1. The short question, which arises in this appeal filed by the Union of India is whether goods imported within the limits of municipality by the Railway Administration are liable to Octroi Duty which the respondent Bhusawal Municipal Council is seeking to recover under a Notification issued under Section 135 of the Railways Act, 1890, on 29th November, 1907.
2. Facts in this case are not in dispute. The Catering Department of the Railway Administration admittedly brought within the limits of the Bhusawal Municipal Council certain articles required by them for catering administration at the Bhusawal Railway Station during the period from 2nd November 1963 to 1st November 1966. The Railway Administration not having paid the necessary Octroi Duty which, according to the Municipal Council, the Railway Administration was liable to pay for those articles brought within the municipal limits, a suit came to be filed for the recovery of the amount of Octroi Duty to the tune of Rs. 7,766.14 along with interest amounting toRs. 2,611.21. Thus, in the suit filed on 6th February 1969 a sum of Rs. 10,377.35 was claimed from the Union of India. The plaint itself does not refer to the Notification date 29th November 1907 but it is common ground that liability to pay Octroi Duty is fastened on the Union of India, according to the Municipal Council, by the Notification dated 29th November 1907 (Exhibit 85). This Notification reads as follows:
'In pursuance of Clause (I) of Section 136 of the Indian Railways Act, 1890 (IX of 1890) and in suppression of the notifications of the Government of India in the Public Works Department, No. 279, dated the 12th June, 1890, and No. 190, dated the 5th Apr., 1893, the Governor General in Council is pleased to declare that every railway administration in British India shall hereafter be liable to pay, in respect of property within any lost area, every tax which may lawfully be imposed by any local authority in all of its funds, under any law for the time being in force.'
Two defenses were raised by the Union of India to this claim, According to the Union of India, it was not liable to pay any duty in the absence of any Notification in the Official Gazette declaring the Railway Administration to be liable to pay such taxes and that the Union of India was further protected under the provisions of Section 3(1) and Section 4 of the Railways (Local Authorities Taxation) Act, 1941 (hereinafter referred to as the 1941 Act), According to the Union of India, the provisions of the 1941 Act will be saved by Article 372 of the Constitution of India. The issue of limitation was also raised. It appears that the plea that a Notification under Section 135 of the Railways Act relating to Octroi tax was not issued was not specifically taken probably because in the plaint taken probably because in the plaint no such Notification was disclosed. The questions involved in the suit were essentially questions of law, the facts essentially questions of law, the facts having been admitted. The oral evidence in the case, therefore, does not become very material.
3. The trail Court took the view that Section 135 of the Railways Act regulated the levy of taxes by a Local Authority and unless a Notification was issued under Section 6 of the 1941 Act, the property of the Railway Administration cannot be subjected to tax by the Local Authority. The trail Court further took the view that Exhibit 86 indicated that the Railways Authority was liable to pay taxes connected with immovable properties connected with immovable properties such as house tax, water tax, conservancy tax, latrine tax, wheel tax and water rate, etc, and that there was no Notification in respect of Octroi on goods brought within the Municipal limits. With reference to the provisions of Article 285 of the Constitution of India, the trial Court took the view that under the Bombay Municipal Borough Act, 1925, when the Bhusawal Municipality had approved and levied Octroi since 1932 and the Octroi Rules were inforce even before the Constitution came into force, the authority to impose Octroi Duty did not cease simply because the Constitution came into force. The trail Court found that the State Government has not framed any rules exempting the catering unit of the Railways from Octroi Duty. The trial Court took the view that the Railway Administration had paid Octroi Duty in the pest and the articles were rightly taxed under the Octroi rules as there was no exemption, With regard to the limitation, the trial Court held that the claim in respect of all the items was within the period of limitation. A decree for Rs. 10,377,35 was thus being passed against the Union of India. This appeal has not been filed by the Union of India challenging the decree of the trial Court.
