M.P. Thakkar, J.
1. Does Octroi duty cease to be octroi duty and become something else if instead of recovering the same on every consignment it is recovered in lumpsum by consent in view of the authority to do so conferred by the statute? Can it be contended by a tax-payer that a higher burden can be imposed on him under the law, but not a lower, and that if a lower burden is imposed the levy is invalidated? These are the questions which come to the fore in this petition under Article 226 of the Constitution of India instituted by Saurashtra Cement and Chemical Industries Limited, Ranavav, challenging the right of a Taluka Panchayat to levy a tax (octroi duty) under Section 183(1) of the Gujarat Panchayats Act, 1961, hereinafter referred to as 'the Act.' The right of the District Panchayat to levy a similar tax under Section 185 is also questioned by the petitioner Company on similar grounds.
2. Under Section 178 of the Act taxes enumerated in Clauses (i), (ii) and (xviii) can be levied by a gram Panchayat and a nagar Panchayat. One of the taxes which can be levied is Octroi on animals, or goods, or both, brought within the gram or nagar for consumption, use or sale therein as per Clause (ii) of Sub-section (1) of Section 178. Respondent No. 1 Adityana Gram Panchayat decided to levy Octroi duty under the aforesaid provision in respect of animals or goods brought within the limits of the Panchayat. Under the relevant rules viz. Gujarat Gram and Nagar Panchayats Taxes and Fees Rules of 1964, Octroi duty could be levied within the parameters prescribed by Rule 24 read with the Schedule. The Schedule prescribes the maximum as also the minimum rates at which duties could be levied on various articles. The petitioner Company imports lime-stone and clay within the limits of the Gram Panchayat for the purpose of manufacturing cement. The petitioner and respondent No. 1 entered into an agreement as contemplated by Section 179(1) which empowers the panchayat to enter into an agreement to levy lump-sum contribution in lieu of the tax sought to be imposed by the panchayat. The said provision reads as under:
179 (1) Subject to any rules that may be made under this Act, and regard being to the fact that a factory itself provides in the factory area all or any of the amenities which such Panchayat provides, a gram Panchayat or as the case may be, nagar panchayat may arrive at an agreement with any factory with the sanction of the State Government to receive a lump-sum contribution in lieu of all or any of the taxes levied by the Panchayat.
3. It will be seen that under Section 179(1), by agreement between the parties, a lump-sum contribution can be fixed taking into account factors favourable to the importer which cannot be taken into consideration for the levy of Octroi duty under Section 178. Regard can be had to the fact that the factory itself provides some amenities. The lump-sum amount may be even less than the amount which would be payable at the minimum rate prescribed by Rule 24 read with the Schedule. It would, therefore, be more beneficial for the Company to enter into an agreement to pay a lump-sum contribution instead of paying octroi duty at the prescribed rates. The petitioner Company presumably because it considered such an arrangement beneficial to it, entered into an agreement for payment of lump-sum compensation instead of octroi duty for the period between April 1,1976 to October 31, 1979. The agreed amount was Rs. 1, 27, 000/-. 4. Now, Section 183 provides for levy of taxes by Taluka Panchayats. The said section in so far as material reads as under:
183. (1) Subject to any general or special orders which the State Government may-make in this behalf, every Taluka Panchayat may after observing the preliminary procedure required by Section 189 impose an education cess and any of taxes and fees which are leviable by a gram or nagar Panchayat under Section 178:
Provided that the rate of tax or fee leviable by a taluka Panchayat in respect of any matter within the limits of any grain or nagar shall not exceed 15 percent of the rate of the tax or fee actually levied by the gram Panchayat or nagar Panchayat in respect of the same matter, and where no such tax or fee has been levied by the gram panchayat or nagar Panchayat, shall not exceed 15 per cent of the prescribed maximum rate of tax or fee in respect of the same matter
