality for consumption, use or sale therein. In fact it is such persons who are the first to be affecte\i by the levy of the octroi duty. They will have to pay it first. They may pass it on to the purchasers subsequently. It is to be presumed that the publication made at the time of the making of the by-law fixing the octroi limits must have been such as had given notice to the persons other than the residents within the municipality. Such persons could file objections against the proposed by-laws. It follows therefore that the residents of the area suosequently added to a municipality, an area which is bound to be adjacent to the original area, cannot effectively contend that they had no opportunity of objecting to the making of the by-law. Further, the provisions of these sub-sections can have reference only to the occasion when bylaws are to be framed or amended and can have no effect on the question of the applicability of the byl~ws. to the newly added area of the municipal d1stnct. In the absence of any express provision in the Act to the effect that no rule or by-law shall be applicable to the newly added area till it is freshly enacted after following the regular procedure, we are not prepared to accept this contention, as its acceptance would mean that the municipality becomes 1962 Bo:olkot Cily Mrmi 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 exemption 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 1 S.C.R. SUPREME COURT REPORTS 729 of all or any taxes, rules, bv-Iaws or forms made, issued, imposed or granted under the Act by any existing municipality and in force within its area immediately before the day from which the local area was included to the municipal district, to and 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 enactment, 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 bylaw 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. 1962 Bag a 'kot City Municipality v. Baga/kot Ctmtnl C Roghubar Dayal, J