T. Ramaprasada Rao, J.
1. The petitioner owns an Esso patrol pump in Mahe, in the Union Territory of Pondicherry. The petitioner says that he is basing assessed to sales tax on his sales of motor spirit by the Government of Pondicherry under the Pondicherry General Sales Tax Act, 1967. On the 20th March, 1970, he received a notice from the Deputy Tahsildar (Revenue)-cum-Receiver, Municipal, Mahe, stating that in accordance with the deliberation of the Municipal Council, dated 7th August, 1969, duly approved by the Government, the Mayor, Mahe, has taken an Arrete on 13th January, 1970, imposing a municipal tax of 5 paise per litre of petrol or diesel oil sold by the petitioner, and called upon the petitioner to submit particulars regarding the quantity of petrol sold during the period involved and also 'informed him that he was obliged to disclose in the future the quantity of petrol and diesel sold by him to the appropriate authority. The petitioner was aggrieved by the notice as well as the projected demand therein. He preferred an appeal to the Government of Pondicherry, but was unsuccessful. On 24th November, 1970, the impugned order has been passed once again by the Deputy Tahsildar reminding the petitioner of the imposition of such a tax on the petitioner's sales of motor spirit, and once again the petitioner was called upon to furnish the necessary particulars within a prescribed time. The petitioner having made his representations on the aforesaid communication and having had no fruitful results thereon, has come up to this Court for the issue of a writ of certiorari to quash the order, dated 24th November, 1970, issued by the Deputy Tahsildar in the circumstances stated.
2. The relevant provisions under which the claim has been raised may be briefly stated. On 7th August, 1969, the Municipal Council of Mahe, purporting to act under the Decree of 1880, passed a resolution to the effect that sales of petrol or diesel oil effected within Mahe, shall suffer a tax of 5 paise per litre sold. Thus was approved by the Government of Pondicherry and the resolution was duly publicised in the gazette dated 24th February, 1970. It was only thereafter that the Deputy Tahsildar made the first demand which I referred to already. Apparently on the representations made by the petitioner who Was the only person prejudiced by the levy and the demand, the municipality undertook to review the position on 15th May, 1970, and passed another resolution but to a similar effect, which was again approved by the Government on 22nd September, 1970. In the second resolution, only the rate was altered but the essence of the tax as a tax on sale of motor spirit was maintained. There is a controversy whether this second resolution was to have prospective effect or was made retrospective from 24th February, 1970. It is unnecessary for me to decide this aspect in the instant case. After Government approved the second resolution of the Municipal Council, it appears that the Mayor issued the Arrete, dated 16th October,1970, authorising the appropriate authority to levy and demand such a tax. It is only pursuant to this last Arrete of the Mayor, dated 16th October, 19 70, that the challenged demand was issued as against the petitioner
3. The resolution of the Mahe Municipal Council, dated 24th February, 1970, the text of which was repeated in the later second resolution, runs, in so far as it is material for this case, as follows:
Article I. - A municipal tax of 5 paise is imposed upon each litre of essence of petrol and diesel oil sold at the petrol pump in the Commune at Mahe.
The first demand which I have already referred to reiterated the position that in accordance with this resolution of the Council, as approved by the Pondicherry Government, and in consequence of an Arrete issued by the Mayor, the petitioner was called upon to pay tax on every litre of petrol or diesel oil sold by him. That the incidence of the tax is on 'sale' cannot be disputed, as it is very boldly writ large both in the resolution of the Municipal Council, and as approved by the later authority, as also in the resultant demand raised by the Deputy Tahsildar on the petitioner. The contention of Mr. Venugopal, in the above circumstances is that; as the levy is essentially a tax on sale of goods, and as the competent Legislature of the Union Territory of Pondicherry, has already undertaken legislation on the subject under the Pondicherry General Sales Tax Act of 1967, the Mahe Municipal Council cannot, in exercise of the powers of the Decree of 1880, impose a similar levy or tax and it has no power to impose the levy. The second contention is 'that the Municipal Council did not levy such a tax at any time before the Union Territory of Pondicherry was integrated with the Union of India, which was on the 16th day of August, 1962. Asunder Section 4(1) of the Pondicherry (Administration) Act, 1962, read with Section 7, thereof, it is only all laws in force immedirately before the appointed day in the former French Establishments or any part thereof that shall continue to be in force in Pondicherry until amended or repealed by a competent Legislature or other competent authority, and all taxes etc., which immediately before the appointed day, were being lawfully levied in the former French Establishments or any part thereof shall continue to be levied in Pondicherry, the Mahe Municipality, in the circumstances of this case, not having levied such a tax earlier, cannot continue to levy the same after the passing of the Pondicherry (Administration) Act, 1962.
