# MUNICIPAL BOARD MAUNATH BHANJAN v. SWADESHI COTTON MILLS CO. LTD. & ORS

- **Citation:** [1977] 2 S.C.R. 865
- **Court:** Supreme Court of India
- **Decided:** 1976-03-26
- **Case number:** Civil Appeal No. 527 of 1976
- **Bench:** Y. V. Chandrachud, P. N. Shinghal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/municipal-board-maunath-bhanjan-v-swadeshi-cotton-mills-co-ltd-ors-7114
- **Pages:** 6

## Headnote

U.P. Municipalities Act, 1916, Ss. 131(3),
134(1)
&
(2), 135(2)
and
300-Draft rules for levying octroi not changed after publication 11/s 131(3)-
Whether their Re-publication necessary on mere reduction of tax rates-Re-publication only of reduced tax rates, whether violateS S. 300 and the General Clauses
Act, S. 23-Resolution u/s 134(2), whether rgndered nugatory if passed before
publication of rules-Notification u/s 135(2), whether requires specific reference to section.
In 1968-69 the respondent was constructing a textile factory within the area
of the appellant Board, and obtained exemption from the levy of octroi on its
incoming building material on the ground that it was a new concern. It then
~tarted bringing more articles within its premises with the result that octroi
was demanded from it.
The Board got permission from the State Government
for realising the same. In a writ petition by the respondent to challenge the
levy, the High Court struck down the. imposition of octroi on three grounds :
I. The provisions of Ss. 134 (I) and 300 of the Act and S. 23 of the
General Clauses Act were violated owing to publication only of the
tax rates and not the draft rules for the levy of octroi.
II. The resolution of the Board u/s 134(2) could not authorise
imposition of tax as it was passed before the publication of
rules.
III. No notification was pJJblished as r~quired u/s 135 (2).
Allowing the appeal by special leave, the Court
the
the
HELD : 1. The draft rules were once published as required by sub-s. (3) )
of s. 131, and as only the rates had- been reduced and the rules had not been
modified, it was not necessary to re-publish them. [868 A-Fl
Municipal Board, Hapur v. Raglmvendra Kripal & Ors. [1966] I SCR 950
and Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur, [1965]
1 · SCR
970, referred to.
·
2. The Resolution dated June 20, 1950, could authorise the imposition of
the tax from July 15, 1950, although it was passed before the publication of
the rules. The resolution was not rendered nugatory and it was not necessary
for the Board to pass another one.
[868 0-H]
3. It is the nature of the not,ification which is decisive of the section under
'which it has been issued and it would not matter if it did not make a specific
reference to sub-section (2) of section 135 and made a reference to Section 300
instead.
[869 BJ

## Text

{
• ....
865
MUNICIPAL BOARD MAUNATH BHANJAN
v.
SWADESHI COTTON MILLS CO. LTD. & ORS.
January 28, .1977
(Y. V. CHANDRACHUD AND P. N. SHINGHAL, JJ.]
U.P. Municipalities Act, 1916, Ss. 131(3),
134(1)
&
(2), 135(2)
and
300-Draft rules for levying octroi not changed after publication 11/s 131(3)-
Whether their Re-publication necessary on mere reduction of tax rates-Re-publication only of reduced tax rates, whether violateS S. 300 and the General Clauses
Act, S. 23-Resolution u/s 134(2), whether rgndered nugatory if passed before
publication of rules-Notification u/s 135(2), whether requires specific reference to section.
In 1968-69 the respondent was constructing a textile factory within the area
of the appellant Board, and obtained exemption from the levy of octroi on its
incoming building material on the ground that it was a new concern. It then
~tarted bringing more articles within its premises with the result that octroi
was demanded from it.
The Board got permission from the State Government
for realising the same. In a writ petition by the respondent to challenge the
levy, the High Court struck down the. imposition of octroi on three grounds :
I. The provisions of Ss. 134 (I) and 300 of the Act and S. 23 of the
General Clauses Act were violated owing to publication only of the
tax rates and not the draft rules for the levy of octroi.
II. The resolution of the Board u/s 134(2) could not authorise
imposition of tax as it was passed before the publication of
rules.
