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State of Gujarat Vs. Godhra Borough Municipality - Court Judgment

LegalCrystal Citation
SubjectOther Taxes
CourtGujarat High Court
Decided On
Judge
Reported in(1977)18GLR636
AppellantState of Gujarat
RespondentGodhra Borough Municipality
Cases ReferredRaja Jagdish Pratap Sahi v. State of Uttar Pradesh
Excerpt:
- - 7. the neat questions which, therefore, arise in this appeal are, whether alternative procedure by a suit is available in respect of the amounts other than those recoverable under chapter viii of the boroughs act 1925 or not, and, whether the clause 'in lieu of any process of recovery allowed by or under this act' and clause 'or in case of failure to realise by such process the whole or any part of any amount recoverable under the provisions of chapter viii' are to be read disjunctively or conjunctively. and (b) communicate to that officer any information and exhibit to him any bill, invoice or document of a like nature, which he may possess relating to such animal or goods; (3) if the person to whom a bill has been presented as aforesaid does not, within fifteen days from the.....b.k. mehta, j.1. a division bench of this court, consisting of a.d. desai and c.v. rane, jj., hearing this appeal found difference of judicial opinion on the point whether a municipality constituted under the bombay municipal boroughs act, 1925, is entitled to file suit for recovery of octroi duty, referred the following questions for our opinion:1. whether the provisions of sections 93 to 98 of the municipal act of 1925 and sections 121 to 127 of the municipalities act of 1963 impose a personal liabil ity on the importer to ply octroi duty on octroiable goods imported by him within the municipal limits for consumption, use or sale.2. whether such personal liability is imposed by octroi rules and byelaws of 1962 framed by the godhra borough municipality.3. whether section 203 covers.....
Judgment:

B.K. Mehta, J.

1. A Division Bench of this Court, consisting of A.D. Desai and C.V. Rane, JJ., hearing this appeal found difference of judicial opinion on the point whether a Municipality constituted under the Bombay Municipal Boroughs Act, 1925, is entitled to file suit for recovery of octroi duty, referred the following questions for our opinion:

1. Whether the provisions of Sections 93 to 98 of the Municipal Act of 1925 and Sections 121 to 127 of the Municipalities Act of 1963 impose a personal liabil ity on the importer to ply octroi duty on octroiable goods imported by him within the municipal limits for consumption, use or sale.

2. Whether such personal liability is imposed by octroi Rules and Byelaws of 1962 framed by the Godhra Borough Municipality.

3. Whether Section 203 covers octroi dues other than those recoverable under Chapter VIII of the Municipal Act of 1925 and Chapter IX of the Munici palities Act of 1963.

4. If the answer to point 3 is in the negative, whether the provisions relating to recovery of octroi dues and the provisions of Section 203 of the Municipal Act of 1925 or Section 249 of the Municipalities Act of 1963 bar a remedy of a suit to recover the octroi dues.

2. In order to appreciate the rival contentions urged in connection with the questions referred to us, it would be necessary to notice a few facts in the context in which these questions arise. The respondent-plaintiff is the Godhra Borough Municipality which filed a Special Civil Suit, being No. 6 of 1967, in the Court of Civil Judge (S.D.) at Godhra against the State of Gujarat to recover Rs. 57,108-42 paise with interest and costs on the ground that the said amount was due in respect of the octroi duty payable by the State Government for having imported food-gains and other articles within the limits of the said Municipality in the course of the period commencing from April 1, 1961 to April 30, 1966. The case of the municipality was that it decided by its Resolution of August 21,1945 to impose octroi duty in respect of certain articles mentioned in the Schedule and imported by road and which were meant for sale, consumption or use within the Municipal limits. After going through the procedure prescribed for imposition of tax under the Bombay Municipal Boroughs Act, 1925, the plaintiff-Municipality made the Rules effective from March 1, 1947. According to these Rules, octroi duty was payable in respect of the goods mentioned in the Schedule and brought within the municipal limits for sales, consumption or use. It appears that the plaintiff-Municipality has enacted fresh Octroi Rules and made them effective from June 1, 1962. According to the plaintiff-Municipality, the State Government imported food-grains etc. within the octroi limits of the said Municipality for purposes of sale, consumption or use and, therefore, the State Government rendered itself liable to pay octroi duty. The plaintiff-Municipality, therefore, made demand on the State Government to arrange to pay the octroi duty payable under .the Rules. As the State Government did not comply with 'the demand made by the plaintiff-Municipality, the present suit, out of which this appeal arises, was filed against the State Government to recover the aforesaid amount of Rs. 57, 108.42 paise being the amount of octroi duty which was due and payable according to the Bombay Municipal Boroughs Act, 1925 and the relevant Rules from 3rd there under.

3. The suit was resisted by the State Government contending, inter alia that if the tax was not paid by the State at the time of import of the goods or articles, the same could be collected only by the procedure of seizure and sale of the goods as provided in the Bombay Municipal Boroughs Act, 1925 and the Gujarat Municipalities Act, 1963 which were applicable to the respective parts of the period with which we are concerned in this appeal.

