N Criminal Appeal No 440 of 1976
Appeal by Special leave from the Judgment and Order dated the 3rd September 1975 of the Allahabad High Court in Criminal Misc
Case No 3291 of 1972
Shankar Ghose RP Bhatt section R Aggarwala Praveen Kumar and Anil Kumar Sharma for the Appellants
BD Sharma Dalveer Bhandari H M Singh and R section Yadav for the Respondent State
324 Yogeshwar Prasad and Mrs Rani Chhabra for Municipal Board
The Judgment of the Court was delivered by VENKATARAMIAH J
This appeal by special leave arises out of a complaint instituted under section 155 of the UP Municipalities Act 1916 Act
No II of 1916 hereinafter referred to as the Act  by the Municipal Board of Pilibhit in the court of the Sub Divisional Magistrate Puranpur District Pilibhit against the Managing Director the General Manager and the Cane Manager of L H Sugar Factory Pilibhit and one Bishan Swaroop an employee of the said Sugar Factory the appellants herein alleging that they had brought by railway on November 30 1967 into their godown at the railway siding situated within their Sugar Factory which was within the limits of the Pilibhit Municipal Board for purposes of consumption or use three wagon loads of sugarcane weighing in all 804 maunds for which octroi of Rs 848 P was payable under the bye laws of the Municipal Board published under notification dated May 18 1960 without paying the said octroi
The said complaint was filed on September 12 1968
During the proceedings before the Magistrate the appellants pleaded that since the payment of octroi by the factory of the appellants on sugarcane brought by railway had been exempted by an order of the Government of the United Provinces bearing G O No 36131XI 395 dated November 20 1936 the prosecution should fail
The relevant part of the Government order which is contained in a letter addressed by the Municipal Department of the Government of the United Provinces to the Commissioner of Rohilkhand Division reads thus I am directed to say that Government have after full examination of the question of local taxation of sugarcane imported for the manufacture of sugar in factories situated within the limits of certain municipalities decided that there is no justification for the continuance of taxes on rail borne cane which is delivered at the railway sidings situated inside the sugar factories because the municipalities concerned render no service with regard to it
The Governor acting with his ministers is accordingly pleased to exempt under section 1573 of the United Provinces Municipalities Act 1916 with immediate effect all such sugarcane from the octroi duty levied in the municipality of Pilibhit
The Municipal 325 Board of Pilibhit may be informed accordingly and also directed to take formal action to amend its octroi schedule to that effect
 After the above plea was raised the complainant Municipal Board went on seeking adjournments in the criminal case and the case remained undisposed of for nearly four years
So the appellants filed a petition under section 561 A of the Code of Criminal Procedure 1898 Act No V of 1 98 before the High Court of Allahabad in Criminal Misc
Case No 3291 of 1972 in September 1972 requesting the High Court to quash the proceedings on the ground that they were vexatious
In the High Court the appellants admitted that they had brought into the municipal area of Pilibhit sugarcane by railway as pleaded by the Municipal Board without paying octroi but submitted that octroi was not payable in view of the exemption granted by the State Government under section 1573 of the Act
The High Court rejected the plea of the appellants and dismissed the petition filed by them on the ground that the case was governed by certain earlier judgments of the High Court and that the exemption was no longer available as the octroi claimed was a new levy not covered by it
Although there was some dispute about the existence of the Government order granting the exemption the High Court held that such an order had been passed by the Provincial Government but it was of no avail to the appellants
Accordingly the High Court dismissed the petition filed by the appellants
Against the judgment of the High Court this appeal has been filed
At the outset it should be stated that until the complaint was filed in the year 1968 the Municipal Board had not collected any octroi from the factory in question on sugarcane brought by railway
We are also informed that by an order communicated to all the Divisional Commissioners and the District Magistrates of the State of Uttar Pradesh on June 3 1982 the levy of octroi on sugarcane brought by sugar factories into the municipalities in the State of Uttar Pradesh for crushing purposes is generally exempted irrespective of the mode of transport used to bring such sugarcane
The relevant part of that communication reads thus SubExemption from octroi on sugarcane brought for crushing in sugar mills within municipal limits
326 Sir On the above subject in continuation of the radiogram of the Government No 2065 B11 9 82 dated 2751982 I have been directed to state that in exercise of the powers conferred under sec