4. Mr. M. R. Kotwal, the learned Government Pleader, has mainly relied on the provisions of Article 285(1) of the Constitution of India under which, according to the learned counsel, there is a blanket exemption of the properties of the Union from all taxes imposed by a State or by any authority within a State unless provisions to the contrary is made by a law of Parliament The learned Government Pleader therefore contended that goods brought within the municipal limits by the catering establishment of the Railway Administration were the property of the Union and since there was no law made by the Parliament providing for those goods being allowed to be taxed by the Local Authority, the Octroi Duty could not be levied by the Municipal Council on the articles in question, Mr. Abhyankar appearing on behalf of the Municipal Council had relied mainly on the provisions of Article 285(3) of the Constitution of India and the argument advanced before us was that goods brought within the municipal limits have already been made subject to tax by virtue of Notification Exhibit 88 and therefore such tax would be saved by the provision of sub article (2) of Article 285. The learned counsel pointed out that Notification of 1997 enabled the Municipal Council to levy Octroi Duty and that Notification continued to be effective even after the coming into force of the Government of India Act 1985 because the power to levy Octroi Duty was preserved in the Municipal Council by the proviso to Sec. 154 of the Government of India Act 1935, According to the learned counsel, as Octroi Duty was levied since 1907 and it continued to be levied even after the commencement of the Constitution, the Union of India could not avoid its liability. Now, admittedly, so far as the Notification of 1907, is concerned, it was revoked by another Notification dated 8th Oct., 1953 Exhibit 9. That Notification expressly stated that the Central Government revokes the Notification of the Government of India 'in the Department of Commerce and Industry No. 9977-Rys. Dated the 29th Nov., 1907 issued under Clause (1) of the said Section' The learned counsel contended that the Octroi Duty was legally levied till 6th Oct., 1953 and that since that Railways have been treated as liable to pay Octroi Duty even therefore, even though the levy may be illegal, the Union of India would be illegal, the Union of India would be liable to pay Octroi Duty. It may be pointed out at this stage that the dispute with regard to the liability to pay Octroi Duty was for the first time raised by the Union of India in Aug., 1969.
5. Article 265 of the Constitution reads as follows?
'(1) The property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a Stage.
(2) Nothing in Clause (1) shall until Parliament by law otherwise provides, prevent any authority with a State from levying any tax on any property of the Union of which such property was immediately before the commencement of this Constitution liable or treated as liable, so long as that tax continues to be levied in that State.'
Article 285 of the Constitution is thus in two parts, Sub-Article (1) provides for exemption of the property of the Union from all taxes imposed by a State or by any authority within a State which will include a Local Authority like a Municipal council. This exemption can, however, be taken away by a law made by the parliament in other words, the property of the Union could be subjected to tax by a State or by a local authority only if it is so permitted by a law made by the Parliament after the Constitution has come into force. It is therefore a blanket exemption in respect of Union property from State taxation or taxation by any authority within a State. It is on the same pattern as is to be found with regard to exemption of federal property from State taxation in the Australian and the Canadian Constitution Sec 114 of Commonwealth of Australia Constitution Act 1950 provides inter alia that 'A' State shall not, without the consent of the Parliament of the Commonwealth, raise or maintain any naval or military force, or impose any tax on property of any kind belonging to the Commonwealth, not shall the Commonwealth impose any property of any kind belonging to a State.' Section 125 of the British North America Act 1967 provides as follows:
'No lands or property belonging to Canada or any province shall be shall be liable to taxation.'
It is, however, open to the parliament to enact a law which will enable the state or any authority within a State to tax the property of the union,
6. The latter part of Art. 285 was intended to save the taxes which were being levied on the property of the Union at the commencement of the Constitution by any authority within a State so long as the tax continued to be levied in the state. Thus, where a property of the Union was, immediately before the commencement of the Constitution, liable to tax or treated as liable to tax levied by a local authority, that tax could continue to be levied in view of the express provision in Art. 285(2) . Such property could be exempted from taxation only by a law made by the parliament . The provision in Art 285 will, therefore, male it clear that the property of the Union of India could not be subjected to tax by a Local Authority unless the condition in sub-Art.(2) was satisfied. It is on this Sub-Art. (2) that Mr. Abhyankar placed heavy reliance. Now, there is no doubt that the word 'property' used in Art. 285 is a word of widest amplitude and it cannot be given any restricted meaning. In order to find out whether the Municipal Council could claim protection in respect of power to levy Octoroon Duty from Art, 285(2), it becomes necessary to find out whether the Octroi Duty can be said to be a tax in respect of the property which was liable to that tax immediately before the commencement of the Constitution. Therefore, through the period in respect of which Octroi Duty is now sought to be recovered is a post-constitution period, we will have to revert back to the position before the commencement of the constitution on 26th January, 1950.