It is evident that the Taluka Panchayats has also been authorised to levy any of the taxes which could be levied by the gram Panchayat subject to the limitation contained in the aforesaid proviso. Octroi duty is a tax which can be levied by the gram panchayat. The Taluka Panchayat can also, therefore, levy octroi duty in respect of goods etc. imported within the limits of the gram panchayat. Since it is an additional levy over and above the levy imposed by the gram Panchayat, Legislature has advisedly prescribed the maximum rate of levy. As per the proviso, the Taluka Panchayat can levy Octroi at a rate not exceeding 15 per cent of the rate of the tax actually levied by the gram panchayat. Even if the gram Panchayat has not levied any such tax, say Octroi duty, the Taluka panchayat can levy such a tax. But in that case the levy cannot be at a rate in excess of 15 per cent of the maximum prescribed by Rule 24 read with the Schedule. In other words, if the gram panchayat can impose a burden of Rs. 100/-a Taluka panchayat can levy a maximum burden of Rs. 15/-. A similar provision contained in Part IV pertaining to taxation by district Panchayats authorises a levy by the district panchayat at a rate not exceeding 10 per cent subject to similar limitations. The provision concerned, in so far as material, reads as under:
185. Subject to any general or special orders which the State Government may make in this behalf, every district Panchayat may, after observing the preliminary procedure required by Section 189 impose any of the taxes and fees which are leviable by a gram Panchayat under Section 178:
Provided that the rate of tax or fee leviable by a district panchayat in respect of any matter within the limits of any gram or nagar shall not exceed 10 per cent of the rate of the tax or fee actually levied by the gram panchayat or nagar Panchayat in respect of the same matter, and where no such tax or fee has been levied by the gram Panchayat or nagar panchayat. shall not exceed 10 per cent, of the prescribed maximum rate of tax or fee in respect of the same matter:
5. The net result is that a tax can be levied by the gram Panchayat at a rate which is not less than the minimum and not more than the maximum prescribed in the Schedule. The taluka panchayat can also levy the same tax but the levy can be made subject to a ceiling of 15 per cent of the actual levy where the gram panchayat has levied the tax, and 10 per cent of the maximum rate where it has not done so. As against this, the district panchayat can also levy a tax at a rate not exceeding 10 percent if a tax is actually levied or at 10 per cent of the prescribed maximum rate if such a tax is not actually levied by the gram panchayat. The resultant position is that if the gram panchayat levies a burden of Rs. 100/~, the Taluka panchayat can impose a further burden not exceeding Rs. 15/-and the district panchayat can impose a further burden not exceeding Rs. 10/-. Such is the scheme of Section 178 read with Section 183 and Section 185. The petitioner Company does not dispute that the Taluka Panchayat and the district panchayat can levy a tax or octroi, whether or not the gram panchayat had done so. The petitioner company also does not challenge the validity of the agreement for payment of lump sum contribution to the gram panchayat entered into under Section 179 of the Act. What is challenged is the right of the Taluka and the district panchayats to impose an additional levy under Section 183 and Section 185. It is not disputed that if the gram panchayat had levied octroi duty at a rate not less than the minimum and not more than the maximum authorised by the rules, the Taluka and the district Panchayats could have levied an additional 15 per cent and 10 per cent respectively under the authority of Section 183 and Section 185. It is, however, contended that the Taluka and the district panchayat do not have the legal competence to impose a levy under Sections 183 and 185 having regard to the fact that the gram panchayat instead of levying octroi duty under Section 178 at a rate within the limits prescribed by the rules, has entered into an agreement for payment of a lump sum contribution in lieu of octroi duty as authorised by Section 179. Gram panchayat having done so, such is the argument, the taluka and district Panchayats cannot levy a tax at 15 per cent of the lump sum contribution agreed upon by the gram panchayat. It is the validity of this argument which is required to be tested.
