T. Ramaprasada Rao, J.
1. The petitioner in both the Writ Petitions is Swadeshi Cotton Mills Company, Limited, Mudaliarpet Commune, Pondicherry. It is a public limited company which took over the quondam Savana Mills in the year 1956. For the purpose of its business the Mills obtained most of its raw materials and other stores from outside the Pondicherry State. Amongst other things it purchased cotton from various States in our own. country and also imported the same from abroad. In addition, various materials like colour chemicals, sizing materials, packing materials, kerosene oil lubricants, spare parts, stationery and building materials etc., and fuel are all purchased by the petitioner from outside the Pondicherry State. Mudaliarpet commune is not served either by railway or by road transport. The petitioner company has no railway station of its own and hence the goods purchased from outside Pondicherry have to be brought into Pondicherry commune by rail or by transport companies. If the goods are sent by rail, they have to be cleared at the Pondicherry Railway Station on payment of what the petitioner initially called 'octroi duty' but what latterly transpired to be a municipal cess or tax or fee levied by the Pondicherry commune in exercise of its powers under the Municipal Law of 1880. Even so when the goods are sought to be brought to Mudaliarpet Commune through the roads of the Pondicherry Commune, they are checked at the Commune boundary and a similar tax or fee is levied for the circulation of such goods in the Commune. The petitioner says that the Pondicherry Commune or the Pondicherry Municipality by its resolutions dated 5th May, 1961 and 12th May, 1961 enhanced the duty on several articles or goods brought into the Pondicherry Commune and such resolutions are said to be without jurisdiction. The petitioner also challenges the power of the Pondicherry Commune to impose such a tax. On the basis that the duty was equitable to octroi the petitioner avers that as the goods, whatever be the nature of the same, are not intended for consumption in the Pondicherry Commune but only in the Mudaliarpet Commune, the levy is illegal and unauthorised. The petitioner also complains that a similar duty is being levied by the Mudaliarpet Commune as well, as the goods re-enter the latter Commune wherein the petitioner's registered office and factory are situate. In the net analysis the petitioner would state that the goods suffer a duty in the hands of the Pondicherry Commune and again in the hands of the Mudaliarpet Commune, and when they go out of the factory as finished products, they are again subjected to a similar levy in the hands of the Pondicherry Commune. In the reply affidavit an. alternative case is set up. It is stated that even if the levy is not octroi, it. would still be illegal and beyond the competence of the Pondicherry Commune as the provisions of the Municipal Act of 1880 authorises the levy under the caption of 'weighing, measuring and gauging charges' only. As this is in the nature of a fee, it ought to be commensurate with the services rendered. It is also suggested that such weighment measurement or gauging was optional and it was left to the citizen concerned to secure such service or not and in this, behalf also the levy is attacked. On the fact that it is only the State that cam bring any such impost, the jurisdiction of the Municipality is attacked. A challenge is made as against the power of the Municipality to change the nomenclature of the levy as well.
2. The respondent contending contra maintains that the levy in question, whether it is a tax or a fee, was a levy made in exercise of lawful power of the Pondicherry Municipality and the provisions of law did authorise the Municipality to bring in the impost and enforce the same and that there is no option left to traders bringing goods into the Commune to escape such a levy. The various provisions of the prior State law and the latterly introduced municipal law are referred to sustain the power of the Commune to levy the tax or fee and change its nomenclature. It is contended that at no time there was any increase or variation of the fee which was lawfully levied and actually collected prior to the historic date of the de jure transfer of Pondicherry State to the Union of India. The respondents after setting forth in detail the various factual and legal contentions touching upon the levy in question urge that these Writ petitions are misconceived and the prayer for a refund of the duty already collected is absolutely unsustainable.