7. The Notification itself is dated 29th November ,1907 and the period from the first levy of the Octroi Duty which is said to have been made in 1932 up to the commencement of the constitution would therefore have to be split up into two parts. Article 285 is the successor of the similar provision which was made un the Government of India Act in Section 154 of the Government of India Act 1935 which came into force on 1st April , 1937. Therefore, the period immediately preceding the commencement of the Octroi Duty would be from 1st April 1937 to 25th January, 1950 and the other period would be from 1st September 1932 to 31st March , 1937. Primarily therefore before the Municipal council can claim that its power to levy Octroi Duty is saved by the provision of Art. 285(2). It would have to be established that the power to levy tax on the property of the Union validly vested in the municipal Council up to 1st April 1937.
8. In this context, the provisions of S. 154 of the Government of India Act, 1935 become relevant. It reads as follows:
'Property vested in His Majesty for purposes of the government of the Federation shall, save in so far as federal law may otherwise provide, be exempt from all taxes imposed by or by any authority within, a province or Federated State:
Provided until any Federal law otherwise provides, any property so vested which was immediate before the commencement of Part III of this Act herbal, or treated as liable, in any such tax, shall, as long as that tax continues, contemns to be liable, or to be trusted as liable, there to.
A reading of S. 164 of the Government of India Act 1935 will show that the scheme of that section is same as the scheme of Art. 285 of the Constitution of India. Under Sec 154 property vested in His Majesty for purposes on the Government of the Federation is exempted from all taxes imposed by or by any authority within a province or a federated State. Prior to the commencement of the Constitution, it cannot be disputed that the railway property was property of the Crown. That property of the Crown is exempted from all taxes which may be imposed by a local authority or by a province or a federated State. This exemption could be taken away by federal Law which has to be a law made by the Central Legislature prior to the commencement of the Constitution. Now there can be no difficulty in holding that under the main part of S. 124 is also used in its widest and generic sense. In Governor General of India in council v. Corporation of Calcutta, : AIR1948Cal116 (2) B. K. Mukherjes, J, (as he then was) while dealing with the scope of S. 154, has observed as follows:
'The language of S. 154 is obviously very wide, it embarrass within its scope all taxes and impositions levied by or by any authority within a province or Federated State. The expression 'property' has also been used in a perfectly general sense and would include land, building, chaltles, shares, debts, and in fact every thing that has a money value in the market and comes within the purview of any taxing stature.' It was pointed out by unless, J. That under the English Law the Crown not being bound by any Stature unless expressly named, property owned and occupied by Crown shall be exempt from taxation unless rendered liable either by express words or by necessary implication, and with reference to the provisions of S. 154 the learned Judge further observed as follows:
'In India it seems prior to the passing of the Government of India Act 1935, the question of exemption of Crown property from taxation was not definitely settled.' Mokherjes, J, referred to the decision of Bell v. Commrs, for the City of Madras ILR(1902) 25 Mad 457, It was pointed out that the view expressed therein was that according to the uniform course of Indian Legislation statutes imposing duties or taxes bind Government unless the very nature of the duty or tax is such as to be inapplicable to Government, It was then observed by Mukherjes J., as follows: 'It is fact, however, that on the general question different views were taken in other cases : vide 14 Bom 213, Many properties vested in His Majesty were treated as liable to taxation, when the Constitution Act of 1935 came into force, and the proviso attached to Section 154 makes it clear that properties which were treated as so liable immediately before Apr., 1937. When Part III of the Act was to come into operation, would not enjoy the exemption given by the main provision of the section. The Parliament deliberately used the words 'liable' or 'treated as liable' with a view to avoid a final solution of the question regarding the legal liability of Crown property to taxation in India prior to the coming into operation of Part III of the Act.'
9. Ormond, J., who was the other Member of the Bench, after pointing out that, 'in England in the absence of special statutory provisions imposing a tax on Crown property. Crown property would be exempt by virtue of the Crown prerogative' and 'it is equally well established that both in England and in India, liability for taxation may be imposed against Crown property by apt statutory provisions' set out in the scheme of S. 154, in paragraphs 20 and 21, as follows:
'The scheme of the section is that in the first (the main body of if) there is an exemption from taxation in general terms. Then in the second part of the section (the proviso in if) they is an exception from that exemption. The result is that any property covered by the exception will be liable to tax in second part, it is clear and undisputed that the whole of the ..................................'