6. As indicated in the course of the discussion hereinbefore, it is beneficial for the Company to enter into an agreement to pay lump sum contribution in lieu of octroi duty. It is beneficial for two reasons. The fact that the factory provides some amenities can enter into consideration for determining the lump sum contribution at a lower figure then based on an estimate of duty payable at the minimum rates on imports made by it during the relevant period. The lump sum amount that may be fixed is arrived at by negotiations and no limitation as regards the minimum rate of duty enters into consideration. Evidently the Company itself considered this arrangement to be more advantageous. Under the circumstances, it has agreed to pay lump sum contribution in lieu of tax. The Taluka panchayat and the district panchayat have imposed an additional levy on its own at 15 percent and 10 per cent respectively of the amount of duty payable to the gram panchayat under the impugned resolution. The power to levy octroi duty enures in favour of the taluka Panchayat, by virtue of Section 183, and in favour of the district Panchayat, by virtue of Section 185, which provisions have been quoted a short while ago. The levy does not offend the criteria embodied in the proviso. The only ground on which it is challenged is that the taluka and the district Panchayats can levy it at 15 per cent and 10% respectively of the rate at which the gram panchayat has levied tax. But then, such is the argument in the present case, the gram panchayat has not levied octroi duty at any particular rate. It has entered into an agreement for lump sum contribution in lieu of tax. Therefore, there is no specified rate of tax. And what is authorised by Sections 183 and 185 is a levy at a rate linked to the rate at which octroi duty is in fact determined, or the maximum rate at which it could be levied having regard to the rates prescribed in the Schedule to the rules. In our opinion, there is no merit in this submission. When Sections 183 and 185 advert to the rate at which octroi duty is levied for the purposes of providing for the maximum rate, it aims at fixing a ceiling on the burden. In the present case the burden imposed on the gram panchayat is of the order of Rs. 1, 27,000/-per annum, Therefore, the burden by way of the additional levy on the part of the taluka panchayat cannot exceed Rs. 19050/-(15 per cent of Rs. 1, 27, 000/-). So also in regard to the district panchayat the burden cannot exceed 10 per cent of the burden imposed by the gram panchayat. That is to say, the burden cannot exceed Rs. 12, 700/-(10 per cent of Rs. 1, 27, 000/-). The month-wise figures have been specified at Annexure 'C' to the petition. In substance, therefore the dispute is regarding the additional levy of Rs. 31, 750/-per annum consisting of the levy of Rs. 19050/-imposed by the taluka panchayat and of Rs. 12, 700/-imposed by the district panchayat. In our opinion, Section 183 cannot become inapplicable merely because instead of calculating the octroi duty on the basis of the rates prescribed in the schedule, the levy is linked to the amount actually recovered by the gram panchayat. Sections 178, 179, 183 and 185 will have to be read in a harmonious manner so that the purpose of these provisions is carried out. It cannot be disputed that the taluka and the district Panchayat could have made a levy on the basis of 15 per cent and 10 per cent respectively of the maximum rates. It is also equally clear that it would have resulted in imposition of a much larger burden. It may suit the petitioner for the purposes of the present petition to contend that a larger burden can be imposed though a smaller one cannot be imposed. We, however, cannot place such a self-defeating construction on the relevant provisions which would in fact be prejudicial to the tax-payer himself.
7. In urging these submissions it is overlooked that:
(1) Octroi duty remains what it is notwithstanding the manner in which it is collected. It does not cease to be duty on import of articles merely be cause it is not collected consignment-wise and is collected in lump sum by consent for the sake of convenience under the authority of Section 178 which authorises such an agreement.
(2) The character of the tax remains the same even though under authority of law (Section 178) in lieu thereof lump sum contribution is collected. It only alters the mode and method of collection.
8. It may also be realised that it would introduce an amount of uncertainty and cause considerable inconvenience to the tax-payer himself if the gram Panchayat were to make a levy by way of a lump sum contribution by agreement whereas the taluka and the district Panchayats were to impose a levy on a different basis which would require ascertainment of the value of the goods imported during the relevant year. Be that as it may, we see no good reason or compulsion rooted in principle, logic, or common sense, to place such a strained construction which would defeat the object of the scheme underlying these provisions and result in greater hardship and prejudice to the tax-payer himself. We are, there fore, unable to accede to the submission urged on behalf of the petitioner Company.
9. A number of points were raised in the petition but ultimately the petition has been argued only from the aforesaid standpoint. No other point has been placed before us or pressed before us.
The petition, therefore, fails and is rejected. Rule is discharged There will be no order regarding costs. Interim orders are vacated.