D.P. Gupta, J.
1. These five writ petitions have been presented by cloth dealers of Pipar town situated in the district of Jodhpur. The grievance of the petitioners is that the Municipal Board, Pipar was realising octroi duty on all varieties of cloth formerly at the flat rate of Rs. 2/- per quintal but by a notification issued on May 6, 1971, octroi duty is now charged at the rate of 1% on he cost price of the cloth brought in the town of Pipar by the petitioners. The contention of the petitioners is that the revised rate of octroi duty on cloth levied at 1% of the cost price is violative of the provisions of Article 14 of the Constitution being discriminatory, as in several other cities and towns of the state of Rajasthan like Bikaner, Parbatsar, Jaipur, Karanpur, Ganganagar, Jodhpur and Pali the octroi duty is still levied on the basis of weight of cloth imported and there is no rational basis for this gross disparity nor there is any nexus with the object sought to be achieved. learned Counsel relied upon two decisions of this Court in support of his aforesaid submission: Johari Mal and Ors. v. State of Rajasthan and Ors. and Popular House v. State of Rajasthan 1972 RLW 144.
2. The respondent Board has controverted the submission of the petitioners and urged that the earlier basis of collecting octroi by weight on all varieties of cloth was itself discriminatory and as such, the method of levying octroi duty on different varieties of cloth on the basis of the cost price thereof is more rational.
3. I have considered the rival contentions and have also gone through the two decisions of this Court relied upon by the learned Counsel for the petitioners. It may also be pointed out here that after the aforesaid two decisions were given by this Court, the provisions of Section 104 of the Rajasthan Municipalities Act, 1959 (hereinafter called 'the Act') have been amended empowering the State Government to fix different rates of tax in respect of different Municipal Boards. The new sub-Section (2) added to Section 104 of the Act runs as follows:
(2) A direction under sub Section (1) may provide for the levy of taxes at different rates in different Municipalities having regard to their varying legal conditions and needs, and on the same considerations by a like direction, the State Government may from time to time:
(i) vary uniformly or differently in relation to different Municipalities, the rates of tax levied; or
(ii) withdraw any tax levied by any Municipality.
However, the submission of the learned Counsel for the petitioners is that the difference in the levy of octroi duty is outrageous and as such, the vice of discrimination still persists even after the recent amendment of Section 104 of the Act.
4. Section 104 of the Act authorises every Municipal Board to levy taxes specified therein, including octroi duty on goods and animals brought within the Municipal limits of the Municipality concerned for consumption, use or sale thereof, at such rates and from such dates as he State Government may in each case direct by a notification published in the official Gazette. So far as the taxes specified in Section 104 ate concerned, it is obligatory on every Municipal Board to levy those relaxes but the dates from which such taxes are to be levied at particular rates are determined by the State Government. In the case of Joharimal , this Court observed that the initial burden of showing that there is discrimination and that persons similarly situated are subjected to differential treatment lies upon the petitioner and then it would be open to the State Government to establish that the differentiation pointed out by the petitioner is based on a rational object sought to be achieved by the Legislature. It was then observed that:
The respondents have not offered any justification for so much divergence in the incidence of tax. It is true the citizens are living in different Municipal areas but all the same they are citizens living in one State and the source of authority for imposing the tax is the State Government. It was in the circumstances absolutely necessary for the State Government to offer justification for this impost which it has completely failed to do.
Thus although it was shown on behalf of the petitioners that there was different pattern of levying tax in different Municipal areas, but the State Government did not offer any justification for adopting different rates of levying octroi duty on cloth and yarn brought within the different Municipal areas. It was on the ground that no justification was at all shown by the respondents that the learned Single Judge of this Court struck down the notification in respect of levying of octroi duty.
5. In the case of Messrs. Popular House 1972 RLW 144 the petitioners alleged that octroi duty on the import of cloth was charged on ad valorem basis in some Municipal Councils and Boards while it was charged on weight basis in some others. It was observed in that case:
No reasonable basis for this difference in the rates on the textile products and terylene, woollen and silken clothes has been given by the learned Advocate-General, and he frankly admitted that no rational basis could be given for fixing different rates in different towns, The only answer that he gave to the question put by the Court was that these rates were in force even before the Act of 1959 came into force and the Government did not like to deviate in the matter of imposition of octroi from the policy followed by each Municipality in the past.
