Appeal No 1375 of 1966
Appeal from the judgment and order dated October 22 1965 of the Bombay High Court Nagpur Bench in Special Civil Application No 355 of 1964
M N Phadke and Naunit Lal for the appellant
B R Agarwala and section B Nerkar for respondent No 1
A K Sen A section Bobde G L Sanghi and O C Mathur for respondent No 2
M section K Sastri R N Sachthey section P Nayar for R H Dhebar for respondent No 3
The appellant had in this petition prayed for the issue of a writ quashing the resolution dated April 6 1964 passed by the Standing Committee Zila Parishad Nagpur and for a writ of mandamus directing the Standing Committee not to interfere with the right of the appellant to impose and collect the octroi duty pursuant to its resolution dated February 25 1963
In order to appreciate the points raised before us it is necessary to give the relevant facts and statutory provisions
The Village Panchayat of Kanhan Pipri hereinafter referred to as the Panchayat was originally constituted under the CP  Berar Panchayat Act 1946 CP  Berar Act No 1 of 1947
On June 1 1959 the Bombay Village Panchayat Act 1958 Bombay Act III of 1959 hereinafter referred to as the Act came into effect in Vidharba region and by virtue of this Act the appellant was deemed to be a Panchayat under the Act
On July 14 1961 the Panchayat passed resolution No 2 with a view to levy octroi duty
The resolution after reciting the need 215 for levying octroi duty and the relevant statutory provisions concludes   it passes the resolution to levy minimum octroi tax on the goods coming within its local limits as per the Schedule No 1 of the Rules On November 17 1962 resolution No 5 was passed which reads as follows 5
The meeting considered the question of imposition of octroi duty
It has been unanimously resolved that by virtue of Grampanchayat Resolution No 2 dated 14 7 61 that octroi duty shall be imposed on the goods coming into its local limits the committee accepts the same
The matter of levying octroi duty shall be undertaken in accordance with the Panchayat Act and its rules
There fore matter of Octroi Rules calling for objections for the tax and taking of decisions thereon after the consideration number of the octroi posts and place etc
should be got decided by the appropriate authority
This matter may be taken into hand very urgently
It is so decided by the majority
 On January 26 1963 a public notice was issued under r 3b of the Maharashtra Village Panchayats Taxes and Fees Rules 1960 hereinafter referred to as the Fees Rules
On February 19 1963 Ms Brooke Bond of India Pr Ltd hereinafter referred to as the Company respondent before us preferred objections against the proposed levy of octroi
On February 25 1963 resolution No3 was passed
After setting out the previous resolutions and the publication of the notice by beat of drum and the various objections received it concludes Having considered all these above objections and suggestions and having given a satisfactory explanation for the same this Committee unanimously resolves that as per the above resolution octroi should be levied on all the goods coming into the limits of the Panchayatas per schedule I item 1and levy the minimum octroi as per the rules in Schedule I item 2
This levy should come into fo rce from 1 4 1963 and its final publication be done on 1 3 1963 as per rules and by public notice and by announcement by beat of drums through loudspeakers On March 17 1963 resolution No 3 was passed fixing octroi limits and number of octroi nakas and their places
On March 18 1963 the Panchayat wrote to the Collector Nagpur seeking his approval to the octroi limits number of octroi nakas and their places
It appears that the Panchayat started collecting octroi from April 1 1963
On May 29 1963 the Company filed an appeal 216 under section 1245 of the Act before the Panchayat Samiti Parseoni
The Panchayat Samiti however rejected the appeal by its resolution dated September 4 1963
This decision was communicated to the Company by letter dated September 19 1963 stating that the appeal has been rejected by the Samiti as per its resolution dated 4th September 1963 because the same was not filed within limitation as per the provisions of Bombay Village Panchayat Act and Rule 5 of Taxes and Fees Rules of 1960
 The Company thereupon filed an appeal before the Standing Committee Zila Parishad Nagpur hereinafter referred to as the Standing Committee on October 22 1963
While the appeal was pending the Tehsildar Ramtek on January 14 1964 approved the octroi limits and the number and location of octroi nakas within the limits of the jurisdiction of the Panchayat under r 21 of the Fees Rules