4. The third contention is virtually an answer to the contention of the respondents. The respondents maintained that though eo nomine, this levy is called a 'tax on sale', yet, it is effectively and really a 'toll' on motor spirit which is brought into Mahe Municipality. I shall presently consider the contention of the respondents. While answering this, learned Counsel for the petitioner says that the Municipality having adopted the unambiguous language to describe the levy in question as a 'tax on sale' of petrol, cannot whittle down its effect by characterising such a tax which is obviously 'sales tax' as a 'toll' on the induction of motor spirit into the municipality of Mahe.
5. The contention of the respondents appeals to be that as it is virtually a toll which ought to have been collected on the entry of the goods into the municipal area of Mahe, the fact that such collection is postponed to a point at the time of sale of such goods would not after the character of the levy. This appears to be the main contention. The other contentions raised in the counter-affidavit are to sustain or justify the levy as a 'toll', as popularly understood. If, therefore, this Court views the levy in the instant case as a 'sales tax', then it would be unnecessary to deal with the factual contentions in the counter-affidavit justifying the rate and quantum of the tax as a 'toll' on the ground that it is required by the Municipality for purposes of providing adequate municipal amenities to its citizens.
6. I have no hesitation in holding that the levy in question is 'sales tax'. I am unable to agree with the learned Counsel for the State of Pondicherry that this, though characterised as a 'tax on sale' should really be understood as a 'toll' simpliciter. A 'toll' is generally a levy which has to be expressly provided for as such and leviable by any authority which has the power to levy such a toll. In the instant case, no doubt, the Mahe Muncipality undoubtedly had the power under Section 52 of the decree of 1880, to levy such a toll. It is, however, not in dispute that the municipality prior to the de jure transfer did not pass any resolution to impose a toll on the incoming motor spirit into the Mahe Municipality in the purported exercise of such powers provided for in the Decree as above. This apart, in the absence of any resolution by the Municipal Council authorising the levy of a toll in the prescribed manner and in a particular situation, it cannot be inferred from the circumstances of this case that the sales-tax sought to be imposed is synonymous to a toll in the nature of octroi. It is well accepted that there is no intendment in a tax, as taxes are levied on subjects only after the competent authority pronounces absolutely and affirmatively in relation thereto laying down the prescription for such a levy. The Municipality did not do so. But, on the other hand, it has stated that a municipal tax of five paise is to be imposed upon each litre of petrol or diesel oil sold at the petrol pump in the Commune at Mahe. The incidence of tax is therefore 'sale'. This cannot be ignored at all and in Article I in the Municipal Arrete, dated 24th February, 1970, lines cannot be read into so as to import the argument of the learned Counsel for the respondents and accept the sales tax imposed as if it is a toll on incoming goods.
7. Reference was made to a decision of the Allahabad High Court in H. Vanaspati Manufacturing Co. v. Ghaziabad Municipality : AIR1962All25 That was a case where the municipality had the power to levy a toll on Vehicles and other conveyances, animals, and laden coolies entering the municipality. There, the tax-payer raised the objection that as the vehicles or conveyances entered into his private land, in the sense of land owned by him, within the precincts of the municipality, then such a toll was not leviable by virtue of Section 128 of the U.P. Municipalities Act, 1916. Repelling this argument, the learned Judges held that as the provision which authorised the imposition was clear and unambiguous and as toll was authorised on vehicles entering the municipality, it would not matter whether the vehicles entered the private lands of the citizens or otherwise, so long as that entry was into the municipality concerned. That decision has absolutely no relevance to the facts of this case.