1573 of the UP Municipalities Act 1916 the Governor exempts sugarcane brought within municipal limits for crushing in sugar mills from octroi duty with immediate effect
You are requested to ensure that the order is carried out and acknowledge receipt of the Government order
Yours faithfully Sd Shashi Kant Jain Under Secretary This communication may however have no bearing on the period in question but only shows how the State Government has understood the scope of its power under section 1573 of the Act
Since all the facts are admitted the only question which requires to be considered is whether on the relevant date the appellants were liable in law to pay octroi on sugarcane brought by them by railway into the sugar factory which was situated within the municipal limits of Pilibhit
Chapter V of the Act contains the provisions relating to municipal taxation
Section 1281 viii and section 157 of the Act are in that Chapter
The relevant part of section 128 as it stood in the year 1936 and section 157 are as follows 128
Taxes which may be imposed 1 Subject to any general rules or special orders of the Local Government in this behalf the taxes which a board may impose in the whole or any part of a municipality are i a tax on the annual value of buildings or lands or of both ii a tax on trades and callings carried on within the municipal limits and deriving special advantages from or imposing special burdens on municipal services 327 iiia tax on trades callings and vocations including all employments remunerated by salary or fees iv tax on vehicles and other conveyances plying for hire or kept within the municipality or on boats moored therein v a tax on dogs kept within the municipality vi a tax on animals used for riding driving draught or burden when kept within the municipality viia toll on vehicles and other conveyances animals and laden coolies entering the municipality viiian octroi on goods or animals brought within the municipality for consumption or use therein There are seven other clauses in section 1281 which relate to other taxes
Exemption 1 A board may exempt for a period not exceeding one year from the payment of a tax or any portion of a tax imposed under this Act by any person who is in its opinion by reason of poverty unable to pay the same and may renew such exemption as often as it deems necessary
2A board may by a special resolution confirmed by the Local Government in the case of cities and by the Commissioner in other cases exempt from the payment of a tax or any portion of a tax imposed under this Act any person or class of persons or any property or description of property
3The Local Government may by order exempt from the payment of a tax or any portion of a tax imposed under this Act any person or class of persons or any property or description of property
 328 It may be noted that while the power of exemption under sub sections 1 and 2 of section 157 of the Act is vested in the Municipal Board the power of exemption under sub section 3 of section 157 is exercisable by the Local Government
Under sub section 2 of section 157 the resolution of the Municipal Board granting exemption should however be confirmed by the Local Government or the Commissioner as the case may be
The first submission made before us is somewhat subtle and needs to be considered in some detail
It is argued that since the exemption had been given under the order dated November 20 1936 on the ground that there was no justification for the continuance of the levy of taxes on rail borne sugarcane as the municipalities were not rendering any service in regard to it the levy from which exemption had been given by that order was either a terminal tax or a fee and not a tax
Since what is being levied as octroi from the year 1960 was a tax the order of exemption would be inapplicable to it
In support of the first part of this argument that the tax referred to in the order of exemption could only be a terminal tax reliance was placed on a decision of the Federal Court in The Punjab Flour and General Mills Co Ltd Lahore vs The Chief Officer Corporation of the City of Lahore and the Province of the Punjab1 In that case the Federal Court had to construe the meaning of entry 58 of List I of the Seventh Schedule to the Government of India Act 1935 which read as 58
Terminal taxes on goods or passengers carried by railway or air taxes on railway fares and freights  and of entry 49 of List II of the Seventh Schedule to the Government of India Act 1935 which read as 49
Cesses on the entry of goods into a local area for consumption use or sale therein 
The facts in that case were these The Lahore Municipality had in the year 1926 imposed under its then existing power of taxation a tax called terminal tax calculated on the gross weight of consignments or per tail as the case might be at the rates and on the specified articles or animals specified in the Schedule to the notification imposing the levy imported into its municipal limits by rail or by road