4. The Trial Court decided against the State Government negative all the contentions raised in the written statement and granted a decree as prayed for by the plaintiff-Municipality. The State Government, there fore, brought the matter in appeal to this Court by its First Appeal No. 50 of 1969. A number of contentions was advanced on behalf of the State Government before the Division Bench (Coram: A.D. Desai and C.V. Rane JJ) which heard this appeal. One of the main contentions advanced on behalf of the State Government was that the plaintiff-Municipality was not entitled to file suit for recovery of the octroi duty as Section 203 of the Bombay Municipal Boroughs Act, 1925, which empowers Borough Muni cipalities to file suit, does not warrant the filing of the suit for purposes of recovery of octroi duty and the only liability of the importer prescribed under the Bombay Municipal Boroughs Act, 1925 was a criminal liability and the only remedy which the Municipalities have under the said Act is the summary remedy of seizure and sale of the goods at the time when they are sought to be introduced within the municipal limits by actually seizing the goods. On this point as there is a diversion of opinion between the two decisions of the Division Benches of the Bombay High Court in (/) Poona City Municipality v. R.N. Parunjpe and Sons A.I.R. 1933 Bom. 296, and (2) Vran Islampur Municipality v. Shankarro Amritrao Jadhav A I.R. 1960 Bom. 467, the Division Bench of this Court thought fit to refer the four questions set out hereinabove to the larger Bench of this Court so as to resolve the difference on the point. The Division Bench has made certain findings as to certain questions of fact in the order of reference in the following terms:

In the suit octroi duty is claimed from the Government in respect of the goods which were imported during the period from April 1, 1961 to April 13, 1966. Octroi rules which were prevalent up to May 30, 1962 have been challenged before us on the ground that the proper procedure at the time of amending the said rules had not been followed. So far, food-grains, etc. brought within the municipal limits by rail before May 1962 is concerned, Mr. Vakil appearing for the Municipality, does not press the claim for the octroi duty with the consequence that the Government is not liable for the same and the decree passed by the trial Court to that extent has to be varied. No octroi duty is also payable on food-grains etc. transmitted by the Government Godowns outside the limits of the Municipality. The octroi duty is payable on food-grains weighing Q. 303972 which were sold by the Government to the wholesale dealers within the municipal limits. The octroi duty in respect of these goods is payable under the Octroi Rules of 1962 which came into force from June 1, 1962.

5. At the time of hearing of this appeal before us, Mr. G.T. Nanavati, Assistant Government Pleader, appearing for the State Government, which is the appellant in this appeal, urged that under Section 203 of the Bombay Municipal Boroughs Act, 1925, the plaintiff-Municipality was not competent, and for that matter no borough municipality is competent to file the suit for recovery of octroi duties, because, Section 203 only permits a suit to be filed in a Civil Court of competent jurisdiction in respect of any sum or sums recoverable under Chapter VIII of the Bombay Municipal Boroughs Act, 1925, or of any compensation, expenses, charges or damages payable under the said Act against the person liable to pay the same. In other words, the contention of Mr. Nanavati is that since the recovery of the octroi duty is not one liable to be recovered under the provisions of Chapter VIII of the Bombay Municipal Boroughs Act, 1925 nor the amount of octroi duty can be classified as compensation, expenses, charges or damages payable under the Act, the suit for recovery of the octroi duty is not competent.

6. The above contention of Mr. Nanavati has been sought to be repelled by Mr. Kaji, learned advocate appearing on behalf of the respon dent-Municipality as the interpretation canvassed on behalf of the State Government does not give full effect to the provision contained in Section 201 of the said Act and it completely ignores that the recovery by the method of suit is merely an alternative procedure to be resorted to in lieu of any process of recovery allowed by or under the Act.

7. The neat questions which, therefore, arise in this appeal are, whether alternative procedure by a suit is available in respect of the amounts other than those recoverable under Chapter VIII of the Boroughs Act 1925 or not, and, whether the Clause 'in lieu of any process of recovery allowed by or under this Act' and Clause ' or in case of failure to realise by such process the whole or any part of any amount recoverable under the provisions of Chapter VIII' are to be read disjunctively or conjunctively. In order to answer the questions referred to us, it would be profitable at this stage to shortly advert to the scheme contained in the Bombay Municipal Boroughs Act, 1925 in respect of the levy, collection and recovery of the octroi duty.

8. Section 3(12) of the Boroughs Act defines 'Octroi' as including the terminal tax and Section 320) defines 'Tax' as to mean any toll, rate, case fee or other impost leviable under the said Act including water rate. Chapter VII deals with the Municipal taxation. Part (1) of Chapter VII comprises of sees 73 to 77. Section 73 empowers Borough Municipalities to impose taxes and classifies different taxes, which can be imposed by the Municipalities. The material part of Section 73, which is relevant for purposes of this appeal, reads:

73. (1) Subject to any general or special orders which the State Government may make in this behalf and to the provisions of Sections 75 and 76, a municipality may impose for the purposes of this Act any of the following taxes, namely:

(i) x x x

(ii) x x x

(iii) x x x

(iv) an octroi on animals or goods or both, brought within the octroi limits for consumption, (use or sale) therein;

Section 75 is an important section, which has a bearing on the questions with which we are concerned in this appeal. The material part of Section 75 reads:

75. A municipality before imposing a tax shall observe the following preliminary procedure:

(a) it shall, by resolution passed at a general meeting, select for the purpose one or other of t) e taxes specified in Section 73 and approve rules prepared for the purposes of Clause (j) of Section 58 prescribing the tax selected, and in such resolution and in such rules specify:

(i) the classes of persons or of property or of both, which the municipality proposes to make liable, and any exemptions which it proposes to make;

(ii) the amount or rate at which the municipality proposes to assess each such class;

(iii) xxx xxx xxx

(iv) xxx xxx xxx(b) When such resolution has been passed, the municipality shall publish the rules so approved with a notice in the form of Schedule II prefixed thereto.

