Appeals Nos 448 and 449 of 1957
Appeals from the judgment and order dated September 27 1956 of the Mysore High Court in Writ Petitions Nos 44 and 45 of 1955
N C Chatterjee D N Mukherjee and B N Ghose for the appellant in C A No 448 of 1957
V L Narasimhamoorthy section N Andley J B Dadachanji Rameshwar Nath and P L Vohra for the appellant in C A No 449 of 1957
G R Ethiraiulu Naidu Advocate General Mysore B R G K Achar and K R Choudhuri for the respondent
February 3
The Judgment of the Court was delivered by KAPUR J
These are two appeals brought against two judgments and orders of the High Court of Mysore which arise out of two petitions filed by the appellants under article 226 challenging the legality of the imposition of octroi on wool and cotton under section 98 of the City of Bangalore Municipal Corporation Act Act LXIX of 1949 which for the sake of convenience will be termed the  Act 
On March 31 1954 a resolution was passed purporting to be under section 981 of the Act by which it was 700 resolved to levy an octroi on cotton and wool as follows  Name of the Articles Rate of duty 1
Raw cotton and wool this includes both loose Rs 19 per and compressed made in cent
ad valorem India or foreign 2 
This was notified in the Mysore Gazette on April 3 1954 and was also published as required by section 981 of the Act
Objections were invited and it is admitted that both the appellants filed their objections
Final resolution under section 982 was passed on December 21 1954 and the resolution in regard to octroi came into force as from January 1 1955
It may be mentioned that the final resolution passed under section 98 2 of the Act was not published in the Official Gazette but was published in the local newspapers and a notice dated December 231954 was also sent to the appellants to the effect that after considering their objections the Municipality had decided to levy an octroi on the goods at the rate already notified
The appellant in CA 44857 filed a petition in the High Court on March 15 1955 under article 226 challenging the validity of the imposition of the octroi on the grounds 1 that the tax was in contravention of section 982 of the Act in so far as a notice was not published in the Official Gazette 2 that the tax was in contravention of section 130 of the Act and 3 that there was excessive delegation
The appellant in C A 44957 filed its petition on March 17 1955 in which besides challenging the validity of the imposition of the tax on grounds above set out it also challenged the vires of the imposition on the grounds   1
that the levy of the octroi was in contravention of article 2762 of the Constitution by which a tax on trade exceeding Rs 250 per annum could not be imposed 701 2
that it was a contravention of article 301 which guaranteed freedom of inter State trade and commerce and 3
that it was in contravention of article 191g of the Constitution
The High Court rejected all these objections and the appellant has come to this court on a certificate of the High Court under article 1331 of the Constitution
In order to decide the question of the legality of the tax it is necessary to refer to the relevant provisions of the Act
Section 97 enumerates the taxes and duties which the Corporation is empowered to levy under the Act
Section 97e provides  97
The Corporation may levy ean octroi on animals or goods or both brought within the octroi limits for consumption or use therein
 Section 98 which deals with the powers
of control of Government and the procedure for the levying of the Municipal taxes provides Section 98 1
 Before the Corporation passes any resolution imposing a tax or duty for the first time it shall direct the Commissioner to publish a notice in the Official Gazette and in the local news
papers of its intention and fix a reasonable period not being less than one month from the date of publication of such notice in the Official Gazette for submission of objections
The Corporation may after considering the objections if any received within the period specified determine by resolution to levy the tax or duty
Such resolution shall specify the rate at which the date from which and the period of levy if any for which such tax or duty shall be levied
2 When the Corporation shall have determined to levy any tax or duty for the first time or at a new rate the Commissioner shall forthwith publish a notice in the manner laid down in sub section 1 specifying the date from which the rate at which and the period of levy if any for which such tax or duty shall be levied
 702 It was argued that instead of passing a resolution Imposing the octroi duty the Corporation should have first published its  resolution  to impose the tax and that the Corporation could not at once pass  a resolution  by which it imposed the tax
It published that resolution in the Official Gazette and also in accordance with other provisions of section 981 and invited objections which were filed
The only defect if defect it can be called at all was that instead of saying that it  intended  to impose a tax the notice which was published said the tax had been resolved to be levied
 This is a technicality and is of no substance
The next objection raised was that after the Corporation adopted the resolution imposing the tax which was after considering all the objections the publication was only in local newspapers and there was no publication in the Government Gazette and this it was submitted was such a serious defect as to make the imposition illegal and ultra vires
