N. Balaraju and Ors. Vs The Hyderabad Municipal ... On 12 August, 1959

N. Balaraju And Ors. vs The Hyderabad Municipal ...
on 12 August, 1959
Andhra High Court

N. Balaraju And Ors. vs The Hyderabad Municipal ... on 12 August, 1959
Equivalent citations: AIR 1960 AP 234
Author: C Reddy
Bench: P C Reddy, M A Ansari
JUDGMENT Chandra Reddy, C.J.
1. The object of all these petitions is to prevent the Hyderabad Municipal Corporation from levying
octroi duty on some of the commodities that are brought into the city.
2. All the petitioners, except those in Writ Petitions NOS. 1351 of 1957, 74,174, 176, 676 and 789 of
1958 and 193/59 are excise contractors, who have taken contracts for the sale of toddy and sendhi
under the group system in auctions held in the year 1956. Under the terms of the contract, toddy
and sendhi were to be sold in the Secunderubad abkari limits in certain places. These petitioners
were allotted for tapping toddy and sendhi trees situated in several districts of the quondam
Hyderabad State including those which were merged in the States of Bombay and Mysore.
They were also given necessary permits to import and transport to the depots situated within the
municipal limits of Secunderabad. They started business on 1st October 1956 and the toddy and
sendhi were carried in lorries to their depots from the place of tapping in various districts. When
these articles reached the octroi barriers erected at the entrance to the Hyderabad municipality, they
were slopped and asked, to pay octroi duty. The petitioners questioned the power of the
municipality to levy octroi but, as the authorities concerned insisted on payment, they are alleged to
have paid it under protest as the goods could not be moved without complying with the demand.
It is said that subsequently representations were made both to the municipality and Excise officials
in that behalf but without any effect. The Minister in charge of Revenue Department also seems to
have been moved hut without success. Thereupon, this Court has been approached invoking its
jurisdiction under Article 226 of the Constitution for various reliefs.
3. At the outset, the vires of the Hyderabad Municipal Corporation Act, Act II of 1956 (hereinafter
referred to as the Act) is challenged. It is urged that it was not within the competence of the
Legislature to have enacted this measure and that, in any event, the proviso to Article 304 of the
Constitution has been violated in that the previous sanction of the President was not obtained.
Before we deal with this contention, it is useful to set out the circumstances under which octroi duty
came to be imposed.
4. The legislature of the erstwhile Hyderabad State enacted a law relating to Municipal corporations
in the twin cities of Secunderabad and Hvderabad in the shape of the Hyderabad Municipal
Corporations Act, 1956. That Act contains Chapter VIII, which confers powers on the Municipality
to impose, inter alia, a tax in the form of octroi. Octroi is defined in Clause 37 of Section 2 thus:
Indian Kanoon - http://indiankanoon.org/doc/1485082/
"Octroi means a cess levied on goods at the time of their entry into the limits of a city for purposes of
consumption, use or sale therein," Section 252 of the Act recites:
"Except hereinafter provided, octroi, at rates not exceeding those respectively specified in schedule
shall be levied in respect of the several articles mentioned in the said schedule or of so many of them
as the Corporation shall from year to year in accordance with Section 186 determine when the said
articles are imported from any place into the city." Section 253 says:
"The Commissioner shall cause tables of octroi for the time being leviable, specifying the rates at
which and the articles on which the same are leviable to be printed in the official gazette, and local
daily newspapers and to be fixed in a conspicuous position at every place at which the same octroi is
levied."
Section 254 exempts articles belonging to Government from octroi and refund of octroi on articles
becoming the property of the Government. Section 255 provides for the refund of the duty in regard
to articles imported for immediate exportation.
5. Pursuant to Section 252, the legislature has annexed Schedule H giving a list of articles, which are
liable for the payment of octroi. Among these articles are included wines and spirits, beer, fruit juice
and all beverages. In exercise of the powers conferred by Section 585 read with Section 197 of the
said Act, a draft of the Hyderabad and Secunderabad Octroi Rules was published on 28-7-1956 for
the information of persons likely to be affected and it was intimated therein that the draft would be
taken for consideration after the 27tli of August 1956 arid objections thereto were invited.
Alter the expiry of the period, this draft was confirmed and rules were made conformably to the
provisions of the Act and Schedule H of the Act. It may be noted that there is no variation even in
the rates of levy. By another notification issued on 17-8-1956, the rules were to come into operation
from 1st September 1956. That also appended a list of articles that were subject to octroi duty.
Under the heading 'edible', a number of articles are enumerated, item (n) being "fruit juice and
beverages". It was decided by the Municipality as far back as July 1956, there should be a single
agency for the collection of octroi for both Hyderabad and Secundrabad and one cordon for both
cities as octroi limit for collection. This received the approval of the Government.
6. The question arose as to what are the articles that were comprehended within the expression
'beverages' mentioned in Schedule H and also in the rules as published earlier. The Government, by
their letter dated 4th October 1956, clarified the matter by saying, inter alia, that the word
"beverages' in item (n) of sub-head 'Edible' included toddy and sendhi and that, therefore, octroi
might be collected on those articles also. It is in accordance with this that toddy and sendhi wore
subjected to octroi duty.
7. We shall now proceed to examine the relevant articles of the Constitution. Article 304, which is
alleged to have been infringed in the passing of the Act, reads as follows:
"Notwithstanding anything in Article 301 or article 303 the Legislature of a State may by law
(a) impose on goods imported from other States or the Union territories any tax to which similar
goods manufactured or produced in that State are subject, so, however, as not to discriminate
between goods so imported and goods so manufactured or produced and
(b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or
within that State as may be required in the public interest:
Provided that no Bill or amendment for the purposes of Clause (b) shall be introduced or moved in
the legislature of a State without the previous sanction of the President."
8. The petitioners seek to bring the impugned statute under the proviso to Clause (b) on the
argument that the impost of octroi is a restriction on the freedom of trade and, as such, attracts the
proviso. Admittedly, the previous sanction of the President was not obtained in this behalf. But the
assent of the President was given to this measure in February 1956. There is no dispute about the
subsequent assent of the President, but, the point presented is that this would not cure the detect
and, consequently, it should be struck down.
9. Freedom of trade and commerce is guaranteed under Part XIII of the Constitution in which
Article 301 occurs. Article 301 enshrines the principle of freedom of trade and commerce. That
Article says that 'Subject to the other provisions of this Part, trade, commerce and intercourse
throughout the territory of India shall be free".
It guarantees intra-State and inter-State trade and commerce i.e., it provides safeguards for carrying
on trade as a whole concerned with the passage of commodities either within or outside State limits.
The underlying idea of this Article is the preservation of the commercial unity of the country.
10. Article 302 authorises the Parliament to impose restrictions upon this freedom of trade between
the State and another or within any part of the territory of India it so required in public interest.
Article 303 prohibits discrimination being made between one State and another by virtue of any
entry relating to trade and commerce in any of the lists in the seventh schedule. Such discriminatory
measures could be passed, if it was necessary for the purpose of dealing with a situation arising from
scarcity of goods in any part of the territory of India. Section 304 is another such enabling measure.
11. Now the question that calls for decision here is whether the levy of octroi duty is a restriction
within the ambit of Clause (b) of that Article. It is urged that it operates as a restriction within the
purview of Clause (b) of that Article and, consequently, the proviso is attracted to it. For this
position, reliance is placed on a judgment of the Rajasthan High Court in Surajmal Baj v. State of
Rajasthan, .
