N. Balaraju and Ors. vs the Hyderabad Municipal ... on 12 August, 1959

Andhra High CourtN. Balaraju And Ors. vs The Hyderabad Municipal ... on 12 August, 1959Equivalent citations: AIR 1960 AP 234Author: C ReddyBench: P C Reddy, M A Ansari

JUDGMENT Chandra Reddy, C.J.

1. The object of all these petitions is to prevent the Hyderabad Municipal Corporation from levyingoctroi duty on some of the commodities that are brought into the city.

2. All the petitioners, except those in Writ Petitions NOS. 1351 of 1957, 74,174, 176, 676 and 789 of1958 and 193/59 are excise contractors, who have taken contracts for the sale of toddy and sendhiunder the group system in auctions held in the year 1956. Under the terms of the contract, toddyand sendhi were to be sold in the Secunderubad abkari limits in certain places. These petitionerswere allotted for tapping toddy and sendhi trees situated in several districts of the quondamHyderabad State including those which were merged in the States of Bombay and Mysore.

They were also given necessary permits to import and transport to the depots situated within themunicipal limits of Secunderabad. They started business on 1st October 1956 and the toddy andsendhi were carried in lorries to their depots from the place of tapping in various districts. Whenthese articles reached the octroi barriers erected at the entrance to the Hyderabad municipality, theywere slopped and asked, to pay octroi duty. The petitioners questioned the power of themunicipality to levy octroi but, as the authorities concerned insisted on payment, they are alleged tohave paid it under protest as the goods could not be moved without complying with the demand.

It is said that subsequently representations were made both to the municipality and Excise officialsin that behalf but without any effect. The Minister in charge of Revenue Department also seems tohave been moved hut without success. Thereupon, this Court has been approached invoking itsjurisdiction under Article 226 of the Constitution for various reliefs.

3. At the outset, the vires of the Hyderabad Municipal Corporation Act, Act II of 1956 (hereinafterreferred to as the Act) is challenged. It is urged that it was not within the competence of theLegislature to have enacted this measure and that, in any event, the proviso to Article 304 of theConstitution has been violated in that the previous sanction of the President was not obtained.Before we deal with this contention, it is useful to set out the circumstances under which octroi dutycame to be imposed.

4. The legislature of the erstwhile Hyderabad State enacted a law relating to Municipal corporationsin the twin cities of Secunderabad and Hvderabad in the shape of the Hyderabad MunicipalCorporations Act, 1956. That Act contains Chapter VIII, which confers powers on the Municipalityto impose, inter alia, a tax in the form of octroi. Octroi is defined in Clause 37 of Section 2 thus:

N. Balaraju And Ors. vs The Hyderabad Municipal ... on 12 August, 1959

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"Octroi means a cess levied on goods at the time of their entry into the limits of a city for purposes ofconsumption, use or sale therein," Section 252 of the Act recites:

"Except hereinafter provided, octroi, at rates not exceeding those respectively specified in scheduleshall be levied in respect of the several articles mentioned in the said schedule or of so many of themas the Corporation shall from year to year in accordance with Section 186 determine when the saidarticles are imported from any place into the city." Section 253 says:

"The Commissioner shall cause tables of octroi for the time being leviable, specifying the rates atwhich and the articles on which the same are leviable to be printed in the official gazette, and localdaily newspapers and to be fixed in a conspicuous position at every place at which the same octroi islevied."

Section 254 exempts articles belonging to Government from octroi and refund of octroi on articlesbecoming the property of the Government. Section 255 provides for the refund of the duty in regardto articles imported for immediate exportation.

5. Pursuant to Section 252, the legislature has annexed Schedule H giving a list of articles, which areliable for the payment of octroi. Among these articles are included wines and spirits, beer, fruit juiceand all beverages. In exercise of the powers conferred by Section 585 read with Section 197 of thesaid Act, a draft of the Hyderabad and Secunderabad Octroi Rules was published on 28-7-1956 forthe information of persons likely to be affected and it was intimated therein that the draft would betaken for consideration after the 27tli of August 1956 arid objections thereto were invited.

Alter the expiry of the period, this draft was confirmed and rules were made conformably to theprovisions of the Act and Schedule H of the Act. It may be noted that there is no variation even inthe rates of levy. By another notification issued on 17-8-1956, the rules were to come into operationfrom 1st September 1956. That also appended a list of articles that were subject to octroi duty.

Under the heading 'edible', a number of articles are enumerated, item (n) being "fruit juice andbeverages". It was decided by the Municipality as far back as July 1956, there should be a singleagency for the collection of octroi for both Hyderabad and Secundrabad and one cordon for bothcities as octroi limit for collection. This received the approval of the Government.

6. The question arose as to what are the articles that were comprehended within the expression'beverages' mentioned in Schedule H and also in the rules as published earlier. The Government, bytheir letter dated 4th October 1956, clarified the matter by saying, inter alia, that the word"beverages' in item (n) of sub-head 'Edible' included toddy and sendhi and that, therefore, octroimight be collected on those articles also. It is in accordance with this that toddy and sendhi woresubjected to octroi duty.

7. We shall now proceed to examine the relevant articles of the Constitution. Article 304, which isalleged to have been infringed in the passing of the Act, reads as follows:



"Notwithstanding anything in Article 301 or article 303 the Legislature of a State may by law

(a) impose on goods imported from other States or the Union territories any tax to which similargoods manufactured or produced in that State are subject, so, however, as not to discriminatebetween goods so imported and goods so manufactured or produced and

(b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with orwithin that State as may be required in the public interest:

Provided that no Bill or amendment for the purposes of Clause (b) shall be introduced or moved inthe legislature of a State without the previous sanction of the President."

8. The petitioners seek to bring the impugned statute under the proviso to Clause (b) on theargument that the impost of octroi is a restriction on the freedom of trade and, as such, attracts theproviso. Admittedly, the previous sanction of the President was not obtained in this behalf. But theassent of the President was given to this measure in February 1956. There is no dispute about thesubsequent assent of the President, but, the point presented is that this would not cure the detectand, consequently, it should be struck down.

9. Freedom of trade and commerce is guaranteed under Part XIII of the Constitution in whichArticle 301 occurs. Article 301 enshrines the principle of freedom of trade and commerce. ThatArticle says that 'Subject to the other provisions of this Part, trade, commerce and intercoursethroughout the territory of India shall be free".

It guarantees intra-State and inter-State trade and commerce i.e., it provides safeguards for carryingon trade as a whole concerned with the passage of commodities either within or outside State limits.The underlying idea of this Article is the preservation of the commercial unity of the country.

10. Article 302 authorises the Parliament to impose restrictions upon this freedom of trade betweenthe State and another or within any part of the territory of India it so required in public interest.Article 303 prohibits discrimination being made between one State and another by virtue of anyentry relating to trade and commerce in any of the lists in the seventh schedule. Such discriminatorymeasures could be passed, if it was necessary for the purpose of dealing with a situation arising fromscarcity of goods in any part of the territory of India. Section 304 is another such enabling measure.

11. Now the question that calls for decision here is whether the levy of octroi duty is a restrictionwithin the ambit of Clause (b) of that Article. It is urged that it operates as a restriction within thepurview of Clause (b) of that Article and, consequently, the proviso is attracted to it. For thisposition, reliance is placed on a judgment of the Rajasthan High Court in Surajmal Baj v. State ofRajasthan, .

