Appeal No 582 of 1961
Appeal from the judgment and decree dated August 25 1959 of the Bombay High Court in Appeal No 774 of 1956
section G Patwardhan section B Tarkunde J B Dadachanji O C Mathur and Ravinder Narain for the appellant
AY Vishwanatha Sastri M R Kotwal and Naunit Lal for the intervener
May 5 1964
The Judgment of the Court was delivered by DAS GUPTA J
This appeal is by the defendant the Municipal Corporation for the City of Poona in a suit for recovery of money
The Poona Municipality was formerly a Municipality under the Bombay District Municipal Act of 1901 Act 3 of 1901
In 1925 it became a Municipal Borough under the Bombay Municipal Boroughs Act of 1925 Act XVIII of 1925
Later under the Bombay provincial Municipal Corporation Act 1949 Municipal Authority for the City of Poona became a Corporation known by the name of Municipal Corporation for the City of Poona
It appears that from the time when the City was a Municipality under Act 3 of 1901 an octroi duty was being levied on goods imported within the Municipal limits of the City
When such goods were exported out of the city municipal limits within specified periods refund used to be given in respect of the duty so recovered
The respondent has for many years been carrying on business of securing refund of octroi duty on behalf of persons who had paid the duty and were entitled to refund
In respect of the period from the 15th February 1950 to the 14th September 1950 the respondent made a claim on behalf of his principals for the refund of Rs 73650 to 181 which according to him they were entitled
The Munici pality however paid to him only 90 per cent of this amount
The remaining 10 per cent was deducted in accordance with Rule 183 of the Octroi Rules which had been framed by the Municipal Authorities
The respondent then represented to the Corporation that with effect from the 15th February 1950 the date from which the Corporation came into existence under the Provincial Municipal Corporation Act 1949 this deduction of 10 per cent had become invalid in law and claimed that this amount should be paid to him
The Corporation however refused to concede this claim
The respondent then brought this suit for recovery of Rs 736415 being 10 per cent of Rs 73650 the amount alleged to have been illegally withheld with interest
The main defence raised by the Corporation to the Plaintiff s claim was that the deduction of 10 per cent was legally valid
It was further urged that in any case the plaintiff who was not the person who paid the amount was not entitled to bring the suit
Lastly it was contended that the suit was barred by limitation
The trial Court held that the plaintiff was entitled to bring the suit and also that it was not barred by limitation
It held however that the deduction of 10 per cent from what was paid as tax was valid
Accordingly it dismissed the suit
On appeal by the plaintiff the District Court Poona held disagreeing with the trial Court that the deduction of 10 per cent of what had been realised was not valid in law
It was however of opinion that the plaintiff was not entitled to bring such a suit
It was also of opinion that the suit was barred by limitation
In this view it dismissed the appeal
The plaintiff then appealed to the High Court of Judicature at Bombay
The High Court has found in favour of the plaintiff on all the three points raised
It held that the deduction of 10 per cent was invalid in law that the plaintiff was entitled to sue and that the suit was not barred 182 by limitation
Accordingly the High Court allowed the appeal and made a decree in favour of the Plaintiff for Rs 736415 with interest thereon at 4 per cent from the date of the suit and interest at the same rate from the date of the judgment with costs throughout
The appellant Corporation challenges the correctness of the High Court s decision on all the three points
The principal question for decision in this appeal is whether the deduction of 10 per cent as provided for in Rule 183 is invalid at least from the 15th February 1950
The Rule runs thus A deduction of ten per cent shall in all cases be made before refunding the amount of octroi duty on exportation of goods either in transit as per rule 13 or otherwise under rule II 2
 It is necessary to mention here that the legality of such a deduction prior to February 15 1950 is not in controversy before us
We shall proceed on the basis that this provision in Rule183 was valid in law prior to the 15th February 1950
The question is whether even though valid then it has ceased to be valid in law
To find the correct answer to this question it is necessary to be clear first as to the legal basis on which this levy by way of deduction was being made prior to 15th February 1950
It appears from exhibit D 72 the copy of the Government resolution dated the 6th March 1922 that the Poona Municipality started this practice of levying this 10 per cent deduction from February 1921
The question of its legality appears to have been raised quite early