It was ruled in that case that the imposition of octroi duty would constitute u restriction on freedom
of trade granted under Article 301 since there would be impediment to the movement of goods into
the municipal limits unless the tax was paid and that freedom implied that there should be no kind
of restriction on trade and commerce. The learned judges thought that their conclusion derived
support from a pronouncement of the House of Lords in James v. Commonwealth of Australia, 1936
AC 573.
12. The question that fell for consideration in the latter case was whether certain regulations
restricting inter-State trade were invalid in view of Section 92 of the Australian Constitution which
provided that, on the imposition of uniform duties of customs, trade, commerce and intercourse
among the States, whether by means of internal carriage or ocean navigations shall he absolutely
tree. What was impeached there was the Dried Fruits Act 1928-35 of the Parliament of the
Commonwealth of Australia as also the regulations made under that Act which had prevented the
appellant, who was a grower and processor of dried fruits in the State of South Australia from
sending his dried fruits out of South Australia in fulfilment of various inter-State contracts, which he
had made.
Disagreeing with the view of the High Court of Australia, their Lordships held that the Dried Fruits
Act. 1928-35 was invalid because the Act and the regulations made thereunder either prohibited
inter-State trade entirely if there was no licence or partially prohibited it if a licence was granted in
accordance with the Act and, as such, violated Section 92 of the Commonwealth of Australia
Constitution Act, the purpose of which has already been set out. In examining the scope of the
expression "absolutely free" this is what their Lordships said (at page 627):
"Free in itself is vague and indeterminate. It must take its colour from the context. Compare, for
instance, its use in free speech, free love, free dinner and free trade. Free speech does not mean free
speech; it means speech hedged in by all the laws against defamation, blasphemy, sedition and so
forth; it means freedom governed by law, as was pointed out in W. A. McArthur Ltd. v. Queensland,
(1920) 28 C.L.R. 530. Free love, on the contrary, means licence or libertinage, though, even so, there
are limitations based on public decency and so forth. Free dinner generally means free of expense,
and sometimes a meal open to any one who comes, subject, however, to his condition or behaviour
not being objectionable. Free trade means, in ordinary parlance, freedom from tariffs.
Free in Section 92 cannot be limited to freedom in the last mentioned sense. There may at first sight
appear to be some plausibility in that idea, because of the starting point in time specified in the
section, because of the sections which surround Section 92 and because the proviso to Section 92
relates to customs duties. But it is clear that much more is included in the term, customs duties and
other like matters constitute a merely pecuniary burden; there may be different and perhaps more
drastic ways of interfering with freedom, as by restriction Or partial or complete prohibition of
passing into or out of the State."
Their Lordships remarked that the word 'absolutely' did not add really anything to the word 'free'
but was merely employed rhetorically perhaps with the object of excluding the risk of partial or
veiled infringements.
13. It is the passage extracted above that was regarded as strengthening the opinion of the learned
Judges in . In our judgment, these remarks do not convey the idea that freedom of trade does not
involve imposition of taxes. It could not be forgotten that Section 92 talks of the imposition of
uniform duties of customs. In this context, we cannot also overlook the observations of their
Lordships that customs duties and other like matters constitute merely a pecuniary burden. Their
Lordships stated that "the true criterion seems to be that what is meant is freedom as at the frontier
or, to use the words of Section 112, in respect of 'goods passing into or out of the State'.
The following passage occurring at page 631 is also significant and, in our opinion, tends to dispel
the notion that freedom of trade implies freedom from all taxation.
"In every case it must be a question of fact whether there is an interference with this freedom of
passage. Their Lordships are of opinion that this construction is not inconsistent with any decided
case, with the doubtful exception of McArthur's case, (1920) 28 C.L.R. 530. As a matter of actual
language, freedom in Section 92 must be somehow limited and the only limitation which emerges
from the context, and which can logically and realistically he applied, is freedom at what is the
crucial point in inter-State trade, that is at the State harrier.' We feel that this only connotes that
trade, commerce or intercourse must be free from purposeful impediments and does not mean that
they should be free from all taxes or regulations. In our view, any measure, which operates to curtail
trade directly as distinguished from restriction envisaged in Clause (b) is unconstitutional (?) Any
Act which affects trade or commerce indirectly cannot be treated as a restriction for the purpose of
Clause (b). We find it difficult to postulate that the levy of a tax in the shape of octroi duty or in some
other form in anyway interfered with trade, commerce or intercourse as it does not prevent the
transportation of the goods from one State to another or within the four corners of a State. That
restriction should be the direct legal effect of the law and not the ulterior economical effect.
14. There is ample authority for the above opinion of ours. In State of Bombay v. R. M. D.
Chamarbaugwala, the Chief Justice of India accepted the principle that freedom of trade, commerce
or intercourse was infringed only when a legislative act resulted in restricting trade, commerce or
intercourse directly and immediately. Referring to the observations of Lord Porter in
Commonwealth of Australia v. Bank of New South Wales, 1950 AC 235, the Chief Justice of India
said:
"His Lordship deduced two general propositions from the decided cases namely (1) that regulation
of trade, commerce and intercourse among the States was compatible with absolute freedom and (2)
that Section 92 was violated only when a legislative or executive act operated to restrict trade,
commerce and intercourse directly and immediately as distinct from creating some indirect or
consequential impediment which might fairly be regarded as remote. The problem whether an
enactment was regulatory or something more or whether a restriction was direct or only remote or
only incidental involved. His Lordship pointed out not so much legal as political, social or economic
considerations."
15. It may be mentioned here that Section 92 of the Commonwealth of Australia Constitution Act is
similar to Article 301 of the Constitution.
16. In Atma Ram Budhia v. State of Bihar, AIR 1952 Pat 358, a Special Bench of the Patna High
Court ruled that the tax imposed by Part III of the Bihar Finance Act was not beyond the legislative
power of the State Legislature and was therefore valid. It was laid down there that these provisions
do not contravene any of the fundamental rights guaranteed under Articles 14, 19, 23 or Part XIII of
the Constitution of India and that the Act bad not in anyway affected the right of free trade or
business which the citizens enjoyed under Article 19(1)(g) of the Constitution. Sarjoo Prosad J, who
delivered the leading opinion of the Court said:
"Taxation is not a restraint on trade unless it is discriminatory in its character and is levied with the
object of helping one person or party against the other."
Further down in the judgment, it is said:
"For the purposes of the present discussion, it would be enough to say that the real test in such cases
should be to examine whether the legislation is directly in respect of any of the rights mentioned in
Article 19. It is only then that the question whether that legislation is saved by appropriate saving
clauses of Article 19 will arise. If, on the other hand, the legislation is not directly in respect of these
subjects but by the operation of the statute incidentally or remotely some of the rights are affected or
infringed, the application of Article 19 does not at all arise."
17. These observations apply with equal force to Article 304 of the Constitution as the rights
conferred by Chapter XIII are similar to those, in Article 19, the former relating to the field of
commerce trade and intercourse, while the latter deals with the freedom of an individual in several
spheres of life.
18. Another Bench of the same Court in Bengal Immunity Co. v. State of Bihar, applied this doctrine
to the Bihar Sales Tax Act. It was, inter alia, decided in the latter case that the Act in its true nature
and character was not an enactment with reference to freedom of trade or commerce and
consequently it was not repugnant to Article 304 of the Constitution,
19. The Travancore-Cochin High Court has also expressed the same opinion. It was held in A. V.
Fernandez v. State, (S) AIR 1955 Trav Co. 126 that the Travancore Cochin General Sales Tax Act was
not open to challenge under Article 303(1) of the Constitution and that the restriction on the
freedom of trade and commerce had not resulted from the provisions of the impugned Act.
