Appeals Nos
2382 2384 of 1966
Appeals from the judgment and orders dated October 6 1966 of the Mysore High Court in Writ Petitions Nos
1056 1607 and 1298 of 1966 section T Desai section C Javali and Vineet Kumar for the appellant in all the appeals
M M Ramamurthi and Shyamala Pappu for respondent No 1 in all the appeals and respondent No 2 in C A No 2382 of 1966
89 The Judgment of the Court was delivered by Shah J
On May 3 1966 the Municipality of Raichur imposed octroi duty on goods specified in Sch
11 to the Mysore
Municipalities Act 22 of 1964 entering the municipal limits for consumption use or sale
The respondents who are traders in cloth at Raichur moved the High Court of Mysore by petitions under article 226 of the Constitution challenging the levy and collection of octroi duty on goods described in Sch
II of the Act in pursuance of the notification dated May 3 1966
The High Court of Mysore held that the tax was properly imposed but in their view collection of the tax was not authorised by law
The High Court accordingly issued a writ of mandamus restraining the Municipal Council Raichur from recovering the octroi duty levied in pursuance of the notification dated May 3 1966
The Municipal Council Raichur has appealed to this Court against the orders passed by the High Court
The relevant provisions of the Mysore Municipalities Act 22 of 1964 and the Bye Laws may be summaried
By section 94 the Municipal Council is authorised subject to the general or special orders of the Government and after observing the preliminary procedure prescribed by section 95 to levy among other taxes octroi on goods specified in Sch
II entering the municipal limits for consumption use or sale therein
By sub section
3 of section 94 it is provided that the taxes specified in sub section
1 shall be assessed levied and collected in accordance with the provisions of the Act and the rules made by the Government under section 323
Section 95 prescribes the procedure preliminary to imposition of tax
A municipal council has by resolution passed at a general meeting to select for the purpose one or more of the taxes specified in section 94 and in such resolution to specify the classes of persons or of property or of both which the municipal council proposes to make liable and to prescribe exemptions which it proposes to make the amount or rate at which the municipal council
proposes to assess any such class and in the case of octroi the octroi stations
The resolution must be published in the official Gazette and in such other manner as may be prescribed
Any inhabitant of the municipality may within one month from the publication of the notice submit his objection to the imposition of the tax or to the amount or rate proposed or to the classes of persons or property to be made liable or to any exemptions proposed
The municipal council must take into consideration the objections and submit to the Government of the State such objections with its opinion thereon and any modifications proposed in accordance therewith together with a copy of the notice
A resolution sanctioned by the Government together with a notice reciting the sanction and the date and number thereof may then be published by the municipal council in the official Gazette and the tax as prescribed by the resolution shall be imposed accordingly
Sub section 2 of The publication of a notice under this section shall be conclusive evidence that the tax has been imposed in 90 accordance with the provisions of this Act and the rules made thereunder
Section 123 provides that every municipal council when submitting for sanction a proposal for the imposition of octroi shall submit therewith for sanction bye laws for the purposes of cl
m of sub section
1 of section 324 or adopt model bye laws made for the said purposes
Section 124 deals with non liability for octroi and refund of octroi on goods in transit
Section 125 invests the municipal council with power to exempt articles liable to octroi duty and section 126 relates to the presentation of bills for octroi and prescribes penalties for evasion of payment of octroi
Section 127 prescribes the penalty for selling articles liable to octroi without a licence or for being in possession of any such article on which octroi has not been paid
Section 323 authorises the Government to make rules for carrying out all or any of the purposes of the Act and to prescribe forms for any proceeding for which it considers that a form shall be prescribed
Exercising the authority conferred by section 323 the Government of Mysore published on September 2 1965 the Mysore Municipalities Taxation Rules 1965
Rules 25 to 32 deal with the collection of octroi
Rule 25 deals with the mode of collection r 26 with pay ment of octroi r 27 with assessment and collection of octroi at octroi station and r 28 with the procedure in case where octroi is leviable ad valorem
Rule 31 requires the municipal council to maintain a list of traders and public bodies allowed to have an account current and r 32 requires a trader or public body allowed to have an account current to present a declaration in Form VII