On April 6 1964 the Standing Committee allowed the appeal of the Company on two grounds first that it was necessary for the Panchayat to have the octroi limits fixed with the approval of the Collector before levying octroi under r 21 and secondly that the Company was not importing tea within the limits of the Panchayat for consumption use or sale
Thereupon the Panchayat as already stated filed an application under article 226 of the Constitution before the High Court
The High Court held that the Panchayat Samiti could not dismiss the appeal of the Company as being barred by limitation because r 5 of the Fees Rules was ultra vires the powers of the rule making authority
The High Court further held that the octroi duty was not validly levied by the Panchayat as it had failed to fix the octroi limits in accordance with law
The High Court did not deal with the question whether the company s tea was imported into the limits of the Panchayat for consumption use or sale because it felt that sufficient facts had not been found by the Standing Committee
The High Court felt that it would not be proper to determine facts for itself
The learned counsel for the appellant contends before us 1 that r 5 of the Fees Rules was intraviress 2 that the Standing Committee had no jurisdiction to decide the appeal on merits as the appeal to the Panchayat Samiti was barred by limitation 3 that the octroi duty has been levied in accordance with law 4 that at any rate the levy was good after the octroi limits were fixed on January 14 1964 5 that the approval of the octroi limits on January 14 1964 relates back to April 1 1963 and 6 that the tea was imported into the Panchayat limits for consumption use or sale
Before we deal with these points it is necessary to set out the relevant statutory provisions
Section 313 of the Bombay Village Panchayat Act 1958 Bombay Act III of 1959 defines octroi or octroi duty to mean a tax on the entry of goods into a village 217 for consumption use or sale therein
Section 1241 empowers Panchayats to levy all or any of the taxes and fees mentioned therein and reads as follows 1241
It shall be competent to a panchayat to levy all or any of the following taxes and fees at such rates as may be decided by it but subject to the minimum and maximum rates which may be fixed by the State Government and in such manner and subject to such exemptions as may be prescribed namely          ii octroi    Section 1245 provides for appeals in these terms Any person aggrieved by the assessment levy or imposition of any tax or fee may appeal to the Panchayat Samiti
A further appeal against the order of the Panchayat Samiti shall lie to the Standing Committee whose decision shall be final Section 1761 enables the State Government to make rules for carrying into effect the purposes of the Act
Section 1762xxvi provides 1762 In particular but without prejudice to the generality of the foregoing provision the State Government may make rules xxviunder section 124 laying down the maximum and the minimum rates and the manner in which and the exemption subject to which taxes and fees specified in the section shall be leviable   In exercise of the powers under s176 of the Act the State Government made the rules called the Maharashtra Village Panchayat Taxes and Fees Rules 1960
Part I of the Fees Rules is headed General and apart from definitions it consists of three rules which read as follows 3
Procedure for levying tax or fee
Every panchayat before deciding to levy a tax or fee shall observe the following procedure namely a The Panchayat shall by resolution passed at its meeting select a tax or fee which it proposes to levy and in such resolution shall specify the rate at which it is to be levied
b The Panchayat shall then notify to the public the proposal together with that Part of these rules 218 which relates to that tax or fee by beat of drum in the village and by means of a notice affixed in the office of the panchayat and at the village chavdi or chora specifying a date not earlier than one month after the date of such publication on or after which the panchayat shall take the proposal into consideration
c Any inhabitant of the village objecting to the levy of the tax or fee proposed by the panchayat may send his objection or suggestion in writing on or before the date specified in the notice published under clause b
d On or after the date fixed under clause b the panchayat shall consider all objections and suggestions made under clause c and may finally select a tax or a fee and decide the rate at which it is to be levied
Final publication of rules relating to tax or fee to be levied
Where a panchayat finally decides to levy any tax or fee the rules in that Part of these rules which relate to such tax or fee together with a notice stating the tax or fee to be levied and the rate thereof shall be published by the panchayat by affixing a copy thereof in the office of the panchayat