The notification regarding levying of octroi duty in the towns of Gangapur and Beawar were struck down as violative of Article 14 of the Constitution. In the aforesaid case, as the learned Advocate-General admitted that there was no rational basis for the disparity in the manner of levying octroi duty on the import of different varieties of cloth.
6. In Gopal Narayan v. State of Uttar Pradesh and Anr. : 4SCR869 , their Lordships of the Supreme Court while upholding the different rates of taxes prevailing in the Bareilly Cantonment area and the Bareilly city area in the State of Uttar Pradesh, observed:
It is clear from the affidavit filed on behalf of the Municipal Board and the map annexed thereto that the area covered by the Civil Lines has been treated is a separate unit in the matter of development from the year 1870. The Municipal Board acquired the land in that area, laid out reads, carved out good sized building plots, and provided special amenities for the residents by way of broad roads, open and bigger plots for construction of houses, parks and gardens, Special lighting arrangements, foot path with cement benches, water booths with watermen for giving water to the public and special sanitary arrangements, whereas the old cits area of Bareilly consisted of small plots of land with small houses thereon situated in congested localities with narrow lanes. The Municipal Board imposed house tax in the Civil Lines area from as early as January 31, 1870 and. after the Act came into force reimposed the impugned tax in accordance with the provisions of the Act. In the case of scavenging tax, there appears to be different methods adopted in the two areas. In the Civil Lines area night soil and rubbish are collected by the Municipal Board from each bungalow, while in the City area they are collected from one common place in each ward. The former certainly involves higher expenditure than the later. It will, therefore be seen that for about 90 years the Civil Lines area has been treated as a separate geographical unit for the purpose of taxation, having regard to historical reasons and the extra amenities provided 'or the residents of that locality and the heavy expenditure incurred by the Municipal Board in doing so. The differences between the old city and the Civil Lines area are so pronounced in the matter of amenities that there is a reasonable relation between the taxes imposed and the geographical classification made for the purpose of taxation. We, therefore, hold that the notification imposing the said taxes does not infringe Article 14 of the Constitution.
In the aforesaid decision, their Lordships of the Supreme Court upheld the difference in the rates of tax prescribed in two adjoining areas included in the old city and the civil lines area of Bareilly on the basis of amenities provided by the Municipal Board concerned and upheld the geographical classification made for the purpose of taxation. In the case of M/s. Popular House 1972 RLW 144 Hon'ble Tyagi J., upheld the charging of octroi duty on the import of medicine on ad valorem basis in the towns of Beawar, Udaipur and Ajmer while octroi duty on the import of medicines was charged in the towns of Jodhpur on weight baits. The argument advanced on behalf of the State in this respect prevailed with the learned Judge that Jodhpur and Jaipur markets were developing as wholesale markets for medicines and in order to develop wholesale markets in these two big cities it was thought proper to provide incentive for larger imports by either abolishing the octroi duty altogether or reducing the rate of octroi duty to a bare minimum by charging the same on weight basis. It was held as under in the Popular House case 1972 RLW 144 in this respect:
In the Municipal Councils of Beawar, Udaipur and Ajmer the octroi duty on the import of medicines is 1% ad valorem, whereas the duty on the import of medicines in the towns of Jodhpur and Jaipur is only Rs. 1/- per quintal. This difference in the octroi duty, according to Mr. G.M. Lodha, is outrageous because, as his argument goes, the residents of these three, towns of Udaipur, Beawar and Ajmer have to pay heavy tax on medicines as compared to the duty paid by the inhabitants of Jodhpur and Jaipur cities. Another argument of Mr. Lodha is that the need of the people everywhere is the same for the supply of medicines & the patients of these three towns cannot be differentiated with the patients of Jodhpur and Jaipur cities. The contention of learned Advocate General, on the other hand, is that Jodhpur and Jaipur markets are developing as wholesale markets for medicines. From these two markets the entire areas around these two big towns are supplied with medicines &, therefore looking to this growth in the trade in medicines the State Government had to take into consideration this important factor while prescribing rates of octroi duty on medicines in Jaipur and Jodhpur, therefore, 1O develop a wholesale market the Government shall have to provide an incentive for larger imports by either abolishing the octroi duty or reducing the rates of octroi duty I need not go into the details of this explanation advanced by Mr. Kasliwal because it is not the function of this Court to see whether lower rate of octroi duty on medicine would help in developing a wholesale market to cater the needs of the surrounding areas. I have simply to examine whether this thinking of the Government provides a rational basis for fixing exorbitantly low rates of octroi for the imports of medicines in Jaipur and Jodhpur as compared to the rates in Beawar, Ajmer and Udaipur cannot fall within the term 'outrageous difference' In this view of the matter I find it difficult to declare rites of octroi duty on medicines in the aforementioned three towns as outrageous.