Section 324 authorises the municipal council to make alter or rescind bye laws subject to the provisions of the Act and the rules made thereunder
Clause m provides insofar as it is material  providing for the exhibition of tables of octroi requiring a licence to be obtained for the sale of any article liable to octroi and prescribing the conditions on or subject to which such licence may be granted refused suspended or withdrawn regulating subject to any general or special orders which the Government may make in this behalf the system under which refunds are to be made on account thereof when the goods on which the octroi has been paid or article manufactured wholly or in part from such goods are again exported and the custody or storage of goods declared not to be intended for use or consumption or for sale within the municipality  
Section 3252 provides that a municipal council may by resolution adopt in respect of any matter the model bye laws made by the Government under sub section
1 of section 325 in respect of matters specified in section 324
Sub section 3 of section 325 provides If a municipal council proposes to adopt the model bye laws in respect of any matter subject to any modifications the procedure specified in sub sections 4 5 and 6 91 of section 324 shall be followed as if the modifications were bye laws proposed to be made by the municipal council
The modifications as approved by the Government shall be published in the prescribed manner and the model bye laws shall subject to such modifications come into force from such date as may be specified by the municipal council and where no date is specified on the date of such publication
Sub sections 4  5 of section 324 set out the procedure to be followed by the municipal council in the making and publication of bye laws
Sub section 6 authorises the local Government while approving the bye laws to make any changes therein which appear to it to be necessary
In the present case the Municipal Council adopted the model bye laws framed by the Government
It appears however that the table of rates in model bye law 16 relating to the levy of storage fee and charges on goods placed in the bonded warehouses was left blank
The Municipal Council has however by resolution prescribed a table of rates of storage fee and charges in respect of different classes of articles stored in the bonded warehouses
The respondents challenge in this Court the validity of the imposition of octroi duty on two grounds i that there was no valid resolution by the Municipal Council under section 94 of the Act selecting the octroi duty for imposition and ii that the model bye laws having been altered by adding a tariff of storage fee in the bonded warehouses without following the procedure prescribed under section 3244  5 the model bye laws could not be deemed to have been validly adopted by the Municipal Council
They also submit that the Municipal Council has no authority to collect octroi duty and support the judgment of the High Court on that question
Before considering the arguments advanced at the Bar the steps taken by the Municipal Council for imposing the tax and for adoption of the model bye laws may be briefly set out
On June 11 1965 the Standing Committee of the Raichur Municipal Council resolved to levy octroi duty according to Sch 11 under section 94 of the Mysore Municipalities Act  1964 at the maximum rates at the octroi barriers specified therein
It was recited in the resolution that confirmation of the general body be obtained
By resolution dated June 28 1965 the general body resolved unanimously to confirm the recommendations of the Standing Committee dated June 11 1965
On October 27 1965 the notification under section 95 of the Act by the Municipality inviting objections to the proposals to impose octroi tax was published
No Objections were received from any resident of the Municipality against the proposal to levy octroi
On February 26 1966 there was a special general body meeting of the Municipal Council and it was resolved to levy 92 octroi with effect from April 1 1966
The resolution was in the following terms After due decision and consideration it was unanimously resolved to levy the octroi duty on all the goods imported within municipal limits of Raichur under the Schedule II of Mysore Municipalities Act 1964 from the first day of April 1966
Further the Committee resolved that the Hyderabad District Municipalities Octroi Rules 1959 will continue till the new Octroi Rules and Bye laws are finalised under Mysore Municipalities Act 1964
 But this resolution was amended on March 25 1966 and the second paragraph was substituted by the following paragraph Further the Committee resolved that the appended Bye laws framed by the Municipality in the light of Octroi Model Bye laws 1965 published by the Government in the Mysore Gazette dated 11th November 1965 have been fully approved
 Approval to the modification in the second paragraph was ob tained by circulation to the members and not in an open general meeting