It was ruled in that case that the imposition of octroi duty would constitute u restriction on freedomof trade granted under Article 301 since there would be impediment to the movement of goods intothe municipal limits unless the tax was paid and that freedom implied that there should be no kind



of restriction on trade and commerce. The learned judges thought that their conclusion derivedsupport from a pronouncement of the House of Lords in James v. Commonwealth of Australia, 1936AC 573.

12. The question that fell for consideration in the latter case was whether certain regulationsrestricting inter-State trade were invalid in view of Section 92 of the Australian Constitution whichprovided that, on the imposition of uniform duties of customs, trade, commerce and intercourseamong the States, whether by means of internal carriage or ocean navigations shall he absolutelytree. What was impeached there was the Dried Fruits Act 1928-35 of the Parliament of theCommonwealth of Australia as also the regulations made under that Act which had prevented theappellant, who was a grower and processor of dried fruits in the State of South Australia fromsending his dried fruits out of South Australia in fulfilment of various inter-State contracts, which hehad made.

Disagreeing with the view of the High Court of Australia, their Lordships held that the Dried FruitsAct. 1928-35 was invalid because the Act and the regulations made thereunder either prohibitedinter-State trade entirely if there was no licence or partially prohibited it if a licence was granted inaccordance with the Act and, as such, violated Section 92 of the Commonwealth of AustraliaConstitution Act, the purpose of which has already been set out. In examining the scope of theexpression "absolutely free" this is what their Lordships said (at page 627):

"Free in itself is vague and indeterminate. It must take its colour from the context. Compare, forinstance, its use in free speech, free love, free dinner and free trade. Free speech does not mean freespeech; it means speech hedged in by all the laws against defamation, blasphemy, sedition and soforth; it means freedom governed by law, as was pointed out in W. A. McArthur Ltd. v. Queensland,(1920) 28 C.L.R. 530. Free love, on the contrary, means licence or libertinage, though, even so, thereare 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 behaviournot being objectionable. Free trade means, in ordinary parlance, freedom from tariffs.

Free in Section 92 cannot be limited to freedom in the last mentioned sense. There may at first sightappear to be some plausibility in that idea, because of the starting point in time specified in thesection, because of the sections which surround Section 92 and because the proviso to Section 92relates to customs duties. But it is clear that much more is included in the term, customs duties andother like matters constitute a merely pecuniary burden; there may be different and perhaps moredrastic ways of interfering with freedom, as by restriction Or partial or complete prohibition ofpassing into or out of the State."

Their Lordships remarked that the word 'absolutely' did not add really anything to the word 'free'but was merely employed rhetorically perhaps with the object of excluding the risk of partial orveiled infringements.

13. It is the passage extracted above that was regarded as strengthening the opinion of the learnedJudges in . In our judgment, these remarks do not convey the idea that freedom of trade does not



involve imposition of taxes. It could not be forgotten that Section 92 talks of the imposition ofuniform duties of customs. In this context, we cannot also overlook the observations of theirLordships that customs duties and other like matters constitute merely a pecuniary burden. TheirLordships stated that "the true criterion seems to be that what is meant is freedom as at the frontieror, to use the words of Section 112, in respect of 'goods passing into or out of the State'.

The following passage occurring at page 631 is also significant and, in our opinion, tends to dispelthe notion that freedom of trade implies freedom from all taxation.

"In every case it must be a question of fact whether there is an interference with this freedom ofpassage. Their Lordships are of opinion that this construction is not inconsistent with any decidedcase, with the doubtful exception of McArthur's case, (1920) 28 C.L.R. 530. As a matter of actuallanguage, freedom in Section 92 must be somehow limited and the only limitation which emergesfrom the context, and which can logically and realistically he applied, is freedom at what is thecrucial point in inter-State trade, that is at the State harrier.' We feel that this only connotes thattrade, commerce or intercourse must be free from purposeful impediments and does not mean thatthey should be free from all taxes or regulations. In our view, any measure, which operates to curtailtrade directly as distinguished from restriction envisaged in Clause (b) is unconstitutional (?) AnyAct which affects trade or commerce indirectly cannot be treated as a restriction for the purpose ofClause (b). We find it difficult to postulate that the levy of a tax in the shape of octroi duty or in someother form in anyway interfered with trade, commerce or intercourse as it does not prevent thetransportation of the goods from one State to another or within the four corners of a State. Thatrestriction should be the direct legal effect of the law and not the ulterior economical effect.

14. There is ample authority for the above opinion of ours. In State of Bombay v. R. M. D.Chamarbaugwala, the Chief Justice of India accepted the principle that freedom of trade, commerceor intercourse was infringed only when a legislative act resulted in restricting trade, commerce orintercourse directly and immediately. Referring to the observations of Lord Porter inCommonwealth of Australia v. Bank of New South Wales, 1950 AC 235, the Chief Justice of Indiasaid:

"His Lordship deduced two general propositions from the decided cases namely (1) that regulationof trade, commerce and intercourse among the States was compatible with absolute freedom and (2)that Section 92 was violated only when a legislative or executive act operated to restrict trade,commerce and intercourse directly and immediately as distinct from creating some indirect orconsequential impediment which might fairly be regarded as remote. The problem whether anenactment was regulatory or something more or whether a restriction was direct or only remote oronly incidental involved. His Lordship pointed out not so much legal as political, social or economicconsiderations."

15. It may be mentioned here that Section 92 of the Commonwealth of Australia Constitution Act issimilar to Article 301 of the Constitution.



16. In Atma Ram Budhia v. State of Bihar, AIR 1952 Pat 358, a Special Bench of the Patna HighCourt ruled that the tax imposed by Part III of the Bihar Finance Act was not beyond the legislativepower of the State Legislature and was therefore valid. It was laid down there that these provisionsdo not contravene any of the fundamental rights guaranteed under Articles 14, 19, 23 or Part XIII ofthe Constitution of India and that the Act bad not in anyway affected the right of free trade orbusiness which the citizens enjoyed under Article 19(1)(g) of the Constitution. Sarjoo Prosad J, whodelivered the leading opinion of the Court said:

"Taxation is not a restraint on trade unless it is discriminatory in its character and is levied with theobject of helping one person or party against the other."

Further down in the judgment, it is said:

"For the purposes of the present discussion, it would be enough to say that the real test in such casesshould be to examine whether the legislation is directly in respect of any of the rights mentioned inArticle 19. It is only then that the question whether that legislation is saved by appropriate savingclauses of Article 19 will arise. If, on the other hand, the legislation is not directly in respect of thesesubjects but by the operation of the statute incidentally or remotely some of the rights are affected orinfringed, the application of Article 19 does not at all arise."

17. These observations apply with equal force to Article 304 of the Constitution as the rightsconferred by Chapter XIII are similar to those, in Article 19, the former relating to the field ofcommerce trade and intercourse, while the latter deals with the freedom of an individual in severalspheres of life.

18. Another Bench of the same Court in Bengal Immunity Co. v. State of Bihar, applied this doctrineto the Bihar Sales Tax Act. It was, inter alia, decided in the latter case that the Act in its true natureand character was not an enactment with reference to freedom of trade or commerce andconsequently it was not repugnant to Article 304 of the Constitution,

19. The Travancore-Cochin High Court has also expressed the same opinion. It was held in A. V.Fernandez v. State, (S) AIR 1955 Trav Co. 126 that the Travancore Cochin General Sales Tax Act wasnot open to challenge under Article 303(1) of the Constitution and that the restriction on thefreedom of trade and commerce had not resulted from the provisions of the impugned Act.