3. The contention of Sri K.K. Venugopal appearing for the petitioner can be summarised thus. The droit in question was not lawfully levied by the Communes within the French Settlement in India and whether it is a fee or a tax, it is not in presenti exigible under Section 7 of the Pondicherry (Administration) Act, 1962 (Act XLIX of 1962), hereinafter, referred to as the Act. Though Section 7 of the said Act postulates the continuance of a tax or levy or fees when it has a lawful origin or has been lawfully levied prior to the date of the de jure transfer, it is claimed that the fee in the instant case was not so lawfully levied prior to 16th August, 1962 when such a transfer took place. The Commune of Pondicherry had no power at any time to levy the droit as it was only the State as a primary organ of administration which in this case is the metropoll of France which reserved such a power to itself and the Municipality of Pondicherry cannot claim any such power even after the promulgation of the Municipal law of 12th March, 1880. It is suggested that the delegation referred to in the Arrete dated 29th November, 1881 which extended the levy in question to the Pondicherry town, did not contemplate a delegation of power to the Municiplaity as such to levy the impost and the Arrete could at best be interpreted as extending the State's power to impose the droit even within a Commune's territorial limits. Even assuming that the droit is a valid levy, it is leviable only in certain peculiar circumstances when the importer of the various scheduled goods into the Communes of Pondicherry seek the assistance of the municipality for weighing, measuring or gauging the articles, and not otherwise. Therefore it is said that the levy is not of general operation and is not attracted by the incidence of the articles brought into the Pondicherry Commune for circulation. A challenge is made against the power of the Municipality to change the nomenclature of the impost. Faintly it is stated that after 16th August, 1962, which is the crucial date for sustaining a pre-existing lawful levy, the rate of fee was changed and in this behalf it cannot be said that even if it was a lawful levy the present droit is a legal impost, for there is a snapping in the continuity of the character and the content of the levy. I may at once state that though the pleadings refer to the levy as octroi, the petitioner did not address arguments on this aspect as the learned Government Pleader made it clear that droit is not octroi duty.
4. One other contention which was ; pressed into service was that prior to ; 16th August, 1962, when Act XLIX of 1962 was passed, there were two sets of laws in force in the Commune of Pondicherry. There was what was known as the 'Metropolitan Law' which was made applicable to the several Communes in the French Settlements and it was this law which ruled from 1790 till 1856, which contemplated a droit on weighing, measuring and gauging and that too I on certain specific articles. In 1880 the f Municipal Law was enacted and the 'contention runs that under Section 52(6) of the Municipal Law of 1880 the levy which the Municipality can impose under the purported exercise of power flowing from the Municipal Law can only be pari materia with the power derived and exercised by the State, namely, the Metro-poll of France, during 1790 and 1856. So it is stated that the various articles which were not enumerated in the State Law between 1790 and 1856 cannot be brought to tax by the municipality. Reliance was placed upon C. Raja-gopalachari v. Corporation of Madras : 53ITR454(SC) the power i of the municipality to change the nomen! clature of the levy into a surveilance duty i on goods entering the Pondicherry Com' mune and it is submitted that in the absence of any such power the droit is illegal and the impost is ultra vires the municipality. The enlargement of the articles which should suffer the droit as made by resolutions in 1910, 1917, 1935, and 1961 are all invalid as being beyond the competence of the municipality. The other argument is that if it is claimed that the municipality derived such power from the State by reason of the delegation in 1881, such a delegation has not been factually established and therefore the droit should fail.
5. The learned Government Pleader contending contra would say that he is not relying upon such a delegation of power referable to the Arrete in 1881 but claims to sustain the droit under the provisions of the Municipal Act of 1880. As such a law provides for the levy of municipal tolls of a general variety including a tax ofweighing, gauging and measurt ing, the droit is well within the powers of ; the municipality. The change in the name of the droit is one of the incidental < powers which the municipality has. As the levy was authorised and was lawfully existing and actually collected prior to 16th August, 1962, its continuance is saved by Section 7 of Act XLIX of 1962 read with Articles 277 and 265 of the Constitution of India. As a fact it is submitted that the rate of tax or fee has not been varied after the crucial date. Whatever may be the situation prior to 1880, the Decree of 1880 authorised the Commune to receive and collect the droit on all the notified articles in circulation in the municipality. The fact that between 1790 and 1856 the State or the Metropoll reserved for itself the power to levy a weighing, measuring or gauging fee on certain specified articles cannot make any difference. The droit in question is general in scope and not conditioned upon the desire of the individual to take advantage of service which the municipality was ready and willing to give at all times. The incidence of tax is on the entry of the specified articles into the respective Communes and as the resolutions imposing the levy and changing its rate expanding the list of articles were all approved by the appropriate authority by an Arrete issued in that behalf under the provisions of the Municipal Act of 1880, the petitioner cannot challenge the levy. Lastly, it is stated that the prejudice caused to the petitioner in paying tax both to the Pondicherry and Mudaliar-pet Communes is an irrelevant consideration so long as the power is exercised I under the statute and the impost is made in exercise of such a statutory power.