On March 31 1966 the minutes of the meeting dated February 26 1966 and the adoption of the resolution modifying the second paragraph by circulation on March 25 1966 were read heard and confirmed unanimously
The storage fee under bye law 16 of the model bye laws was also adopted
On April 16 1966 sanction of the Government under section 96 of the Act to the levy of octroi and the adoption of model bye laws was given and on May 3 1966 the notification under section 97 of the Act imposing octroi duty under Sch
II to the Act and adopting the bye laws was published
Thereafter on various dates in the months of July and August 1966 the writ petitions out of which these appeals arise were filed
There is no substance in the contention that the municipal council had not passed a resolution selecting the octroi tax for imposition
As stated earlier on June 11 1965 the Standing Committee of the Municipal Council had resolved to impose octroi duty under Sch 11 to the Act
But the resolution also stated that confirmation of the general body meeting should be obtained
The Municipal Council at its meeting dated June 28 1965 treated the resolution of the Standing Committee as a recommendation and confirmed the recommendation
The resolution dated June 28 1965 was passed by the general body and thereby the Municipal Council adopted the recommendations of the Standing Committee and resolved to select levy of octroi duty at the maximum rates at the octroi barriers specified therein
It is true that the resolution modifying the original resolution dated February 26 1966 was passed by circulation on March 25 93 1966
But in view of the terms of section 805 the validity of the resolution was not liable to be questioned on the ground of irregularity which manifestly did not affect the merit of the case
 It may be recalled that on March 31 1966 the circulation dated 25 3 66 were read heard and confirmed unanimously
 The plea that a resolution passed by the Municipal Council cannot under the Act be modified or cancelled within three months is without force
Section 57 of the Act provides that no resolution of a municipal council shall be modified or cancelled within three months after the passing thereof except by a resolution passed in the manner prescribed in that behalf
There are no materials on the record to prove that the requirements of section 57 were not complied with and section 972 prohibits an enquiry into the regularity of the procedure for imposition of the tax after a notice under section 971 is published
This Court in Municipal Board Hapur vs Raghuvendra Kripal  Ors1 in dealing with a similar provision in section 135 of the U P Municipalities Act 2 of 1916 held that section 1353 shuts out enquiry into the procedure by which a tax had been imposed
Hidayatullah J speaking for the majority observed p 958 
There is a difference between the tax and the imposition of the tax
The former is the levy itself and the latter the method by which the levy is imposed and collected
What the sub section does is to put beyond question the procedure by which the tax is imposed that is to say the various steps taken to impose it Section 972 makes the publication of the notice under section 971 conclusive evidence that the tax has been imposed in accordance with the provisions of the Act and the rules made thereunder
The expression imposed in accordance with the provisions of this Act in our judgment means imposed in accordance with the procedure provided under the Act
All enquiry into the regularity of the procedure followed by the Municipal Council prior to the publication of the notice is excluded by section 972
This is not a case in which the Municipal Council had not selected a tax for imposition by a resolution nor is it a case in which the Municipal Council was seeking to levy tax not authorised by law
A Municipal Council when submitting for sanction a proposal for the imposition of octroi has to submit under section 123 with the proposal for imposition of octroi also  bye laws for the purposes of cl
m of sub section
1 of section 324 or to adopt model bye laws made for the said purposes
It is to be noticed that under section 943 of the Act the tax has to be
assessed levied and collected in accordance 11966 I SCR 950
94 with the provisions of the Act and the rules made by the Government under section 323
Bye laws contemplated to be made under section 3241m and required to be adopted from the model bye laws or specially framed and submitted under section 123 deal with matters of details such as the exhibition of tables of octroi requiring a licence to be obtained for the sale of any article liable to octroi and prescribing the conditions on or subject to which such licence may be granted refused suspended or withdrawn  regulating the system under which the refunds are to be made when the goods on which the octroi has been paid are again exported for the custody or storage of goods declared not to be intended for use or consumption or for sale within the municipality prescribing a period of limitation after which no claim for refund of octroi shall be entertained and prescribing the minimum amount for which any claim for refund may be made