The Legal Remembrancer to the Government of Bombay expressed his view on this question in these words The special powers conferred in the last sentence of clause f of section 481 of the Bombay District Municipal Act seems to negative the power of the Municipality of Shirpur to make any deduction from the refunds by means 183 of rules regulating the system for making refunds referred to in the earlier part of the clause
The charge on refunds appears how ever to be a kind of tax which may be imposed under section 59b xi of the Act
 On this the Councillors of the Municipality passed a resolution that a 10 percent tax should be levied on all octroi refund under section 59 b xi
This proposal was submitted to the Government of Bombay for sanction and was duly approved
It may be mentioned here that section 59 b xi of Act 3 of 1901 which deals with the question of a Municipality s powers to impose taxes sets out in the cls
i to x various taxes which the Municipalities can impose and then mentions in cl
xi the words any other tax
The Government appears to have accepted the view of the Legal Remembrancer that the levy by way of deduction of 10 per cent from the amount to be refunded should be authorised as a tax on octroi refund this being  any other tax within the meaning of section 59bXi
It is no longer open to dispute that after Government s sanction was received the Municipality could under the old
Act legally levy such tax
It is also not disputed that the deductions that continued to be made under Rule 183 were all along made under this authority as a tax levied under section 59b xi of the Bombay District Municipal Act 1901
The levy of the tax continued even after Act 3 of 1901  ceased to be applicable to Poona and it became a Municipal Borough under the Bombay Municipal Boroughs Act 1925
The validity of such continuation does not also appear to have been challenged The Bombay Provincial Municipal Corporation Act 1949 was applied to Poona on the 15th February 1950 From that date therefore the powers of taxation of the municipality became governed by section 127 of the Act
This section first authorises a Corporation under the Act to impose a property taxes b
a tax on vehicles boats and animals
It then mentions in the second sub section certain other taxes which the Corporation may impose In cls
a to f a is octroi b a profession tax c a tax on dogs d a theatre tax e a toll on animals and vehicles and f mentions any other 184 tax which the State Legislature has power under the Constitution to impose in the State
Sub section 4 provides Nothing in this section shall authorise the imposition of any tax which the State Legislature has no power to impose in the State under the Constitution
 A tax on octroi refund is not thus one of the taxes which the Bombay Municipal Corporation could impose  It is not one of the specified taxes
Nor is it a tax which the State Legislature has power under the Constitution to impose in the State
Apart from this absence of power to impose such a tax which is clear from the earlier parts of section 127 we have the categorical prohibition in sub section 4 against the imposition of any such tax by the Corporation
Mr Patwardhan next tried to persuade us that even if this levy could not be made under the new Act as a tax it could be made as a fee
In support of his argument he drew our attention to section 147 and section 466 of the new Act
The first sub section of section 466 provides that the Commissioner of the Corporation may make standing orders consistent with the provisions of the Act and the rules and bye laws in respect of the matters specified
One of the matters specified is determining the supervision under which the routes by which and the time within which the goods intended for immediate exportation shall be conveyed out of the City and the fees payable by persons so conveying the goods section 466 1Af
Section 147 dealing with a controversy that may arise whether the importation of some goods into the City has been for the purpose of consumption use or sale therein says Until the contrary is proved any goods imported into the City shall be presumed to have been imported for the purpose of consumption use or sale therein unless such goods are conveyed from the place of import to the place of export by such routes within such time under such supervision and on payment of such fees therefor as shall be determined by the standing orders
 It is obvious that reference to fees in this section is to such fees as may be prescribed by standing orders under 185 the provisions of section 4661Af
It is unnecessary for us to decide for the purpose of the present appeal whether the I provision of section 466 for determination of fess payable by persons conveying goods imported into the City is valid in law or not
Assuming without deciding that such a levy can be validly made by way of fees under section 466 what we find is that in fact there has been no standing order prescribing any fees
It may be mentioned in this connec tion that sub section 2 of section 466 lays down that no order made by the Commissioner under cl
A of sub section 1 shall be valid unless it is approved by the Standing Com mittee and confirmed by the State Government