7. In the cases before me, the Municipal Board has furnished the reasons on account of which the State Government has amended the mode of levy of octroi duty from weight basis to ad valorem basis, on the cost price of cloth imported within Pipar Municipal limits. It may be proper to point out here that while deciding the case of Popular House 1972 RLW 144, Hon'ble Tyagi J. observed that from a study of the rates prescribed by the Government to> levy octroi duty in different Municipalities in the State it appeared that the old system obtainable in each Municipality was simply followed and he also expressed the view that a uniform pattern for levying octroi duty in the Municipalities of the State should be tried to be evolved.
8. In these cases, respondent Municipal Board has offered an explanation for charging octroi duty on ad valorem basis It is urged that the levying of octroi duty on weight basis in respect of all kinds of textiles including cotton, terylene, silk, woollen is itself discriminatory. A reference may be made in this connection to the inspection note of the Collector Jodhpur dated November 21, 1976 wherein it was suggested that in respect of different varieties of cloth, octroi duty should be charged on the value of the cloth imported so that some reasonable amount of tax may be collected by the Municipal Board by way of octroi duty. It was pointed out that charging octroi duty at the uniform rate of Rs. 8/- per quintal in respect of terylene or silk is meaningless and ridiculous inasmuch as terylene or silk weighing one quintal may cost anything between Rs. 50,000/ to Rs. 1,00,000/- & octroi duty of Rs. 2/- on such a huge consignment is wholly unrealistic. In the affidavit filed by the petitioner on April 12, 1977, he has himself pointed out that the cost of one quintal of long cloth(Latha)for other cotton cloth of rough variety may be about Rs. 2100/- or Rs. 2200/- In my humble view, the fan that the same amount of octroi duty of Rs. 2/- per quintal is levied on Lattha or other cotton cloth of rough variety of the Rs. 2200/- as also on terylene or silk weighing of the value of Rs. 50,000/ or 1,00,000/- is highly outrageous in itself. It may be pointed out here that cloth is not sold on weight basis but the sale price is calculated on the basis of units of length of cloth in meters. It is not the case of the petitioners that in the case of Pipar town there is any wholesale market of cloth. The Municipal Board has furnished a statement is Schedule A-III showing the quantity of cloth brought by the five petitioners in the town of Pipar during each one of the preceding three years & it appears from a perusal thereof and also of the details of octroi duty paid by the petitioner's during the preceding three years, prior to alteration of the rate of octroi duty from weight basis to ad valorem basis, that cloth is not imported in very large quantities in Piper town and the octroi duty paid in respect thereof by the petitioners is not very significant.
9. In the two earlier cases of this Court referred to above, it was observed that uniform schedule of rates is difficult to be prescribed for all Municipalities in the State because allowance has to be made for the variation in local conditions prevailing in each Municipal Board and the capacity to make payment of tax by the citizens on whom the burden of tax is ultimately to be borne. It was recognised in both the cases that conditions in the matter of trade and commerce differ from area to area and from town to town. But it was observed that some rational basis should exist while prescribing different rates of octroi duty in areas lying within different Municipal Boards & that the difference in the rates prescribed must be related to the different conditions obtainable in different towns. In both the cases, the rates of octroi duty prescribed in some of the Municipal Boards on ad valorem basis were struck down mainly on the ground that the respondents did not offer any justification for divergence in the incidence of tax, which was found to be outrageous-While discussing the history of the levy of octroi duty, Hon'ble Tyagi J. in the Popular House case 1972 RLW 144 has referred to the report of the committee set up by the Government of India to study local finance, in the year 1951 and has also referred to the recommendation of the committee that the rate should be prescribed generally on ad valorem basis and where ad valorem basis was not suitable, the rate could be adopted on the basis of maundage i.e. on weight basis.
