Case: Bhaskar Textile Mills Limited Vs. Jharsuguda Municipality and Others

The appellant is a company duly incorporated under the Indian Companies Act, 1956 having its mills located at village Ektali under the Jharsuguda police station in District Sambalpur, Orissa. The said area of the village was included within the Ektali Panchayat. The company mainly carries on spinning of cotton which in the manufacturing process is transformed from loose fibres into finishedarea under the Ektali village in which the appellants factory was located was constituted, along with other villages as a Gram by a declaration made under s.3 of the, Orissa Grama Panchayat Act, 1964. On or about 25th March, 1970 Jharsuguda Municipality passed a resolution for the inclusion of Ektali and other villages in the Jharsuguda Municipality and thus extending the area of the said Municipality. Against the proposed extension the appellant made a representation to the State Government inter alia on the ground that he said, village Ektali could not under the relevant rules be included in the Municipality under s.4(1)(c) of the Orissa Municipal Act, 1950 in view of the proviso to s.4(1) which contemplates that a declaration shall not be made under this sub-section unless the State Government are satisfied that two-thirds of the adult male population of the town to which it refers are chiefly employed in pursuits other than agriculture and that such a town contains not less than 10, 000 inhabitants and an average number of not less than 1000 inhabitants to a square mile of the area of such a town. The appellant alleged that the male population of the said village Ektali was 2640 as per 1971 census report, out of which only 1 586 were chiefly employed in pursuits other than agriculture and thus two- thirds of such male population were not employed in non- agricultural pursuits.The State Government, however, by a notification dated 31st July 1973 declared their intention under s.4(1)(c) of the Municipal Act, 1950 to include within the Jharsuguda Municipality the local area of a number of villages including the village Ektali. By the said notification published in Orissa Gazette Extraordinary dated 22nd August, 1973 the Government invited objections within six weeks from the date of publication. The appellant did file objection to the said notification. Objection was also filed by Grama Panchayat of Ektali to the effect that the Ektali Grama was duly constituted , by the State Government in Community Development and Panchayat Raj Department in exercise of powers under s.3(1) of the Orissa Grama Panchayat Act and in the absence or any notification under s.3(1) and s.149 of the Gram a Panchayat Act, village Ektali still continues to be aobjections were examined by the District Magistrate, Sambalpur and the Revenue Division Commissioner Northern Division, Sambalpur and the same were rejected. On 12th August, 1975, notification under s.4(33(b) declaring the inclusion of the said villagsa including the village Ektali, into Jharsuguda Municipality was issued. Soon thereafter on 1st September, 1975 the said Jharsuguda Municipality sent a letter to the appellant directing it to pay octroi as per provisions of s.5 of the Orissa Municipal Act. The said octroi was payable at the rate of 1 per cent ad valorem on cotton as soon as it entered the municipal check-post for the purpose o f its being spun intolevy or octroi duty was challenged by filing a petition under Arts. 226 and 227 of the Constitution on various grounds viz., (a) the inclusion of village Ektali in the area of Jharsuguda Municipality was illegal and ultra vires the provisions of the Orissa Municipal Act, and (b) the levy of octroi duty at the rate of I percent ad valorem was arbitrary, coercive and violative of Art. 301 of the Constitution and, therefore, the appellant prayed for quashing the notifications referred to above.The writ petition was, however, dismissed by a Division Bench of the Orissa High Court by its order dated 5th January. 1977 The appellant filed an application under Art. 133(1) of the Constitution for the grant of a certificate for leave to appeal to this Court, which was dismissed by the High Court by its order dated 19th January, 1977. The appellant has now filed the present appeal after-obtaining special leave from this Court.