This was superseded by a notification issued in the year 1938 by which the municipality gave notice of the imposition of a new tax called octroi without refunds  which was to be calculated on the gross weight of consignments and on animals per tail at the rates and on the articles specified in the Schedule to the relevant notification 329 imported into its limits
This notification was superseded by a further notification of the year 1940 by which a tax called octroi without refunds  was to be charged at the new rates with effect from May 11 1940 on consignments including grain imported into its limits
The Punjab Flour and General Mills Co Ltd Lahore which was importing for use or consumption grain into its factory which was situated within the Lahore municipal limits contended that the tax in question was a terminal tax by whatever name it might have been called falling under entry 58 of List I of the Seventh Schedule to the Government of India Act 1935 and was not imposable in 1938 or in 1940 after the relevant provisions of the Government of India Act 1935 had come into force
It was contended by the company that the tax in question did not fall under entry 49 of List II of the Seventh Schedule to the Government of India Act 1935
The Federal Court after explaining the difference between the terminal taxes and cesses which can be levied on goods imported into a local area for purposes of use consumption or sale therein rejected the contention of the company with these observations There appears to us a definite distinction between the type of taxes referred to as terminal taxes in entry No 58 of List 1 of the Seventh Schedule and the type of taxes referred to as cesses on the entry of goods into a local area in entry No 49 of List II
The former taxes must be a terminal and b confined to goods and passengers carried by railway or air
They must be chargeable at a rail or air terminus and be referable to services Whether of carriage or otherwise rendered or to be rendered by some rail or air transport organisation
The essential features of the cesses referred to in entry No 49 of List II are on the other hand simply a the entry of goods into a definite local area and b the requirement that the goods should enter for the purpose of consumption use sale therein
It is to be noted that there is no limitation on the manner by which the goods to be subjected to such cesses may enter
There is no ground for suggesting that entry of goods by rail or air is any less contemplated than entry by waterway or road
It was argued by the appellant s counsel that because by entry No 20 of List I Federal railways and the regulation of railways and so forth is included in the Central Government Legislative List and by List II the Provincial 330 Government is mainly given powers of legislation over roads and internal waterways and transport thereon entry No 18 it should therefore be deduced that all taxation on rail and air borne goods must be imposed if at all under the powers conferred by entry No 58 of List 1 and that powers of taxation conferred by entry No 49 of List II must be confined to goods that enter by road or internal waterway only
We cannot accept this argument
It is not in our judgment justified by the wording of the various entries in the two Lists and would impose a limitation on local taxation under entry No 49 in List II which would often work most inequitably in practice between those importing goods by road or waterway and those who could import by rail or air
In our judgment there is no limitation to be implied in entry No 49 List II in regard to the manner in which goods may be transported into a local area
It follows that so far as rail borne goods are concerned the same goods may well be subjected to taxation under entry No 58 of List I as well as to local taxation under entry No 49 of List II
The grounds of taxation under the two entries are as indicated above radically different and there is no case for suggesting that taxation under the one entry limits or interferes in any way with taxation under the other
 It is true that in the course of the above decision it is observed that the element of service to be rendered is treated as an ingredient of a terminal tax but that does not mean that when tax is clearly laid on goods when they are brought into a local area for purposes of use sale or consumption it ceased to be a tax levied under section 128 1 viii read with entry 49 of List II of the Seventh Schedule to the Government of India Act 1935 merely because of the reason given for granting exemption under the order the Provincial Government dated November 20 1936 issued under section 157 3 of the Act
There is no doubt that the octroi which was being levied in 1936 when the exemption was granted and the subsequent levy imposed in the year 1960 are both taxes levied under the Act and fall within the State List both under the Government of India Act 1935 and under the Constitution