6. Before the contentions of parties are considered, a historical survey of the nature, scope and extent of the droit in question is necessary. From about 14th. December, 1789 till 12th March, 1880 there was no independent law governing Communes or Municipalities in the French Indian Settlements. During this period the Metropoll of France was making laws which were made applicable to the French Settlements in India including Pondicherry. In or about 1789 the State set up Public Weigh Houses, tonnage and gauging offices wherein all the citizens could get their goods weighed md gauged on payment of a fair and noderate fee. This levy obviously gave he impression that resort to such Public Weigh Houses was optional and there was 10 compulsion on the part of the citizens to avail themselves of the amenity. This s seen from the extract from the trans-ation made by A. Carpentier of 'Codes Et Lois' which was in force at that time. Later, from 18th July, 1837 ;o 5th April, 1884 it would appear that law made it incumbent on every trader bringing in goods into the town of Pondicherry to have such goods weighed, measured or gauged in the Public Weigh Houses and the said merchandise Was subject to a tax which constituted ordinary communal receipts of the Communes. These taxes came under the category of indirect taxes. This is what the famous commentator Dalloz says in his ' Repertoire Pratigue'. It is also indicated that the tariff of the tax to be collected was to be fixed by the Town Council. By arrete dated 20th November, 1856 and 26th December, 1856, the measurement fee was made compulsory. Article 34 of the arrete dated, 20th November, 1856 provided that grains and seeds of all kinds, alimentarry, oleaginous and others, as well as the oleaginous, fruits introduced by land or water in, the towns of Pondicherry, Karaikal, Mahe and Yanam were liable to a measurement fee. This fee was payable jointly by the owners or consignees of grains introduced and was borne by the purchaser or by the seller or apportioned between them, according to the conventions or customs of the place. On account of this payment the seller or purchaser of grains acquired the option of measuring the merchandise without expenses, gratification or any general charges, by the Government measures. It was by this arrete that the fee in question was made compulsory and the Government was prohibited from charging the measurement, weighment or gauging fee independent of the fee contemplated in Article 34 of the Arrete. By the arrete dated 27th December, 1856, a regulation to determine the rates of measurement fee, the mode of collection and the formalities to which the entry and the exit of grains are subjected to was made. Under Article 3 therein it was provided that every individual introducing into the town, by land, grains, seeds or oleaginous fruits of all kinds should produce them at the office of measurement or at any other specified point for purposes of the introduced merchandise suffering what was called the measurement fee. A similar provision Was made for articles introduced by sea. A breach of the said regulation was made punishable. Thus what was originally an optional fee was made -compulsory in due course and at all times it was the Metropoll which reserved for itself the power to levy the fee on certain specified goods or merchandise introduced into specified towns such as Pondicherry. It is therefore clear that the law prior to 1880 was a totally distinct and self-active one and the measurement fee on certain nominated articles was levied in exercise of such power and the incidence of tax being the introduction of merchandise in the town of Pondicherry with which we are concerned in these writ petitions.