It is not the case of the appellant Corporation that any Standing Order was made at all under section 466 prescribing any fees
It is not possible therefore to justify the deductions that were made in the present case as a levy of fee
The appellant relied next on cl
5a of Appendix IV to the Act read with section 493
Section 493 provides that provisions of Appendix IV shall apply to constitution of the Corporation and other matters specified therein
Appendix IV is headed Transitory Provisions and is plainly intended to deal with the position that arose as a result of the repeal of the old Act
section 490
The relevant portion of cl 5 a is in these words Save as expressly provided by the provisions of this Appendix or by a notification issued under paragraph 22 or order made under paragraph 23 a any appointment notification notice tax order scheme licence permission rule bye law or form made issued imposed or granted under the Bombay District Municipal Act 1901 or the Bombay Municipal Boroughs Act 1925 or any other law in force in any local area constituted to be a City immediately before the appointed day shall in so far as it is not inconsistent with the provisions of this Act continue in force until it is superseded by 186 any appointment notification notice tax order scheme licence permission rule bye law or form made issued imposed or granted under this Act or any other law as aforesaid as the case may be Mr Patwardhan readily conceded that the 10 per cent deduction as a tax on octroi refund could not get the pro tection of el
5a for the simple reason that such taxation is on the face of it inconsistent with section 1274 of the Act
He asked us however to regard this levy as a fee and on that basis argued that this should continue in force under cl
a of section 5 of Appendix IV since the levy of such a fee is consistent with the provisions of section 466 of the Act
If in fact a fee was being realised  under the old Act it may be that levy of such fees could continue in force until superseded by any order under the new Act as coming under an order issued under the District Municipal Act 1901 or the Bombay Municipal Boroughs Act 1925
In fact however this was not levied as a fee but was levied as a tax
The tax did not become a fee merely because the new Act Act LIX of 1949 prohibited the imposition of such a tax
We are clearly of opinion therefor that cl
5a of Appendix IV furnishes no justification for the levy of the ten per cent deduction  after the 15th February 1950 when the Act LIX of 1949 with its categorical prohibition in section 1274 against the imposition by the Corporation of a tax which the State legislature had no power to impose under the Constitution became applicable
The defence that the deduction of 1 0 per cent of the amount collected as octroi was legally valid has thus been rightly rejected by the High Court
We also agree with the High Court s conclusion  that the plaintiff was entitled to bring the present suit
The Poona City Municipality s Octroi Rules and Bye laws under which the claim for refund can be made define a claimant as a per son Who produces the duly receipted import bill and the corresponding export certificates Rule 2 cl
It is not disputed that for the several cases in respect of which this deduction of ten per cent had been made by the Corporation the plaintiff was the person 187 who produced the duly receipted import bill and the corresponding export certificate Indeed it is on that basis that 90 per cent of the amount paid by different exporters was refunded by the Corporation to the claimant
It is difficult to understand how if the plaintiff was entitled  to claim and obtain refund in respect of 90 per cent of the amount paid he was not entitled to make the claim with respect to the remaining 10 per cent
It may be pointed out that as the receipted import bill and the corresponding export certificates in respect of the goods in question have already been made over by the plaintiff to the defendant Corporation it will not be possible for the merchants who actually imported the goods and then exported them to make any fresh claim
For no claim would be accepted without the receipted import bill and the corresponding export certificates
Mr Patwardhan faintly argued that the definition of a claimant in the Rules is only in respect of 90 per cent of the octroi refund
There is obviously no substance in this argument
Rule 1 1 deals with the procedure of claims to refund and requires that claimant should produce a duly receipted import bill and an export certificate relating to such goods
Rule II 2 iv
These provisions are entirely independent of Rule 183 which lays down that a deduction of ten per cent shall in all cases be made before refunding the amount of octroi duty in certain circumstances
It is in our opinion clear that the plaintiff having made the claim in accordance with the rules was the person entitled to receive what amount was legally refundable
As we have found that the deduction of ten per cent could not legally be made in other words the entire amount paid was refundable it follows that the plaintiff was the person entitled to obtain the refund and so he was also entitled to bring the suit