It was not a terminal tax falling under entry 58 of List I of the Seventh Schedule to the Government of India Act 1935
It does not 331 also fall under entry 89 of List I of the Seventh Schedule to the Constitution now
The said levy came within entry 49 of List II of the Seventh Schedule to the Government of India Act 1935 and now falls under entry 52 of List II of the Seventh Schedule to the Constitution
The exemption granted in the year 1936 should be construed as an exemption from all taxation by way of octroi leviable and levied under the Act on rail borne sugarcane and that exemption would continue until it is either rescinded or modified or becomes inapplicable for any other reason
The second part of the above submission was that the levy was in the nature of a fee and not a tax as it had been described as a cess in entry 49 of List II of the Seventh Schedule to the Government of India Act 1935
There is no merit in this submission also
A cess may either be a tax or a fee
Whether a cess in a given context is a tax or a fee depends upon the purpose for which it is levied
The very decision relied on by the respondents in this connection namely The Hingir Rampur Coal Co Ltd  Ors
vs The State of Orissa  Ors1 substantiates the above view
In that case this Court held that the cess imposed by the Orissa Mining Areas Development Fund Act 1952 was a fee relatable to entries 23 and 66 of List II of the Seventh Schedule to the Constitution having regard to the object and the scheme of that Act and the purpose for which the cess collected under it was to be used
There is no doubt that in entry 49 of List II of the Seventh Schedule to the Government of India Act 1935 the expression cesses  is used in the sense of taxes 
In entry 52 of List II of the Seventh Schedule to the Constitution the expression taxes  is substituted in the place of the expression cesses  which was in the former entry 49 in the Government of India Act 1935 but the nature and content of the legislative power under both are the same
The decision of the Federal Court in the case of the Punjab Flour and General Mills Co Ltd supra itself shows that a cess levied in exercise of the power under entry 49 of List II of the Seventh Schedule to the Government of India Act 1935 was a tax irrespective of any refund allowed or not allowed by the Government as can be seen from the following observation made by the Federal Court at page 26 of the Report We can see no cause whatsoever for holding that if cesses are imposed in pursuance of the powers conferred 332 by entry No 49 in List II any provision need be made for refunds
Whether or not there should be any refunds in respect of such cesses appears to us to be a matter open for determination by Provincial or local taxing authority and the existence or non existence of a provision of system of refunds cannot affect the tax being or not being a cess within entry No 49
 It is also significant that the word octroi in section 128 1 viii of the Act is found in the group of taxes referred to in section 128
All sums received by a Municipal Board on account of the various levies made under section 128 have to be credited to the municipal fund under section 114 of the Act which can be utilised for the purposes of the Municipal Board as stated in section 120 of the Act
The sum received as octroi is also dealt with like any other tax
There is no element of quid pro quo between the person who pays the octroi and the Municipal Board
Hence octroi being a tax it was competent to the Provincial Government to make an order under section 157 3 of the Act exempting railborne sugarcane from payment of octroi
The next submission urged before us is that the appellants having failed in an earlier writ petition in which they had questioned the validity of the levy of octroi cannot now be permitted to challenge the levy again in these proceedings
The facts bearing on the above contention are these In the year 1960 by a notification published in the Official Gazette dated April 23 1960 the Municipal Board of Pilibhit promulgated new rules relating to the levy of octroi and also published a fresh schedule of rates of octroi in the Official Gazette dated May 18 1960
This was done with the previous sanction of the State Government under section 133 of the Act
The octroi imposed by these notifications related to number of articles including sugar sugarcane etc
The appellants who were liable to pay octroi on many of those articles challenged in a petition filed under Article 226 of the Constitution in Civil Misc
Writ No 2310 of 1960 on the file of the High Court of Allahabad the validity of the levy on the ground that the procedure followed in imposing octroi at the fresh rates was not valid It was also pleaded that sugar industry being a controlled industry levy of octroi on sugar was invalid
By that notification octroi had been imposed also on the import of sugarcane into the municipal limits of Pilibhit for purposes of sale use or consumption
That petition was 333 dismissed by the High Court
