Contractual tax exemption did not bind successor municipal authority after merger; octroi levy remained valid.

A tax exemption recorded in the 1943 arrangement was contractual, not legislative, because it was not enacted in the recognised manner required for law and therefore did not operate as a binding rule of conduct. After merger, that consensus could bind the sovereign as contracting party but not the Municipal Committee as a statutory body. Since octroi had already been imposed under the Committee's rules, the later resolution merely restored collection of an existing levy and did not create a fresh tax or preserve the earlier exemption. The Municipal Committee was therefore entitled to levy octroi, and the demand was upheld.

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Issues: Whether the 1943 arrangement and earlier concessions operated as law so as to bind the Municipal Committee and prevent levy of octroi on the appellant company after the merger.

Analysis: The concessions contained in the 1943 document were held to be contractual in character and not legislative commands. A law must be enacted in the customary or formally recognised manner and must operate as a binding rule of conduct; an agreement reached by the sovereign in consideration of reciprocal benefits does not become law merely because it records the will of the ruler. The earlier exemptions were therefore only matters of consensus and could bind the sovereign as a contracting party, but not the Municipal Committee as a statutory body once the former State had merged and the ruler's control ceased. The Municipal Committee had already imposed octroi under its rules, and the later resolution merely restored collection of a tax already in existence rather than creating a fresh levy or cancelling a municipal exemption granted by the Committee.

Conclusion: The 1943 agreement did not have the force of law and did not prevent the Municipal Committee from levying octroi; the demand was valid and the issue was decided against the appellant.

Final Conclusion: The appeal failed, and the levy of octroi by the Municipal Committee was upheld.

Ratio Decidendi: A sovereign's contractual promise of tax exemption, when embodied in an agreement and not in a law, does not bind a successor municipal authority after merger unless it has been enacted or continued as law.

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