20. Another Bench of the same Court in Parameswaran v. Sub Magistrate Koothattukulam, had laid
down that the Travancore-Cochin Vehicles Taxation Act had not in anyway interfered with the
freedom of trade, commerce and intercourse, since it was only a fiscal enactment coming under
Entry 57 of List II of the Seventh Schedule, and as such it did not require the prior sanction of the
President.
21. The effect of Guruviah Naidu v. State of Madras, 1957-2 Mad L.J. 469: (AIR 1958 Mad 158) is
also the same. See also Emperor v. Munna Lal, AIR 1942 All 156.
22. It is clear from the several decided cases that taxation does not cause interference with the right
guaranteed under Article 304 of the Constitution and it is not a restriction within the scope of
Clause (b). A taxing measure, which deals directly with the imposition of tax on goods and does not
profess to lay any restriction on trade or commerce is not governed by Article 304(h). For these
reasons, we express our respectful dissent from .
23. It looks to us that Article 304 has drawn a distinction between a tax measure imposing certain
restrictions and other kinds of legislation placing general limitations upon freedom of trade. If really
Clause (b) has reference to fiscal enactments Clause (a) becomes redundant since that also deals
with taxing measures. That shows that they concern two distinct and different kinds of restrictions.
The restrictions contemplated by Clause (b) are those which have a direct impact on the Tight
guaranteed under Article 301 of the Constitution working interference on trade and commerce and
not the indirect consequence following upon taxation.
It is apparent from the Constitution that taxation is regarded as a distinct matter for the purpose of
legislative competence. A perusal of the various entries in the Union list as well as the State lists
discloses this. Items 1 to 81 in list I enumerate general topics, while items 82 to 97 deal with powers
of taxation. Similarly, items 1 to 44 of list II i.e., the State list bear on general subjects, while items
45 to 63 and 66 concern the taxing authority of the States. In this situation, we are unable to accede
to the theory propounded for the petitioners that the enactment is governed by Article 304(b). We
are also of opinion that the two rulings cited by Sri Ramachandra Rao, counsel for some of the
petitioners, viz., Anantakrishnan v. State of Madras, AIR 1952 Mad 395 and McCulloch v. State of
Maryland, (1857) 4 Law Ed. 579 are not of much avail to the petitioner.
24. In the first of them Section 3 of the Indian Stamp Act (Act I of 1899) which enacted that the
instruments mentioned in Schedule I should be chargeable with duty of the amount indicated in the
schedule as the proper duty thereof subject to certain exceptions and item 30 of Schedule I were
called in question by a person, who wanted to be enrolled as an advocate. By reason of item 30, an
Advocate to he entered on the roll of any High Court had to pay a sum of Rs. 500/-. This amount
was enhanced to Rs. 625/- by the Madras Stamp (Amendment) Act (Act VI of 1922).
The point raised there was whether this was repugnant to Article 19(1)(g) of the Constitution which
declared the right of every citizen to practise any profession or to carry on any occupation, trade or
business'. This argument did not find favour with the Bench of the Madras High Court and it was
held that the impugned provision was quite valid and that it was not in any way opposed to the
fundamental right of the petitioner therein. It is in solving that problem that the following remarks
relied on by the learned counsel for the petitioners were made by Venkatarama Ayyar J, one of the
Judges constituting the Bench;
"As already pointed out, there is a difference between profession tax and income-tax. The power of
levying a tax on income is absolute and if the legislature chooses to levy a tax of fifteen annas in the
rupee on that income, courts will have no jurisdiction to declare it unconstitutional on the ground
that it is unreasonable. But a right to carry on business is a fundamental right protected by the
Constitution and it stands to reason that a tax on such a right should not be such as to destroy it--as
for example--a professional tax equal or nearly equal to the income earned in the previous year. It
might well be contended that there is in such cases a limitation on the powers of taxation, implicit in
the Constitution itself, that it should not be exercised in such a manner as to take away with one
hand what has been given by the other. If this is the correct position, it will follow that, while the
levy of income-tax cannot be questioned On the ground that it is so unreasonable and excessive as to
be prohibitive of the right to carry on trade. Any question whether a tax in a particular case is so
unreasonable as to amount to a destruction of the rights, will, of course be a matter for
determination by courts, in the same manner as question of reasonableness of restrictions under
Article 19, Sub-clauses 3 to 5."
We do not think that the rationale underlying the passage has any application to a situation like this.
The learned Judges there were not concerned with the question whether a tax measure is attracted
by Clause (b) of Article 304. Secondly, all that is stated there was that when there is a limitation
upon the power to tax, that power should not be so exercised as to destroy fundamental rights. That
is not the position here.
There is no question of limitations set by the statute upon the power of taxation having been
disregarded, as the cesses levied were within the limits set by the schedule. Nor would it be urged
that the taxes here are so excessive or prohibitive as to destroy the right to carry on trade. Chief
Justice Rajamannar, who gave the leading opinion of the Court, observed that if the taxation was
only for legitimate revenue purposes, it would not become invalid merely because it might adversely
affect any of the fundamental rights. So, that judgment is not in point and does not carry the
petitioners anywhere.
25. In the second one, the question was whether the State of Maryland could tax a branch of the
Bank of the United States which was established in the city of Baltimore. The Bank of the United
States had constitutionally a right to establish its branches or offices of discount and deposit within
any State. Notwithstanding this, by virtue of the provisions of an Act to impose a tax on all banks, or
branches thereof in the State of Maryland, not chartered by the legislature, the State sought to tax
that branch.
This right of the concerned State was challenged in the Baltimore County Court. When the matter
went before the Supreme Court ultimately, the plea of the Bank that the impost on that branch was
violative of the Constitution of the United States was upheld. The opinion of the Supreme Court was
that the Act incorporating the Bunk of United States was a law made in pursuance of the
Constitution and, as such, is a part of the Supreme law of that land, that the branches proceeding
from the same stock and being conducive to the complete accomplishment of the object were equally
constitutional and, therefore, the State of Maryland was restrained from exercising any power which
in its nature might be incompatible with and repugnant to the constitutional laws of the Union.
It was laid down that the States had no power 'by taxation or otherwise' to retard, impede, burden or
in any manner control the operations of the constitutional laws enacted by the Congress to carry
into effect the powers vested in the national Government. In the result the law passed by the
legislature of Maryland imposing a tax on the Bank of the United Status was struck down as
unconstitutional and void. The position here docs not resemble that envisaged in (1857) 4 Law Ed.
579 as the question of any repugnancy between the State Laws and Union Laws does not arise here.
Nor did a controversy involved in this enquiry present itself before the Supreme Court.
26. Even on the assumption that Article 304(b) takes in legislation of the kind involved in this
enquiry, we do not think that the Act is open to attack on the ground of non-compliance with the
proviso. Under the proviso, bills dealing with subjects tailing under Clause (b) should first receive
sanction before they are moved or introduced and, in this case, such an ingredient is absent. That
however does not render this enactment void in this case, since the presidential assent has been
contained that is the effect of Article 255 of the Constitution. It is convenient to read that Article
here, omitting unnecessary portions :
"No Act of Parliament or of the Legislature of a State and no provision in any such Act, shall be
invalid by reason only that some recommendation or previous sanction required by this
Constitution was not given, if assent to that Act was given XX XX XX
(e) where the recommendation or previous sanction required was that of the President by the
President."