It is urged that because that petition had been dismissed it is not open to the appellants now to contend that the exemption granted under the order of 1936 was still available
The High Court has accepted this contention urged on behalf of the respondents
With due respect we should say that the conclusion of the High Court on the above point is erroneous
In the earlier writ petition the appellants had challenged the validity of the new octroi bye laws and the imposition of octroi on many articles brought by them into the municipal limits
By reason of the dismissal of the writ petition they would no doubt be not entitled to reagitate the same question
In this case the question involved is a different one and that is whether even if the octroi bye laws and the imposition of octroi on sugarcane was good the Municipal Board of Pilibhit is competent to recover octroi on sugarcane brought by rail by reason of the exemption accorded under section 157 3
There is however no dispute that octroi would be payable under the octroi bye laws when sugarcane is brought by the appellants by any other means of transport
In the circumstances the High Court was in error in holding that the order of exemption granted under section 157 3 was the same as any general rule or special order of the State Government referred to in sub section 1 of section 128 subject to which the Municipal Board may impose any tax referred to therein and the effect of the exemption granted in 1936 was also in issue in the earlier writ petition
In that writ petition the said question was neither directly nor constructively in issue in that case
An exemption becomes operative only when the tax is validly imposed under section 128
The restriction that may be imposed by any general rule or special order of the State Government under section 128 1 affects the initial power of the Municipal Board to levy a tax
An order under section 157 3 operates only after a tax is validly imposed with the sanction of the State Government or of the Commissioner as the case may be as stated in section 133 of the Act
It is therefore open to the appellants to contend even after the dismissal of their earlier petition that they are entitled to the limited exemption granted by the order of 1936 generally in favour of a number of sugar factories in several municipal areas
The decision of the High Court of Allahabad in Vir Singh  Ors
vs Municipal Board  Anr1 also has no bearing on this question
334 The next question is whether the nature of the tax levied under clause viii of section 1281 of the Act has undergone any change after the commencement of the Constitution
The said clause has not been materially amended after the commencement of the Constitution
While it formerly read as an octroi on goods or animals brought within the municipality for consumption or use therein  now it reads as an octroi on goods or animals brought within the municipality for consumption use or sale therein  by reason of the addition of the word sale  by an amending Act passed subsequent to the commencement of the Constitution
The High Court has observed that after the commencement of the Constitution there has been a material change in the nature of octroi levied under the Act and on account of the framing of the new bye laws the exemption granted under section 1573 would no longer be available for the following reasons It is significant that under Government of India Act 1935 7th Schedule List II item No 49 provides cess on the entry of goods into the local area for consumption or use or sale therein
For the purposes of cess it was necessary that the local body should render some service as principle of quid pro quo applies
Under the Constitution of India 7th Schedule List II item No 52 provides for levying taxes on the entry of goods into the area for consumption or use or sale therein
The tax certainly is different from cess and as such different considerations arise for levying taxes
Learned counsel for the opposite party has also pointed out that by Act VII of 1953 section 1281 viii has been substituted and as such more powers were conferred on the Municipal Board
The only difference is that octroi can now be imposed on goods meant for sale also
The fact remains that the Government order of 1936 was under section 1573 of the Act and as such had the effect of allowing exemption with regard to levy of octroi duty on sugarcane according to the rules then in force
When the rules themselves were changed and new bye laws had been enforced which had the sanction of State Government or the delegated authority that exemption could no longer apply unless fresh order was passed under section 1573 of the Act
 335 With respect we should express our disagreement with the above view
As already observed by us under the Government of India Act 1935 octroi leviable under entry 49 of List II of the Seventh Schedule thereto was not a fee but was a tax
The new set of bye laws with the modified rates of octroi brought into force in 1960 by the Municipal Board though with the sanction of the State Government does not have the effect of rescinding or annulling the exemption granted under section 1573 by the former Provincial Government