It shall also announce by beat of drum in the village the fact of such publication
The tax or fee shall accordingly be levied from
the date which shall be specified in the notice and which shall not be earlier than one month after the date of publication of the notice
Appeal against levy of any tax or fee A person desiring to make an appeal under sub section 5 of section 124 shall do so within sixty days from the date of publication of the notice under rule 4
The scheme of the Fees Rules is first to prescribe general rules and then to deal individually with various taxes
Part II deals with tax on Buildings and Lands Part III with Octroi Part IV with Pilgrim Tax Part V with tax on Fairs Festivals and Entertainments Part VI with taxes on Bicycles and on Vehicles drawn by Animals and so on
We are concerned with Part ITT
This Part consists of rules 21 to 35 and two Schedules
The important rules are rules 21 22 and 23 and may be set out in full 21
Fixing of octroi limits and nakas
A Panchayat shall with the approval of the Collector or of any officer authorised by the Collector not below the rank of Mamlatdar Tehsildar Naib Tehsildar or Mahalkari fix octroi limits and the number and location of octroi Nakas within 219 the limits of its jurisdiction
Rate of octroi Octroi may be levied by a panchayat after following the procedure prescribed in rules 3 and 4 on all or any of the goods specified in column 1 of Schedule 1 annexed to this Part which are imported into the octroi limits for consumption use or sale therein and at such rates as may be decided by it but not below the minimum and not exceeding the maximum rates specified in columns 2 and 3 respectively of that Schedule
Payment of octroi on introduction of goods etc
The octroi shall be paid at the octroi Naka at the time when the articles in respect of which it is leviable are imported into the octroi limits of a panchayat
 Rules 30 31 32 and 33 deal with refund of octroi
We may first deal with the question of the validity of the levy of octroi duty
It seems to us that the octroi duty has been levied in accordance with law
It would be noticed that the rule which authorises the levy is r22 but it enjoins that the procedure prescribed in rr3 and 4 should be followed before the octroi duty can be levied
When we turn to rr3 and 4 it would be noticed that these rules prescribe the procedure for levying tax or fee and are not confined to octroi duty only
Rule 7 which deals with tax on buildings and lands also prescribes that the panchayat shall follow the procedure prescribed in rr3 and 4 before levying a tax on buildings and lands
Similarly r37 which deals with tax on pilgrims provides that the procedure prescribed in rr3 and 4 should be followed
Again in r53 which deals with tax on vehicles a reference is made to rr
3 and 4
Rule 71 which deals with tax on professions also contains a reference to rr 3 and 4
Rule 84 which deals with fee on markets and weekly bazars has a reference to rr3 and 4
Rule 93 which deals with fee on cartstands and tonga stands makes the procedure in rr3 and 4 appli cable
The scheme of the Fees Rules accordingly seems to be that the general procedure for levying taxes or fees is laid down and then this procedure is made applicable to the levy of various taxes mentioned in the other parts of the Rules
Viewed in this background it seems to us that r3b does not require the Panchayat to fix the octroi limits in the resolution passed under r3a
It only deals with two items 1 selection of the tax and the rate at which it is to be levied
Rule 3c has to be similarly read
The inhabitants of the village would be entitled to object only to these two matters namely 1 the tax or fee imposed and the rate at which it is levied
Under r3d what the panchayat does is to consider objections and suggestions and then finally make the choice as regards two things ie the tax or fee to be imposed and the rate at which it is to be levied
220 This interpretation is reinforced by a proper reading of r 4
Rule 4 requires a notice stating two things 1 the tax or fee to be levied and 2 the rate
But the learned counsel for the Company Mr Ashok Sen argues that this interpretation is not correct because para 2 of r4 says that the tax shall accordingly be levied from the date which shall be specified in the notice and he says that if the octroi limits had not been approved of by the time the resolution is passed how could the tax be levied from the date specified in the notice
But r4 has to be read alongwith r21 and if so read it would mean that before the octroi duty can start being levied r21 must be complied with
In other words para 2 of r4
must be read to mean that the octroi will be levied from that date provided r21 had been complied with
We are however unable to agree with the learned counsel for the appellant that before the octroi limits are approved octroi can be collected