20. Another Bench of the same Court in Parameswaran v. Sub Magistrate Koothattukulam, had laiddown that the Travancore-Cochin Vehicles Taxation Act had not in anyway interfered with thefreedom of trade, commerce and intercourse, since it was only a fiscal enactment coming underEntry 57 of List II of the Seventh Schedule, and as such it did not require the prior sanction of thePresident.

21. The effect of Guruviah Naidu v. State of Madras, 1957-2 Mad L.J. 469: (AIR 1958 Mad 158) isalso the same. See also Emperor v. Munna Lal, AIR 1942 All 156.



22. It is clear from the several decided cases that taxation does not cause interference with the rightguaranteed under Article 304 of the Constitution and it is not a restriction within the scope ofClause (b). A taxing measure, which deals directly with the imposition of tax on goods and does notprofess to lay any restriction on trade or commerce is not governed by Article 304(h). For thesereasons, we express our respectful dissent from .

23. It looks to us that Article 304 has drawn a distinction between a tax measure imposing certainrestrictions and other kinds of legislation placing general limitations upon freedom of trade. If reallyClause (b) has reference to fiscal enactments Clause (a) becomes redundant since that also dealswith taxing measures. That shows that they concern two distinct and different kinds of restrictions.The restrictions contemplated by Clause (b) are those which have a direct impact on the Tightguaranteed under Article 301 of the Constitution working interference on trade and commerce andnot the indirect consequence following upon taxation.

It is apparent from the Constitution that taxation is regarded as a distinct matter for the purpose oflegislative competence. A perusal of the various entries in the Union list as well as the State listsdiscloses this. Items 1 to 81 in list I enumerate general topics, while items 82 to 97 deal with powersof taxation. Similarly, items 1 to 44 of list II i.e., the State list bear on general subjects, while items45 to 63 and 66 concern the taxing authority of the States. In this situation, we are unable to accedeto the theory propounded for the petitioners that the enactment is governed by Article 304(b). Weare also of opinion that the two rulings cited by Sri Ramachandra Rao, counsel for some of thepetitioners, viz., Anantakrishnan v. State of Madras, AIR 1952 Mad 395 and McCulloch v. State ofMaryland, (1857) 4 Law Ed. 579 are not of much avail to the petitioner.

24. In the first of them Section 3 of the Indian Stamp Act (Act I of 1899) which enacted that theinstruments mentioned in Schedule I should be chargeable with duty of the amount indicated in theschedule as the proper duty thereof subject to certain exceptions and item 30 of Schedule I werecalled in question by a person, who wanted to be enrolled as an advocate. By reason of item 30, anAdvocate to he entered on the roll of any High Court had to pay a sum of Rs. 500/-. This amountwas enhanced to Rs. 625/- by the Madras Stamp (Amendment) Act (Act VI of 1922).

The point raised there was whether this was repugnant to Article 19(1)(g) of the Constitution whichdeclared the right of every citizen to practise any profession or to carry on any occupation, trade orbusiness'. This argument did not find favour with the Bench of the Madras High Court and it washeld that the impugned provision was quite valid and that it was not in any way opposed to thefundamental right of the petitioner therein. It is in solving that problem that the following remarksrelied on by the learned counsel for the petitioners were made by Venkatarama Ayyar J, one of theJudges constituting the Bench;

"As already pointed out, there is a difference between profession tax and income-tax. The power oflevying a tax on income is absolute and if the legislature chooses to levy a tax of fifteen annas in therupee on that income, courts will have no jurisdiction to declare it unconstitutional on the groundthat it is unreasonable. But a right to carry on business is a fundamental right protected by theConstitution and it stands to reason that a tax on such a right should not be such as to destroy it--as



for example--a professional tax equal or nearly equal to the income earned in the previous year. Itmight well be contended that there is in such cases a limitation on the powers of taxation, implicit inthe Constitution itself, that it should not be exercised in such a manner as to take away with onehand what has been given by the other. If this is the correct position, it will follow that, while thelevy of income-tax cannot be questioned On the ground that it is so unreasonable and excessive as tobe prohibitive of the right to carry on trade. Any question whether a tax in a particular case is sounreasonable as to amount to a destruction of the rights, will, of course be a matter fordetermination by courts, in the same manner as question of reasonableness of restrictions underArticle 19, Sub-clauses 3 to 5."

We do not think that the rationale underlying the passage has any application to a situation like this.The learned Judges there were not concerned with the question whether a tax measure is attractedby Clause (b) of Article 304. Secondly, all that is stated there was that when there is a limitationupon the power to tax, that power should not be so exercised as to destroy fundamental rights. Thatis not the position here.

There is no question of limitations set by the statute upon the power of taxation having beendisregarded, as the cesses levied were within the limits set by the schedule. Nor would it be urgedthat the taxes here are so excessive or prohibitive as to destroy the right to carry on trade. ChiefJustice Rajamannar, who gave the leading opinion of the Court, observed that if the taxation wasonly for legitimate revenue purposes, it would not become invalid merely because it might adverselyaffect any of the fundamental rights. So, that judgment is not in point and does not carry thepetitioners anywhere.

25. In the second one, the question was whether the State of Maryland could tax a branch of theBank of the United States which was established in the city of Baltimore. The Bank of the UnitedStates had constitutionally a right to establish its branches or offices of discount and deposit withinany State. Notwithstanding this, by virtue of the provisions of an Act to impose a tax on all banks, orbranches thereof in the State of Maryland, not chartered by the legislature, the State sought to taxthat branch.

This right of the concerned State was challenged in the Baltimore County Court. When the matterwent before the Supreme Court ultimately, the plea of the Bank that the impost on that branch wasviolative of the Constitution of the United States was upheld. The opinion of the Supreme Court wasthat the Act incorporating the Bunk of United States was a law made in pursuance of theConstitution and, as such, is a part of the Supreme law of that land, that the branches proceedingfrom the same stock and being conducive to the complete accomplishment of the object were equallyconstitutional and, therefore, the State of Maryland was restrained from exercising any power whichin its nature might be incompatible with and repugnant to the constitutional laws of the Union.

It was laid down that the States had no power 'by taxation or otherwise' to retard, impede, burden orin any manner control the operations of the constitutional laws enacted by the Congress to carryinto effect the powers vested in the national Government. In the result the law passed by thelegislature of Maryland imposing a tax on the Bank of the United Status was struck down as



unconstitutional and void. The position here docs not resemble that envisaged in (1857) 4 Law Ed.579 as the question of any repugnancy between the State Laws and Union Laws does not arise here.Nor did a controversy involved in this enquiry present itself before the Supreme Court.

26. Even on the assumption that Article 304(b) takes in legislation of the kind involved in thisenquiry, we do not think that the Act is open to attack on the ground of non-compliance with theproviso. Under the proviso, bills dealing with subjects tailing under Clause (b) should first receivesanction before they are moved or introduced and, in this case, such an ingredient is absent. Thathowever does not render this enactment void in this case, since the presidential assent has beencontained that is the effect of Article 255 of the Constitution. It is convenient to read that Articlehere, omitting unnecessary portions :

"No Act of Parliament or of the Legislature of a State and no provision in any such Act, shall beinvalid by reason only that some recommendation or previous sanction required by thisConstitution was not given, if assent to that Act was given XX XX XX

(e) where the recommendation or previous sanction required was that of the President by thePresident."