In support counsel for the appellants relied on certain judgments where publication in the Official Gazette was held to be a condition precedent to the legality of the imposition of the tax
These cases are Krishna Jute  Cotton Mills vs The Municipal Council Vizianagram 1 Municipal Council Rajamundry vs Nidamarti Jaladurga Prasadarayudu 2
Reference was made also to The Municipal Council Anantapur vs Sangali Vasudeva Rao 3  Manak Chand vs Municipal Council4 and State of Kerala vs P J Joseph 5 
This question we are not considering as we are referring this case to a larger Bench on certain constitutional points and shall refer this question also in the sequel
The second objection raised was that there was no compliance with section 130 of the Act
That section is as follows  Section 130
 If the corporation by a resolution determines that an octroi should be levied on animals or goods brought within the octroi limits of 1 AIR 1926 Mad
2 AIR 1926 Mad
3 Mad
4 AIR 1951 Raj
5 AIR 1958 SC 296 299
703 the city such octroi shall be levied on such articles or goods specified in Part V Schedule III at such rates not exceeding those laid down in the said  Part in such manner as may be determined by the corporation
 That is not a charging section but it imposes a limitation on the power of the Municipality as to the rate at which a tax can be imposed
It was further argued that before a resolution under section 981 could be passed the goods sought to be taxed had to be specified under section 130 read with Schedule 111 Part V of the Act
Clause 18 of that Schedule provides that octroi on animals and goods shall be levied at the rates not exceeding the following
Classes I to VII specify articles on which octroi can be levied at the maximum rate
Class VIII was as follows Octroi Maximum rate Other articles which are not speci fied above and which may be Rs2 0 0 per cent
approved by the Corporation ad valorem by an order in this behalf That class empowers the Municipal Council to impose octroi duty on other articles which are not specified but which may be approved by the Corporation
In other words the Corporation can choose other articles upon which tax can be imposed and the respondent Corporation in the present case did resolve to impose tax on raw cotton and wool and also fixed the rate at Rs 1 9 0 per cent
ad valorem
The submission that as a result of the operation of section 130 first a resolution had to be passed specifying raw cotton and wool as goods on which octroi duty would be levied and then the procedure under section 981 and 2 had to be gone through is without substance
What the Corporation did was that it passed a resolution choosing these goods to be goods on which octroi duty was to be levied and by the same resolution it resolved that the goods therein specified be taxed at the rate therein specified
There is no contravention of section 130 even if the contention of the appellants was to be taken most strictly The goods were specified the 704 rate of tax to be levied on the goods was also specified the resolution was passed to that effect and the other procedure laid down in section 981 was then followed
In our opinion it is not necessary that first a resolution should be passed specifying the goods and then another resolution should be passed showing the intention of the Municipality to tax those goods
What has been done substantially complies with the provisions of the Act
It was next argued that the words of Class VIII in Part V of Schedule III where the  words used are  other articles which are not specified above  and which may be approved by the Corporation by order in this behalf meant that the goods must be precisely defined and included by name in the Schedule and that the use of the word in this behalf  meant adding to the list of articles in Schedule III
Reliance was placed on the interpretation of the word  in this behalf  as given by this Court in Bijay Cotton Mills Ltd vs Their Workmen 1
But that case has no application to the facts of the present case because the resolution was as a matter of fact passed for the purpose of imposing an octroi duty on the goods in dispute
The words used in Bijay Cotton Mills Ltd vs Their Workmen2 were in another context and  even there all that was said was that a notification had to issue making the Central Government the appropriate Government
As we have said above in the present case there was a resolution which sought to include these goods in the Schedule for the purpose of imposing the tax
The excessive nature of delegation under Class VIII in Part V of Schedule III was also urged but this was not a question which was raised in the High Court nor is there any substance in the matter
The argument raised was that the power of the Municipal Corporation to specify goods under Class VIII was excessive delegation which was both uncanalised and uncontrolled and reliance was placed on a judgment of this Court in Hamdard Dawakhana vs Union of India but that case has no application to the facts 1  2   705 of the present case
In the present case the Legislature has laid down the powers of the Municipality to tax various goods
It has enumerated certain articles and animals and Class VIII read with section 97e of the Act has authorised the Municipality to impose tax on other articles and goods