8. The other incidental argument of the learned Counsel for the State of Pondicherry, was that it should be assurred to be a 'toll' and it should be said that its collection has been pos poned to the point of sale of such inducted goods. This is again a Very ingenious argument. Reliance was placed on Rubber Manufacturers v. Union : 2SCR68 which presents an entirely different situation altogether. That was a case where manufactured rubber over which excise duty was payable was assessed to excise duty at the point of sale. The question mooted was that as excise duty is essentially a duty which is collected at the point of manufacture, it cannot be collected at the time when the manufactured goods are sold. The Supreme Court said that excise duty could be imposed at the stage it was found to be-most convenient and lucrative as that is a matter relating to the machinery of collection and did not affect the essential nature of the tax. Therefore, merely because the incidence of tax is shifted to the users of rubber under Section 12(2) of the Rubber Act (XXIV of 1947), Which provides for the method of collection, the tax would not cease to be one falling Within Entry 84 of List I of the VII Schedule to the Constitution. The collection apparently made was shifted to the users of rubber and apparently was at the point of sale. Here again, the essential characteristic of the levy was maintained throughout. There was a postponement of the collection for convenience of the revenue. That cannot alter the nature of the tax.
9. It, therefore, follows that if eo nomine, and in reality, the tax imposed by the municipality is sales tax, then the municipality had not the requisite power to impose such a tax. I have already expressed my view that I have no hesitation in holding that the instant levy is 'sales tax' as its incidence is on 'sale' and it is payable only when a sale effected.
10. This is sufficient for the rule nisi to be made absolute. The other argument of Mr. Venugopal that this levy was not contemplated by the municipality before the de jure transfer of the Union Territory of Pondicherry and therefore such a tax which was not levied before 16th August, 1962, cannot be imposed for the first time, or continue to be imposed is well founded. The Supreme Court had occasion to consider a similar aspect in Ammraoti Municipality v. Ramachandra : 53ITR444(SC) . Though the Act which Was considered by the Supreme Court was the C.P. and Berar Municipalities Act, the ratio therein is apposite. Section 7 of the Pondicherry (Administration) Act of 1962, provides that all taxes etc., which were being lawfully levied in the former French establishments shall continue to be levied in Pondicherry. The question therefore is whether the tax in question was lawfully levied in the former French establishments, for an authority such as the municipality of Mahe to continue the same under Section 7 of the Pondicherry (Administration) Act. The factual position is that no such levy was made prior to the said Act. In those circumstances, interpreting Article 277 of the Constitution which is in pari materiel with Section 7 as above, the Supreme Court said:
Admittedly, there Was no imposition of the charge now sought to be recovered prior to the Constitution i.e., the Act did not impose the charge by Section 66 but merely enabled the Municipal Committee by appropriate procedure to impose the tax. If, of course, this power had been availed of and a charge had been imposed it would be a different matter. So long as the Municipal Committee did not pass the necessary resolutions and impose the tax there was no charge levied on the commodity, so that it could not besaid that the tax 'was being lawfully levied' before the commencement of the Constitution. The words 'was being lawfully levied' obviously mean 'was actually levied' and it would not be sufficient to satisfy those words that the municipal authority could lawfully levy the tax, but had not availed itself of that power.
Respectfully, adopting the reasoning, I have to hold that the Mahe Municipal Council, in the circumstances of this case, had no power to pass the resolution, dated 13th January, 1970, and impose the tax as they did. Even otherwise, after the Pondicherry General Sales Tax Act, 1967, no such powers are avalilable to the Municipal Council, as that subject has been legislated upon by a competent Legislature and the Municipal Council cannot therefore invoke the Decree of 1880 and impose such a levy.
11. In the view, that I have expressed, the rule nisi is made absolute and the writ petition is allowed. There will be no order as to costs.
12. This Court, while admitting this writ petition, passed orders on the interim, application (W.M.P. No. 3974 of 1971), whereby the petitioner was directed to furnish security of his properties for the. due payment of the tax. He was also-directed to pay month after month to wads the impugned tax a sum of Rs. 2,500. As the rule has been made absolute, the petitioner would be entitled to a refund of the amounts paid by virtue of the interim order of this Court and also to the cancellation of the security, if any, offered already.