10. The explanation offered by the Municipal Board, Pipar in respect of the charging of octroi duty by it on ad valorem basis rather than on the weight basis, in my view, discloses rational thinking in the matter of prescribing rates for charging octroi duty. Looking to the figures which have been supplied by the respondent Board regarding the meagre quantity of cloth imported in the town of Pipar by the petitioners the charging of octroi on weight basis would be wholly unrealistic. It my view, there is an inherent inconsistency in charging octroi duty on weight basis on all qualities of cloth like terylene or silk or woollen or cotton including rough varieties thereof. If octroi duty is charged on terylene or silk on weight basis Rs. 2/- per quintal, then as pointed out by the respondents, the octroi duty of only Rs. 2/- chargeable on one quintal of terylene or silken cloth, which may be of the value of Rs. 50,000/- to Rs. 1,00,000/- would be ridiculously low and almost nugatory. According to the petitioners own affidavit dated April 12, 1977, the cost of one quintal of long cloth or other rough varieties of cotton cloth may be about Rs. 2100/- or 2200/- and charging of the octroi duty of Rs. 2/- on one quintal of long cloth or rough varieties of cotton of the aforesaid value and also charging octroi duty of Rs. 2/- for one quintal of terylene or silk of the value of Rs. 50,000/- to one lac is ex facie outrageous. As held by Tyagi J. in the case of Popular House 1972 RLW 144, while dealing with the question of import of medicines, the charging of octroi duty on weight basis could be justified only in these cases where it was desired by the Municipal Board to develop wholesale markets in particular commodities within their areas and in cases of such big cities where there are varied and more important sources of income of the Municipal Boards rather than the receipts from octroi duty. The petitioner has referred to the fact that octroi duty is collected on weight basis in cities like Jaipur, Jodhpur and other important cities in the State, where wholesale Mandis of cloth are said to be developed and in their case the charging of octroi duty on weight basis may have some justification, as in those big cities cloth is imported in wagon loads for wholesale consumption in the areas around them. Similar is the case of Udaipur, Ganganagar. Bikaner and Ajmer which are also big cities having flourishing wholesale markets of all varieties of cloth and places like Pali, which is also desired to be developed as a wholesale Mandi of cloth. The Government in such places may provide for charging of octroi duty on weight basis in order to provide incentive for larger imports to cater the needs of the surrounding areas. But to hold that octroi duty should also be charged in smaller towns like Pipar, where there is a small retail market of cloth, on weight basis in the same manner as in larger cities like Jaipur. Jodhpur, Udaipur Bikaner, Ganganagar and Ajmer, where there are well developed wholesale markets or Mandis of cloth and Pali, where wholesale market of cloth is being developed, would be to stretch the principle of equality into an absurdity As I have already pointed out above, in such smaller towns, charging of octroi duty on weight basis at the fame rate of say Rs. 2/- per quintal or Rs. 4/- per quintal would introduce outrageous discrimination in respect of the import of different varieties of cloth, because by prescribing the same rate of tax on weight basis in respect of the various varieties of cloth ranging from terylene and silken to rough cotton varieties, the difference in the octroi duty payable per meter on such different varieties of cloth would rather be exorbitant and awful. Taking into consideration the fact that cloth is sold by retail sale on per meter basis and not on weight basis, it would be wholly unrealistic and even ridiculous if the principle of equality enshrined in Article 14 of the Constitution is applied, by charging octroi duty Rs. 2/- per quintal on finer varieties of cloth and artificial thread like terylene and silken of the value of Rs. 50,000/- to rupees one lac per quintal while charging the same duty of Rs. 2/ per quintal in respect of rough varieties of cotton cloth like Latha, which may be of the value of Rs. 2100/- to 2200/- per quintal. Thus, in my view, the charging of octroi duty on weight basis on various varieties of cloth ranging from terylene and silk to rough and cheaper cotton cloth would itself amount to discrimination when considered in relation to the import thereof within the same Municipal area.