'The proviso is worded in a manner which have down a positive liability to ex in the case of the particular class of Crown property described in it ................................ The first result of the proviso is that any property covered by the exception in the proviso will be liable to tax, in spite of any exemption in the earlier part of the section within the section itself. The further result is also, that any property covered by the exception will be liable to tax, in spite of any general exemption outside the section, such as might have been based on the general Crown prerogative.'
The learned Judge further dealing with the proviso pointed out that the only taxable property brought within the exception contained in the proviso is property which was in physical existence before 1st Apr., 1937, The four conditions which would be necessary to be established to bring the property within the proviso were set out as follows ;
'(1) Physical existence of the property before 1-4--1937.
(2) Liability of that property to the tax then,
(3) Physical existence of the same property now,'
It may be pointed out that the learned Government Pleader has heavily relied on the fact that one of the conditions necessary for the Union property to be subjected to Octroi Duty was that the identity of the property must be established both prior to and after the commencement of the Constitution and both prior to and after 1st Apr., 1937, The contention was that Octroi Duty is levied on goods as they come within the municipal limits and it is nor a recurring duty on the same goods and the goods being different every time the duty is sought to be levied, whatever might have been the position prior to 1st Apr., 1937, after 1st Apr., 1937 and 26th Jan., 1950, in view of the substantive provisions in S. 154 of the Government of India Act 1935 and Art. 285 of the Constitution of India, the goods belonging to the Union of India are not liable to Octroi Duty. The goods belonging to the Union of India are not liable to Octroi Duty. The wide meaning to the word property given by the Calcutta High Court has been expressly approved by the Federal Court in. The Corporation of Calcutta v. Governors of st. Thomas School, Calcutta AIR 1945 FC 181 Dealing with S. 154 and the meaning of the word property used therein, the Federal Court observed as follows:
'Section 154 raises two questions for determination when an exemption from liability to tax is claimed: (1) whether law is claimed in respect of property, and (II) whether such property is vested in Government : The word 'Property' is used in the context without any limitation and therefore should hear its normal meaning interpreted in that way if will embrace every kind of property As observed by Langdate, M. R. In Jones v. Skinner (1835) 5 LJ Ch 97 : 'Property is the generic term for all that a person has dominion over, it is the most comprehensive of all terms which could be used as much as it is indicative and descriptive of every possible interest which the property can have'
Without attempting to defined affirmatively what the generic term will cover, it is sufficient for us to hold that the buildings in question are property and as in India the ownership of a building is not necessarily related to the ownership of the land on which the building stands the buildings in the present case were vested in the Government ...............................In our opinion, the meaning of 'property' adopted in governor-general of India in Council v. Corporation of Calcutta : AIR1948Cal116 is correct.'
We have referred to this meaning given to the word property in S. 184 because at one stage it was contended by the learned Government pleader that in S. 154 when the proviso referred to properties or taxes on property, the reference was only to immovable property and that the proviso to S. 154 did not save the power to levy Octroi Duty which was a tax levied on movable property. Vis.,goods. In view of the wide meaning which the word property bears, even movable property will be covered by it and if the Municipal Council succeeds in proving that Octroi Duty levied in respect of such property is saved by the proviso S. 154, it would be possible for it to contend that the requirements. Of Act, 285(2) have also been satisfied.
10. Thus in the face of an express hard to tax Crown property contained in Section 194 of the government of India Act 1935, If was incumbent on the Municipal Council to satisfy the Court that the power to levy Octroi Duty could be validly exercised even after 1937 when Part III of the Government of India Act 1935 came into force. It was for this purpose that reference was made to the Notification of 1907 which was issued under the Railways Act. It is necessary now, therefore, to refer to the provisions, of S. 135 of the Railways Act. Clauses 1, 2 and if of the Railways Act read as follows ;
'135. Notwithstanding anything to the contrary in any enactment or in any agreement or award based on any enactment, the following rules shall regulate the levy of taxes in respect of railways and from railway administrations to aid of the funds of local authorities, namely; -
(1) A railway administration shall not be liable to pay any tax in aid of the funds of any local authority unless the Central Government has, by notification in the Official Gazette, declared the railway administration to be liable to pay the tax.
(2) While a notification of the Central Government under Cl. (1) or this section is in force, the railway administration shall be liable to pay to the local authority either the tax mentioned in the notification or in lieu thereof such sum if any, as an officer appointed in this behalf by the Central Government may, having regard to all the circumstances of the case, from time to time determine to be fair and reasonable.