(c) Any inhabitant of the municipal borough objecting to the imposition of the said tax or to the amount or rate proposed or to the classes of persons or property to be made liable thereto or to any exemptions proposed may, within one month from the publication of the said notice, send his objection in writing to the municipality; the municipality shall take all such objections, into consideration, or shall authorize a committee to consider the same and report thereon; and unless it decides to abandon the proposed tax, shall submit such objections with its opinion thereon and any modifications proposed in accordance therewith together with the notice and rules aforesaid to the State Government.

Section 76 empowers the State Government to sanction and modify the Rules with or without conditions. Section 77A provides for the power of the State Government to permit a Municipality to levy tax at the varying amounts or varying rates. Part (2) of Chapter VII provides for assessment of and liability to rates on buildings or lands with which we are not concerned. Part (2) comprises of Sections 78 to 89. Part (3) of Chapter VII deals with the power to charge fees. It consists of only one section viz. Section 90. Part (4) of Chapter VII makes special provisions elating to certain taxes and it comprises of two sections viz. Sections 91 and 92. Part (5) of Chapter VII deals with octroi and tolls. Section 93 thereof enjoins a municipality to observe the requirements of Sub-sections (2) and (3) of Section 61 before framing Byelaws in connection with octroi and tolls. Section 94 empowers the municipalities to exempt articles liable to octroi when brought within the municipal limits. The material part of Section 94(1) reads as under:

94. (1) A person bringing into or receiving from beyond the octroi limits of a municipal borough any animal or goods on which octroi is payable shall, when required by an officer authorized in this behalf by the Chief Officer and so far as may be necessary for ascertaining the amount of tax chargeable,-

(a) permit that officer to inspect, examine, weigh, and otherwise deal with such animal or goods; and

(b) communicate to that officer any information and exhibit to him any bill, invoice or document of a like nature, which he may possess relating to such animal or goods;

(c) make a declaration in writing to that officer regarding the correctness and accuracy of the document shown to him.

Sub-section (2) of Section 94 empowers the officer concerned to search the goods brought by the person from beyond the octroi limits of municipal borough on which octroi is levied. Section 95 is a material section for purposes of the questions referred to us and it provides:

95. An officer demanding octroi by the authority of the municipality shall tender to every person introducing or receiving anything on which the tax is claimed, a bill specifying the animal or goods taxable, the amount claimed, and the rate at which the tax is calculated.

Section 96 provides for penalty for evasion of octroi duty. It reads as under:

96. Where any animal or goods passing into a municipal borough are liable to the payment of octroi, any person who, with the intention of defrauding the municipality, causes or abets the introduction of or himself introduces or attempts to introduce within the octroi limits of the said borough any such animal or goods upon which payment of the octroi due on such introduction has neither been made nor tendered, shall be punishable with fine which may extend to ten times the amount of such octroi or to fifty rupees, whichever may be greater

Section 97 deals with the tables of tolls with which we are not concerned. Section 98 empowers the officer concerned of the municipality to seize vehicle or animal or goods on nonpayment of octroi. It reads as under:

98. (1) In the case of non-payment on demand of any octroi or of any toll livable by a municipality, any person appointed to collect such octroi or toll may seize any animal or goods on which octroi is chargeable, or any vehicle or animal on which the toll is chargeable or any part of the burden of such vehicle or animal which is of sufficient value to satisfy the demand, and may detain the same. He shall thereupon give the person in possession of the vehicle, animal or thing seized, a list of the property together with a written notice in the form of Schedule VII.

Sub-section (2) of Section 98 empowers the officer concerned to sell the property seized and the circumstances in which that power can be exercised. Sub-section (3) thereof enables the officer concerned to release the property so seized if the payment of octroi dues together with all the incidental expenses is made before the sale is commenced. Sub Sections (4) and (5) are not of any importance for purposes of this appeal. Section 99, which is another important section and which has a bearing on the questions referred to us reads as under:

99. The standing committee, if it thinks fit, instead of requiring payment of octroi due from any person, mercantile firm or public body to be made at the time when the animals or goods in respect of which the octroi is leviable are introduced within the octroi limits of the municipal borough, may at any time direct that an account-current shall be kept on behalf of the municipality of the octroi so due from such person, firm or body. Such account shall be settled at intervals not exceeding one month, and such person, firm or public body shall give such information or details and make such deposit or furnish such security as the standing committee or any officer authorized by it in this behalf shall consider sufficient to cover the amount which may at any time be due from such person, firm or body in respect of such dues. Any amount so due at the expiry of any such interval shall, for the purposes of Chapter VIII, be deemed to be, and shall be recoverable in the same manner as, an amount claimed on account of any tax recoverable under the said Chapter.