If bye laws in respect of these matters specified in cl
m of section 3241 are made and submitted for sanction or model bye laws framed by the Government for those purposes are adopted the requirements of section 1231 will be satisfied and if the State Government sanctions the resolution of the Municipal Council imposing octroi duty under section 971 and the notice is duly published octroi duty may be collected by the Municipal Council
Defect in the bye laws will not affect the authority of the Municipal Council to collect the tax for the authority arises under section 943 from the Act and the rules
The Municipal Council of Raichur adopted the model byelaws made by the Government
None of the bye laws for the purposes of cl
m of section 324 in the model bye laws was defective or incomplete
The model bye laws undoubtedly did not prescribe the storage fee and the resolution of the Municipal Council levying storage fee at the rates set out in the bye laws and submitted to the Government was not made in conformity with the terms of section 3244  5
The High Court held that the bye laws adopted by the Muni cipal Council were invalid because 1 the resolution dated February 261966 could not have been modified by circulation and 2 that it was not shown that the Municipal Council had complied with the requirements of section 57 when modifying the resolution dated February 26 1966 and 3 that the State Government had not fixed the time prescribed by bye laws Nos
23e 27 28 and 32 and since no decision was taken on those bye laws by the Municipal Council the enforcement of the octroi levy was rendered difficult
It is clear that under section 3253 modifications to the model bye laws alone require compliance with sub sections
4  5 of section 324
It may be assumed that fixing a tariff for storage fee under bye law 16 which is not prescribed under the model bye laws amounts to 95 modification of the bye laws but even on that assumption only bye law 16 may be deemed to be invalid and the power to collect the storage fee may not be lawfuly exercised by the Municipal Council that does not affect the validity of the other bye laws
If without a particular bye law the scheme of the
rest of the bye laws may be unworkable it may follow by necessary implication that the other bye laws have also become ineffective
But that cannot be said of the defect in adopting the table of fees for the purpose of bye law 16
The Municipal Council may not be entitled to levy any charge for storage under bye law 16 but that is the only effect of non compliance with the terms of sub sections
4 and 5 of section 324
The other bye laws remain valid and operative for they are plainly severable
Bye law 23e of the model bye laws provides that no refunds shall be allowed in respect of goods which are transported outside the municipal limits within one month of their being brought into the municipal limits but regarding which the intimation has not been given to the Municipal Commissioner or Chief Officer within such time as may be fixed by the Municipal Council
Bye law 27 provides that the application for refund with the goods to which it relates shall be presented at the Octroi Station through which it is transported outside the municipal limits within such interval from the hour of examination as the municipal council may determine
Similarly bye law 28 provides that the Octroi Official inCharge of the Octroi Station shall satisfy himself that the goods produced for transport outside the municipal limits as covered by the refund application correspond with the entries in the refund application form and that they are presented within the time fixed by the Municipal Council under bye law 27
In our judgment the time contemplated to be fixed for the purposes of bye laws 23e 27  28 need not be fixed by the bye laws
If time is fixed by resolution of the Municipal Council even after the bye laws are sanctioned there would be no defect in the bye laws
Bye law 32 provides that no person shall sell articles men tioned therein without obtaining a licence granted in that behalf
The model bye law is silent as to the articles which may not be sold without obtaining a licence
Bye laws 313 to 36 depend for their operation upon the list of articles being effectively incorporated in bye law 32
Failure to incorporate the list of articles would result in the Municipal Council being unable to enforce compliance with the requirements of taking out a licence
But we are unable to hold that because of the failure to fix the time under bye laws 23e 27 28 or for failure to incorporate the list of articles in bye law 32 the rest of the bye laws became ineffective
We are of the view that even without these bye laws and bye law 16 octroi duty may be levied by the Municipal Council
In our view the High Court was in error in holding that the model byelaws which were adopted by the Municipal Council were unenforceable
96 The appeals must therefore be allowed and the petitions filed by the respondents dismissed with costs in this Court