(3) The Central Government may at any time revoke or vary a notification under Cl (1) of this section.'
Section 135 specifically deals with railway property which could be subjected to levy of taxes in aid of the funds of the Local Authority. By Cl. (5) of that section the term Local Authority is given the same inclining as in the General Clauses Act 1887. Under S. 135 unless the Railway Administration is expressly declared as being liable to pay a tax, that tax cannot be levied on the Railway Administration. This declaration has to be by a notification issued by the Central Government. The second clause only deals with quantification of the tax liability. If provides that the liability could be discharged by paying a lump sum to be determined by an officer to be appointed by the central Government. Clause (3) gives power to Central Government to revoke the said notification. Now Exhibit 88, which is leaned in exercise of power under S. 135, enable the Local authority to impose all such taxes respect of property of the Railway Administration which could be imposed by that local authority in aid of its funds. We do not think it can be seriously disputed that on the terms of this notification Octroi Duty could have been validly levied by the Municipal Council in respect of railway property because under Sec 72 of the Bombay Municipal Boroughs Act 1955 one of the taxes which could be imposed by the Municipality is 'Octroi on animals or goods or both brought within the Municipal limits for consumption, use or sale thereof' Articles brought within the municipal limits by the catering department of the Railway Administration were obviously brought either for consumption of for sale or use. The question, however, is Does his power survive after coming into operation of S. 154 of the Government of India Act 1935 if the proviso to S. 154 of the Government of India Act 1933 it the proviso to S. 154 was not attracted, then there would be no power in the municipality to tax the property of the Railway Administration because of the express bar in the main part of S. 154 of the Government of India Act 1935, The power under S. 135 of the Railways Act to issue a notification could not have been exercised in respect of Government property after 1st Apri., 1954 because S. 154 of the Government of India Act 1935 exempted all such property from local taxation unless there was a federal law providing to the contrary. In view of the fact that S. 154 of the Government of India Act 1935 exempted the railway property from provincial or local taxation, except so far as the legislation may otherwise provide and under the proviso, all the taxes payable by virtue of Notifications issued under Section 135 of the Railways Act continue to be payable until Legislature enacted the Railways (Local Authorities Taxation) Act 1941, reliance on which has been placed on behalf of the municipality. The relevant provisions are in sections 3 and 4 of that act. The entire Act itself has only five sections Section 3 reads as follows:
'3. (1) In respect of property vested in the Central Government, being property of a railway, a railway administration shall be liable to pay any tax in aid of the funds of any local authority, if the Central Government, by notification in the Official Gazette, declares it to be so liable.
(2) While a notification under sub-section (1) is in force, the railway administration shall be liable to pay to the local authority either the tax mentioned in the notification or in lieu thereof such sum, if any as a person appointed in this behalf by the Central government may, having regard to the services rendered to the railway and all the relevant circumstances of the case, fro time to time determine to be fair and reasonable. The person so appointed shall be a person who is or has been a judge of a High court or a District judge'. section 4 reads as follows :
'4 The central Government may, by notification in the official Gazette, revoke or vary any notification issued under Cl.(1) of S.135 of the Indian Railways Act 1890; and where a notification is so revoked, any liability arising out of the notification to pay and tax to any local authority shall cease. And where a notification is so varied the liability arising out of the notification shall be varied accordingly.'
Section 3 of this Act thus enables the local authority to levy a tax in aid of its funds in respect of property vested in the central Government. Being a property of a railway, only if the central Government issues a notification declaring the Railway Administration to be so liable. Therefore, after coming into force of part III of the Government of India Act 1935. Before the Railway property can be t axed, a notification under S. 3 of the 1941 Act has to be issued by the central Government. Section 4 only empowers the central Government to revoke or modify a notification issued under S.135 of the Railways Act. The consequence of revocation is that the liability of revocation is that the liability to pay tax to any local authority under that notification ceases. The position, as it appears, is that the notification of 1907 was revoked in October 1953. Therefore, even assuming that the notification of 1907 was revoked in October 1953. Therefore, even assuming that the notification of 1907 empowered the local authority to levy octoroon Duty, that liability ceased in terms of S. 4 of the 1941 Act with effect from 3rd October 1953. And no recovery of octroi Duty could have been made thereafter.