(Emphasis supplied by us)

The remaining sections of Part (5), viz. Sections 100 and 101 are not relevant for purposes of this appeal, Part (6) of Chapter VII deals with the powers of the State Government in respect of the municipal taxes.

9. Chapter VIII provides for the recovery of municipal claims. Section 104 is the only section which has a bearing on the questions referred to us and it provides as under:

104. (1) When any amount

(a) which by or under any provisions of this Act, is declared to be recoverable in the manner provided by this Chapter, or

(b) which, rot being leviable under Sub-section (1) of Section 98 or payable on demand on account of an octroi or a toll, is claimable as an amount or installment on account of any other tax which now is imposed or hereafter may be imposed in any municipal borough, shall have become due, the Chief Officer shall, with the least practicable delay, cause to be presented to any person liable for the payment thereof, a bill for the sum claimed as due.

(Emphasis supplied by us)

Sub-section (2) prescribes the contents of bill referred to in Sub-section (1). Sub-section (3) provides as under:

(3) If the person to whom a bill has been presented as aforesaid does not, within fifteen days from the presentation thereof, either-

(a) pay the sum claimed as due in the bill, or

(b) show cause to the satisfaction of the Chief Officer why he is not liable to pay the same, or

(c) prefer an appeal in accordance with the provisions of Section 110 against the claim,' the Chief Officer may cause to be served upon the person liable for the payment of the said sum a notice of demand in the form of Schedule V or to the like effect.

Section 105 provides for the remedy, if the notice of demand issued under Sub-section (3) of Section 104 is not complied with. It provides for the recovery of the amount mentioned in the aforesaid notice of demand by distress and sale of the moveable property or the attachment and sale of the immovable property of the defaulter and for incidental maters as to whom and how the warrant is to he executed before the summary remedy is enforced. Section 106 provides for the sale of goods detrained in special cases under Section 105 which are subject to speedy and natural decay, or when the expense of keeping it in custody together with the amount to be levied is likely to exceed its value. The other sections of Chapter VIII are not relevant, for our purposes. The important section thereafter to which we should refer and on the interpretation of which there are conflicting decisions is Section 203, which provides for the alternative procedure to municipalities for recovery of their dues. It reads as under:

203. In lieu of any process of recovery allowed by or under this Act or in case of failure to realise by such process the whole or any part of any amount recoverable under the provisions of Chapter VIII, or of any compensation, expenses, charges or damages payable under this Act, it shall be lawful for a municipality to sue in any Court of competent jurisdiction the person liable to pay the same.