7. On 12th March, 1880, independent municipalities were set up and the territory of French India was divided into 17 Communes, of which Pondicherry formed one. By law, provision was made for the constitution of the Municipal Council Body, the number of members who should form the Municipal Council, the powers of the Mayor and the Deputy Mayor, the manner in which proceedings, of Municipal Councils should be conducted, 'he Municipal powers in general, etc., were all provided for, such that for the first time the Municipal Law of the Communes or Municipalities in the territory of French India was codified. The Decree dated 12th March, 1880, is an independent piece of legislation touching upon; municipal affairs and administration which held the field after March, 1880 and enabled the Commune of Pondicherry to levy the droit in question so as to subserve the budgetary provisions in the decree dated 12th March, 1880. Incidentally the ordinary receipts of the Communes amongst other receipts comprise of municipal tolls, weighing, measuring and gauging taxes and taxes connected with roads and other taxes lawfully established. Therefore the taxing power of the municipality was general in nature and covered all kinds of municipal tolls including weighment, measurement and gauging fee. Certain articles of the Decree dated 12th March, 1880, are to be necessarily noticed.
8. Under Article 46 municipal councils shall deliberate over the following matters, which deliberation meant the power to pass resolutions. The matters so enumerated include the budget of the commune and in general all receipts and expenditure either ordinary or extraordinary, and also the mode of assessment, rates and rules regarding collection of all municipal revenue except octroi. Unde Chapter III expenditure and receipts under the budgets of the communes have to be discussed and resolved upon by the municipal council. Article 52 refers to the receipts of the commune. Clause (6) of Article 52 refers to municipal tolls, weighing, measuring and gauging taxes, and taxes connected with roads and other taxes lawfully established and the receipts therein are Considered to be ordinary receipts of the commune. All the deliberations of the municipal council referred to in Article 46 and all the budgetary resolutions detailed in Chapter III have to be submitted to the Governor who shall finally approve of the same by an arrete issued thereunder made by him in Privy Council. The Scheme of the provisions of the Decree dated 12th March, 1880 makes it clear that the scope of Article 52(6) therein is wide and general in its content and application. On 26th December, 1910, the Pondicherry Municipality passed a resolution to the following effect:
The question of rationalising the legislation on the collection of ' droit de measurage at de pesage' in order to secure additional funds required for the maintenance of the Roads of the town in good condition, the deterioration of which is caused by the continuous movement of the carts which carry the bags of groundnut, has been discussed on 10th February, of this year in the Municipal Council. The latter on the recommendation of its commission, has approved to extend the levy of tax on all the ground-nuts brought into the Commune whether these groundnuts are intended to be exported or not.
9. On 23rd October, 1917,again the Municipal council extended the measurement I fee to certain articles not hitherto covered. j As already stated, the incidence of tax I was the introduction by land, by sea and by rail, merchandise into the Commune of Pondicherry. On 13th August, i 1921, the designation of the measurement fee was changed into a different head 'supervision fee on merchandise in circulation'. On 16th August, 1935, a resolution extending the pale of the fee to some more articles including bales of cotton introduced into the Commune of Pondicherry by land, by sea or by air was made. On 6th September, 1946 and 6th February, 1947 the schedule of rates as regards the supervision fee was catalogued and that too by resolutions made by the Municipal Council on those dates. Even so the impugned resolutions made on 5th May, 1961 and 12th May, 1961, were passed by the Municipal Council, In exercise of its powers under the Municipal Law of 1880. The records which were produced on the issue of rule nisi establish that every such resolution passed by the Municipal Council as above had the approval of the Governor in Privy Council. Invariably therefore an arrete under the signature of the Governor was issued approving of the manner of the levy, the change of the head, the variation in the rates of levy, etc. To subserve municipal needs and in public municipal interest various imposts were thought of from time to time by the Commune. In order to meet the normal avowed municipal expenditure, various methods of taxation were introduced from time to time. The methodology adopted is peculiar, but sanctioned by the decree and ultimately blessed by the arrete issued by the Governor which has the force of law. The Municipal Council apparently while preparing the budget and dealing with budgetary provisions, brought about changes in the then existing patterns of taxation either by introducing new taxes or varying the existing rates of tax or bringing into the net of taxation new items for being taxed. That the municipality has the authority to levy and collect the droit in question cannot therefore be disputed. In fact, it is conceded that the Municipal Law of 1880 is an independent statute and is operative proprio vigore. The only pre-requisite to badge such resolutions with the impress of enforceable law was to get them approved by the Governor in Privy Council. Thus, whenever a resolution is passed by the Commune of Pondicherry which projects a tax liability or imposes a levy and increases the field of pre-existing taxing activity of the Commune, then such a resolution as and when it is merged in an arrete of the Governor, becomes the law of the municipality. If, therefore, the arrete is enforced and the necessary notifications issued for its enforcement, then it is beyond question. I am unable to agree that after the Decree of 12th March, 1880, came into force and a separate law promulgated for the municipality or communes it would yet be necessary to search for power aliunde and by a circuitous process make an attempt to vest such power in the metropoll or the State only, when it is not necessary to seek or search for such power. It is fundamental that when a subject is governed by a special law then it excludes the general. Even accepting for argument's sake that the measurement fee was a special subject or a metropoll subject prior to 1856, yet it is easy to conceive of a situation where such a power became vested by substitution and by provisions of a specific law enacted for the purpose, in the municipalities or communes which have an independent existence and statutory recognition as well.