One hearing fee
The order passed by the High Court regarding the costs is maintained
GC Appeals allowed


Summary:
On June 11 1965 the Standing Committee of the Raichur Municipal Council resolved to levy octroi duty according to Sch
II under section 94 of the Mysore Municipalities Act 1964
It was recited in the resolution that the confirmation of the general body be obtained
The general body unanimously approved the resolution of the Standing Committee
On October 27 1965 the notification under section 95 of the Act inviting objections from the public was published no objections were received
On February 26 1966 there was a special general body meeting and it was
resolved to levy octroi with effect from April 1 1966
This resolution was however amended by modification of its second paragraph on March 25 1966
Approval to this modification was obtained at first by circulation to the members on March 31 1966 the minutes of the meeting dated February 26 1966 and the adoption of the resolution modifying the second paragraph by circulation on March 25 1966 were read heard and confirmed unanimously
As required by section 123 of the Act the model bye laws framed by Government were adopted but the table of rates in model bye law 16 relating to the levy of storage fee and charges on goods placed in the bonded warehouses was left blank
The rates were fixed by the Council by its resolution of March 31 1966
On April 16 1966 sanction of the Government under section 96 of the Act to the levy of octroi and the adoption of model by laws was given and on May 3 1966 the notification under section 97 of the Act imposing octroi duty under Sch
II and adopting the bye laws was published
The respondents who were dealers in cloth in Raichur moved the High Court of Mysore under article 226 of the Constitution
The High Court held that though octroi had been properly levied its collection wag unau thorised owing to defects in the bye laws adopted
The municipality appealed
The following questions fell for consideration i whether the resolution levying the octroi and the subsequent modification of the said resolution were procedurally valid ii whether the fixation of rates for the purpose of model bye law 16 was validly made the procedure in section 3244 and 5 not having been followed  iii whether the bye laws were unenforceable for the reason that they did not fix the time for the purpose of bye laws 23 27 and 28 and did not give a list of articles for the purpose of bye laws 33 to 36
HELDi The resolution of the Standing Committee selecting octroi tax for imposition expressly stated that confirmation of the general body would be obtained and such confirmation was actually obtained
It could not in the circumstances be contended that 88 there was no valid resolution by the Municipal Council under section 94 selecting octroi duty for imposition
92F H The resolution modifying the original resolution dated February 26 1966 was no doubt passed by circulation but later the said circulation was read heard and confirmed unanimously by the general body
Under section 805 any irregularity not affecting the merit of the case can be cured and section 972 prohibits enquiry into the regularity of the procedure by which a tax has been imposed after a notice under section 97 1 is published
No material had been placed before the Court to show that in making the modification section 57 had not been complied with
93A D Municipal Board Hapur vs Raghuvendra Kripal  Ors   relied on
iiIf bye laws in respect of the matters specified in cl
m of section 3241 are made and submitted for sanction or model bye laws framed by the Government for those purposes are adopted the requirements of section 1231 will be satisfied and if Government sanctions the resolution of the Municipal Council imposing octroi duty under section 971 and the notice is duly published
octroi duty may be collected by the Municipal Council
Defect in the bye laws will not affect the authority of the Municipal Council to collect the tax for the authority arises under section 943 from Act and the Rules
94C D The Municipal Council by fixing a tariff for storage fee under bye law 16 modified the model bye laws and since the modification was made without the Procedure prescribed in section 3244 and 5 the said bye law was invalid
As a result the Municipal Council was not entitled to levy any charge for storage under bye law 16
But the validity of other bye laws was not thereby affected
94H 95C iiiThe time contemplated to be fixed for the purposes of byelaws 23e 27 and 28 need not be fixed in the bye laws
If time is fixed by resolution of the Municipal Council after the bye laws are sanctioned there would be no defect in the bye laws
95E F Bye laws 33 to 36 depend for their operation upon the list of articles being effectively incorporated in bye law 32
Failure to incorporate the list of articles would result in the Municipal Council I being unable to enforce compliance with the requirement of taking out a licence
The rest of the by laws did not threby become ineffective
95G H