We consider that the fixing of the octroi limits with the approval of the Collector is an essential condition precedent to the levy of octroi duty
The learned counsel for the appellant says that the approval of the Collector on January 14 1964 relates back and therefore the levy of octroi from April 1 1963 was regularised
We are unable to agree with this submission
Apart from the fact that it may in certain circumstances lead to illegal levies there is nothing in the language of r21 which indicates that the Collector can regularise an imposition made without the authority of law
The Collector may in particular cases enlarge the octroi limits or reduce the octroi limits and it would lead to great confusion if either of the things happens after the Panchayat had been collecting octroi duty within the octroi limits submitted by it to collector for approval
We may here deal with a minor point which was mentioned in the course of arguments
The High Court held that r3b must therefore be interpreted as requiring the Panchayat to notify to the public not only the the proposal about the tax selected by it for levy but also the rules relating to that tax which must mean the action taken under the Act and the rules
 On the language of r3b we are unable to appreciate how action taken under the Act and the rules is required to be notified to the public
There is nothing in the language to warrant such a construction
In conclusion we hold that the octroi duty was validly levied and that it could be imposed and collected with effect from January 14 1964
Mr Sen raised another point not dealt with by the High Court
He urges that there was no proper publication under r4
We are unable to allow him to raise this point at this stage
He says that this point was raised before the High Court but it has not been 221 A dealt with by it
He points out a passage in the judgment of the High Court but we are unable to agree with him that the High Court has implied that this point was raised before it
He further says that this point was taken in the return filed on behalf of the Company
Para 2 of the return only alleged This respondent says that at that time no copy of the Rules required to be published by Rule 4 of the Rules was exhibited along with the said Notice
This respondent is not aware and does not admit that the fact of publication of the Notice under Rule 4 was announced by beat of drum in the village
 This allegation is reiterated in para 9 of the return
No such specific point was taken in the grounds of appeal to the Panchayat Samiti
It was broadly stated that the procedure required to be followed for imposing octroi had not been followed in imposing the same
Similarly in the grounds of appeal to the Standing Committee vague allegations were made that the village Panchayat has erred in law in not following the procedure contemplated by law in the matter of imposing the octroi and has acted contrary to the principles of natural justice on an assumption that the formalities contemplated by law were complied with He relies on the notice which is on the record to show that as a matter of fact the publication was not in accordance with law
In the circumstances noted above we are unable to allow him to raise this point at this stage
Coming to the question of the vires of r5 it seems to us that the High Court has placed a wrong interpretation on r5
The High Court has held that as r 5 applies to all appeals under s1245 of the Panchayat Act the fixing of the commencement of the period of limitation as the date of publication of the notice under r4 for all appeals is arbitrary and destructive of the right of appeal
But this interpretation with respect is not correct if r5 is read in the setting in which it occurs
Rule 5 follows imme diately rr3 and 4 and is headed Appeal against levy of any tax or fee and the period of sixty days of limitation commences from the date of the publication of the notice under r4 ie the notice following the decision of a Panchayat to levy any tax or fee
This date shows that r5 is dealing only with appeals against levy of any tax and not with the assessment or imposition of a tax or any further appeals to the Panchayat Simiti under section 1245
It is true that the opening sentence makes a reference to an appeal under sub section
5 of section 124 and this opening sentence would cover all II appeals under sub section
5 of section 124 but in the context and setting the heading of r 5 brings out the scope of the rule
Accordingly
the appeal of the Company to the Samiti was wrongly dismissed as time barred
It follows from this that the Standing Committee was entitled to deal with the appeal on merits
222 The only point that remains is whether the Company brought tea into the octroi limits of the Panchayat for consumption use or sale therein