10. No question of delegation of power by the State to the Municipality arises. A reference to the order of the Governor dated 29th August, 1891, extending the measurement fee to the entire Commune of Pondicherry is unnecessary in view of the other express and specific statutory provisions enabling the municipality to impose the levy on its own. In fact, the provocation for this argument came from the pleadings and particularly the counter-affidavits filed on behalf of the respandents. In paragraph 7 of the supplemental counter-affidavit filed on behalf of the 1st respondent, it is stated; that according to indications available on record, it appears that the droit do mesurage which was hitherto levied and 'collected by the State Government was transferred to the Municipality as-per Arrete dated 29th August, 1881, imrae' diately after the Municipal Act of 1880 was enacted. The learned Government Pleader, however, in the course of arguments made it clear that he is not relying upon this arrete as the basis or source of power to the Commune in question to levy the droit. As to why this statement Was introduced in the pleading is not clearly explained. But as it is the duty of the Court to interpret the existing law as it stands and not be guided by a priori considerations and as a Valid levy made by an appropriate statutory authority is exercise of its powers therein has to be sustained instead of being lightly declared as void, I have referred to the historical background and the course of law over the subject in question from 1790 to 1880 and thereafter and I am of the view that the levy is under the decree dated 12th March, 1880 and not under any other provision of law or the alleged delegation referred to in the arrete dated 29th August, 1881.
11. The contention of the learned Counsel that in any event the droit should be circumscribed to the fact of weighment, measurement or gauging alone is not sustainable. The droit in question is a municipal toll intended for municipal administration and to subserve public interest and municipal needs. If this is therefore the object for which the Legislature has empowered the Municipality to make budgetary resolutions concerning receipts and expenditure, it is the recommending body which is in charge of the administration of the municipality which has to weigh the pros and cons and decide what tax or fee has to be levied to balance the receipts and expenditure in a budget. If this recommendation is ultimately approved by the Governor in an arrete it becomes law. This position is not seriously disputed. Therefore, the mere fact that the State at one time imposed a measurement levy on Weighing, measuring and gauging certain articles which came to a particular commune, does not mean that the municipality has ho power to levy a similar fee or any other municipal toll for such Weighing, measuring and gauging but under different circumstances as well. Even the metro-poll law provided for a compulsory levy of the measurement fee. The municipal law expanded the impost, retained the name of measurement fee for some time but changed the head into supervision fee on merchandise in circulation and fixed the rates of such levy and increased; them from time to time. This was done. in exercise of legal authority and statutory. power. This is not therefore open to question.
12. The other argument of the Counsel: that only grains and such other articles, enumerated in the Government Orders on or before 20th November, 1856 were liable to measurement fee or to suffer the droit in question is an argument without substance. If once the power of the municipality to bring in the impost under the caption 'supervision fee for merchandise in circulation' is accepted and is not open to challenge then if the articles or the nature of merchandise coming within the mischief of the droit is extended by addition: of more and more articles which should suffer the tax or levy, it would be deemed to be lawful exercise of power by the appropriate authority which is-imbedded and ancillary to the parent power to levy the impost.