III. No notification was pJJblished as r~quired u/s 135 (2).
Allowing the appeal by special leave, the Court
the
the
HELD : 1. The draft rules were once published as required by sub-s. (3) )
of s. 131, and as only the rates had- been reduced and the rules had not been
modified, it was not necessary to re-publish them. [868 A-Fl
Municipal Board, Hapur v. Raglmvendra Kripal & Ors. [1966] I SCR 950
and Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur, [1965]
1 · SCR
970, referred to.
·
2. The Resolution dated June 20, 1950, could authorise the imposition of
the tax from July 15, 1950, although it was passed before the publication of
the rules. The resolution was not rendered nugatory and it was not necessary
for the Board to pass another one.
[868 0-H]
3. It is the nature of the not,ification which is decisive of the section under
'which it has been issued and it would not matter if it did not make a specific
reference to sub-section (2) of section 135 and made a reference to Section 300
instead.
[869 BJ
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 527 of 1976.
Appeal by Special Leave from the Judgment and Order dated the
26-3-1976 of the Allahabad High Court in Civil Misc. Writ No. 6277
cf 1974.
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866
SUPREME COURT REPORTS
[1977] 2 ~C.R.
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L. N. Sinha, Sol. General, S. C. Agarwala and V. !. Francis for
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the Appellant.
Yogeshwar Prasad and (Miss) Rani Arora for Respondent No. 1.
0. P. Rana for Respondent No. 2.
The Judgment of the Court was delivered by
SHINGHAL, J.
This appeal by special leave is directed against the
judgment of the Allahabad High Court dated March 26, 1976. It
relates to the validity of the imposition of octroi with effect from July
15, 1950, on certain goods brought within the Maunath
Bhanjan
Municipality, hereinafter referred to as the Board.
The challenge to the imposition was made by the Swadeshi Cotton
Mills Company Ltd., hereinafter referred to as the Company.
The
Company started constructing a textile factory, a part of which, at any
rate, fell within the area of the Board.
It applied for and obtained
exemption from the levy of octroi on its building material on
the
ground that it was a new concern.
It howeVler started bringing more
articles within its premises, and the Octroi Superintendent
made
a demand for a payment octroi on June
25, 1969.
The
Com-·
parry tried to avoid the levy on the basis of the order of exemption,
but the Executive Officer of the Board repeated the demand on May
30, 1970 and June 16, 1970.
The Board also wrote to the State
Government for permission to realise octroi from the Company. The
Government gave the permission to realise the tax.
The Company
thereupon challenged the levy of the octroi in the High Court by a writ
petition.
The High Court took the view that the initial imposition
of the octroi was illegal, allowed the writ petition, and issued a mandamus directing the Board not .to realise the tax.
The Board feels
aggrieved and has come up in appeal to this Court.
It appears that the Company took four grounds for challenging
the levy of octroi, but the High Court examined only the following
ground, as it took the view that it was enough for the
Company's
F . success in the petition, and did not examine the other grounds,-
"that the procedure prescribed for the imposition
of
taxes by municipal boards under sections 131 to 135 of the
U.P. Municipalities Act, 1916, was not followed by
the
Municipal Board."
Counsel for the parties have accordingly confined their arguments
G
to the finding of the High Court in favour of the Company on
this
ground.
·
As the ground on which the Company has succeeded
is quite
general and vague, we a~ked counsel for the parties to refer to the
precise plea in that respect, in the writ petition.
They could however
only invite our attention to ground No. 6 of the writ petition where
H
the Cc-mpany has merely stated that the imposition of octroi was void
-and illegal
"because mandatory provisions for imposition of octroi
~-·
tax as provided in the U.P. Municipalities Act has not been followed."
It is therefore obvious, and has not been disputed before us, that the
..
MUNICIPAL ~OARD v. SWADESHI COTTON (Shinghal, !.)
867
Company took a very vague ground to challenge the validity of the
imposition of octroi, and left it to the High Court to embark on a
roving and fishing inquiry, on the off chance of finding some violation
of the so-called "mandatory provisions for the imposition of octroi."
