Case: The Municipality Of Anand Vs. State Of Bombay

2. The appellant Municipality filed a petition in the High Court at Bombay under Art. 226 of the Constitution challenging the validity of the order. This petition was dismissed by the High Court. The appellant Municipality has now come up to this Court in appeal against the decision of the High Court.3. The questions that arise in this case will be stated after a few of the sections of the Act have been referred to. Chapter VII of the Act deals with municipal taxation. We shall be concerned principally with Ss. 59, 60, 61 and 62 which are all contained in this chapter and deal with imposition of taxes by Municipalities. It will be necessary also to consider S. 46.4. Section 46 gives power to a Municipality to make rules for various purposes as specified in the several clauses contained in it. Under cl. (i) of this section, a Municipality has power to make rules for the purpose of "prescribing, subject to the provisions of Chapter VII, the taxes to be levied." Section 59 is the section on which the decision of this case will really turn and we, therefore, think it right to set out that portion of it which is relevant for our purpose.S. 59. (1) Subject to any general or special orders which the State Government may make in this behalf, anyafter observing the preliminary procedure required by S. 60 and(b) with the sanction of the State Government in the case of City Municipalities.................... and subject to such modifications or conditions as under S. 61 the State Government..........................., in according such sanction, deems fit,may impose, for the purposes of this Act, any of the following taxes, that is to say,. . . .. . . . . . . . . . . . . . . . . . . . . . ... ...... ............... . ..........(iv) an octroi on animals or goods, or both, brought within the octroi limits for consumption, use or sale therein;Section 60 lays down the procedure to be observed by a Municipality preliminary to imposing a tax. It requires that first a resolution stall be passed at a meeting of the Municipality selecting the tax and making rules for the purposes of cl. (i) of S. 46 prescribing the tax. Thereafter the resolution has to be published with a notice in a Specified form inviting the inhabitants of the Municipal area to submit within a month their objections, if any, to the tax. After the objections have come in, they are to be considered by a Committee of the Municipality and unless on the report of the Committee the Municipality decides to abandon the tax, it had to submit the objections with its opinion thereon any modifications it desires to make and the rules prescribing the tax to the State Government. Section 61 provides that on receipt of the rules and the other things mentioned in S. 60 from the Municipality, the Government may refuse to sanction the rules, or return them to the Municipality for further consideration or sanction them with or without modifications or subject to conditions prescribed: Section 62 lays down that the rules as sanctioned by the Government shall be published by the Municipality and the tax shall, from the date which shall be specified in the notice publishing the rules, be imposed accordingly. It is not in controversy that in the present case the procedure prescribed in the sections mentioned above had been complied with.

Court's reasoning:
6. In our opinion, thecontention is well founded. The Municipalitys power to tax arises only under S. 59. Under that section, it has been given the power to impose a tax after following the procedure prescribed but subject always to the general or special orders of the Government. The appellant Municipality can succeed in this appeal only if the word "impose" in S. 59 means the acquisition of the power to tax by following the procedure laid down in Ss. 60 to 62. Its appeal must otherwise fail. It seems to us that the word "impose" in S. 59 has not the meaning for which the appellant Municipality contends.7. It would have been noticed that under S. 59 a Municipality may impose a tax only after it has framed a rule under S. 60 prescribing the tax to be levied and the Government has given its sanction to that rule under S. 61. It is this imposition which is made by S. 59 "subject to any general or special orders which the State Government may make in this behalf". Therefore, it is the imposition after the making of the rule authorising the tax, that is subject to the Governments orders and not the making of the rule itself, which authorises the tax. It is plain from S. 59 that the control over a Municipalitys power to tax imposed by the requirement of the Governments sanction of the rule prescribing the tax contained in S. 61, is not the same thing as the control contemplated by the general or special orders mentioned in S. 59, for both are mentioned in S.59.If it were not so, it would have been unnecessary to provide for the general or special orders controlling the imposition the tax in S. 59. This is the first reason why we think that the appellant Municipalitys contention is untenable.8. The imposition contemplated by S. 59 is clearly not the passing of the resolutions under S. 60 selecting the tax and making the rule prescribing the tax to be levied in norms of S. 46 (i), for S. 59(1)(a) expressly makes the imposition something happening after S. 60 has been complied with. This seems to us to be another reason for not accepting the appellant Municipalitys contention.9. The third reason is to be found in S. 62. As we have earlier stated, it provides that the tax shall be imposed from the date mentioned in the notice publishing the sanctioned rule. The choice of this date lies with the Municipality and not with the Government. The power to levy the tax is acquired by a Municipality when the rule prescribing the tax made by it is sanctioned by the Government. The Municipality at its own choice thereafter fixes it date from which it will collect the tax. Therefore, the word "impose" in S. 62 does not refer to the acquisition of power to levy a tax by making the rule but to the actual levy of the tax under the power so acquired. It is of some significance it note that in S. 46 (i) the words used are "make. . . . rules. . . . . , prescribing . . . . . , the taxes to be levied". What we wish to point out is that in connection with the making of the rules the Act uses the word "levied " in S. 46 (i) and in connection with an actual impost, the word "imposed in S. 62. We, therefore, think that it would be legitimate to construe the word "impose" in S. 59 in the sense in which it has clearly been used in a connected provision, that is, S. 62.Hence in our view, "impose" in S. 59 means the actual levy of the tax after authority to levy it has been acquired by rules duly made and sanctioned, and it is such imposition that is made subject to the general or special orders of the Government. Therefore, the Government can at any time by any such order prohibit the imposition of the73, does not empower an order prohibiting the imposition of a tax altogether as the order in the present case does. It only gives power to suspend the levy of the tax authorised till the objections to the tax which the Government required to be removed, had been removed. Because S. 73 gives a power to suspend the tax, it is, in our opinion, no argument that the general or special orders in S. 59 must be understood as confined to such order, Section 73 cannot help in interpreting the words "general or special orders" in S. 59.from the very interesting question raised by the learned Attorney General that the Municipality being a local authority, was a State, and was not therefore entitled to the benefit of Art. 14, as to which we think it unnecessary to express any opinion, we are on the facts satisfied that there is no discrimination. The Government has now, it is not disputed, prohibited all Municipalities from levying any octroi tax on milk. Furthermore, it has not been shown to us that all Municipalities stand on the same footing with regard togrievance is completely without foundation. The Government had earlier requested the appellant Municipality to drop the tax on the ground, among others, that milk was really being purchased for the Government and that the Government was not liable to be taxed by a Municipality. It may be that this ground was not justified on the facts, but as to this we do not come to any finding. It is clear to us that even if this stand taken by, the Government was not tenable, that it no reason for thinking that the order was made mala fide. It was said that the Government had made this order to benefit respondent No. 2, a co-operative union, dealing in milk. This is a bare allegation and is not supported by facts. In any event, since similar orders have now been made in respect of all Municipalities within the State, no question of mala fides can possibly arise.13. We think that the challenge to the order dated April 4, 1955 is without any foundation. In our view, that order was perfectly legitimate and must be upheld.