11. Of course, as held by Hon'ble Tyagi J. in Populer House case 1972 RLW 144 while dealing with the matter of import of medicines, charging of octroi duty on weight basis may be justified in bigger cities where there are wholesale markets or Mandis of cloth and the Government intends to provide incentive for larger imports by reducing the octroi duty to a bare minimum. But in case of smaller towns like Piper, discrimination which lies in charging octroi duty on weight basis on different varieties of cloth is more pronounced and outrageous within the same Municipal area, as compared to the charging of octroi duty on import of cloth on ad valorem basis, whereby the finer and costly varieties of cloth would be charged larger amount of duty on the basis of its value as compared to the rough varieties of cotton cloth. It is to be borne in mind that in the final analysis the incidence of tax is to be borne by the consumer and as in the smaller cities the cloth is imported only for the purposes of retail sale, it would not be improper if the octroi duty is charged o3n the basis of value of the particular variety of cloth. If this is done, then the poorer sections of the society, who normally purchase rough and cheaper varieties of cloth, will have to bear lesser burden of octroi duty than the richer and more affluent sections of the society, who normally purchase the finer varieties of cloth, including terylene and silken. It is not well established that discrimination is not only caused when persons similarly situated are treated differently but it is equally manifest when unequals are treated in the same manner as equals. In the Popular House case 1972 RLW 144 this Court expressed the hope that the State Government should make an attempt to examine the question of prescribing rates of octroi duty charged by different Municipalities in a scientific manner and evolve a formula which may give a rational and reasonable basis for prescribing rates for imposition of octroi duty. Although in that case, no material was placed before the Court in respect of the basis for imposition of octroi duty on the import of cloth by certain Municipal Boards, but as relevant material has been placed before me and which I have referred to above, the dictum of Hon'ble Tyagi J. in the Popular House case 1972 RLW 144, relating to the imposition of octroi duty on the import of medicines can very well be applied in these cases and it can be safely held that the glaring difference between the rates of octroi duty imposed in the smaller towns on ad valorem basis and in the bigger cities like Jaipur, Jodhpur, Udaipur, Ganganagar, Bikaner, Ajmer and Mandis of cloth like Pali on weight basis can be justified on a rational basis. The smaller Municipalities, where cloth is imported only for sale on retail basis for consumption in that Municipal area generally fall in a separate category and the difference between them and the bigger Municipalities cannot be termed as discriminatory. The reason is simple that the class of Municipalities, where there are wholesale markets of cloth existing or desired to be developed and where the Government and the Municipal Boards concerned consider it proper to charge merely a nominal octroi duty so as to provide incentive for larger imports from a separate category which may have a different basis for charging octroi duty like the weight basis. On the other hand, smaller Municipal Boards where cloth is imported for retail sale within the Municipal area in smaller quantities form a separate category altogether and if a different basis for imposition of octroi duty, according to the value of the cloth or what is termed as the ad valorem basis, is employed in such Municipalities, it is difficult to hold that the imposition of octroi duty on ad valorem basis in those areas is discrimination or violative of the provisions of Article 14 of the Constitution. learned Counsel for the petitioner pointed out that in some smaller Municipal Boards like Pali and (Pa(sic) b itsar) also, the octroi duty is charged on weight basis. If that is so, it may be a ground for striking down the rates of octroi duty imposed in those Municipal areas on the ground of inherent discrimination of charging the same rate of octroi duty on different varieties of cloth ranging from terylene and silken to rough cotton varieties of cloth of different value, but it would certainly be no ground for holding that the octroi duty charged by Pipar Municipal Board is discriminatory. learned Counsel for the Board pointed out that in several other Municipal Boards, the octroi duty was charged on ad valorem basis and as I have pointed cut above, the smaller Municipal Boards form a separate category for imposition of octroi duty. The attempt of the State Government to bring the basis of charging octroi in Pipar Municipal Board in conformity with the basis in other smaller Municipal Boards, according to the value of cloth imported, cannot be termed as unfair or arbitrary.
12. The respondents have also sought to justify the charging of octroi duty by Pipar Municipal Board on ad valorem basis on the ground that the income from octroi is one of the main sources of the Municipal Board, Pipar, and it is necessary to augment the income from this source in order to provide the basic amenities to the residents of that Municipal area. In has also been stated that in Pipar, the consumption of terylene or silken cloth may be very small. Taking into consideration all the aforesaid facts and circumstances, it is difficult to hold that there is no rational basis in imposing the octroi duty on the import of cloth in the Pipar Municipal area on value or ad valorem basis.
13. In the result, all the five writ petitioners are dismissed. The parties are left to bear their own costs.