11. Looking at the matter from a different aspect, it will have to be ascertained whether the notification of 1907 is such that the proviso to S. 154 of the Government of India Act would be attracted to it. Now there can be no doubts ready pointed out, that the notification of 1097 enables even Octroi Duty to be levied in respect of goods. But for the purposes of the proviso t S. 154, the requirement of that proviso has to be satisfied. The requirement, as pointed out by ormond, J. In Calcutta corporations case. Is that the property which is being subjected to tax must be in existence before 1st April 1937 physically and the property must be the same at the time when the tax is sought to be levied. This is the indisputable effect of the proviso and the manner in which it is worded. And thus the proviso to section worded, and this the proviso to section 154, Government of India Act 1935 saved some taxes. The taxes saved were in respect of property which vested in His majesty and was. Immediately before 1st April 1937, liable to tax and taxes only in respect of such property could be recovered after 1st April 1937.The physical identity of the property, before and after 1st April 1937.is therefore a sine qua non for levy of a tax after 1st April 1937 by virtue to the proviso of S. 154 of the Government of India Act 1935. Such cannot however be said to be the case where octroi Duty is sought to be levied. Octroi Duty is levied once and for all on any particular article or goods. There is no occasion to levy octroi Duty again and again in respect of the same property. In otherwords, the octroi Duty is paid on a property which comes for the first time within the municipal limits and that is brought for consumption, sale or use and the same goods are not again liable to duty. Therefore, the physical identity of the property prior to 1st April 1937 cannot be the same where on and after 1st April 1937 new goods are brought with in municipal limits and octroi Duty is sought to be levied on those goods or articles. In the case of Octroi Duty, therefore, it is obvious that the proviso to S. 154 would be wholly inapplicable and unless there is federal Law as contemplated by the substantive provision in S. 154 of the Government of India Act 1935, there will be no power in any municipal council to levy octroi Duty in respect of Government property after 1st April 1937. That will also be the position in the post-constitution period and unless there is a law made by the parliament permitting the property of the union to be taxed. Octroi Duty could not be levied after 25th January 1950.
12. We may now refer to two decisions of the supreme court in which the scope of Article 285 has been considered. In union of India owner of the Eastern Railway v.commissioner of Sahibganj municipality AIR 1973 SC 118 a notification was issued on 24th August 1911 under section 135 of the Railways Act declaring that the Administration of East India Railway shall be liable to pay in aid of the funds of the local authorities set out in the schedule thereto annexed the taxes specified in the second column thereof. The taxes in question were house rate and latrine fees. Out of the buildings in question some were constructed after 31st mar. 1937 and some after 25th Jan.1950. the Union of India contended that it was not liable to pay municipal tax by virtue of provisions contained in S. 154 of the Government of India Act 1935 and Article 285 of the constitution. The High court had held that the 1941 Act was a Federal Law within the meaning of section 154 of the Government of India Act and section 4 of the 1941 Act rendered the buildings liable to taxation. Reversing the decision of the High court it was pointed out by the supreme court that the High court overlooked the effect of section 3 of the 1941 Act which required a notification declaring a liability to pay and that the notification under 1941 Act created a liability for railway property coming into existence after 1941 Act but no such notification was issued. Pointing out that section 4 of the 1941 Act did not provide for payment of taxes in respect of railway property and that there was no law contemplated by Article 285 providing for taxation of railway property the supreme court observed as follows (at p. 187):-
'The High court was in error in construing the notification issued in 1911 under the 1890 Act to continue by virtue of the provisions contained in section 4 of the 1941 Act. These 32 blocks of buildings vested in the Union some of them after 1st April 1837 and some after the constitution came into existence. These properties could be made liable to pay tax to the municipality only if parliament by law provided to that effect.'