There remains for consideration the appellant s plea of limitation
For this plea the appellant relies on section 487 of Act LIX of 1949
The material part of the section runs thus 1 No suit shall be instituted against the Corporation or against the Commissioner or the 188 Transport Manager or against any municipal officer or servant in respect of any act done or purported to be done in pursuance or execu tion or intended execution of this Act or in respect of any alleged neglect or default in the execution of this Act a until the expiration of one month next after notice in writing has been in the case of the Corporation left at the chief municipal office and in the case of the Commissioner or of the Transport Manager or of a municipal officer or servant delivered to him or left at his office or place of abode stating with reasonable particularity the cause of action and the name and place of abode of the intending plaintiff and of his attorney advocate pleader or agent if any for the purpose of such suit or b unless it is commenced within six months next after the accrual of the cause of action
 The benefit of this section would be available to the Corporation only if it was held that this deduction of ten per cent was an act done or purported to be done in pursu ance or execution or intended execution of this Act
 We have already held that this levy was not in pursuance or execution of the Act
It is equally clear that in view of the provisions of section 1274 to which we have already referred the levy could not be said to be purported to be done in pursuance or execution or intended execution of the Act
 For what is plainly prohibited by the Act cannot be claimed to be purported to be done in pursuance or intended execution of the Act
Our conclusion is that the High Court has rightly held that the suit was not barred by limitation
All the points raised in the appeal fail
The appeal is accordingly dismissed
Anneal dismissed


Summary:
The respondent who had been carrying on the business of securing refund of octroi duty on behalf of persons who had paid duty and were entitled to refund claimed the refund of money paid as octroi duty by his principals in respect of the period commencing from February 15 1950 the date from which the appellant became a Municipal Corporation under the Provincial Municipal Corporation Act 1949
After deducting ten percent of the amount in accordance with r 183 of the Octroi Rules framed by the Municipal Authorities the ap pellant Corporation paid the balance to the respondent
The representation of the respondent that from the date from which the Corporation had come into existence the deduction had become invalid in law
was turned down by the appellant
Thereupon the respondent filed a suit for recovery of the balance with interest
The defence was that the deduction was valid that in any case the respondent who was not the person who paid the amount was not entitled to bring the suit and that the suit was barred by limitation
The trial court held the respondent was entitled to bring the suit and also that it was not barred by limitation but the deduction was valid and it dismissed the suit
On appeal the District Court disagreeing with the trial court held that the deduction was not valid in law but the plaintiff was not entitled to bring such a suit and that the suit was barred by limitation and it dismissed the appeal
On a further appeal the High Court found in favour of the respondent on all the three points and allowed the appeal
HELD i A tax on octroi refund is not one of the taxes which the Bombay Municipal Corporation could impose
Apart from the absence of power to impose such a tax which is clear from the earlier parts of section 127 of the Bombay Act of 1949 there is the categorical prohibition in sub section
4 against the imposition of any such tax by the Cor poration
ii Assuming without deciding that such a levy can be validly made by way of fees under section 466 since no standing order was made under section 466 prescribing any fee it is not possible to justify the deductions as _ levy of fee
iiiThe tax did not become a fee merely because the new Act Bom
Act 59 of 1949 prohibited the imposition of such a tax
ivCl 5a of Appendix IV furnishes no justification for the levy often percent deduction after February 15 1950 when the Act 59 of 1949with its categorical prohibition in section 1274 against the imposi tion by the Corporation of a tax which the State Legislature had no power to impose under the Constitution became applicable
vThe respondent having made the claim in accordance with the rules was the person entitled to receive what amount was legally refundable and so he was also entitled to bring the suit
 180 viThe suit was not barred by limitation
The benefit of section 487 of Act 59 of 1949 would be available to the Corporation only if it was held that this deduction was an act done or purported to be done in pursuance or execution or intended execution of the Act