It has not been disputed be.fore us that the High Court m:1dertook such
an inquiry\ and struck down the imposition on the followmg ground,-
( 1) The draft rules for the levy of the tax were not published, and only the rates of octroi were published,
so that there was violation of the provisions of section
23 of the General Clauses Act and sections 134 ( 1)
and 300 of the Act.
(2) The order of the District Magistrate, which was equivalent to the special resolution of the Board under
sub-section (2) of section 134 was invalid as it was
passed on .June 20, 1950, while the rules were finalised and published on July 15, 1950.
·
(3) There was no "foundation or basis" of the notification under section 135 (2) and no such notification
was published.
· Counsel for the Company however strenuously argued that there
was no compliance with the provisions of sections 131 to 133 also,
and made a reference to the decisions in, Municipal Board, Hapur v.
Raglmvendra Kripal and others(') and Raza Buland Sugar Co. Ltd. v.
Municipal Board, Rampur('), for the purpose of showing that parts
of sections 131 to 134 were mandatory, and had to be followed. We
find that the High Court has categorically stated that the Company did
not assert that sub-sections (2) and (3) of section 131 had not been
complied with, and that there was "no dispute regarding compliance
with the provisions of section 131."
The High Court has also stated that the Company "has not asserted!
that any of the provisions of section 132 has not been followed." It
J1as further stated that there was "no complaint of non-compliance
with the provisions of section 133 also."
There was thus no challenge
to the validity of the imposition of octroi on the ground that there
was no compliance with the provisions of sections 131, 132 and 133
and we are not called upon to examine the argument that there was
noJJ-·compliance with the provisions of those sections.
There was
also no dispute in the High Court th•at "the Municipal Board
was
competent to impose octroi tax."
We shall accordingly examine the
three grounds, on which the High Court has held the imposi•tion of
odroi as invalid, in this background.
Ground No. 1.
The. High Court has held that there was
no
previous publication of the draft rules for the levy of octroi
and
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that only the rates of octroi were published.
So that there
was
breach of the provisions of sections 134 ( 1) and 300 of the United
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(1) [l966j 1 S.C.R. 950.
(2) [1965] 1 S.C.R. 970.
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868
SUPREME COURT REPORTS
[1977] 2 s.c.R.
Provinces Municipalities Act, 1916, hereinafter referred to as the Act
and seetion 23 of the General Clauses Act.
It will be recalled that
~he H~&h Court has. found that the Company had not challenged the
imposition of octro1 on the ground that there was non-compliance
with the provisions of sections 131 to 133. It cannot therefore be
disputed that the draft rules were puolished as required by sub-section
( 3) of section 131.
Moreover we find from the affidavit which has
been filed on behalf of the Board that its Officer incharge wrote
to
the prescribed Authority on January 9, 1950, that the draft rules had
been published in the "Sansar" on November 1, 1949, and may be
sanctioned.
A copy of that letter has been placed on the record. It
may also be mentioned that the Officer Incharge wrote to the Commissioner intimating that ·only two objections had been received, which
were for reduction of the tax, and that after considering them the rate
of the tax had been reduced from Rs. 1/8/- to Re. 1/- per maund,
and the necessary amendment had been made in the rate chart. An
objection was a'lso received from the Shoe Makers' Association, and
the Commissioner directed that if the Board wanted to make
any
modification, it may again publish the modified proposals.
This was
done on February 14, 1950, but as only the rates had been reduced,
and the rules had not been modified, it wasc not necessary to republish
the draft rules.
The Prescribed Authority accordingly
sanctioned
the same on April 1, 1950, under section 133.
The rules
were
forwarded to the Prescribed Authority on April 26, 1950, and
were
published in the State Gazette dated July 7, 1950.
It was
stated
in the notification that the rules were published under section
300
of the Act, which required their previous publication, but there
can
be no doubt that it was a notification under sub-section (2) of section
135 as it was issued after receipt of the Board's special resolution in
pursuance of the sanction of the Prescribed Authority, and it was directed that the rules shall take effect from July 15, 1950.