This Article covers precisely cases that come within the mischief of the proviso. If that Article docs
not govern the proviso to Article 304, it becomes otiose. To accept that argument will be to ignore
the definite terms of Article 255 of the Constitution and to give inadmissible weight to it.
27. The corner-stone of the argument on behalf of the petitioners that Article 255 would not come to
the rescue of measures or bills which are introduced without the prior sanction of the President is
the remark in a passage in a judgment of their Lordships of the Supreme Court in Saghir Ahmed v.
State of U. P. . The observations called in aid are the following:
"If this view is adopted in regard to Article 301 of our Constitution, it can plausibly be argued that
the legislation in the present case is invalid as contravening the terms of the Article. The question of
reasonable restrictions could not also arise in this case, as the Bill was not introduced with the
previous sanction of the President as required by the proviso to Section 304(b). It is true that the
consent of the President was taken subsequently but the proviso expressly insists on the sanction
being taken previous to the introduction of the bill"
Torn out of the context, the last two sentences may appear to give support to the contention of the
petitioners. But this has to be considered in the light of what has been said by their Lordships both
in the earlier paragraph as also at the end of the judgment. It is clear from the previous paragraph
that their Lordships were only setting out the several contentions that have been or could be raised
in that case. Said their Lordships earlier :
"We have thus indicated only the points that could be raised and the possible views that could be
taken but as we have said already, we do not desire to express any final opinion on these points as it
is unnecessary for purposes of the present case,"
Thus, it is plain that no final opinion was expressed by the Supreme Court in that case.
28. Subsequently, the Supreme Court in 1957 SCJ 607 at p. 623: ((S) AIR 1907 SC 699 at p. 712)
decided that Article 255 saves an enactment despite non-fulfilment of the condition laid down by the
proviso. The following remarks contain the principle in that regard:
"It is conceded that the bill which became Act XXX of 1952 and amended the 1948 Act in the
manner hereinbefore stated was introduced in the legislature of the State without the previous
sanction of the President and consequently the condition precedent to the validity of the resulting
Act as laid down in the proviso had not been complied with, but it is submitted, we think correctly
that the defect was cured under Article 255, by the assent given subsequently by the President to the
impugned Act."
29. The rule stated in Balmukund v. Gadi Narayana, AIR 1943 Nag 312 which discusses the
applicability of Section 109 of the Government of India Act, 1935, which is in pari materia with
Article 255 of the Constitution, accords with our conclusion here. The underlying idea of the proviso
to Article 304 seems to be that legislations, which affect adversely trade and commerce, should be
considered by the President, as the aim and object of Chapter XIII is to establish commercial unity
of the country and that it should not be left to individual States to enact measures indiscriminately,
which will have the effect of curtailing inter-State trade. It is for this reason that the proviso was
inserted, so that the Central Government may be appraised of the intention to enact such measures.
This object could also be achieved by reserving it for the consideration of the President subsequently
and this is illustrated by Article 255, which speaks in clear and unequivocal terms.
30. At this stage, it is convenient to deal with another contention, namely, that the rules and bylaws
framed in respect of all matters prescribed under the Act should not only be laid before the
legislative assembly but prior sanction of the President should be obtained as well before they are
made. The foundation for this argument is a judgment of a Bench of Bombay High Court in State of
Bombay v. R.M.D. Chamarbaugwala , where Chief Justice Chagla observed in the course of the
judgment that, where restrictions within the purview of Part XIII of the Constitution were
introduced by rules after the President had given his assent to an enactment, the rules would be
ultra vires the Legislature since the Presidential bat is not there in regard to that also.
We do not consider this ruling as having any bearing on this enquiry. The learned Judge has made it
clear that, if the legislature had indicated its policy and given a mandate to the Government and the
rules were framed in pursuance of the mandate, then it could be said that the President applied his
mind to the policy underlying the rules. If the policy is indicated in the enactment itself, then the
rules would not suffer from such an infirmity. Moreover, in that case, it was the rules that laid the
restrictions.
Such a situation does not obtain here for the reason that the rules do not contain any restrictions
which are not traceable to the enactment itself. Schedule II, which is a part of the statute has made
provision for all these matters and there is nothing new in these rules. To say that the rules made
under an Act should also comply with the proviso to Article 304(b) is to incorporate something into
10
it, which is not warranted by the language of the Article. Thus, there is no force in this submission
either.
31. The next point that requires consideration is whether this Act is within the legislative
competence of the erstwhile Hyderabad State. What is maintained on behalf of the petitioners is that
entry 52 of list II clothes the State Legislature with power to pass laws authorising the imposition, of
tax on the entry of goods into a local area for consumption, use or sale therein, while the impugned
enactment enables the Municipality to levy cesses. This argument is based on the definition of,
octroi duty in Section 2(37) of the Act, which reads:
"Octroi means a cess levied on goods at the time of their entry into the limits of a City for purposes
of consumption, use or sale therein."
Octroi duty being only a cess could not come within the sweep of entry 52, continues the learned
counsel. He seeks to gather support for the theory that tax and cess are different things from a ruling
of the Madhya Bharat High Court in Gwalior Sugar Co. Limited v. State of Madhya Bharat, AIR 1954
Madh B 196, where the learned Judges pointed out the distinction between cess and licence fee. A
cess is a tax levied for a specific purpose often with a prefixed word defining the object. A licence, on
the other hand, involves a permission to trade subject to compliance with certain conditions and
cess is not a licence fee. We do not see how this judgment renders any assistance to the petitioners.
The learned Judges have defined 'cess' as a tax imposed for a particular purpose.
32. That apart, entry 52 itself empowers the imposition of a tax on the entry of goods into the local
area for consumption, use or sale therein. This can have reference to taxes or cesses of the same
nature as octroi duty. The meaning of 'cess' as given in the Chambers Twentieth Century Dictionary
is a tax, a local rate. Thus, cess is a tax confined to local area for a particular purpose. Cess and tax
arc interchangeable words so far as taxing power is concerned.
33. That no such distinction was sought to be made by the Constitution as suggested by the counsel
for the petitioners is borne out by Article 277 and Article 266 Article 277 so far as it is relevant for
this enquiry says:
"Any taxes, duties, cesses or fees which immediately before the commencement of this Constitution
were being lawfully levied by the Government of any State or by any municipality or other local
authority or body for the purposes of the State, municipality, district or other local area may,
notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union list, continue to
be levied and to be applied to the same purposes until provision to the contrary is made by
Parliament by law."
Again "taxation" is defined as including the imposition of any tax or impost, whether general or local
or special and tax shall be construed accordingly.
34. The expression "tax" is used in a very wide sense and embraces cesses. The legislature has not
employed in the instant case the word as connoting anything different from a tax. It could not be
11
posited that the levy of octroi duty is not an imposition coming within the definition of taxation in
Clause 28 of Article 366.
35. The same concept is given expression to by the Supreme Court in Commissioner of Hindu
Religious Endowments v. Lakshmindra Thirtha Swamiar 1954 SCJ 335 at p, 358: (AIR 1954 SC 283
at p. 295). This is what Mukherjee J. says:
"Article 277 also mentions taxes, cesses and fees separately. It is not clear, however, whether the
word 'tax' as used in Article 285 has not been used in the wider sense as including all other
impositions like cesses and fees; and that at least seems to be the implication of Clause 28 of Article
266 which defines taxation as including the imposition of any tax or impost, whether general, local
or special. It seems to us that though levying of fees is only a particular form of the exercise of the
taxing power of the State, our Constitution has placed fees under a separate category for purposes of
legislation and at the end of each one of the three legislative lists, it has given a power to the
particular legislature to legislate on the imposition of fees in respect to every one of the items dealt
with in the list itself."