This Article covers precisely cases that come within the mischief of the proviso. If that Article docsnot govern the proviso to Article 304, it becomes otiose. To accept that argument will be to ignorethe definite terms of Article 255 of the Constitution and to give inadmissible weight to it.

27. The corner-stone of the argument on behalf of the petitioners that Article 255 would not come tothe rescue of measures or bills which are introduced without the prior sanction of the President isthe remark in a passage in a judgment of their Lordships of the Supreme Court in Saghir Ahmed v.State of U. P. . The observations called in aid are the following:

"If this view is adopted in regard to Article 301 of our Constitution, it can plausibly be argued thatthe legislation in the present case is invalid as contravening the terms of the Article. The question ofreasonable restrictions could not also arise in this case, as the Bill was not introduced with theprevious sanction of the President as required by the proviso to Section 304(b). It is true that theconsent of the President was taken subsequently but the proviso expressly insists on the sanctionbeing taken previous to the introduction of the bill"

Torn out of the context, the last two sentences may appear to give support to the contention of thepetitioners. But this has to be considered in the light of what has been said by their Lordships bothin the earlier paragraph as also at the end of the judgment. It is clear from the previous paragraphthat their Lordships were only setting out the several contentions that have been or could be raisedin that case. Said their Lordships earlier :

"We have thus indicated only the points that could be raised and the possible views that could betaken but as we have said already, we do not desire to express any final opinion on these points as itis unnecessary for purposes of the present case,"



Thus, it is plain that no final opinion was expressed by the Supreme Court in that case.

28. Subsequently, the Supreme Court in 1957 SCJ 607 at p. 623: ((S) AIR 1907 SC 699 at p. 712)decided that Article 255 saves an enactment despite non-fulfilment of the condition laid down by theproviso. The following remarks contain the principle in that regard:

"It is conceded that the bill which became Act XXX of 1952 and amended the 1948 Act in themanner hereinbefore stated was introduced in the legislature of the State without the previoussanction of the President and consequently the condition precedent to the validity of the resultingAct as laid down in the proviso had not been complied with, but it is submitted, we think correctlythat the defect was cured under Article 255, by the assent given subsequently by the President to theimpugned Act."

29. The rule stated in Balmukund v. Gadi Narayana, AIR 1943 Nag 312 which discusses theapplicability of Section 109 of the Government of India Act, 1935, which is in pari materia withArticle 255 of the Constitution, accords with our conclusion here. The underlying idea of the provisoto Article 304 seems to be that legislations, which affect adversely trade and commerce, should beconsidered by the President, as the aim and object of Chapter XIII is to establish commercial unityof the country and that it should not be left to individual States to enact measures indiscriminately,which will have the effect of curtailing inter-State trade. It is for this reason that the proviso wasinserted, so that the Central Government may be appraised of the intention to enact such measures.This object could also be achieved by reserving it for the consideration of the President subsequentlyand this is illustrated by Article 255, which speaks in clear and unequivocal terms.

30. At this stage, it is convenient to deal with another contention, namely, that the rules and bylawsframed in respect of all matters prescribed under the Act should not only be laid before thelegislative assembly but prior sanction of the President should be obtained as well before they aremade. The foundation for this argument is a judgment of a Bench of Bombay High Court in State ofBombay v. R.M.D. Chamarbaugwala , where Chief Justice Chagla observed in the course of thejudgment that, where restrictions within the purview of Part XIII of the Constitution wereintroduced by rules after the President had given his assent to an enactment, the rules would beultra vires the Legislature since the Presidential bat is not there in regard to that also.

We do not consider this ruling as having any bearing on this enquiry. The learned Judge has made itclear that, if the legislature had indicated its policy and given a mandate to the Government and therules were framed in pursuance of the mandate, then it could be said that the President applied hismind to the policy underlying the rules. If the policy is indicated in the enactment itself, then therules would not suffer from such an infirmity. Moreover, in that case, it was the rules that laid therestrictions.

Such a situation does not obtain here for the reason that the rules do not contain any restrictionswhich are not traceable to the enactment itself. Schedule II, which is a part of the statute has madeprovision for all these matters and there is nothing new in these rules. To say that the rules madeunder an Act should also comply with the proviso to Article 304(b) is to incorporate something into



it, which is not warranted by the language of the Article. Thus, there is no force in this submissioneither.

31. The next point that requires consideration is whether this Act is within the legislativecompetence of the erstwhile Hyderabad State. What is maintained on behalf of the petitioners is thatentry 52 of list II clothes the State Legislature with power to pass laws authorising the imposition, oftax on the entry of goods into a local area for consumption, use or sale therein, while the impugnedenactment enables the Municipality to levy cesses. This argument is based on the definition of,octroi duty in Section 2(37) of the Act, which reads:

"Octroi means a cess levied on goods at the time of their entry into the limits of a City for purposesof consumption, use or sale therein."

Octroi duty being only a cess could not come within the sweep of entry 52, continues the learnedcounsel. He seeks to gather support for the theory that tax and cess are different things from a rulingof the Madhya Bharat High Court in Gwalior Sugar Co. Limited v. State of Madhya Bharat, AIR 1954Madh B 196, where the learned Judges pointed out the distinction between cess and licence fee. Acess is a tax levied for a specific purpose often with a prefixed word defining the object. A licence, onthe other hand, involves a permission to trade subject to compliance with certain conditions andcess is not a licence fee. We do not see how this judgment renders any assistance to the petitioners.The learned Judges have defined 'cess' as a tax imposed for a particular purpose.

32. That apart, entry 52 itself empowers the imposition of a tax on the entry of goods into the localarea for consumption, use or sale therein. This can have reference to taxes or cesses of the samenature as octroi duty. The meaning of 'cess' as given in the Chambers Twentieth Century Dictionaryis a tax, a local rate. Thus, cess is a tax confined to local area for a particular purpose. Cess and taxarc interchangeable words so far as taxing power is concerned.

33. That no such distinction was sought to be made by the Constitution as suggested by the counselfor the petitioners is borne out by Article 277 and Article 266 Article 277 so far as it is relevant forthis enquiry says:

"Any taxes, duties, cesses or fees which immediately before the commencement of this Constitutionwere being lawfully levied by the Government of any State or by any municipality or other localauthority or body for the purposes of the State, municipality, district or other local area may,notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union list, continue tobe levied and to be applied to the same purposes until provision to the contrary is made byParliament by law."

Again "taxation" is defined as including the imposition of any tax or impost, whether general or localor special and tax shall be construed accordingly.

34. The expression "tax" is used in a very wide sense and embraces cesses. The legislature has notemployed in the instant case the word as connoting anything different from a tax. It could not be



posited that the levy of octroi duty is not an imposition coming within the definition of taxation inClause 28 of Article 366.

35. The same concept is given expression to by the Supreme Court in Commissioner of HinduReligious Endowments v. Lakshmindra Thirtha Swamiar 1954 SCJ 335 at p, 358: (AIR 1954 SC 283at p. 295). This is what Mukherjee J. says:

"Article 277 also mentions taxes, cesses and fees separately. It is not clear, however, whether theword 'tax' as used in Article 285 has not been used in the wider sense as including all otherimpositions like cesses and fees; and that at least seems to be the implication of Clause 28 of Article266 which defines taxation as including the imposition of any tax or impost, whether general, localor special. It seems to us that though levying of fees is only a particular form of the exercise of thetaxing power of the State, our Constitution has placed fees under a separate category for purposes oflegislation and at the end of each one of the three legislative lists, it has given a power to theparticular legislature to legislate on the imposition of fees in respect to every one of the items dealtwith in the list itself."