10. This is broadly the scheme of levy, collection and recovery of the octroi duty under the Bombay Municipal Boroughs Act, 1925. The entire thread running through the contention that a regular suit in a Civil Court by a borough municipality is not competent under the Bombay Municipal Boroughs Act, 1925 for recovery of the amount due and payable on account of octroi duty imposed by the Municipality is broadly that no civil liability is imposed on the person owning such goods which have been brought within the municipal limits for sale, consumption or use, or on the importer of such goods, because there is no charging section to that effect and more so particularly because in the very nature of the octroi duty the impost can be on the goods and not on the person. In the first decision of the Bombay High Court in Poona City Municipality's case (supra) this contention has found favour with the Division Bench consisting of Beaumont C.J. and Baker, J. The Bombay High Court was concerned in that case with an order of Small Cause Court Judge, Poona in a suit where the plaintiff-Municipality prayed for the recovery of a sum of Rs. 34-8-0 as 'due to them in respect of octroi on certain goods, which belonged to the defendants'. The Small Cause Court Judge dismissed the suit as he found that the suit was not competent. The Division Bench affirmed that view of the Small Cause Court Judge as the Division Bench, speaking through Beaumont C.J., did not find in the scheme contained in the different sections of the Bombay Municipal Boroughs Act, 1925 pertaining to levy and recovery of octroi duty that any liability was imposed on the persons importing goods to pay octroi duty and inasmuch as the Poona Municipality failed to prove that a current account was kept under Section 99 of the said Act and, therefore, the powers of recovery conferred by Chapter VIII were held as not available to the plaintiff-Municipality. It should be noted, in the first instance, that the most important sections, viz. Sections 75 and 95 of the Bombay Municipal Boroughs Act, 1925, were not pointed out in terms to the Division Bench hearing Poona Municipality's case (supra). Section 75, as we have set out above, enjoins a municipal before it can validly impose a tax, to select one or other of the taxes specified in Section 73, by a proper resolution passed at the general meeting and also approve the Rules prepared for purposes of Clause (j) of Section 58 prescribing the tax selected and also specify therein the classes of persons or property or both which the municipality proposes to make liable. Section 95 provides for presentation of bills for octroi to the persons bringing into or receiving from beyond the octroi limits of the municipal borough any animal or goods on which octroi is payable. Section 94, in the first instance, requires such a person to permit the officer concerned to inspect, examine, weigh and otherwise deal with such animal or goods, and also enjoins him to communicate to that officer any information and exhibit to him any bill, invoice or document of a like nature which he may possess relating to such animal or goods, and also compels him to make a declaration in writing to that officer regarding the correctness and accuracy of the document shown to him. Section 95, as stated above, empowers the officer concerned to tender to every person introducing or receiving animals or goods liable to octroi and on which the tax is claimed, a bill specifying the animal or goods taxable, the amount claimed, and the rate at which the tax is calculated Section 98 empowers the officer concerned in case of non-payment of demand of any octroi to seize the animals or goods on which octroi is chargeable which may be of sufficient value to satisfy the demand and may detain the same. Now these provisions had not been clearly brought to the notice of the Division Bench of the Bombay High Court in Poona City Municipality's case (supra) and it appears, therefore, that its attention having not been drawn to these sections, especially Sections 75, 94 and 95, the Division Bench made the observation that there is no liability imposed on the persons bringing the goods or animals within the municipal limits to pay any octroi duty and, therefore, unless current account is maintained under Section 99, it would not be an amount recoverable under Chapter VIII and, therefore, the suit under Section 203 would not be competent We have not been able to appreciate the contention of the learned Assistant Government Pleader urged on behalf of the State Government relying on this decision that there is no liability imposed by the Bombay Municipal Boroughs Act, 1925 on any person to pay octroi duty and the only liability, according to the learned Assistant Government Pleader is the criminal liability, which has been provided under Section 96. The learned Assistant Government Pleader also contended that the only tight which the Municipality has, if the octroi duty is not paid on demand being made at the time of import of the goods or animal within the municipal limits, is to seize the goods and to detain them, and to sell the same for recovery of the duty payable. We are afraid; we cannot assure with such a broad contention, which has been urged by the learned Assistant Government Pleader. It is no doubt true that the decision of the Division Bench of the Bombay High Court in Poone City Municipality's rase (supra) apparently lends support to this contention. But, as observed above, it seems to us clear from the short paragraph by which a similar contention was upheld by the said Division Bench that this provision contained in Section 75 and the provisions contained in Sections 94 and 95 and 99 of the Municipal Boroughs Act have not been clearly brought to the notice of the said Division Bench so as to consider the problem from that aspect, whether the liability for the octroi dues on the person importing the goods is imposed under the Act or not. We are of the opinion that on plain reading of Section 75 (a) (i) the Legislature has empowered the Municipality and as a matter of course enjoined it to select one of the taxes specified in Section 73 by an appropriate resolution and approve Rules prescribing the tax so selected and specify classes of persons or property which the Municipality proposes to make liable. The Rules, therefore, would be the appropriate place where, in the first instance, we have to find out whether a liability on the person importing goods or animal is prescribed or not. Secondly, Sections 94 and 95 clearly, in our opinion, impose an obligation on the person bringing into or receiving from beyond the octroi limits of a municipal borough any animal or goods on which octroi is payable, to pay the same on the bill being presented to him by the officer concerned. It is no doubt true that Section 96 provides for a penalty for non-payment of such amount of octroi duty after the bill is presented. Section 98 at the same time empowers the officer concerned in case of non-payment of the duty according to the bill to seize and detain the goods and empowers further the Municipality to sell the goods in case the amount is not paid after the detention and seizure. But the liability of being penalised under Section 96 is sort of a criminal liability while powers of seizure, detention and sale under Section 98 are the powers by which summary demand can be enforced. But to contend from Section 96 or 98 that no civil liability is created on the person importing the goods or animals from outside the octroi limits of a municipal borough is, in our opinion, not well founded. The very fact that non-payment of duty as demanded in the bill would expose him to penalty and summary enforcement is conclusive on the question of liability of importer or owner. Even under the alternative procedure envisaged in Section 99 of maintaining an account being in lieu of requirement of immediate payment of such octroi dues by the person concerned at the time of import of the goods in the octroi limits as expressly stated in Section 99, this liability of importer or owner is clearly envisaged. Besides, the particular rules with which we are concerned in this appeal clearly make the importer or owner liable and the relevant provisions contained in Rules 4(3), 6(1)(e), (k), (1) and (m) and (5), 14 and 15 clearly indicate in this direction and fortify the view which we are inclined to take that the contention about the absence of any provision creating civil liability to pay tax either in the Bombay Municipal Boroughs Act, 1925 and/or the Rules is not well conceived. To that is the legal position that a liability is entailed on a person bringing into or receiving from beyond the octroi limits of a municipal borough any animal or goods on which octroi is payable to pay the duty on the demand being made, we do not think that the contention which has been advanced that the Municipality is not competent to file suit under Section 203 of the Bombay Municipal Boroughs Act, 1925, is well founded. The view, which has appealed to the Division Bench of the Bombay High Court in Poona City Municipality's case (Supra) that inasmuch as there is no liability on any person to pay the octroi duty on the goods or animals which he brings within the municipal limits, no suit can be filed under Section 203 cannot be accepted by us in the view which we are taking of the matter. Section 203, as set out above, is an alternative remedy, which a Municipality can pursue in lieu of the summary remedy, which is available to it. The learned Assistant Government Pleader made a strenuous attempt to impress upon us that the only right to file a suit in lieu of any process of recovery allowed by or under the Act is in cases of recovery of whole or any part of the amount recoverable under the provisions of Chapter VIII or for recovery of any compensation, expenses, charges or damages payable under the Act, and in so far as Section 104 of Chapter VIII of the said Act saves and excepts the amounts of octroi duty payable from the general class of the amounts which can be enforced in the manner provided in Chapter VIII, suit under Section 203 are not competent. The contention prima facie appears to be attractive and it no doubt has impressed the Division Bench of the Bombay High Court in Poona City Municipality's case (Supra) but in our opinion on close scrutiny, it does not help the cause which the learned Assistant Government Pleader is pleading before us, obviously for two reasons: in the first place, the interpretation which he advances on the phraseology of Section 203 read with Section 104 of the Municipal Boroughs Act, 1925 would, in our opinion, not give the full scope and effect to Section 203. In the ultimate analysis, it is the provision contained in Section 203 which must bear out the right of a Municipality to file suit for recovery of the octroi duty, provided there is any liability under the Act to pay the duty. Section 203 opens with the words:

In lieu of any process of recovery allowed by or under this Act.

The interpretation which has been advanced by the learned Assistant Government Pleader, if accepted, would render the first Clause of Section 203, which we have set out above, otiose. It is any recovery allowed by or under the Municipal Boroughs Act, which can be recovered by filing a suit. The learned Assistant Government Pleader, therefore, urged that it would not be a proper reading of the section in the manner in which we are trying to read. According to the learned Assistant Government Pleader, we must read the first and the second clauses of Section 203 together. He wants us to read clauses, 'In lieu of any process of recovery allowed by or under this Act', and 'or in case of failure to realise by such process the whole or any part of any amount recoverable under the provisions of Chapter VIII' conjointly. We are afraid that the manner suggested by the learned Assistant Government Pleader of reading this Section would completely defeat the right of the Municipality to recover the octroi duty except by enforcing summary remedy or resting itself satisfied with imposition of the penalty under Section 96 on the importer. In our, opinion, the first two clauses of Section 203 provide for two different contingencies. The remedy provided in Section 203, it should be noted, is in lieu of summary process. The alternative remedy none-the-less is provided in the matter of recovery allowed by or under the Act. The attempt of the learned Assistant Government Pleader that the suit is competent only in respect of the two matters viz. the amount recoverable under Chapter VIII and the amount of compensation expenses, charges or damages payable under the Act would militate against not only the accepted principles of construction of statutes but would result in an extremely absurd position that the Municipality is entitled to file suit for the incidental claims of compensation, expenses, charges and damages but would not be entitled to file suit in respect of the main matter such as for the amount due and payable on account of taxes or fees. The learned Assistant Government Pleader made an attempt to explain this by urging that because the summary method of recovery is provided and a criminal liability is provided, the legislature has not thought fit to provide for the competency of suits to recover such amounts. We do not think that this explanation is satisfactory. As we have said, it begs the question, whether the liability is provided in the Act and also in the Rules on the persons bringing into or receiving from beyond the octroi limits goods or animals to pay the octroi duty. In this connection our attention has been drawn by the learned Assistant Government Pleader to a provision, which according to him is similar, in the Bombay District Local Boards Act. The decision on this provision of the Bombay District Local Boards Act has been rendered by the Division Bench consisting of Stone, C.J. and Divatia, J. in District Local Board, Rainagiri v. Shantaram Rajaram and Ors. A.I.R. 1946 Bombay, 117. The Division Bench, Speaking through Stone, C.J. stressed the etymological meaning of the term 'octroi' by reference to its nature of impost and similar impost in different countries and has taken the view that in the very nature of the impost of octroi duty incidence can be only on the goods and cannot be attached to the persons. The Division Bench thereafter considered the scheme contained in the Bombay District Local Boards Act, 1923 as amended by Act 23 of 1938 and the relevant provision which empowered the Local Board to file suit is contained in Section 72 of the said Act. The material part of the said section provides:

In lieu of proceeding by distress and sale, or in case of failure to realise by so proceeding the whole or any part of any amount recoverable under the provision of Chap. VIII or of any compensation, expenses, charges or damages awarded under this Act, the district local board may sue in any Court of competent jurisdiction the person liable to pay the same.