36. It may be mentioned that entry 49 in list II of the relevant schedule of the Government of India
Act refers to this form of taxation as a cess on the entry of goods into a local area for consumption.
Presumably, the Constitution makers introduced the word 'tax' in the present item to make it more
comprehensive.
37. In Daulat Ram v. Lahore Municipality, AIR 1941 Lab 40 Din Muhammad J., after referring to the
definition of cess in Murray's Oxford Dictionary as a tax levied for a specific object, remarked that it
was impossible to distinguish tax from cess or duty and that though the draftsmen had used three
different terms in different parts of the Government of India Act, they did not convey different ideas
thereby.
38. There remains the question whether the erstwhile Legislative Assembly had in any way
encroached upon the field reserved for the Union Parliament in enacting the impugned measure.
What is argued by Sri Sanyasiraju for sonic of the petitioners is that the offending Act authorises the
levy of duty which is nothing but an excise duty or an import duty. It is said that the impost on
commercial goods falls within tile purview of entry No. 41, which refers to 'trade and commerce with
foreign countries, import and export across customs frontiers and definition of 'customs frontiers',
entry 42 which deals with inter-State trade and commerce and entry 83 which deals with dutius of
customs including export duties.
He also attempted to substantiate du's proposition by citing to us certain passages from Chanter XIV
of Cooley's Constitutional Limitations, which discusses the powers of taxation of a State. Those
passages are not of any help to the petitioners, The author there discusses several aspects of the
powers of the State to impose taxes, which power rests upon necessity and is inherent in every
sovereignty,
12
39. To take up first entry 83 of list I, it is concerned only with customs and export duties and has
nothing to do with taxes to be collected on goods imported into a local area. Octroi duty falls
exclusively within the intendment of entry 52 of List II and is unconcerned with item 83 of List I.
This view of ours is reinforced by a pronouncement of the Supreme Court in Ram Krishna
Ramanath Agarwal, Kamptee Firm, v. Secretary, Municipal Committee, Kamptee . It was decided
there that octroi duty as imposed by the Municipality on tobacco under Section 60(1) of the Central
Provinces Municipalities Act fell within the ambit of entry 49 of list II of the Seventh Schedule to the
Government of India Act, which is the same as the present item 52 and that such, a levy could not be
regarded as an excise duty.
40. In Murli Manohar v. State of Uttar Pradesh, (S) , the validity of a cess or tax imposed by the
State Government on sugar cane entering the premises of sugar factories in Uttar Pradesh was
assailed on grounds, inter alia, that it was beyond the competence of the State Legislature, the
reason offered in support of this ground being that a cess of that nature was an excise duty within
the meaning of entry 45 of list I of the Seventh Schedule to the Government of India Act, which is in
the same terms as entry 48 of the Union List. This argument was negatived on the ground that it was
not an excise duty on sugar.
41. Nor is the submission that a measure like the impugned Act, falls within the scope of items 41
and 42 of List I admissible. Those two entries deal with topics regulating matters indicated in them.
These entries do not confer any power on the Union Parliament to make laws for the imposition of
taxes. The aim and object of those two entries is altogether different from that of entry 52 of List II.
As already pointed out in another context, a glance at the several entries in the different legislative
lists would establish that taxation was not intended to be included in the items which deal with
general subjects and that it was a distinct matter for the purpose of legislative powers, This is
brought out forcibly, if we may say so with respect, by Venkatarama Ayyar J. in Sundara Ramier and
Co. v. State of Andhra Pradesh. thus:
"The above analysis -- and it is not exhaustive of the entries in the lists--leads to the inference that
taxation is not intended to be comprised in the main subject in which it might on an extended
construction be regarded as included, but is treated as a distinct matter for the purposes of
legislative competence."
On this discussion, it follows that the constitutionality of the Hyderabad Municipal Corporations Act
would not be questioned on any ground and that it is a valid piece of legislation. That being the
position, the further argument of Sri Sanyasiraju that there is overlapping between the entries of
respective lists and in that position the Central list should prevail should be rejected as being utterly
devoid of substance. Nor is his contention that entry 52 is vague and misleading and is only a
repetition of the items in list I and is attributable to unskilful draftsmanship of the
Constitution-makers deserve, any serious consideration.
42. We shall next examine the tenability of a contention founded upon an order alleged to have been
passed by the then Revenue Minister. The complaint made on behalf of some of the petitioners is
this. On a petition submitted to the Revenue Minister questioning the legality of the impost on the
13
ground that as the toddy contractors paid rentals as also tree tax, it would be unjust that the
petitioners should be saddled with the additional burden contrary to the terms of the contract
entered into with the Government, he endorsed on 13th October 1956 that the levy of octroi duty on
Sendhi and toddy was illegal, that it should not be recovered from the petitioners and, if necessary,
the duty must be met from the Government treasury and that if any amount should have been
recovered from the excise contractors, the amount so recovered should he adjusted towards the
rental on production by the contractors of the receipts of such payments.
This endorsement is sought to be invested with the character of an enforceable order creating a right
in the petitioners to compel Government to direct the Municipality to cancel the levy or itself to
meet the burden. We do not fancy how such an alleged endorsement could have any of the results
that are ascribed to it. On their own showing, no order was communicated by the Government to the
petitioners exempting them from the payment of octroi duty, which means that no effect was given
to that opinion for some reason or other. That implies that the endorsement was in the nature of an
opinion by a Minister and would not have the postulate of a decision with regard to their rights.
43. There are also other difficulties in the way of giving weight to this contention. Article 166 of the
Constitution recites that all executive actions of the Government of a State shall be expressed to be
taken in the name of the Governor. Clause 2 of that Article says:
"Orders and other instruments made and executed in the name of the Governor shall be
authenticated in such manner as may be specified in rules to be made by the Governor and the
validity of an order or instrument which is so authenticated shall not be called in question on the
ground that it is not an order or instrument made or executed by the Governor."
That Article provides for making rules for the allocation of portfolios amongst the various Ministers.
Therefore, the allocation of distinct subject to different Ministers is only for the sake of convenience
and any order passed by any Minister shall be deemed to have been made by the Governor on the
advice of his Council of Ministers.
44. Article 166, which was applicable to Part-A States was made applicable to Part B States by
reason of Article 238 of the Constitution, with the result that all principles enshrined in Articles 166
and 167 are attracted to Part VII, which deals with Part B States except to the extent modified in the
latter part. By reason of Article 166 read with Article 238, the Rajpramukh was empowered to make
rules for the conduct of governmental business of a State. Rules were made by the Rajpramukh of
the erstwhile Hyderabad State pursuant to the relevant provisions of the Constitution for the
distribution of Governmental functions amongst the various ministers in exercise of the powers
conferred under Article 166 read with Article 238 of the Constitution of India.
45. Rule 3 says that the Rajapramukh on the advice of the Chief Minister shall allot among his
Ministers the business of the Government by assigning each department of the Secretariat to the
charge of a Minister or Ministers. Under Rule 6, certain cases could be brought before the Council of
Ministers either by the direction of the Rajpramukh or the Chief Minister or the Minister-in-charge
of the case with the consent of the Chief Minister. Rule 7 provided for bringing before the Council of
14
Ministers the following cases:

xXXX
(c) any proposal affecting the finances of the State or for re appropriation within a grant in which
the Minister in charge of the finance Department has not concurred.