36. It may be mentioned that entry 49 in list II of the relevant schedule of the Government of IndiaAct refers to this form of taxation as a cess on the entry of goods into a local area for consumption.Presumably, the Constitution makers introduced the word 'tax' in the present item to make it morecomprehensive.

37. In Daulat Ram v. Lahore Municipality, AIR 1941 Lab 40 Din Muhammad J., after referring to thedefinition of cess in Murray's Oxford Dictionary as a tax levied for a specific object, remarked that itwas impossible to distinguish tax from cess or duty and that though the draftsmen had used threedifferent terms in different parts of the Government of India Act, they did not convey different ideasthereby.

38. There remains the question whether the erstwhile Legislative Assembly had in any wayencroached upon the field reserved for the Union Parliament in enacting the impugned measure.What is argued by Sri Sanyasiraju for sonic of the petitioners is that the offending Act authorises thelevy of duty which is nothing but an excise duty or an import duty. It is said that the impost oncommercial goods falls within tile purview of entry No. 41, which refers to 'trade and commerce withforeign countries, import and export across customs frontiers and definition of 'customs frontiers',entry 42 which deals with inter-State trade and commerce and entry 83 which deals with dutius ofcustoms including export duties.

He also attempted to substantiate du's proposition by citing to us certain passages from Chanter XIVof Cooley's Constitutional Limitations, which discusses the powers of taxation of a State. Thosepassages are not of any help to the petitioners, The author there discusses several aspects of thepowers of the State to impose taxes, which power rests upon necessity and is inherent in everysovereignty,



39. To take up first entry 83 of list I, it is concerned only with customs and export duties and hasnothing to do with taxes to be collected on goods imported into a local area. Octroi duty fallsexclusively within the intendment of entry 52 of List II and is unconcerned with item 83 of List I.This view of ours is reinforced by a pronouncement of the Supreme Court in Ram KrishnaRamanath Agarwal, Kamptee Firm, v. Secretary, Municipal Committee, Kamptee . It was decidedthere that octroi duty as imposed by the Municipality on tobacco under Section 60(1) of the CentralProvinces Municipalities Act fell within the ambit of entry 49 of list II of the Seventh Schedule to theGovernment of India Act, which is the same as the present item 52 and that such, a levy could not beregarded as an excise duty.

40. In Murli Manohar v. State of Uttar Pradesh, (S) , the validity of a cess or tax imposed by theState Government on sugar cane entering the premises of sugar factories in Uttar Pradesh wasassailed on grounds, inter alia, that it was beyond the competence of the State Legislature, thereason offered in support of this ground being that a cess of that nature was an excise duty withinthe meaning of entry 45 of list I of the Seventh Schedule to the Government of India Act, which is inthe same terms as entry 48 of the Union List. This argument was negatived on the ground that it wasnot an excise duty on sugar.

41. Nor is the submission that a measure like the impugned Act, falls within the scope of items 41and 42 of List I admissible. Those two entries deal with topics regulating matters indicated in them.These entries do not confer any power on the Union Parliament to make laws for the imposition oftaxes. The aim and object of those two entries is altogether different from that of entry 52 of List II.As already pointed out in another context, a glance at the several entries in the different legislativelists would establish that taxation was not intended to be included in the items which deal withgeneral subjects and that it was a distinct matter for the purpose of legislative powers, This isbrought out forcibly, if we may say so with respect, by Venkatarama Ayyar J. in Sundara Ramier andCo. v. State of Andhra Pradesh. thus:

"The above analysis -- and it is not exhaustive of the entries in the lists--leads to the inference thattaxation is not intended to be comprised in the main subject in which it might on an extendedconstruction be regarded as included, but is treated as a distinct matter for the purposes oflegislative competence."

On this discussion, it follows that the constitutionality of the Hyderabad Municipal Corporations Actwould not be questioned on any ground and that it is a valid piece of legislation. That being theposition, the further argument of Sri Sanyasiraju that there is overlapping between the entries ofrespective lists and in that position the Central list should prevail should be rejected as being utterlydevoid of substance. Nor is his contention that entry 52 is vague and misleading and is only arepetition of the items in l ist I and is attributable to unskilful draftsmanship of theConstitution-makers deserve, any serious consideration.

42. We shall next examine the tenability of a contention founded upon an order alleged to have beenpassed by the then Revenue Minister. The complaint made on behalf of some of the petitioners isthis. On a petition submitted to the Revenue Minister questioning the legality of the impost on the



ground that as the toddy contractors paid rentals as also tree tax, it would be unjust that thepetitioners should be saddled with the additional burden contrary to the terms of the contractentered into with the Government, he endorsed on 13th October 1956 that the levy of octroi duty onSendhi and toddy was illegal, that it should not be recovered from the petitioners and, if necessary,the duty must be met from the Government treasury and that if any amount should have beenrecovered from the excise contractors, the amount so recovered should he adjusted towards therental on production by the contractors of the receipts of such payments.

This endorsement is sought to be invested with the character of an enforceable order creating a rightin the petitioners to compel Government to direct the Municipality to cancel the levy or itself tomeet the burden. We do not fancy how such an alleged endorsement could have any of the resultsthat are ascribed to it. On their own showing, no order was communicated by the Government to thepetitioners exempting them from the payment of octroi duty, which means that no effect was givento that opinion for some reason or other. That implies that the endorsement was in the nature of anopinion by a Minister and would not have the postulate of a decision with regard to their rights.

43. There are also other difficulties in the way of giving weight to this contention. Article 166 of theConstitution recites that all executive actions of the Government of a State shall be expressed to betaken in the name of the Governor. Clause 2 of that Article says:

"Orders and other instruments made and executed in the name of the Governor shall beauthenticated in such manner as may be specified in rules to be made by the Governor and thevalidity of an order or instrument which is so authenticated shall not be called in question on theground that it is not an order or instrument made or executed by the Governor."

That Article provides for making rules for the allocation of portfolios amongst the various Ministers.Therefore, the allocation of distinct subject to different Ministers is only for the sake of convenienceand any order passed by any Minister shall be deemed to have been made by the Governor on theadvice of his Council of Ministers.

44. Article 166, which was applicable to Part-A States was made applicable to Part B States byreason of Article 238 of the Constitution, with the result that all principles enshrined in Articles 166and 167 are attracted to Part VII, which deals with Part B States except to the extent modified in thelatter part. By reason of Article 166 read with Article 238, the Rajpramukh was empowered to makerules for the conduct of governmental business of a State. Rules were made by the Rajpramukh ofthe erstwhile Hyderabad State pursuant to the relevant provisions of the Constitution for thedistribution of Governmental functions amongst the various ministers in exercise of the powersconferred under Article 166 read with Article 238 of the Constitution of India.

45. Rule 3 says that the Rajapramukh on the advice of the Chief Minister shall allot among hisMinisters the business of the Government by assigning each department of the Secretariat to thecharge of a Minister or Ministers. Under Rule 6, certain cases could be brought before the Council ofMinisters either by the direction of the Rajpramukh or the Chief Minister or the Minister-in-chargeof the case with the consent of the Chief Minister. Rule 7 provided for bringing before the Council of



Ministers the following cases:

x X X X

(c) any proposal affecting the finances of the State or for re appropriation within a grant in whichthe Minister in charge of the finance Department has not concurred.