The Division Bench held that before the 1938 amendment became operative, on written demands or notices or bills which could ratify sub Section (2) of Section 104 were served, and hence the amount of octroi could not be recovered by distress under the subsequent sections of Chapter VIII, because there was no demand and no delivery of a bill under Section 104, and accordingly, he alternative procedure of suing the importer in a Civil Court by virtue of Section 72 for recovery of octroi duty by obtaining a personal decree against him could not arise unless the machinery of Section 104 with regard to the giving of a bill which is mandatory had been complied with. The Division Bench further took the view that even after the amendments of 1938, the alternative procedure laid down in Section 72 of suing the importer in a Civil Court has no application to the case of an octroi. In our opinion this authority would not be of much assistance to the appellant-State. The provision contained in Section 72 of the Bombay Local Boards Act, 1923 is, in the first instance, not part material with Section 203 of the Municipal Boroughs Act, but on the contrary the said Section 72 appears to be nearer to the provision contained in sec'. 164 of the Bombay District Municipal Act, 1901 and, therefore, in view of the difference between the provisions of Section 72 of the Bombay Local Boards Act, 1923 and Section 203 of the Bombay Municipal Boroughs Act, 1925 we do riot think that this decision can be successfully pressed into service by trig learned Assistant Government Pleader in support of his contention. The marked difference between the provision contained in Section 164 of the District Municipal Act (which is part material with Section 72 of the Bombay District Local Boards Act, 1923 as amended by Act 23 of 1938) and Section 203 of the Bombay Municipal Boroughs Act, 1925 has been noted as a significant distinguishing feature by the Division Bench of the Bombay High Court consisting of Vyas and Tambe JJ Uran lslampur Municipality v. Shankarrao Amritrao Jadhav A.I.R. 1960 Bombay 467, where the Court was concerned with a similar question of competency of suit for recovery of octroi duty udder Section 164 of the Bombay District Municipal Act, 1901. We read Section 164 as under:

In lieu of proceeding by distress and sale, or in case of failure to realise by so proceeding the whole or any part of any amount recoverable under the provisions of Chapter VIII or of any compensation, expenses, charges or damages awarded under this Act, it shall be lawful for the Municipality to sue in any court of competent jurisdiction the person liable to pay the same, as also any other person who may have in any other way caused or may appear likely to cause, any inquiry to any property, rights or privileges of the Municipality.

The Division Bench in Uran lslampur Municipality's case (supra) distinguished the decision of Wassoodew, J in Bhusawal Municipality v. Hindustan Construction Co., Bombay A.I.R. 1943 Bom 30, which was sought to be relied upon by the Advocate for Uran lslampur Municipality in support of the contention that such a suit for recovery of the octroi duty was competent under Section 164 of the Bombay District Municipal Act, 1901. The Division Bench while distinguishing the said decision observed as under at page 470 in paragraph 6:

There are more reasons than one why this decision would not avail the plaintiff Municipality. In the first place, as I have said, there is no provisions in part (5) of Chapter VII of the Act which is the only part relating to octroi and tolls, which makes a person, who introduces an article into the octroi limits of a municipal district, liable to pay. Therefore, unless there is a provision in the Act which makes a person sued liable to pay that person cannot be sued. Then, again, and this is important 44 Bom. L.R. 890 : AIR 1943 Bom. 30 was not a case under the Bombay District Municipal Act, 1901, but it was a case under the Bombay Municipal Boroughs Act, 1925. Now, if we turn to Section 203 of the Bombay Municipal Boroughs Act, 1925 and compare the language of that section with the language of Section 164 of the Bombay District Municipal Act, 1901, we would find a substantial and fundamental difference between the language of the two sections.

After setting out Section 203 and Section 164 of the respective Acts, the Division Bench proceeded to observe further as under:

The important words which find place in Section 203 of the Bombay Municipal Borough. Act is and which are significantly absent in Section 164 of the Bombay District Municipal Act 1901 is 'by or under this Act'. If, for instance, Section 164 had read in of proceeding by distress and sale allowed by or under the Act etc. 'then Mr. Albal would have been right in his contention, and he would also have been right in relying upon the above mentioned case in support of to contention, that the words 'distress and sale' would relate not merely to discuss and sale provided under Chapter VI11 but also to digress and sale provided under Chapter Vll of the Act. But the Legislature while enacting Section 164 of the Bombay District Municipal Act, 1901 did not use the significant words 'by or under this Act' after the words 'distress and sale'. Instead, while dealing with a case of failure to realise, the whole or any part of the amount of octroi, they dealt win a case of failure under Chapter VIII of the Act, clearly indicating thereby that when they used the words 'distress and sale' in the opening part of Section 164. Intended to refer to distress and sale under Chapter VIII of the Act.