As we have pointed out the High Court felt difficulty in dealing with the question because neither the Panchayat Samiti nor the Standing Committee had found sufficient facts to enable it to deal with the question
Mr Sen says that he is willing to take the facts as stated at the bar by the learned counsel for the appellant
But we consider that it is an unsatisfactory way of dealing with questions of fact
Before this question can be dealt with satisfactorily all the relevant facts must be found by the Standing Committee It is true that the Standing Committee inspected the premises of the Company but in their order they have given very scanty facts They do not say whether the tea is crushed processed or treated chemically to convert it into a marketable commodity
The learned counsel for the Panchayat contends that these things are done and that the resultant product is completely different from the tea imported into octroi limits
It is also not quite clear whether the tea which is imported by the Company is known in trade circles as a different commodity from the tea actually sent out in boxes
In the circumstances we must also decline to deal with this point
In the result the appeal is allowed and it is declared that the Panchayat could validly impose octroi duty from January 14 1964 in accordance with the resolutions dated February 25 1963 and March 17 1963
The case is remanded to the High Court to deal with the question whether the Company imported tea for the purpose of consumption use or sale within the octroi limits of the Panchayat
The High Court may either remand the case to the Panchayat Samiti or deal with it as it may consider best in accordance with law
Under the circumstances there will be no order as to costs in this appeal
GC Appeal allowed


Summary:
The appellant Panchayat levied octroi duty on goods coming within its limits by following the procedure laid down in rr 3 and 4 of the Maharashtra Village Panchayats Taxes and Fees Rules 1960
Although the resolution finally levying octroi was passed on February 25 1963 and the octroi limits were fixed by resolution dated March 17 1963 the approval of the Collector to the octroi limits as required by r 21 was not obtained till January 14 1964
When the Panchayat began collecting octroi on April 1 1963 the respondent company appealed under section 1245 of the Bombay Village Panchayat Act 1958 to the Panchayat Samita
The appeal was rejected as it was considered time barred under r 5 of the Taxes  Fees Rules which required an appeal under section 1245 of the Act to be filed within 60 days of the publication of the notice under r 4
On further appeal the Standing Committee Zila Parishad Nagpur decided in favour of the respondent company on the ground that the Panchayat had not complied with r 21
The Panchayat filed a writ petition under article 226 of the Constitution
The High Court upheld the findIng of the Standing Committee as to the effect of non compliance with r 21
It however further held that r 5 in requiring all appeals under a 1245 of the Act to be filed within 60 days of the publication of the notice under section 4 was arbitrary and destructive of the right of appeal and therefore ultra vires
The Panchayat appealed to this Court
Held i Octroi can be validly levied under r 22 after following the procedure in rr
3 and 4 Rule 3 deals only with i selection of the tax and ii the rate at which it is to be levied
Rule 4 deals with final publication of the notice levying octroi
The levy of octroi under r 22 read with rr 3 and 4 does not require prior approval to the octroi limits by the Collector under r 21
219D H 220A C
ii However the octroi cannnot be validly collected before the octroi limits are approved by the Collector under r 21
Collections made earlier cannot be regularised by subsequent approval
The plea on behalf of the appellant that the approval of the Collector on January 14 1964 should relate back to April 1 1963 could not be accepted
220 D E
iii Rule 5 is not invalid as it does not apply to all appeals under section 1245
The rule follows rr 3 and 4 and is headed appeal against levy of any tax or fee and the period of sixty days of limitation commences from the date of the publication of the notice 214 under r 4 ie the notice following the decision of a Panchayat to levy any tax or fee
This date shows that r 5 is dealing only with appeals against levy of any tax and not with the assessment or imposition of a tax or any further appeals to the Panchayat Samiti under section 1245
In its context and setting the heading of r 5 brings out the scope of the rule 220 F H
Accordingly the appeal of the company to the Samiti was wrongly dismissed as time barred
It followed from this that the Standing Committee was entitled to deal with the appeal on merits
220 H