Rule 10 recites that no department shall without previous consultation with the Finance Departmentauthorise any orders (other than orders pursuant to any general delegation made by the FinanceDepartment) which either immediately or by their repercussions, will affect the finances of the Stateor which in particular either x x x x

(c) in any way involve any relinquishment of revenue. Sub-Rule 2:

No proposal which requires previous consultation with the Finance Department under Sub-rule 1,but in which the Finance Department has not concurred, may be proceeded with unless a decision tothat effect has been taken by the Council of Ministers.

46. Rules 11, 13 and 14 are also important and they are set out hereunder:

"(11) Without prejudice to the provisions of Rule 5, the Minister in charge of a department shall beprimarily responsible for tendering to the Rajpramukh advice as to the disposal of the businessappertaining to that department.

(13) All orders or instruments made or executed by order or on behalf of Government shall beexpressed to be made by or by order of the Rajpramukh.

(14) Save in cases where an officer has been specifically empowered to sign an order or instrumentof the Government of Hyderabad every such order or instrument shall be signed by either aSecretary, an additional Secretary, a Joint Secretary, a Deputy Secretary, an Under Secretary or anAssistant Secretary to the Government of Hyderabad and such signatures shall be deemed to be theproper authentication of such order or instrument."

47. If the matter is considered in the light of these rules, it is abundantly clear that the order inquestion could not be issued by the Revenue Minister by himself independently and that it will beineffectual for various, reasons. Indisputably, if effect were to be given to that order, it would affectthe finances of the State and, as such, it had to he brought before a Council of Ministers. Otherwiseit could not be issued without the previous consultation of the Finance Department as indicated byRule 10.

According to Rule 11, the Minister could only tender advice to the Rajpramukh in regard to matters,which are within his sphere, and, by reason of Rule 13, all orders or instruments made or executedby order or on behalf of Government should be expressed to be made by or by order of theRajpramukh, embodying the same conception as Article 166 of the Constitution. Rule 14 has



empowered the Secretaries or other persons enumerated therein to sign orders on behalf of theGovernment. Thus, an individual Minister could not issue orders in his own name independently ofthe Secretariat even in regard to mutters that are within the portfolio allotted to him.

48. The object of Articles 166 and 238 is to prescribe the mode in which the business of theGovernment should be carried on as between the Governor and the Ministers and Secretaries of theGovernment in Part A States and the Rajpramukh. his Ministers and Secretaries in Part B States. Inboth the categories of States, in theory, the responsibility rested on the Governor or the Rajpramukhas the case may be for carrying on the administration. He is the Executive head of the State andwhatever functions were to be performed by the Governor they were to be performed in the name ofthe head of the State.

Therefore, whenever the Government of a State, either Part A or Part B State, acts, its acts were to beexpressed in the form of an order and that order was to be issued by the Secretary or some otherofficer authorised in that behalf in the name of the Governor or the Rajpramukh. It is true, that,under the concerned rules, the Minister in charge of the portfolio may he mainly responsible fortendering advice to the Rajpramukh for the disposal of the business relating to the subjects allottedto him hut whether the advice was accepted by the Rajpramukh or not could not be investigated by aCourt. Until that advice is accepted by the Rajpramukh and is given effect to by the issue of an orderin conformity with the terms of Article 166, it does not become an order of Government and couldnot be operated.

49. This opinion is shared by Rajagopalan and Rajagopala Ayyengar JJ. in Messrs. Poineer MotorsLtd. v. Majeed Mirania Motor Service, . There learned Judges decided that the decision by aMinister in the exercise of revisional powers conferred by Section 64-A of the Motor Vehicles Act asit stood prior to Act 39 of 1944 but not communicated to the parties would not amount to an orderof the Government and it acquired that quality only when it was embodied in a formal order issuedin the form as laid down by Article 166.

50. The following observations occurring at p. 442 (of Mud LJ): (at p. 57 of AIR) are quite appositein this context:

"The order of the Minister is not final, for another Minister may call for the file and bring up thematter before the Council, for he is entitled to do so, as every Minister assumes responsibility forthat order. Again, the Secretary might disagree with that order and have the matter brought up forreconsideration by the Minister...the Governor may call for the file and have the matter brought upbefore the Council of Ministers. All these matters might take place before the stage of finality isreached at the ministerial level and it is only when the Secretary of the Department or those underhim named in Rule 12 affix their signatures to the order, that the Governor's assent to the issue ofthat order is taken to be signified, so that it is only then that it becomes an order of theGovernment."

The situation hero is analogous to that in that case. The present is an a fortiori case for the reasonthat here the orders have not been even communicated.



51. This position is contested by Sri Subbarayudu for some of the petitioners on the reasoning that,under the laws prevailing in the Hyderabad State the Revenue Minister could take decisions andpass orders, that they came into operation the moment they were noted on the file and that theorder passed in the instant case being a judicial one affecting the rights of the parties, it will takeeffect whether it is communicated or not. In support of the first branch of the argument, he drew ourattention to some of the cases disposed of by the erstwhile Hyderabad High Court in which orders ofthe Revenue Minister were sought to be quashed viz., Trimbak Prasad v. State of Hyderabad, AIR1952 Hyd 10, Rachamma v. The Hyderabad State, ILR (1954) Hyd 632; (AIR 1954 Hyd 210) and MirLiaqat Hussain v. Minister for Revenue, Government of Hyderabad, I.L.R. 1956 Hyd 243.

In these cases, the decisions of the Revenue Minister were attacked on some ground or other, Butthey have no bearing on the present enquiry. For one thing, under the enactments under which theorders were passed by the Revenue Minister, he was specifically authorised to make those ordersand further it might also be that under the then rules the order could be issued in the name of anindividual Minister and the problem was not posed in those cases whether an individual Ministercould issue orders in his own name and without reference to the concerned Secretaries or theRajpramukh.

We do not also know whether 'the orders actually went in the name of the Rajpramukh, Whateverthat be, the rules extracted above do not warrant the proposition that orders could issue in the nameof an individual Minister and without reference to the Government. Moreover, as already pointedout, in this case it remained only in the stage of noting and had not taken a final shape, namely, ofits being embodied in an order.

52. The ruling relied on by Sri Subbarayudu for the proposition that an order to be effectual neednot be communicated viz., Dattatreya v. State of Bombay, is not relevant here. In that case, thelegality of an order of detention under the Preventive Detention Act was contested, inter alia, on theground that there was no valid order of confirmation and that a confidential communication fromthe Home Department could not be regarded as an order under Section 11(1) of the Act.

The objection raised on behalf of the detenu was overruled on the ground that the order was not anullity even though it has not been expressed to be made in the name of the Governor. It cannot beoverlooked that, in that case, the order under Section 11(1) purporting to be that of the Governmentof Bombay was signed by an officer, who was competent to sign according to the rules framed by theGovernor. The only infirmity was that it did not issue in the name of the Governor.

It was pointed out that Article 166(1) of the Constitution was confined to cases where the executiveaction is required to be expressed in the shape of a formal order or notification or any otherinstrument. That ruling could have no application to the instant case for the reasons that it was amere opinion expressed by a Minister, that it was never communicated and that it did not purport tobe that of the Government nor signed by the Secretary.