An order under section 1573 can be withdrawn or modified by the State Government only
Even if the said provision is capable of a construction that when the new bye law or rates of tax imposed by the Municipal Board with the sanction of the Government under section 133 which are totally inconsistent with the exemption granted earlier under section 1573 the exemption would cease in the instant case we do not find any such irreconcilable inconsistency between the notification published in 1960 and the order of exemption made in the year 1936 which is in respect of a number of municipalities
While under the notification of 1960 octroi is payable on the import of sugarcane into the municipal limits for purposes of sale use or consumption by virtue of the order made in 1936 under section 1573 sugarcane brought by rail and delivered at the railway siding inside the factory premises alone is exempted from the levy of octroi
Sugarcane brought by other means of transport would be governed by the notification issued in 1960
It is worthy of note that there is no provision in the notification of 1960 to the effect that the said exemption is either withdrawn or that sugarcane brought by rail would be taxable
The order of exemption does not say that it relates to a particular tax levied under a specific notification issued by a particular Municipal Board
It is in general terms and therefore the exemption would continue to operate even after the notification was issued in 1960 in supersession of the former notification in so for as rail borne sugarcane is concerned
If the contention urged by the Municipal Board is accepted then it would indirectly arm a Municipal Board to get over any order of exemption passed by the State Government by merely amending its taxation bye laws
It may be noted here that in the case of municipalities other than city municipalities the sanctioning authority is the Commissioner and not the State Government while under section 1573 the State Government alone can grant exemption
Hence such a construction should be avoided
It is significant that for nearly eight years after the promulgation of the new bye laws no claim was made by the Municipal Board in respect of octroi payable on rail borne sugarcane 336 and subsequently the State Government by the letter dated June 3 1982 referred to above has enlarged the scope of exemption by exempting from payment of octroi on sugarcane brought into the municipal limits of all municipalities for crushing in the sugar mills irrespective of the mode of transport employed for bringing it
On a consideration of all the contentions urged by the parties before us we hold that the Municipal Board of Pilibhit was not entitled to collect octroi on sugarcane brought into its municipal limits by the appellants by rail on the relevant date
The prosecution therefore is not sustainable
In the result this appeal is allowed the judgment of the High Court is set aside and the proceedings in the Magistrate s court out of which this appeal has arisen are quashed
There will be no order as to costs
HSK Appeal allowed


Summary:
The respondent Municipal Board filed a complaint in the trial court against the appellants under section 155 of the UP Municipalities Act 1916 alleging that the appellants had brought by railway on November 30 1967 at the railway siding in their sugar factory within the limits of the respondent for purposes of consumption or use certain quantity of sugarcane without paying octroi payable under the new bye laws of the respondent published on May 18 1960
The appellants pleaded that since the payment of octroi on sugarcane brought by railway at the railway siding situated inside their factory had been exempted by UP Government s order dated November 20 1936 passed under section 157 3 of the Act the prosecution should fail
As the respondent went on seeking adjournments and the case remained undisposed of for nearly four years the appellants filed a petition under section 561 A of the Code of Criminal Procedure 1898 in the High Court for quashing the proceedings on the ground that they were vexatious
The High Court dismissed the petition observing that after the commencement of the Constitution there has been a material change in the nature of octroi levied under the Act and on account of the framing of the new bye laws the exemption granted under section 1573 of the Act would no longer be available
The High Court held that since a petition filed by the appellants challenging the notification containing the new bye laws was earlier dismissed by the High Court it was not open to the appellants now to contend that the exemption granted under the Order of 1936 was still available
In this appeal the respondent contended that the levy from which exemption had been given by the Order of 1936 was either a terminal tax or a fee and not a tax and since what was being levied as octroi from the year 1960 322 under the new bye laws was a tax the order of exemption would not be applicable to it
