1. This is an application under Article 226 of the Constitution by Surajmal Baj for issue of a writ of mandamus, prohibition or any other appropriate writ, or direction or order against the State of Rajasthun and the Administrator of the Municipality of Jaipur City, and two others, in connection with the demand of octroi from the applicant.
2. The case of the applicant is that he is a resident of Jaipur City and carries on trade and commerce in allopathic medicines. He was entering the city of Jaipur on 4-9-1953, at about 1 P.M. with a packet of allopathic medicines sent to him by May and Baker (India) Ltd., New Delhi, for the purpose of his trade and commerce. He was stopped by the Octroi Inspector who was also made a party to this petition and was asked to pay octroi duty amounting to Rs. 1/6/6 and was informed that the goods bo detained till the octroi duty was paid.
It was urged that this demand and detention of his goods were illegal for the reasons that the octroi imposed by the Municipal Council of Jaipur City from 1-9-1953, was suspended on the 3rd September, and thereafter the Municipal Council was superseded and an Administrator appointed, and no octroi duty had been imposed by the Administrator in accordance with the terms of the Jaipur Municipal Act, 1943. Thus there was no octroi duty in force on 4-9-1953, and the demand made from him was illegal. It was further contended that under Article 301 of the Constitution trade and commerce was free throughout the territory of India, & no duty in the nature of octroi could be levied or collected at all by the State or the Municipal Council. The applicant, therefore, prayed for the issue of an appropriate writ.
3. The application was opposed on behalf of the State of Rajasthan and the Administrator of the Municipality of Jaipur City, and it was urged in reply that the levy of octroi duty was not covered by Article 301, and was, in any case, protected under Article 305 of the Constitution, that the Municipal Council of Jaipur had no authority to suspend the octroi duty without the approval of the Government, that the meeting in which the duty was suspended by the Municipal Council was irregular and therefore the resolution suspending the duty had no force.
4. Wo shall first deal with the argument based on the provisions of the Constitution. In this connection, reference may be made to Article 301 which provides that subject to the other provisions of that Part, trade, commerce and intercourse throughout the territory of India shall be free.
Article 302 gives power to Parliament to impose restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest.
Article 303 restricts power of legislation and forbids giving of preference to one State over another or making any discrimination between one State or another subject to the exception that such preference or discrimination can be made in case there is a situation arising from scarcity of goods in any part of the territory of India.
Article 304, among other things, gives power to a State Legislature, notwithstanding Article 301 or Article 303, to impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest, provided that any bill for this purpose must have the previous sanction of the President before being introduced in the Legislature of a State. Article 303 is important and runs as follows: 'Nothing in Articles 301 and 303 shall affect the provisions of any casting laws except in so far as the President may by order otherwise provide.' Article 306 provides for continuance of certain duties by Part B States, while Article 307 gives power to Parliament to appoint such authority by law as it considers proper for carrying out the purposes of Articles 301, 303 and 304.
The contention on behalf of the applicant is that in view of Article 301, which provides that trade and commerce and intercourse throughout the territory of India shall bo free, no octroi duty can be levied at all. It is urged that levying of Octroi duty amounts to interfering with the freedom of trade, commence and intercourse, and therefore is prohibited by Article 301. In reply it is urged on behalf of the State that levy of Octroi Duty cannot amount to interference with the freedom of trade, and commerce, and is, under no circumstances, hit by Article 301.
5. The first question, therefore, that arises is whether levy of octroi duty on entry of goods within the municipal limits amounts to interference with the freedom of trade and commerce. We do not think it can be seriously contended that such levy does not amount to interference with the freedom of trade and commerce. Freedom implies that there should be no restrictions on trade and commerce. Levying of octroi duty on entiy of goods inside municipal limits would certainly restrict freedom of trade, inasmuch as there will be impediment to the movement of goods into municipal limits unless the duty was paid.