We are of the opinion that the phrase 'in lieu of any process of recovery allowed by or under this Act' is a phrase of a very wide import and on the plain reading of the section it cannot be restricted to the amounts recoverable under the provisions of Chapter VIII only. There are different types of process of recovery prescribed under the Bombay Municipal Boroughs Act one of them is by seizure and detention of the goods at the time of import of the goods and articles within the octroi limits if the duty is not mid on the bill being presented to the importer or owner. That is one of the modes of recovery under the Act. In lieu of that recovery the right to file a suit is granted to the Municipality under Section 203. The attempt to read the first two clauses of Section 203 jointly is, in our opinion, misconceived It is no doubt true that in the second clause namely 'or m case of failure to realise by such process the whole or any part of any amount recoverable under the provisions of Chapter VIII', the words used arc 'such process'. But that would not warrant that the first clause viz. 'In lieu of any process of recovery allowed by or under this Act' should be restricted to the amounts recoverable under Chapter VIII only. These two clauses should be read disjunctively; otherwise we fail to give full scope and effect to the first clause contained in Section 203 of the Bombay Municipal Boroughs Act, 1925, namely, 'in lieu of any process of recovery allowed by or under this Act'. In the ultimate analysis, we have to find it out from the Act with which we are concerned in this appeal whether civil liability has been prescribed or not. As we have stated above, we are not inclined to agree with the learned Assistant Government Pleader that it is only a criminal liability which has been prescribed under the Bombay Municipal Boroughs Act for non-payment of the octroi duty on the importer of animals or goods and that there is no civil liability for payment of the duty for which a suit can be filed for the enforcement thereof. As a matter of fact we do not think that this conflict is still open and alive in view of the decision of the Supreme Court in Raja Jagdish Pratap Sahi v. State of Uttar Pradesh : [1973]88ITR443(SC) , where a suit was filed by the State for recovery of agricultural income-tax and the question arose before the Supreme Court as to the maintainability of such a suit, in view of Section 32 of the U.P. Agricultural Income-tax Act, 1948, which provided the mode of recovery of penalties. It was contended before the Division Bench that the only mode of recovery of arrears of tax or penalty due under the said Act was to be found under Section 32 only and the State could not recover any such amount by any other mode such as by a suit. The facts in the case before the Supreme Court was that the appellant Raja Jagdish Pratap Sahi was assessed to agricultural income-tax for the year 1359 Faslima sum of Rs. 53,097-25 and was directed to pay the same in four installments of Rs. 13,274-31 each payable on 9-12-52, 9-2-53, 9-4-53 and 9-6 53 The first installment was recovered from the assessed with penalty Notice to pay second and third installments was served on him but instead of paying the amount the assesses filed a writ petition in the Allahabad High Court and obtained a stay order which was subsequently vacated The State of U.P., therefore, filed a suit against the appellant for the recovery of the tax m arrears after the action of the State to recover the amount contention urged behalf of the appellant about the in competency of the suit, Jaganmohan Reddy, J. speaking' for the Court, observed as under

Before we deal with the main contention it may be stated that once a notice of demand served on the assesses for payment of t due under the A and the assesses makes a default after the date for payment specified therein has expired a debt created in favour of the State. This debt the State can recover by any of the modes open to it under the general Law.

The Supreme Court thereafter considered the position available for recovery' of the tax by summary methods as well as by regular civil action under the Income-tax Act, 1922, as amended by the Income-tax (Amendment Act of 1953. By the Indian Income-tax (Amendment) Act 1953 an FT1 nation was added to Sub-section (7) of Section 46. In the Explanation no clear right was conferred on the Revenue to recover the arrears of tax by any other mode other than those provided in the Act. The Supreme Court thereafter observed as under.

It is manifest that this explanation does not in any way conference revenue to recover area's of tax by any mode other the, law that Act. That right which the State or 'the tax which is a debt due to it, is a general right conference on either by a suit or by some other method open to it.

Thereafter the Supreme Court referred to Section 32 of the income tax Act, 1948 and proceeded to observe as under

Section 32, though it does not have an Explanation analogous to Section does not preclude either specifically or by necessary implication a right the arrears of tax due by a suit. The method prescribed in, his the modes of recovery which is a summary remedy is however State to adopt any method available to it for the recovery as it would be open to it to recover ordinary debt and obtain a decree with costs against the it could also probably, without obtaining a See' or same' for the payment of dues if there are the Court or it may perhaps demand payment in the hand, of in respect of any property of the assesses if due in the funds, given. On these aspects, however, we do not propose to express any views. As already observed, after an assessment is made upon the assesses quantifying the tax due from him and a demand for the payment thereof is issued within the period specified therein, it creates a debt payable by the assesses in favour of the State. It is well established that once a debt is created, the State has the right to recover it by any of the modes open to it under the general law, unless as a matter of policy only a specific mode to the exclusion of any other is prescribed by the law. No such prohibition is enacted in Section 32 of the Act.

The Supreme Court thereafter referred to the judgments of various High Courts and held as under:

On principle as well as on the consistent view of the High Courts, it is beyond doubt that where a taxing statute provides for a summary mode of recovery and is not exhaustive, it will be open to the State to have recourse to any other mode open to it under the general law.

11. In view of this settled legal position, we do not think that it is open to the learned Assistant Government Pleader who incidentally represent the State here, which has committed a default in payment of the tax to the Municipality, to contend, even faintly, that the Municipality is not competent to file the suit because the method of recovery prescribed in Section 203 is by way of and in the nature of alternative remedy and Section 98, which empowers the Municipality to seize and detain and thereafter sell the goods or animals, or Section 104, which provides the mode of recovery by distress and sale of moveable and immovable properties, cannot be said to be exhaustive. Till that view of the matter, therefore, we do not think that the contention urged on behalf of the State Government about the incompetency of the suit can be sustained. We, therefore, answer--

Question No. 1: In the affirmative;

Question No. 2: In the affirmative;

Question. No. 3: In the affirmative; and

Question No. 4: Does not arise.

12. This appeal shall go back to the Division Bench with the direction to dispose of the matter in the light of the opinion, which we have given on question Nos. 1, 2, and 3. The costs will be costs in the cause in the appeal.


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