Rule 10 recites that no department shall without previous consultation with the Finance Department
authorise any orders (other than orders pursuant to any general delegation made by the Finance
Department) which either immediately or by their repercussions, will affect the finances of the State
or which in particular either x x x x
(c) in any way involve any relinquishment of revenue. Sub-Rule 2:
No proposal which requires previous consultation with the Finance Department under Sub-rule 1,
but in which the Finance Department has not concurred, may be proceeded with unless a decision to
that effect has been taken by the Council of Ministers.
46. Rules 11, 13 and 14 are also important and they are set out hereunder:
"(11) Without prejudice to the provisions of Rule 5, the Minister in charge of a department shall be
primarily responsible for tendering to the Rajpramukh advice as to the disposal of the business
appertaining to that department.
(13) All orders or instruments made or executed by order or on behalf of Government shall be
expressed to be made by or by order of the Rajpramukh.
(14) Save in cases where an officer has been specifically empowered to sign an order or instrument
of the Government of Hyderabad every such order or instrument shall be signed by either a
Secretary, an additional Secretary, a Joint Secretary, a Deputy Secretary, an Under Secretary or an
Assistant Secretary to the Government of Hyderabad and such signatures shall be deemed to be the
proper authentication of such order or instrument."
47. If the matter is considered in the light of these rules, it is abundantly clear that the order in
question could not be issued by the Revenue Minister by himself independently and that it will be
ineffectual for various, reasons. Indisputably, if effect were to be given to that order, it would affect
the finances of the State and, as such, it had to he brought before a Council of Ministers. Otherwise
it could not be issued without the previous consultation of the Finance Department as indicated by
Rule 10.
According to Rule 11, the Minister could only tender advice to the Rajpramukh in regard to matters,
which are within his sphere, and, by reason of Rule 13, all orders or instruments made or executed
by order or on behalf of Government should be expressed to be made by or by order of the
Rajpramukh, embodying the same conception as Article 166 of the Constitution. Rule 14 has
15
empowered the Secretaries or other persons enumerated therein to sign orders on behalf of the
Government. Thus, an individual Minister could not issue orders in his own name independently of
the Secretariat even in regard to mutters that are within the portfolio allotted to him.
48. The object of Articles 166 and 238 is to prescribe the mode in which the business of the
Government should be carried on as between the Governor and the Ministers and Secretaries of the
Government in Part A States and the Rajpramukh. his Ministers and Secretaries in Part B States. In
both the categories of States, in theory, the responsibility rested on the Governor or the Rajpramukh
as the case may be for carrying on the administration. He is the Executive head of the State and
whatever functions were to be performed by the Governor they were to be performed in the name of
the head of the State.
Therefore, whenever the Government of a State, either Part A or Part B State, acts, its acts were to be
expressed in the form of an order and that order was to be issued by the Secretary or some other
officer authorised in that behalf in the name of the Governor or the Rajpramukh. It is true, that,
under the concerned rules, the Minister in charge of the portfolio may he mainly responsible for
tendering advice to the Rajpramukh for the disposal of the business relating to the subjects allotted
to him hut whether the advice was accepted by the Rajpramukh or not could not be investigated by a
Court. Until that advice is accepted by the Rajpramukh and is given effect to by the issue of an order
in conformity with the terms of Article 166, it does not become an order of Government and could
not be operated.
49. This opinion is shared by Rajagopalan and Rajagopala Ayyengar JJ. in Messrs. Poineer Motors
Ltd. v. Majeed Mirania Motor Service, . There learned Judges decided that the decision by a
Minister in the exercise of revisional powers conferred by Section 64-A of the Motor Vehicles Act as
it stood prior to Act 39 of 1944 but not communicated to the parties would not amount to an order
of the Government and it acquired that quality only when it was embodied in a formal order issued
in the form as laid down by Article 166.
50. The following observations occurring at p. 442 (of Mud LJ): (at p. 57 of AIR) are quite apposite
in this context:
"The order of the Minister is not final, for another Minister may call for the file and bring up the
matter before the Council, for he is entitled to do so, as every Minister assumes responsibility for
that order. Again, the Secretary might disagree with that order and have the matter brought up for
reconsideration by the Minister...the Governor may call for the file and have the matter brought up
before the Council of Ministers. All these matters might take place before the stage of finality is
reached at the ministerial level and it is only when the Secretary of the Department or those under
him named in Rule 12 affix their signatures to the order, that the Governor's assent to the issue of
that order is taken to be signified, so that it is only then that it becomes an order of the
Government."
The situation hero is analogous to that in that case. The present is an a fortiori case for the reason
that here the orders have not been even communicated.
16
51. This position is contested by Sri Subbarayudu for some of the petitioners on the reasoning that,
under the laws prevailing in the Hyderabad State the Revenue Minister could take decisions and
pass orders, that they came into operation the moment they were noted on the file and that the
order passed in the instant case being a judicial one affecting the rights of the parties, it will take
effect whether it is communicated or not. In support of the first branch of the argument, he drew our
attention to some of the cases disposed of by the erstwhile Hyderabad High Court in which orders of
the Revenue Minister were sought to be quashed viz., Trimbak Prasad v. State of Hyderabad, AIR
1952 Hyd 10, Rachamma v. The Hyderabad State, ILR (1954) Hyd 632; (AIR 1954 Hyd 210) and Mir
Liaqat Hussain v. Minister for Revenue, Government of Hyderabad, I.L.R. 1956 Hyd 243.
In these cases, the decisions of the Revenue Minister were attacked on some ground or other, But
they have no bearing on the present enquiry. For one thing, under the enactments under which the
orders were passed by the Revenue Minister, he was specifically authorised to make those orders
and further it might also be that under the then rules the order could be issued in the name of an
individual Minister and the problem was not posed in those cases whether an individual Minister
could issue orders in his own name and without reference to the concerned Secretaries or the
Rajpramukh.
We do not also know whether 'the orders actually went in the name of the Rajpramukh, Whatever
that be, the rules extracted above do not warrant the proposition that orders could issue in the name
of an individual Minister and without reference to the Government. Moreover, as already pointed
out, in this case it remained only in the stage of noting and had not taken a final shape, namely, of
its being embodied in an order.
52. The ruling relied on by Sri Subbarayudu for the proposition that an order to be effectual need
not be communicated viz., Dattatreya v. State of Bombay, is not relevant here. In that case, the
legality of an order of detention under the Preventive Detention Act was contested, inter alia, on the
ground that there was no valid order of confirmation and that a confidential communication from
the Home Department could not be regarded as an order under Section 11(1) of the Act.
The objection raised on behalf of the detenu was overruled on the ground that the order was not a
nullity even though it has not been expressed to be made in the name of the Governor. It cannot be
overlooked that, in that case, the order under Section 11(1) purporting to be that of the Government
of Bombay was signed by an officer, who was competent to sign according to the rules framed by the
Governor. The only infirmity was that it did not issue in the name of the Governor.
It was pointed out that Article 166(1) of the Constitution was confined to cases where the executive
action is required to be expressed in the shape of a formal order or notification or any other
instrument. That ruling could have no application to the instant case for the reasons that it was a
mere opinion expressed by a Minister, that it was never communicated and that it did not purport to
be that of the Government nor signed by the Secretary.
53. We are also unable to see how such an opinion could be regarded as a judicial or quasi-judicial
one. There is no provision either in the Hyderabad Municipal Corporations Act or in the Hyderabad
17
Abkari Act empowering the Revenue Minister either to direct the Municipality to desist from levying
or collecting octroi duty or to direct the Government to meet the demand made by the Municipality
in that regard.