In this connection we may refer to 'James v. Commonwealth of Australia, (No. 2)', 1936 AC 578 (A). That was a case from Australia, and the question arose whether certain regulations restricting inter-state trade were invalid in view of Section 92 of the Australian Constitution which provided that on the imposition of uniform duties of customs, trade, commerce and intercourse among the States, whether by means of internal carriage or ocean navigations, shall be absolutely free. Their Lordships of the Judicial Committee examined the effect of this section and first addressed themselves with the meaning of the words 'absolutely free', and said that the word 'absolutely' added nothing and might perhaps be regarded as merely inserted to add emphasis. Then they referred to the meaning of the word 'free', and said that the word 'free' in itself was vague and indeterminate, and must take its colour from the context. Following observations at p. 627 may well be quoted in this connection -
'Compare, for instance, its use in free speech, free love, free dinner and free trade. Free speech does not mean free speech; it means speech hedged in by all the laws against defamation, blasphemy, sedition and so forth; it means freedom governed by law, as was pointed out in 'McArthur's case', 28 Com. WLR 530 (B). Free love, on the contrary, means licence of libertinage, though, even so, there arc limitations based on public decency and so forth. Free dinner generally means free of expense, and sometimes a meal open to any one who comes, subject, however, to his condition or behaviour not being objectionable. Free trade means, in ordinary parlance, freedom from tariffs.'
Their Lordships, however, went on to observe that 'free' cannot be limited to freedom from tariffs alone, and went on to observe as follows at p. 628-
'But it is clear that much more is included in the term; customs duties and other like matters constitute a merely pecuniary burden; there may be different and perhaps more drastic ways of interfering with freedom, as by restriction or partial or complete prohibition of passing into or out of the State.'
It is clear from these observations that duties on entry of goods would certainly amount to interference with freedom.
6. In 'Gloucester Ferry Co. v. Commonwealth of Pennsylvania', (1884) 29 Law Ed 158 (C), the meaning of the words 'freedom of transportation' came to be interpreted and the following observations were made at p. 167-
'That freedom implies exemption from charges other than such as are imposed by way of compensation for the use of the property employed, or for facilities afforded for its use, or as ordinary taxes upon the value of the property.'
It seems to us therefore that imposition of octroi duty would amount to restriction on the freedom of trade granted under Article 301. We cannot, therefore, accept the argument raised on behalf of the State that impositions of octroi duty can, under no circumstances, be hit by Article 301. At the same time, we must point out that the freedom granted under Article 301 is not absolute, but is subject to the other provisions of Part XIII of the Constitution. The argument, therefore, on behalf of the applicant that octroi duties can, in no circumstances, be imposed, is also incorrect. Article 304 envisages imposition of such reasonable restrictions on the freedom of trade, commerce or intercourse with or within the State as may be required in the public interest. Item 52 of List II of the Seventh Schedule gives power to the State to impose taxes on the entry of goods into a local area for consumption, use or sale therein. The Constitution, therefore, envisages imposition of Octroi duty on entry of goods in municipal area in the public interest, and octroi duty can be imposed under Article 304 if the State passes law as provided in that article.
7. This is, however, not a case governed by Article 304, and we have to go to Article 305 for our purposes. That article saves existing law from being hit by Article 301. Existing law is defined in Article 366(10) as meaning
'any law, Ordinance, order, bye-law, rule or regulation passed or made before the commencement of this Constitution by any Legislature, authority or persons having power to make such a law, Ordinance, order, bye-law, rule or regulation.'
Arguments have been addressed from both sides as to the interpretation of Article 305. It is contended on behalf of the applicant that as there was no bye-law in force in the Jaipur Municipality imposing octroi duty before the Constitution came into force, no bye-laws could be passed for this purpose by the Jaipur Municipality. The contention on behalf of the State and the Municipality, on the other hand, is that the Jaipur Municipality Act was in force, and was 'existing law' within the meaning of Article 366(10). That law has been saved by Article 305 and authorises the Municipality to impose octroi duty by framing bye-laws even after the coining into force of the Constitution, Section 77 of the Jaipur Municipal Act (No. 53) of 1943 authorises the Municipal Board, after observance of certain formalities, to impose various taxes including an octroi on goods or animals or both brought within the octroi limit for consumption or use therein. The question, that requires determination, is whether, in view of the Jaipur Municipal Act being an existing law, it was open to the Municipality to impose an octroi duty by framing bye-laws after the Constitution came into force. It is admitted that rules and bye-laws for levying octroi duty were framed in this case on 15-7-1953, and were published in the Gazette on 25-7-1953, and the necessary formalities provided under Section 77 of the City of Jaipur Municipal Act, 1943 were gone through.