Allowing the appeal  HELD The respondent was not entitled to collect octroi on sugarcane brought into its municipal limits by the appellants by rail on the relevant date
336 B The word octroi  in section 1281 viii of the Act is found in the group of taxes referred to in section 128
The sum received by a Municipal Board on account of octroi is also dealt with like any other tax
There is no element of quid pro quo between the person who pays the octroi and the Municipal Board
The octroi leviable under entry 49 of List II of the Seventh Schedule to the Government of India Act 1935 was not a fee but was a tax
332 B C 335 A A cess may either be a tax or a fee
Whether a cess in a given context is a tax or a fee depends upon the purpose for which it is levied
In entry 49 of List II of the Seventh Schedule of the Government of India Act 1935 the expression cesses  is used in the sense of taxes 
In entry 52 of List II of the Seventh Schedule of the Constitution the expression taxes  is substituted in the place of the expression cesses  which was in the former entry 49 in the Government of India Act 1935 but the nature and content of the legislative power under both are the same
331 C E F When tax is clearly levied on goods when they are brought into a local area for purposes of use sale or consumption it does not cease to be a tax levied under section 1281 read with entry 49 of List II of the Seventh Schedule to the Government of India Act 1935 merely because the municipalities concerned render no service with regard to it
G The Punjab Flour and General Mills Co Ltd Lahore vs The Chief Officer Corporation of the City of Lahore and the Province of the Punjab  and The Hingir Rampur Coal Co Ltd  Ors
vs The State of Orissa  Ors  referred to
The octroi which was being levied in 1936 when the exemption was granted and the subsequent levy imposed in the year 1960 are both taxes levied under the Act and fall within the State List both under the Government of India Act 1935 and under the Constitution
It was not a terminal tax falling under entry 58 of List I of the Seventh Schedule to the Government of India Act 1935
It does not also fall under entry 89 of List I of the Seventh Schedule to the Constitution now
The said levy came within entry 49 of List II of the Seventh Schedule to the Government of India Act 1935 and now falls under entry 52 of List II of the Seventh Schedule of the Constitution
The exemption granted in the year 1936 should be construed as an exemption from all taxation by way of octroi leviable and levied under the Act on rail borne sugarcane and that exemption would continue until it is either rescinded or modified by the State Government or becomes inapplicable for any other reason
The new set of bye laws brought into force in 1960 by the Municipal Board though with 323 the sanction of the State Government does not have the effect of rescinding or annulling the exemption granted under section 1573 by the former Provincial Government
330 G 331 A B 336 A D There is no irreconcilable in consistency between notification published in 1960 and the order of exemption made in the year 1936
While under the Notification of 1960 octroi is payable on the import of sugarcane into municipal limits for purposes of sale use or consumption by virtue of the order made in 1936 under section 1573 sugarcane brought by rail and delivered at the railway siding inside the factory premises alone is exempted from the levy of octroi
Sugarcane brought by other means of transport would be governed by the notification issued in 1960
There is no provision in the notification of 1960 to the effect that the said exemption is either withdrawn or that sugarcane brought by rail would be taxable
335 C E The High Court was in error in holding that the order of exemption granted under section 1573 was the same as any general rule or special order of the State Government referred to in sub section 1 of section 128 subject to which the Municipal Board may impose any tax referred to therein and the effect of the exemption granted in 1936 was also in issue in earlier writ petition
In that writ petition the said question was neither directly nor constructively in issue
An exemption becomes operative only when the tax is validly imposed under section 128
The restriction that may be imposed by any general rule or special order of the State Government under section 1281 affects the initial power of the Municipal Board to levy a tax
An order under section 1573 operates only after a tax is validly imposed with the sanction of the State Government or of the Commissioner as the case may be as stated in section 133 of the Act
It is therefore open to the appellants to contend even after the dismissal of their earlier petition that they are entitled to the limited exemption granted by the Order of 1936
333 D G Vir Singh  Ors
vs Municipal Board  Anr Civil Misc
Writ No 3181 of 1960 decided on May 4 1960 not relevant to the point raised