Our attention was not drawn to any statutory provision in any enactment clothing the Revenue
Minister with such power. If effect were to be given by the Government to a note made by one of the
Ministers, certain rights might low from it. But It could not have the characteristics of a judicial
order. None of the attributes of a judicial order are present in the instant case. It is only an opinion
expressed by a Minister on the I administrative side. Even if such an opinion is enforceable, such of
the petitioners to whose benefit the noting might enure, could request the Government for a rebate
of the rentals and, if that is not complied with, they could resort to such remedies as are open to
them. Moreover, this court cannot give a direction either to the Rajpramukh or to the Government
as constituted to give effect to the noting of a single Minister. We are not shown any instance where
a duly constituted Government was compelled by a Court to accept the advice or opinion of one of
the Ministers. This is not the forum for agitating such matters.
54. If it is a term of the contract as suggested by him that the Government should pay octroi duty, he
could enforce it in ordinary courts of law. Further, the terms of the contract have not been placed
before us which could lead to any such inference. It follows that this contention is also inadmissible
and has to be rejected.
55. We will next deal with the argument that toddy and sendhi, being the property of the
Government, are exempt from octroi duty by virtue of Section 254 of the Act. In our opinion, this
submission is devoid of substance. Merely because Government receives rentals for granting lease
for the sale of liquor in the State or receives tree tax for permitting palmyra and date trees to be
tapped, the toddy or sendhi does not become the property of the Government.
By selling contracts in public auction for the sale of liquor, the Government merely realises the
abkari revenue but has no proprietary right in the toddy or sendhi. Government merely confers a
right on the contractor by the issue of a licence to sell toddy or sendhi at a particular place. It is for
the grant of this licence or privilege that the rentals are paid. The Government does not acquire any
right in the toddy or sendhi extracted from the palmyra or date trees and their position cannot be
equated to that of the owners of the toddy or sendhi.
Indisputably, the Government is not entitled to the sale proceeds. They surely belong to the
contractors who pay the rentals, the tree tax, remuneration to the tappers and the transport charges
and who appropriate the realisations to themselves. The various sections of the Abkari Act or the
Land Revenue Act to which our attention was drawn do not either individually or cumulatively
establish the proposition that ownership in the goods is in the Government. If the proprietorship of
the toddy and sendhi vest's in the Government, the whole price realised must be remitted to the
Government treasury the contractors being entitled only to some remuneration for having
undertaken to sell toddy and sendhi by way of commission or fixed wages. Surely, that is not the
position here.
18
The petitioners would not be willing to concede the right of the Government to take away the sale
proceeds. By obtaining these contracts, the contractor only gets his licence to carry on trade in toddy
and sendhi on payment of rentals and tree tax and the various amounts he pays are for granting him
the permission.
56. Even if it is assumed that it is the property of the Government, that is not sufficient to entitle the
contractor to gel the benefit of Section 254 of the Act.
57. Another requisite should exist before that section is invoked, namely, that the article is used or
intended to be used solely for public purposes and not to be used or intended to be used for the
purpose of profit. Surely, it could not be postulated that toddy and sendhi are used for public
purposes and not for the purpose of profit.
Whether it is solid for the benefit of the Government or for the benefit of the contractors, it is for the
purpose of profit. It cannot be posited that the importation of toddy and sendhi in for a public
purpose. The sale of liquor to individual members of the public Far a price could not come within
the connotation of public purpose. For these reasons, we are unable to give effect to this argument
also.
58. It is convenient to dispose of here the complaint made by Sri Ramchandra Rao for some of the
petitioners that, although the toddy and sendhi were brought into the city for use in the shops
outside the city limits, octroi duty was levied on that also. It is said that a portion of the toddy and
sendhi transported into the city was for sale at Uppala and Ramanadhapuram and consequently
they could not be subjected to octroi.
If the facts arc wellfounded, the argument is a substantial one. Under Section 255 of the Act if any
commodity is brought into the city for immediate exportation, it is exempt from tax under the
conditions, indicated therein and If octroi has been paid upon the article and it has been exported
afterwards from the city, the full amount of the octroi so paid, by force of Section 256 of the Act,
would be refunded.
That being The position, the goods whose ultimate destination is a place outside the Municipal
limits of Hyderabad and Secunderabad will not be liable to octroi duty and if cess has already been
paid, it will have to be refunded. We are assured by the learned counsel For the Municipality that in
all cases where such collections were made they will be refunded to the contractors if the authorities
concerned are approached and if it is proved that in any case the toddy or sendhi was not sold within
the limits of Hyderabad or Secunderabad.
59. Another contention pressed upon us is that it was not within the competence of the Hyderabad
Municipality to collect octori duty on goods meant lor consumption in Secunderabad Municipality, ii
at all it is only that Municipality in which the commodity has to be sold that could legilimately make
such an impost.
19
60. This argument overlooks the existence of Section 100 of the Act which so far as it is relevant for
this inquiry says:
* * * * "The Corporation may from time to time with the sanction of the Government enter into an
agreement with a local authority or with a combination of local authorities for the levy of octori or
toll or any other tax by the Corporation on behalf of the bodies so agreeing and in that event the
provisions of this Act shall apply in respect of such levy as if the area of the city were extended so as
to include the area subject to the control of such local authority or such combination of local
authorities".
'Local authority' is defined in Section 2(3) as including a Municipal Corporation, City and Town
Municipalities etc. Section 2(6) says: "City means the area declared by the State Government by
notification to be the city of Hyderabad or the City of Secunderabad as the case may be".
Thus, Section 100 confers power upon the two Municipalities to reach an agreement for the creation
of a single agency for the collection of octroi. It is pursuant to this section that the two corporations
entered into an agreement for the collection of octroi on behalf of each other, We have already
adverted to the resolution of the concerned Municipality for the creation of a single agency for the
collection of octroi for the twin cities of Hyderabad and Sccunderabad and one cordon for both the
cities as octroi limit for the collection. A machinery was also set up for this purpose and for the
distribution of the income between the two cities.
It is, therefore, futile to contend that it is not within the province of the Hyderabad Municipality to
collect duty on goods meant for consumption is Secunderabad. The only feasible mode of realising
the octroi revenue, for the two cities of such cordons will facilitate the evasion of the payment of
duty. We do not think that there is anything illegal or unjustifiable in the action taken by the
authorities of the Hyderabad Municipality in that behalf.
61. The next question we have to address ourselves is whether toddy and sendhi are included within
the term "beverage". What is urged on behalf of the petitioners is that the expression "beverage" is
ejusdem generis with fruit juice i.e. of the same kind. It is said that beverage refers only to drinks of
the same kind as fruit juice. To accept this interpretation would be to render the word "beverage
nugatory. The words 'fruit juice' include juices extracted from kinds of fruits and it would be
unmeaning to construe "beverage" as fruit juice.
In our opinion the word beverage is a word of wide import and takes in drinks of every description.
Beverage means every liquid used for drinking purposes. One of the meanings given in Chambers
Dictionary is a liquor for drinking, a mixture of cider and water, a drink. In our judgment it does not
admit of such doubt that beverage embraces within its connotation toddy and sendhi.