It is, therefore, urged on behalf of the State that imposition of Octroi duty by framing rules and bye-laws in July, 1953, was not hit by Article 301 as such rules and bye-laws were framed under the provisions of the City of Jaipur Municipal Act which was saved under Article 305. The contention on the other side is that as the bye-laws imposing octroi duty did not exist on the date the Constitution came into force, they could not be existing law within the meaning of Article 366(10) and could not, therefore, be saved.
8. There is an apparent contradiction in the two positions. On the one side, stress is laid on the Jaipur Municipal Act which undoubtedly was existing law and provided for imposition of taxes. On the other side, stress is laid on the absence of the rales and bye-laws imposing octroi duty, and it is said that the rules and bye-laws, which came into existence in July, 1953, cannot be existing law and are, therefore, not saved by Article 305. A careful examination of Article 305, however, shows that that article completely saves all the provisions of any existing law except in so far as the President may by order otherwise provide. The President made no other provision in this case and, therefore, the whole of the City of Jaipur Municipal Act was saved by Article 305 and could not be hit by Article 301. Section 77 of that Act gave power to the Municipality to impose an octroi duty after observing certain formalities. It has been urged on behalf of the applicant that though the power was saved, the Municipality could not frame new bye-laws imposing octroi duty after the commencement of the Constitution.
This argument, in our opinion, would make Article 305 valueless. If the intention of the framers of the Constitution was merely to save the duties that were existing at the time the Constitution was framed, Article 305 would have been very differently worded. The present wording of Article 305, in our opinion, clearly shows that the intention was to save the provisions of existing laws, and if those provisions authorise a Municipal Board, for example, to frame bye-laws and impose octroi duty, the power to frame such bye-laws and impose such duty in future was also saved. There would otherwise be no meaning in saving the provisions of an Act, which empower a certain body to impose certain taxes, if the intention was not to save the bye-laws imposing taxes, which might in future be passed. It is true that the words 'existing law' as defined in Article 306 include not only laws but also bye-laws and rules. That was necessary to indicate the scope of the words 'existing law' which were used in various other parts of the Constitution but that definition did not mean that if the law was saved, no bye-law could be passed after the Constitution even though the law authorised the making of the bye-laws and imposition of duties.
Reliance was placed on behalf of the applicant on the principle that general provisions do not derogate from special provisions. This principle, in our opinion, has no application in the present case, because there are no two separate Acts in existence, one general and the other special. A bye-law, which can be framed under the power given under the City of Jaipur Municipal Act, cannot be called as a special Act in contradistinction to the Jaipur Municipal Act itself. Nor can advantage be taken of another principle which lays down that when two words or expressions are coupled together, one of which generally includes the other, it is obvious that the more general term gives a meaning which excludes the specific one, for the simple reason that Article 305 only used one term 'existing law' and not two words or expressions, one having a more general meaning than the other. We are, therefore, of opinion that Article 305 saved the provisions of the City of Jaipur Municipal Act, and therefore saved the power of the Municipality under Section 77 to frame rules and bye-laws to impose octroi duty in future. It, therefore, follows that the rules and bye-laws framed by the Municipality at Jaipur on 15-7-1953, imposing octroi duty from 1-9-1953, were valid and did not come into conflict with Article 301 in view of Article 305.
9. We now come to the contention that the Municipal Council of Jaipur had suspended the octroi duty on 3-9-1953, and as admittedly no octroi duty was imposed by the Administrator after following the provisions prescribed in Section 77 and subsequent sections of the Jaipur Municipal Act, no duty could be levied on goods coming into Municipal limits on the 4th of September. The reply to this argument is that the Municipal council of Jaipur was not authorised by law to suspend a tax without the approval of the Government. Reliance in this connection is placed on Sections 62 and 63 of the Jaipur Municipal Act. Section 62 gives powers to the Municipality to frame rules and bye-laws not inconsistent with the Act or with the rules made by the Government under Section 250, and to alter or rescind such rules from time to time. Proviso (i) to this Section lays down that
'no rule made or alteration or rescission of a rule made by tho Municipal Board under this section shall have effect unless and until it has been approved by the Government.'