13. If, therefore, the Pondicherry Municipality, with which we are concerned, was lawfully levying the droit in question-prior to 16th August, 1962 and did not vary the rate or the scope of such droit' after the passing of Act XLIXof 1962,then it follows that such fee or tax should be considered to be one which Was lawfully levied in the former French Establishments and such duty or tax or cess or fee can be continued to be levied in Pondicherry for the same purpose. This is what Section 7 of Act XLIX of 1962 says. It provides:
All taxes, duties, cesses and fee which, immediately before the appointed day, were being lawfully levied in the former French Establishrments or any part thereof shall continue to be levied in Pondicherry and to be applied to the same purposes, until other provision is made by a competent Legislature or other competent authority.
Even under the Constitution of India,, Article 265 says that no tax shall be levied or collected except by authority of law. I have already held that there is authority for the Municipality to levy and collect the tax or fee in question. A provision similar to Section 7 of Act 49 of 1962 is to be found in Article 277 of the Constitution as well. I am therefore of the view that the droit in question should be considered as a lawful levy which was actually collected by the commune even prior to the de jure transfer of the French Establishments into the Union territory and therefore the continuance of such an existing levy cannot be interdicted by the issue of a writ of mandamus.
14. Lastly it was sought to be made out that there was a variation in the levy and it is not what it was prior to 16th August, 1962. Factually it does not appear to be so, because no material has been placed before me to sustain the contention that on and after the said date new rates have been fixed by the municipality or any change in the pattern of the droit was introduced after the crucial date. Ramakrishnan, J., dealing with the scope of Section 7 of Act 49 of 1962 in the light of the judicial interpretation given to the expression 'lawful levy ' in Article 277 of the Constitution by the Supreme Court, in 1965 M.W.N. Civil 328 observed that the power granted to mtinue the levy of taxes or fees whicn Were being lawfully levied, will not include the power to enhance the pre-existing rates. Mr. Venugopal however relied strongly upon Rajagopalachari v. Corporation of Madras. : 53ITR454(SC) That was a case where the Court noticed, after going through the facts, that the profession tax which was proposed to be levied by the Corporation of Madras was not one Which was being lawfully levied prior to the commencement of Part III of the Government of India Act, which circumstance alone permitted the tax or levy to be continued. In the ultimate analysis, the above decision as well as the ratio in Rajagopalachari v. Corporation of Madras : 53ITR454(SC) , lay down the fundamental pre-requisite that for the continuance of a levy under Article 277, and I may with respect add under Section 7 of Act XLIX of 1962; the conditions are: (1) the tax must be one which Was lawfully levied, by a local authority for the purpose of a local area (2) the identity of the body that collects the tax, the area for whose-benefit the tax is to be utilised and the-purposes for which the utilization is to-take place continue to be the same, and (3) the rate of the tax is not enhanced nor its incidence in any manner altered, so that it continues to be the same tax.. Every limb of the continuity-principle as above is satisfied in the instant case. On the peculiar facts stated in Rajagopalachari v. Corporation of Madras : 53ITR454(SC) , the Court did not sustain the levy on the ground that: it was not a pre-existing levy and therefore it is not an identical levy enabling. its continuance after the prescribed date.
15. Considering all the circumstances inr the instant case, the historical background the source of power and the continuance of the levy after 16th August, 1962, in the same manner and in the same way and for the same purpose for which the levy was thought of and imposed, I am of the view that the impost is not only regular and legal but is a valid levy within the meaning of Section 7 of Act XLIX of 1962 and the municipality has not transgressed its public duty in any manner so as to suffer a rule in the nature of a mandamus, under Article 226 of the Constitution. Undoubtedly the relief for refund of a regular tax, is misconceived and even otherwise the petitioner would not be entitled to it in a summary enquiry, under Article 226 of the Constitution; For all the above reasons the writ petitions are dismissed with costs--Counsel's, fee one set, Rs. 250.