Reasoning:
But this Court took the view that since section 5(4) of the Punjab Act did not, significantly, refer to notifications and since section 62(1) of the Punjab Act spoke of "notification" for the imposition of taxes, it was not competent to the municipality to levy and collect octroi from the company on the strength merely of the provision contained in s. 5(4) of the Punjab Act. That case, however, is distinguishable and cannot be of much assistance for solving the problem before us. Section 5 of the Orissa Municipal Act makes all the provisions of the Act and of any rules, by-laws, notifications, or orders made thereunder, which immediately before such inclusion were in force throughout such municipality, applicable to such area, unless the State Government, in and by the notification, otherwise direct. This section, therefore, includes not only the provisions of the Act, rules and bye-laws but also includes notifications. This distinguishes the. . present case from the Visakhapatnam Municipalitys case (supra).For the appellant, next reliance was placed upon Bagalkot City Municipality v. Bagalkot Cement.(1) In that case also at the time of the imposition of the octroi duty the respondents factory was situated outside the municipal district and was not subject to the octroi duty. Subsequently, the Government extended the municipal district so that the factory came to be included within that district. The appellant in that case contended that upon such extension its octroi limits also stood extended to include the factory and the respondent became liable to pay octroi duty in respect of goods brought into the factory. The majority view was that the expression "municipal district" in the bye-law referred to the municipal district as existing when the bye-law was framed. The context prevented the definition of "municipal . district" in the Act, namely, the municipal district as from time to time existing from being applied under s.20 of the Bombay General Clauses Act to interpret the bye-law The bye-law had been made without being published to the respondent, and if it was so read referring to the municipal district from time to time existing it would be invalid for non-compliance with the provisions of s.48 of the Act. This case again is distinguishable in view of the wording of s.5 of the Orissa Municipalit is urged that the octroi duty levied in this case by the Municipality is unreasonable and excessive. The Municipality is required to provide certain amenities not only for the permanent residents within the municipality, but also even for casual visitors who may on occasions enter the limits of the municipality. The entry of large quantities of goods within the municipality almost daily from outside necessarily creates innumerable problems such as provisions of water supply, lighting facilities, facilities for conservancy, sanitation, maintenance of good roads and markets etc. which the Jharsuguda Municipality has done and there is no allegation to the contrary by the appellant.From the material placed before us we are of the view that the levy is not an unreasonable one. It is not also excessive. . The imposition of octroi cannot, therefore, be challenged on the ground that there is violation of Art. 19(1)(g) of the Constitution.Considering the case from any aspect the imposition of octroi duty, in our opinion, does not suffer from any infirmity.The argument proceeds on the assumption that the proviso to s.4(1) applies. But a bare persual of the proviso clearly indicates that the requirement is thatof the adult male population of the town to which it refers should be engaged in pursuits. The provision, to our mind, applies not to all the classes ofof s.4 but it applies only to cl.(a) ofof s.4, because it is cl.(a) of s.4(1) which talks of town. Therefore, the proviso, in . . Our opinion, has no application to the present case and that cannot be taken to be a ground for challenging the notification for inclusion of village Ektali in the Jharsuguda Municipality. This takes us to the third ground.The appellant had filed an objection underof s.4. The said objection was examined by the District Magistrate, Sambalpur and the Revenue Divisional Commissioner (Northern Division), Sambalpur: They overruled the objection treating it to be of general nature. Thereafter, the Community Development and the Panchati Raj (Grama Panchayat) Department were consulted to agree with this proposal, to which they agreed, and it was thereafter. that the Urban Development Department issued a final notification dated 12th August, 1975 to include the above village into the municipal limits of Jharsuguda Municipality. The contention of the appellant that the objection had not been considered by the State Government cannot be accepted in as much as the objection is required to be made through the Magistrate of the district. Naturally, the District Magistrate while forwarding the objection to the State Government made his comment. The Revenue Divisional Commissioner intervenes in the channel of communication between the District Magistrate and the State Government and he, therefore, had an occasion to. process the matter.Government while dealing with the matter consulted the. Panchayati Raj Department and ultimately notified in terms of notification dated 12th August, 1975. In the circumstances it cannot be accepted that the objection filed by the appellant had not been considered by the Statethe material placed before us we are of the view that the levy is not an unreasonable one. It is not also excessive. . The imposition of octroi cannot, therefore, be challenged on the ground that there is violation of Art. 19(1)(g) of the Constitution.Considering the case from any aspect the imposition of octroi duty, in our opinion, does not suffer from any infirmity.