Thus the making or altering or rescission of any rule or bye-law by the Municipality was subject to the approval of the Government.
Then comes Section 63 which runs as follows:
'(1) Subject to the requirements of proviso (i) to Section 62, the Municipal Board may, except as otherwise provided in Clause (b) of the proviso to Section 99 at any time for any sufficient reason suspend, modify or abolish any existing tax by suspending, altering or rescinding, any rule prescribing such tax.
(2) The provisions of chapter VII relating to the imposition of taxes shall apply so far as may be to the suspension, modification or abolition of any tax and to the suspension, alteration or rescission of any rule prescribing a tax.'
10. The argument on behalf of the applicant is that the approval of the Government is only necessary for alteration or rescission of a rule for the abolition or modification of a tax, but that it is not necessary for the suspension of a rule prescribing a tax, and therefore suspension of the tax itself. Section 63 (1) gives three powers to the Board, namely (i) suspending, (ii) modifying, (iii) and abolishing a tax by (i) suspending (ii) altering (iii) or rescinding the rule prescribing the tax. So far as alteration or rescission is concerned, it is subject to Government approval under proviso (i) to Section 62; but it is urged that that proviso does not speak of suspension of rule and therefore suspension of a rule prescribing a tax and consequent suspension of the tax by the Municipality is not subject to Government approval.
This argument would have had force if proviso (1) to Section 62 existed alone. But we find that Section 63(2) makes a further provision with respect not only to alteration or rescission of rule and modification and abolition of a tax, but also with respect to suspension of a tax and suspension of a rule prescribing a tax. This special provision is that the provisions of chapter VII relating to the imposition of taxes will apply so far as may be to the suspension of a tax and suspension of a rule prescribing a tax. It seems, therefore, that the Legislature was going beyond what was provided in proviso (i) to Section 62 so far as suspension of a tax and suspension of a rule prescribing a tax was concerned. It pro vided' in Section 63(2) that such suspension shall be subject as far as possible to the provisions of chapter VII imposing taxes, Now whatever may be said about the other provisions of chapter VII there is one provision of chapter VII about imposition of taxes which can certainly be applied to cases of suspension. That provision is contained in Section 77 (b) and is as follows:
'The Municipal Board, with the sanction of theGovernment, and subject to such modifications orconditions as under Section 79, the Government inaccording such sanction deems fit, may impose,for the purposes of this Act, any one or moreof the following taxes ......'
Thus the sanction of Government was necessary in every case of imposition of a tax by the Municipal Board. This provision of sanction therefore, applies, by virtue of Section 63(2) to a case of suspension also, Whether, therefore, other provisions of chapter VII can be applied to a case of suspension of a tax or suspension of a rule prescribing a tax, or not provision as to sanction can certainly be applied and would be covered by the words 'shall apply so far as may be'. We are of opinion that the provision of Section 63 (2) with respect to suspension of a tax or suspension of a rule prescribing a tax is in addition to proviso (i) to Section 62. Tho Municipal Council of Jaipur, therefore, in our opinion could not suspend a tax, or suspend a rule prescribing a tax without the sanction of the Government as required by Section 77(b) read with Section 63(2). Their resolution, therefore, suspending the collection of the tax and the rule relating thereto on 3-9-1953, could be of no avail till the Government sanction was obtained about such suspension. The Octroi Inspector was, therefore, within the law in demanding octroi duty on 4-9-1953 tor it is no one's ease that the Government had approved of the suspension of the tax, and the rule prescribing it at any time. The suspension, therefore, never came into effect.
11. The last point, that was urged on behalf of the State, was that the resolution, that was passed on 3-9-1953, was of no force and effect because it was not in accordance with the provisions of Section 42 relating to meetings of the Municipal Boards. In view of our decision on the other two points we do not think it necessary to decide the question whether the meeting of 3-9-1953 was regularly held or not.
12. We, therefore, dismiss the application with one set of costs to the State and the Administrator, Municipal Board, as their defence was one.