This power is more in the nature of conditional delegation as was held in Baxter vs Ah Way1 where it was hold that under a 52 g of the Australian Customs Act 1901 a power given to prohibit by proclamation the importation of certain articles was not a delegation of legislative power but conditional legislation because the prohibition of importation was a legislative abet of Parliament itself and the effect of sub section
g of section 52 was only to confer upon the Governor General in Council the discretion to determine to which class of goods other than those specified in the section and under what conditions the prohibition shall apply
All that the Legislature has done in the present case is that it has specified certain articles on which octroi duty can be imposed and it has also given to the Municipal Corporation the discretion to determine on what other goods and under what conditions the tax should be levied
That in our opinion is not a case which falls under the rule laid down by this Court in Hamdard Dawakhana vs Union of India 2
It was contended in C A 44957 that the imposition of duty on raw cotton could not cover processed cotton that is cotton which had been ginned combed and pressed
The High Court held that the cotton by being ginned or pressed in bales does not cease to be raw cotton and was to be regarded as raw for the purpose of the Act
The same would apply to wool
The notification levying the tax specifically stated that raw cotton and wool included both loose and compressed ie compressed cotton and wool whether it was Indian cotton or foreign cotton
It will not in our opinion be a correct meaning to give to the notification if it were  interpreted to apply only to cotton which had been gathered from the fields and had neither been ginned nor pressed
 We agree with 1  2  706 the High Court that this resolution covers the articles which the appellants in the two cases were importing into the limits of the Corporation of Bangalore
I The learned Advocate General appearing for the respondent also relied on section 38 of the Act which provides  Section 38 1
 No act done or proceeding taken under this Act shall be questioned merely on the ground a         b of any defect or irregularity in such act or proceeding not affecting the merit of the case
 This section validates all defects and irregularities in in any act or proceedings which do not affect the merit of the case
It was submitted that this section is in another chapter ie chapter 2 dealing with provisions common to the Corporation and the Standing Committees
It may be that it is in another chapter but the language of the section is wide and applies to all defects or irregularities in any act or proceeding done not affecting the merits of the case
In our opinion the following points should be heard by the Constitution Bench 1 Whether the imposition in the present case offends article 276 or 301 of the Constitution  2 Whether the failure to notify the final resolution of the imposition of the tax in the Government Gazette is fatal to the tax  If the answer to these questions or any of them is in the affirmative the appeal will have to be allowed
But if the two questions are answered against the appellants the appeals will fail as all other points have been decided by us against the appellants
The costs will follow the event unless the Bench hearing the reference makes other order
Referred to Constitution Bench final disposal
The decision of the Constitution Bench is reported infra


Summary:
The appellant was convicted of an offence under section 92 of the  for working a salt works without obtaining a licence
The salt works extended over an area of about 250 acres  The only buildings on this land were temporary shelters for the resident labour and for an office  at some places there where pucca platforms for fixing the water pump where 593 required to pump water from the sea
The appellant contend ed i that the salt works was not a factory as defined in section 2m of the Act ii that the word  premises  in the definition of factory did not include open land and iii that in converting sea water into salt the appellant was not carrying on any manufacturing process as defined in section 2k
Held that the salt works was a factory within the definition given in the Act and that the appellant was rightly convicted for working it without a licence
The word  premises  is a generic term meaning open land or land with buildings or buildings alone the salt works came within the expression premises in the definition of the word  factory 
The extraction of salt from sea water was not due merely to natural forces but was due to human efforts aided by natural forces
The process of conversion of sea water into salt was a  manufacturing process  as defined in cl
k of section 2 inasmuch as salt was manufactured from sea water by a process of treatment and adaptation
By this process sea water a non commercial article was converted into a different thing salt a commercial article
Kent vs Astley  Redgrave vs Lee and Nash vs Hollinshead 1901 1 KB 700 distinguished
Sedgwick vs Watney Combe Reid  Co Ltd  Grove vs Lloyds British Testing Co Ltd  Kaye vs Burrows  Ors
and Hines vs Eastern Counties Farmers  Co operative Association Ltd  The State of Kerala vs V M Patel Cr
42 of 1959 decided on 12 10 1960 In re Chinniah Manager Sangu Soap Works AIR 1957 Mad 755
Paterson vs Hunt  Law vs Graham  Hoare vs Truman Hanbury Buxton  CO  and McNicol vs Pinch  referred to