53. We are also unable to see how such an opinion could be regarded as a judicial or quasi-judicialone. There is no provision either in the Hyderabad Municipal Corporations Act or in the Hyderabad



Abkari Act empowering the Revenue Minister either to direct the Municipality to desist from levyingor collecting octroi duty or to direct the Government to meet the demand made by the Municipalityin that regard.

Our attention was not drawn to any statutory provision in any enactment clothing the RevenueMinister with such power. If effect were to be given by the Government to a note made by one of theMinisters, certain rights might low from it. But It could not have the characteristics of a judicialorder. None of the attributes of a judicial order are present in the instant case. It is only an opinionexpressed by a Minister on the I administrative side. Even if such an opinion is enforceable, such ofthe petitioners to whose benefit the noting might enure, could request the Government for a rebateof the rentals and, if that is not complied with, they could resort to such remedies as are open tothem. Moreover, this court cannot give a direction either to the Rajpramukh or to the Governmentas constituted to give effect to the noting of a single Minister. We are not shown any instance wherea duly constituted Government was compelled by a Court to accept the advice or opinion of one ofthe Ministers. This is not the forum for agitating such matters.

54. If it is a term of the contract as suggested by him that the Government should pay octroi duty, hecould enforce it in ordinary courts of law. Further, the terms of the contract have not been placedbefore us which could lead to any such inference. It follows that this contention is also inadmissibleand has to be rejected.

55. We will next deal with the argument that toddy and sendhi, being the property of theGovernment, are exempt from octroi duty by virtue of Section 254 of the Act. In our opinion, thissubmission is devoid of substance. Merely because Government receives rentals for granting leasefor the sale of liquor in the State or receives tree tax for permitting palmyra and date trees to betapped, the toddy or sendhi does not become the property of the Government.

By selling contracts in public auction for the sale of liquor, the Government merely realises theabkari revenue but has no proprietary right in the toddy or sendhi. Government merely confers aright on the contractor by the issue of a licence to sell toddy or sendhi at a particular place. It is forthe grant of this licence or privilege that the rentals are paid. The Government does not acquire anyright in the toddy or sendhi extracted from the palmyra or date trees and their position cannot beequated to that of the owners of the toddy or sendhi.

Indisputably, the Government is not entitled to the sale proceeds. They surely belong to thecontractors who pay the rentals, the tree tax, remuneration to the tappers and the transport chargesand who appropriate the realisations to themselves. The various sections of the Abkari Act or theLand Revenue Act to which our attention was drawn do not either individually or cumulativelyestablish the proposition that ownership in the goods is in the Government. If the proprietorship ofthe toddy and sendhi vest's in the Government, the whole price realised must be remitted to theGovernment treasury the contractors being entitled only to some remuneration for havingundertaken to sell toddy and sendhi by way of commission or fixed wages. Surely, that is not theposition here.



The petitioners would not be willing to concede the right of the Government to take away the saleproceeds. By obtaining these contracts, the contractor only gets his licence to carry on trade in toddyand sendhi on payment of rentals and tree tax and the various amounts he pays are for granting himthe permission.

56. Even if it is assumed that it is the property of the Government, that is not sufficient to entitle thecontractor to gel the benefit of Section 254 of the Act.

57. Another requisite should exist before that section is invoked, namely, that the article is used orintended to be used solely for public purposes and not to be used or intended to be used for thepurpose of profit. Surely, it could not be postulated that toddy and sendhi are used for publicpurposes and not for the purpose of profit.

Whether it is solid for the benefit of the Government or for the benefit of the contractors, it is for thepurpose of profit. It cannot be posited that the importation of toddy and sendhi in for a publicpurpose. The sale of liquor to individual members of the public Far a price could not come withinthe connotation of public purpose. For these reasons, we are unable to give effect to this argumentalso.

58. It is convenient to dispose of here the complaint made by Sri Ramchandra Rao for some of thepetitioners that, although the toddy and sendhi were brought into the city for use in the shopsoutside the city limits, octroi duty was levied on that also. It is said that a portion of the toddy andsendhi transported into the city was for sale at Uppala and Ramanadhapuram and consequentlythey could not be subjected to octroi.

If the facts arc wellfounded, the argument is a substantial one. Under Section 255 of the Act if anycommodity is brought into the city for immediate exportation, it is exempt from tax under theconditions, indicated therein and If octroi has been paid upon the article and it has been exportedafterwards from the city, the full amount of the octroi so paid, by force of Section 256 of the Act,would be refunded.

That being The position, the goods whose ultimate destination is a place outside the Municipallimits of Hyderabad and Secunderabad will not be liable to octroi duty and if cess has already beenpaid, it will have to be refunded. We are assured by the learned counsel For the Municipality that inall cases where such collections were made they will be refunded to the contractors if the authoritiesconcerned are approached and if it is proved that in any case the toddy or sendhi was not sold withinthe limits of Hyderabad or Secunderabad.

59. Another contention pressed upon us is that it was not within the competence of the HyderabadMunicipality to collect octori duty on goods meant lor consumption in Secunderabad Municipality, iiat all it is only that Municipality in which the commodity has to be sold that could legilimately makesuch an impost.



60. This argument overlooks the existence of Section 100 of the Act which so far as it is relevant forthis inquiry says:

* * * * "The Corporation may from time to time with the sanction of the Government enter into anagreement with a local authority or with a combination of local authorities for the levy of octori ortoll or any other tax by the Corporation on behalf of the bodies so agreeing and in that event theprovisions of this Act shall apply in respect of such levy as if the area of the city were extended so asto include the area subject to the control of such local authority or such combination of localauthorities".

'Local authority' is defined in Section 2(3) as including a Municipal Corporation, City and TownMunicipalities etc. Section 2(6) says: "City means the area declared by the State Government bynotification to be the city of Hyderabad or the City of Secunderabad as the case may be".

Thus, Section 100 confers power upon the two Municipalities to reach an agreement for the creationof a single agency for the collection of octroi. It is pursuant to this section that the two corporationsentered into an agreement for the collection of octroi on behalf of each other, We have alreadyadverted to the resolution of the concerned Municipality for the creation of a single agency for thecollection of octroi for the twin cities of Hyderabad and Sccunderabad and one cordon for both thecities as octroi limit for the collection. A machinery was also set up for this purpose and for thedistribution of the income between the two cities.

It is, therefore, futile to contend that it is not within the province of the Hyderabad Municipality tocollect duty on goods meant for consumption is Secunderabad. The only feasible mode of realisingthe octroi revenue, for the two cities of such cordons will facilitate the evasion of the payment ofduty. We do not think that there is anything illegal or unjustifiable in the action taken by theauthorities of the Hyderabad Municipality in that behalf.

61. The next question we have to address ourselves is whether toddy and sendhi are included withinthe term "beverage". What is urged on behalf of the petitioners is that the expression "beverage" isejusdem generis with fruit juice i.e. of the same kind. It is said that beverage refers only to drinks ofthe same kind as fruit juice. To accept this interpretation would be to render the word "beveragenugatory. The words 'fruit juice' include juices extracted from kinds of fruits and it would beunmeaning to construe "beverage" as fruit juice.

In our opinion the word beverage is a word of wide import and takes in drinks of every description.Beverage means every liquid used for drinking purposes. One of the meanings given in ChambersDictionary is a liquor for drinking, a mixture of cider and water, a drink. In our judgment it does notadmit of such doubt that beverage embraces within its connotation toddy and sendhi.