The supreme court thus held that the notification under the 1890 Act did not apply to the 32 blocks of buildings which were not in existence before 1st April 1937 and that there was no law declaring the 32 blocks of buildings to be liable to payment of tax as claimed by the municipality. The supreme court decision therefore points out that the notification issued under the Railways Act could not be availed of by the municipal council after 1st April 1937. The scope of the proviso was. However, not in question in that case. The other not in question in that case. The other decision is in union of India v.city municipal council. Bellary, : 1SCR573 . The supreme court referring to the scope of Article 285 observed as follows (para 7):-
''The property of the union is exempt from all taxes imposed by a state or by any authority within a state. But the parliament may by law provide otherwise and then any tax on the property of the union can be imposed and levied in accordance with the said law. But then an exception has been carved out in clause (2). The exceptions not meant for levying any tax on such property by any state; but it is merely for the benefit of any authority including the local authority like the municipal council in question. Clause (1) cannot prevent such authority from levying any tax on any property of the union if such property was eligible to such tax immediately b effort the commencement of the constitution. The local authority, however, can reap advantage of this exception only under two conditions namely (1) that it is 'that tax' which is being continued to be levied and no other; (2) that the local authority in 'that state' is claiming to continue the levy of the tax. In other words. The nature, type and the property on which the tax was being levied prior to the commencement of the constitution must be the same as also the local authority must be the local authority of the same state to which it belonged before the commencement of the c institution.'
13. MR.Abhyankar appearing on behalf of the municipality has contended that when octroi Duty is levied the nature and character is the same both as to the property and the tax. The contention appeared to be that the property subjected to tax were goods imported within municipal limits and the nature of tax was Octroi tax and therefore according to the learned counsel even the condition laid down by the supreme court in Bellary municipality's case was satisfied. Now it is obvious that when the supreme court referred to the nature and type of the property on which tax was being levied, that was in the context of Article 285(2) which expressly provided that the property in respect of which the tax was being sought to b e levied must be the same property which was liable or treated as liable prior to the coming into force of the constitution. As already pointed out. When octroi Duty is levied on goods brought into the municipal limits for the first time, one each occasion the goods are different and not the same goods though in a given case the goods may be identical or of the same kind.
14. We may also point out that the supreme court in the Bellary municipality,s case has taken the view that the provisions of the 1941 Act are not saved by Article 285 of the constitution because, it was not a law made by the parliament as contemplated by article 285(2) Referring to the provisions of the 1941 Act in the context of Art. 285 and Article 372 of the constitution the supreme court has observed as follows (para 8):-
'The Act of 1941 creating the liability of the Railways to taxation by local authorities was passed by then central Legislature which was a Federal Legislature of India. The present central Legislature, namely, the parliament has not enacted any law after coming into force of the constitution making any provision affecting the exemption of the property of the union from all taxes imposed by a state or by any authority within a state. The 1941 Act is repugnant to clause (1) of Article 285. It is neither a law made by parliament nor a law made by the central Legislature after he advent of the constitution. In either view of the matter it is not a law covered by the phrase 'save in so far as parliament may by law otherwise provide' occurring in clause (1) of Article 285.'
It therefore appears to be clear to us that Octroi Duty which was permitted to be levied by the notification of 1907 could not have been levied on goods brought by the Railways after 1st April 1937 because of the bar under the main part of section 154 of the Government of India Act and because such a tax was not saved by the proviso to section 154. The Octroi Duty could also not be levied after the commencement of the constitution because of the express bar in Article 285(1) and further because there was no octroi Duty which could be claimed under Article 285(2).
15. It was at one state contended by Mr. Abhyankar on the basis of the decision of the Calcutta High court in corporation of Calcutta v.Union of India , : AIR1957Cal548 that even if the Octroi tax was illegally levied after 1953, when the notification of 1907 was revoked, the case would still be covered by Article 285(2) and the municipal council was therefore entitled to claim octroi Duty from the Railway Administration. Dealing with the meaning of the words 'treated as liable' which are to be found both in the proviso to section 154 of the Government of India Act and Article 285(2) of the constitution of India, the Division Bench of the Calcutta High court has observed as follows (at p.550):
'The phrase 'treated as liable' has the same legal meaning in both the proviso to S. 154 of the Government of India Act, 1935, and clause (2) of Article 285 of the constitution and it has the same purpose, namely, to avoid a final solution of the dispute as to the legal liability of the particular property to the disputed tax and to authorise or validate the levy of the tax in the post-Act and post-constitution period respectively, at least when such tax was actually levied and realised and paid, in fact, for the particular property as Central Government property for the period immediately before the relevant date, that is, the commencement of part III of the Government of India Act, 1935, in the one case and the commencement of the constitution in the other, even if such levy was illegal.'