It is therefore
futile to contend that the rules were not made in accordance with the
provisions of sections 134(1) and 300 of the Act and section 23 of
the General Clauses Act which requires certain conditions to
be
observed in regard to the making of rules after previous publication.
Ground No. 2.
It is not in dispute that the, special resolution for
the imposition of the tax was sent by the Officer Incharge of the
Municipal Board on June 20, 1950, stating that July 15, 1950 had
been fixed for the levy of the tax.
It is true that the rules were published under the notification dated July 7, 1950, but that would not
necessarily lead to the conclusion that the resolution dated June 20,
1950 was rendered nugatory, or that it was necessary for the Board
to p~ss another resolution.
The notifica~ion sho~s tha~ the. authority
concerned not only published the resolut10n by its notification dated
July 7, 1950, but also stated that they shall take. effect from
July
15 1950 which was the date fixed by the resolut10n dated June 20,
l 9SO, fo; the imposition of the tax.
The:e was therefore no justificati'on for taking the view that the resolution
dated June 20, 1950
could not authorise the imposition of the tax from July 15, 1950,
merely because it was passed before the publication ?f the rules. At any
rate any technical defect in the date of the resolut10n could not have
--- -.
.,,.-- ...
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JI
MUNICIPAL BOARD v. SWADESHI COTTON (Shinghal, J.)
8 69
the effect of making the imposition void in the facts and circumstances
of this case.
Ground No. 3.
As has been shown, the notification dated July
7, 1950, which was published under section 300 of the Act, was,
in
fact and substance, issued under the authority of sub-section (2)
of
A
section 133, and it would not matter if it did not make a specific refeB
rence to that sub-section and made a reference to section 300 instead.
The High Court therefore erred in thinking that there was no notification under-sub-section (2) of section 135 at all.
It is the nature of
the notification which is decisive of the section under which it
has
teen issued, and we have no doubt that the impugned notification was
really issued under sub-section (2) of section 135.
We have thus no doubt that the notification had really been issued
in compliance with the requirement of sub-section (2) of section 135
of the Act.
That would attract the application of sub-section ( 3)
of that section which provides as follows,-
"135(3) A notification of the imposition of a tax under subsection (2) shall be conclusive proof that the tax has
been imposed in accordance with the provisions of
this Act."
So when a probative effect had been given by law making the notification of the imposition of the tax as "conclusivle proof" that the tax
had been imposed "in accordance with the provisions of the
Act",
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no evidence could be allowed to combat that fact, and we have no
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hesitation in holding that the impos;'i:ion was according to the law.
It is not disputed that. Maunath Bhanjan is an industrial town, and
its Board was collecting octroi since July 15, 1950.
The Company
started the construction of its factory in 1968-69, and, as has been
stated, it applied for and obtained exemption from the levy of octroi
on its building material on the ground that it was a new concern. The
F
Board granted the exemption on July 21, 1967, for a period of 10
years, and that fact was acknowledged in the Company's fotter dated
August 18, 1967.
The Company prayed for the continuance of the
exemption even after that time limit.
The State Government however
granted the exemption for five years.
The Company started "importing" certain other articles, and the State Government ultimately gave
permission to the Board on April 2, 1973 to realise octroi from the
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Company with effect from May, 1974.
The Company once again
applied for further exemption on August 14, 1973, but without success.
It is thus clear that, far from having any doubts about the validity of
the imposition and levy of octroi, the Company accepted the validity
thereof and prayed 'for exemption.
It availed of that exemption, for
some years, and applied for its extension until as late as August 14,
l 973.
It was only when further exemption was refused, that the
H
Company thought of filing the· writ petition.
As has been shown,
the Company did not, even then, venture to point out any reason why
the imposition could be said to be invalid, and merely stated that the
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870
SUPREME COURT REPORTS
[1977] 2 S:<;:.R.
"procedure" prescrib_ed under sections 131-135 had not been followed.
That was far too vague a plea to justify investigation and interference
in the exercise of the· extraordinary jurisdiction of the High
Court
under artic]e 226 of the Constitution.
The appeal is allowed, the impugned judgment of the High- Court
dated March 26, 1976, is set aside, and the writ petition is dismissed
with costs.
M.R.
Appeal al/owed.