62. The various passages in the judgment of the Supreme Court in State of Bombay v. Balsara, 1951
SCJ 478 at p. 490: (AIR 1951 SC 318 at p. 325) clearly indicate that that expression includes toddy
and sendhi. At p. 489 (of SCJ): (at p. 325 of AIR) Fad Ali J., who spoke for the Court said this:
20
"Thus, according to the Dictionary, the word 'liquor' may have a general meaning in the sense at a
liquid, or it may have a special meaning, which is the third meaning assigned to it in the extract
quoted above, viz., a drink or beverage produced by fermentation or distillation. The latter is
undoubtedly the popular and most widely accepted meaning, and the basic idea of beverage seems
rather prominently to run through the main provisions of the various Acts of this country as well as
of America and England relating to intoxicating liquor, to which our attention is drawn. But, at the
same time, on a reference to these very Acts, it is difficult to hold that they deal exclusively with
beverages and are not applicable to certain articles which are strictly speaking not beverages".
His Lordship added:
"... I consider the appropriate conclusion to be that the word liquor covers not only those alcoholio
liquids which are generally used for beverage purposes and produce intoxication but also all liquids
containing alcohol".
Thus, it is plain that the expression "beverage" is used in a general sense as applicable to all kinds of
drinks. As pointed out by the Supreme Court to State of Bombay v. Ali Gulshan, apart from the fact
that the doctrine of ejusdem generis should be confined with narrow limits and general or
comprehensive words should receive their full and natural meaning unless they are clearly
restrictive in their intendment, it is requisite that there must be a distinct genus, which must
comprise more than one species before it can be applied. Our conclusion on this topic is that toddy
and sendhi are subject to octroi duty as they come within the purview of Schedule H.
63. Another point that was sought to be made was that it was outside the jurisdiction of the
Government to have issued directions to the Municipality to levy octroi on toddy and sendhi and
that has vitiated the levy and collection of the duty. The directions complained of are to be found in
the letter dated 11-9-1956. It is said that the procedure adopted by the Government was illegal in
this regard and that it had gone into the root of the whole matter. This argument is sought to be but
tressed by referring to Mahadayal Premchandra v. Commercial Tax-Officer, .
There a Commercial Tax-Officer, without applying his mind in making an assessment, requested for
the instructions of the Assistant Commissioner. Instructions to assess the appellant were given by
the Assistant Commissioner but the Commercial Tax Officer did not agree with the opinion
contained in the instructions and he indicated to the Assistant Commissioner his opinion and asked
for his valued opinion.
Thereupon, the Assistant Commissioner directed the Commercial Tax Officer to assess the appellant
in accordance with his opinion. The Commercial Tax Officer made the assessment without giving
any satisfactory reasons. If was held that the order impugned showed that the Commercial Tax
Officer merely voiced the opinion of the Assistant Commissioner without exercising his own
judgment. It is in this context that the Supreme Court remarked.
"This was hardly a satisfactory way of dealing with the matter. If the Assistant Commissioner had
been dealing with the same he could have by all means given in the assessment order which he made
21
his reasons for doing so and these reasons would have been open to scrutiny in further proceedings
taken by the appellants either by way of appeal or otherwise."
"The procedure adopted was to say the least unfair and was calculated to undermine the confidence
of the public in the impartial and fair administration of the Sales Tax Department concerned."
We do not think that that has any analogy here. In that case, the judgment was that of the assessing
authority, namely, the Commercial Tax Officer and he had to apply his mind to the facts of the case
and arrive at a conclusion. Contrary to his own conviction he had merely accepted the opinion of the
Assistant Commissioner and had not given satisfactory reasons therefor. The position here is
altogether different, Here the Government merely clarified the matter.
Apart from that, under Section 677 of the Act, the Government has ample authority to call upon the
Municipality to perform its functions properly. Section 677, so far as it is relevant for this enquiry,
enacts:
"If on receipt of any information Or report obtained under Section 675 or 676 or otherwise, the
Government is of opinion
(a) that any duty imposed on any Municipal Authority by or under this Act has not been per formed
or has been performed in an imperfect, inefficient or unsuitable manner.
xx xx the Government may by an order direct the Corporation or Commissioner within a period to
be specified in the order to make arrangements for the performance of the duty".
64. The wording of the section makes it plain that if the Government thinks that the Municipality is
remiss in the discharge of its duties, it is entitled to issue directions for the proper performance of
the duty or obligation. Section 252 casts a duty on the Municipality to levy octroi on the articles
mentioned in Schedule H at the rates specified therein.
That section is couched in mandatory language and, therefore, the Municipality is bound to make
the impost without making any discrimination between one article and another. It follows that the
Government was quite within their jurisdiction to issue instructions requiring the Corporation to
conform to Section 252 of the Act.
65. It was lastly complained that while octroi duty is imposed on the basis of the cost price of the
other commodities, a different basis was adopted for toddy and sendhi, namely, the price fixed by
the Government for the sale of these articles. It may be that normally the tax is so calculated with
regard to other articles. But then the basis is furnished for such computation by the invoices
produced by the persons carrying the articles into the city, So far as toddy and sendhi are concerned,
such invoices cannot be produced and it is difficult to determine the cost price of each pot or
container of toddy or sendhi. It is true that definite amounts are paid by the renter in the form of
rentals and tree tax. But it is difficult to say in advance what quantity of toddy or sendhi is going to
be extracted from the various trees that are allotted to a particular renter and to make
22
apportionment with regard to each pot or container of toddy or sendhi.

66. No material has been placed before us which would enable us to make a computation in that
behalf and the learned counsel for the Municipality also expressed his inability to afford us any basis
for this purpose. It is true that the Government may fix the sale price on some basis. They might
take into account the approximate cost of the commodity in the shape in which it is to be sold and
also the reasonable rate of profit for the renters. But we have no information in that behalf.
If the renters were aggrieved by the method adopted by the Municipality in that respect, they would
have requested the authorities concerned to call for particulars and make the assessment on the
basis of that information or, at any rate, they could have approached the Government for that
purpose.
67. Be that as it may, in such cases, a remedy is provided under Section 282 of the Act. It says:
"(1) Subject to the provisions hereinafter contained, appeals against any rateable value or tax fixed
or charged under this Act shall be heard and determined by the Judge."
The expression 'Judge.' is defined in Section 2(27) of the Act as, in the City of Hyderabad the first
Judge of the Court of Small Causes and in the city of Secunderabad the District Judge and shall
include a Sub-Judge to whom such Judge may transfer in accordance with the provisions of this Act
an application or appeal for disposal. It is, therefore, open to an aggrieved party to pursue the
remedy provided by that section especially when we have no means of arriving at the cost price. For
these reasons, we cannot give effect to this contention also.
68. In these circumstances, all the Writ Petitions are dismissed with costs. Advocate's fee is fixed at
Rs. 100/- in each to be apportioned between the Municipality and the Government. These petitions
have to be dismissed on another ground also, namely, that this court in exercise of jurisdiction
under Article 226 of the Constitution would not grant declaration or direct the refund of the amount
collected from the petitioners, for in such an eventuality, any person seeking such relief, should have
recourse to the ordinary courts of law.
69. The second appeal also is dismissed with costs as the point raised in this appeal is covered by
our decision in the Writ Petitions.
23

N. Balaraju and Ors. Vs The Hyderabad Municipal ... On 12 August, 1959

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

N. Balaraju and Ors. Vs The Hyderabad Municipal ... On 12 August, 1959

Uploaded by

Copyright:

Available Formats

N. Balaraju And Ors. vs The Hyderabad Municipal ...

Andhra High Court

Indian Kanoon - http://indiankanoon.org/doc/1485082/