These observations are not of any assistance to the municipal council. The concept of 'treated as liable' have been used by the learned judge in the context of the particular property and it is in respect of such property which has once been treated as liable that it is said that the tax could be recovered even though it was illegally levied. That case dealt with house property which was assessed to municipal taxes and the contention on behalf of the municipal council was that though the assessment up to the end of the second quarter of 1950-51 i,e. Up to a post-constitution period was actually paid by the union, the union was disputing the assessment as illegal and ultra vires immediately when the property came under the ownership to the central Government on 1st April 1943 and the property, according to the union of India. Ceased to be liable to municipal taxes. The Calcutta High court held that the levy of the disputed tax in the disputed post-constitution period was valid in law because the disputed premise belong to central Government and owned by it and were actually assessed to municipal tax and such tax was paid and realized immediately before the commencement of the constitution. The premises were therefore held to be 'treated as liable' for the purposes of Article 285(2). As already pointed out. We are in the present case, concerned with octroi Duty and each levy is a fresh levy on fresh articles and tax was not intended to be recovered for the same goods for which once it is paid. The trial court was, therefore, in our view wrong in holding that the union was liable to pay octroi Duty as claimed.
16. This finding is sufficient to dispose the appeal. However, the question of limitation has been argued before us and we proved to decide it.Admittedly, the Limitation Act, 1963 came into force on 1st January, 1964. Out of the several items which were subjected to octroi Duty, there were only two items which fell within the period before 1st January 1964. Those are items 1 and 2 in Exhibit 41 dated 2nd November, 1963 to 17th December, 1963. The remaining items are between 10th January 1964 and 1st November, 1966. Admittedly the suit is filed after the Limitation Act, 1963 has come into force. The trial court has found that the limitation for the suit under the old Act would have been six years but under the new Act it is only three years under Article 113 which is the Article corresponding to Article 120 of the 1908 Limitation Act. The commencement of limitation in both the Acts would be from the time when the right to sue would normally accrue when the tax would become payable. It normally becomes payable at the time when the goods are brought within the municipal limits. Now the trial court has taken the view that since under the new Limitation Act the period of limitation prescribed is lessee. Three years, then the one prescribed under the old Act, i.e., three years, than the one prescribed under the old Act i,e, six years, the provisions of section 30 of the Limitation Act 1963 could be invoked by the municipal council and therefore the municipal council was entitled to file a suit within a period of seven years from 2nd November 1963. The only material provision is in clause (a) of Article 30 which reads as follows:-
'30 Notwithstanding anything contained in this Act. (A) any suit for which the period of limitation is shorter than the period of limitation prescribed by the Indian Limitation Act, 1908 may be instituted within a period of seven years next after the commencement of this Act or within the period prescribed for such suit by the Indian Limitation Act. 1908. Which ever period expires earlier.'
The trial court has taken the view that the suit could be filed within seven years from 1st January 1964 and making provision for the statutory notice period of two months. It could be instituted on 1st march 1971 and since it was instituted on 6th February 1969. Even the item dated 2nd November 1963 would be within limitation. In our view, the trial court has fallen in a serious error of law in invoking the provisions of section 30.A suit in respect of a claim for Octroi Duty arising after 1st January 1964 would be wholly governed by the provisions of Article 113 of the Limitation Act 1963. It is difficult for us to appreciate how the provisions of section 30 of the Limitation Act could be made applicable to a cause of action which arises after the Limitation Act has already come into operation. Section 30 CL. (A) refers to a suit for which the period of limitation is shorter than the period of limitation prescribed by the Indian Limitation Act, 1908. It contemplates that the cause of action has arisen prior to the Act of 1963 but that the limitation for such a suit which has not been filed before 1st January 1964 is shorter under the new Act. It is apparent therefore that the provisions of section 30 of the Limitation Act could be invoked only in respect of the first two items dated 2nd November 1963 and 17th December 1963. In respect of the remaining items the suit would be governed by the provisos of Article 113 of the Limitation Act 1963. On that view, items between 10th January 1964 and 10th January 1966 could not have been claimed in the present suit because the claim in respect thereof would be barred by limitation. If at all the municipality was entitled to any claim. It could be only in respect of items between 2nd November 1963 and 17th December 1963 and for items 45 to 257.
17. In the view which we have taken on the constitutional position in the appeal, the suit filed by the municipal council must stand dismissed. The judgment and decree passed by the trial court are set aside and the appeal filed by the Union of India Is allowed. Suit filed by the plaintiff is dismissed with costs throughout.
18. Appeal allowed.