62. The various passages in the judgment of the Supreme Court in State of Bombay v. Balsara, 1951SCJ 478 at p. 490: (AIR 1951 SC 318 at p. 325) clearly indicate that that expression includes toddyand sendhi. At p. 489 (of SCJ): (at p. 325 of AIR) Fad Ali J., who spoke for the Court said this:



"Thus, according to the Dictionary, the word 'liquor' may have a general meaning in the sense at aliquid, or it may have a special meaning, which is the third meaning assigned to it in the extractquoted above, viz., a drink or beverage produced by fermentation or distillation. The latter isundoubtedly the popular and most widely accepted meaning, and the basic idea of beverage seemsrather prominently to run through the main provisions of the various Acts of this country as well asof America and England relating to intoxicating liquor, to which our attention is drawn. But, at thesame time, on a reference to these very Acts, it is difficult to hold that they deal exclusively withbeverages and are not applicable to certain articles which are strictly speaking not beverages".

His Lordship added:

"... I consider the appropriate conclusion to be that the word liquor covers not only those alcoholioliquids which are generally used for beverage purposes and produce intoxication but also all liquidscontaining alcohol".

Thus, it is plain that the expression "beverage" is used in a general sense as applicable to all kinds ofdrinks. As pointed out by the Supreme Court to State of Bombay v. Ali Gulshan, apart from the factthat the doctrine of ejusdem generis should be confined with narrow limits and general orcomprehensive words should receive their full and natural meaning unless they are clearlyrestrictive in their intendment, it is requisite that there must be a distinct genus, which mustcomprise more than one species before it can be applied. Our conclusion on this topic is that toddyand sendhi are subject to octroi duty as they come within the purview of Schedule H.

63. Another point that was sought to be made was that it was outside the jurisdiction of theGovernment to have issued directions to the Municipality to levy octroi on toddy and sendhi andthat has vitiated the levy and collection of the duty. The directions complained of are to be found inthe letter dated 11-9-1956. It is said that the procedure adopted by the Government was illegal inthis regard and that it had gone into the root of the whole matter. This argument is sought to be buttressed by referring to Mahadayal Premchandra v. Commercial Tax-Officer, .

There a Commercial Tax-Officer, without applying his mind in making an assessment, requested forthe instructions of the Assistant Commissioner. Instructions to assess the appellant were given bythe Assistant Commissioner but the Commercial Tax Officer did not agree with the opinioncontained in the instructions and he indicated to the Assistant Commissioner his opinion and askedfor his valued opinion.

Thereupon, the Assistant Commissioner directed the Commercial Tax Officer to assess the appellantin accordance with his opinion. The Commercial Tax Officer made the assessment without givingany satisfactory reasons. If was held that the order impugned showed that the Commercial TaxOfficer merely voiced the opinion of the Assistant Commissioner without exercising his ownjudgment. It is in this context that the Supreme Court remarked.

"This was hardly a satisfactory way of dealing with the matter. If the Assistant Commissioner hadbeen dealing with the same he could have by all means given in the assessment order which he made



his reasons for doing so and these reasons would have been open to scrutiny in further proceedingstaken by the appellants either by way of appeal or otherwise."

"The procedure adopted was to say the least unfair and was calculated to undermine the confidenceof the public in the impartial and fair administration of the Sales Tax Department concerned."

We do not think that that has any analogy here. In that case, the judgment was that of the assessingauthority, namely, the Commercial Tax Officer and he had to apply his mind to the facts of the caseand arrive at a conclusion. Contrary to his own conviction he had merely accepted the opinion of theAssistant Commissioner and had not given satisfactory reasons therefor. The position here isaltogether different, Here the Government merely clarified the matter.

Apart from that, under Section 677 of the Act, the Government has ample authority to call upon theMunicipality to perform its functions properly. Section 677, so far as it is relevant for this enquiry,enacts:

"If on receipt of any information Or report obtained under Section 675 or 676 or otherwise, theGovernment is of opinion

(a) that any duty imposed on any Municipal Authority by or under this Act has not been per formedor has been performed in an imperfect, inefficient or unsuitable manner.

xx xx the Government may by an order direct the Corporation or Commissioner within a period tobe specified in the order to make arrangements for the performance of the duty".

64. The wording of the section makes it plain that if the Government thinks that the Municipality isremiss in the discharge of its duties, it is entitled to issue directions for the proper performance ofthe duty or obligation. Section 252 casts a duty on the Municipality to levy octroi on the articlesmentioned in Schedule H at the rates specified therein.

That section is couched in mandatory language and, therefore, the Municipality is bound to makethe impost without making any discrimination between one article and another. It follows that theGovernment was quite within their jurisdiction to issue instructions requiring the Corporation toconform to Section 252 of the Act.

65. It was lastly complained that while octroi duty is imposed on the basis of the cost price of theother commodities, a different basis was adopted for toddy and sendhi, namely, the price fixed bythe Government for the sale of these articles. It may be that normally the tax is so calculated withregard to other articles. But then the basis is furnished for such computation by the invoicesproduced by the persons carrying the articles into the city, So far as toddy and sendhi are concerned,such invoices cannot be produced and it is difficult to determine the cost price of each pot orcontainer of toddy or sendhi. It is true that definite amounts are paid by the renter in the form ofrentals and tree tax. But it is difficult to say in advance what quantity of toddy or sendhi is going tobe extracted from the various trees that are allotted to a particular renter and to make



apportionment with regard to each pot or container of toddy or sendhi.

66. No material has been placed before us which would enable us to make a computation in thatbehalf and the learned counsel for the Municipality also expressed his inability to afford us any basisfor this purpose. It is true that the Government may fix the sale price on some basis. They mighttake into account the approximate cost of the commodity in the shape in which it is to be sold andalso the reasonable rate of profit for the renters. But we have no information in that behalf.

If the renters were aggrieved by the method adopted by the Municipality in that respect, they wouldhave requested the authorities concerned to call for particulars and make the assessment on thebasis of that information or, at any rate, they could have approached the Government for thatpurpose.

67. Be that as it may, in such cases, a remedy is provided under Section 282 of the Act. It says:

"(1) Subject to the provisions hereinafter contained, appeals against any rateable value or tax fixedor charged under this Act shall be heard and determined by the Judge."

The expression 'Judge.' is defined in Section 2(27) of the Act as, in the City of Hyderabad the firstJudge of the Court of Small Causes and in the city of Secunderabad the District Judge and shallinclude a Sub-Judge to whom such Judge may transfer in accordance with the provisions of this Actan application or appeal for disposal. It is, therefore, open to an aggrieved party to pursue theremedy provided by that section especially when we have no means of arriving at the cost price. Forthese reasons, we cannot give effect to this contention also.

68. In these circumstances, all the Writ Petitions are dismissed with costs. Advocate's fee is fixed atRs. 100/- in each to be apportioned between the Municipality and the Government. These petitionshave to be dismissed on another ground also, namely, that this court in exercise of jurisdictionunder Article 226 of the Constitution would not grant declaration or direct the refund of the amountcollected from the petitioners, for in such an eventuality, any person seeking such relief, should haverecourse to the ordinary courts of law.

69. The second appeal also is dismissed with costs as the point raised in this appeal is covered byour decision in the Writ Petitions.



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N. Balaraju and Ors. vs the Hyderabad Municipal ... on 12 August, 1959

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