1959 (8) TMI 63 - HC - Indian Laws

Court upholds octroi duty on toddy and sendhi under Municipal Act

N. Balaraju and Ors. Versus The Hyderabad Municipal Corporation and Ors.

N. Balaraju and Ors. Versus The Hyderabad Municipal Corporation and Ors. - TMI Issues Involved:1. Vires of the Hyderabad Municipal Corporation Act, 1956.2. Competence of the Legislature to enact the Act.3. Compliance with Article 304(b) of the Constitution.4. Definition and scope of 'beverages' under Schedule H.5. Legality of the levy of octroi duty on toddy and sendhi.6. Whether toddy and sendhi are exempt from octroi duty as government property.7. Legality of the government's directions to the Municipality.8. Competence of the Hyderabad Municipality to collect octroi duty on goods meant for Secunderabad.9. Basis for calculating octroi duty on toddy and sendhi.10. Availability of alternative remedies under Section 282 of the Act.Detailed Analysis:1. Vires of the Hyderabad Municipal Corporation Act, 1956:The petitioners challenged the vires of the Hyderabad Municipal Corporation Act, 1956, asserting that it was beyond the competence of the Legislature and violated the proviso to Article 304 of the Constitution. The Court noted that the Act was enacted to empower municipalities to levy taxes, including octroi, and was within the legislative competence of the erstwhile Hyderabad State.2. Competence of the Legislature to Enact the Act:The Court examined the legislative competence under entry 52 of list II, which authorizes the imposition of a tax on the entry of goods into a local area for consumption, use, or sale therein. The Court held that octroi duty, being a cess levied on goods at the time of their entry into the city, falls within the scope of this entry.3. Compliance with Article 304(b) of the Constitution:The petitioners argued that the levy of octroi duty restricted the freedom of trade under Article 301 and attracted the proviso to Article 304(b), which requires the previous sanction of the President. The Court held that taxation does not constitute a restriction on trade and commerce within the meaning of Article 304(b). The subsequent assent of the President cured any defect arising from the lack of prior sanction.4. Definition and Scope of 'Beverages' under Schedule H:The Court addressed whether toddy and sendhi fall within the term 'beverages' in Schedule H. It concluded that 'beverage' is a word of wide import, encompassing all liquids used for drinking purposes, including toddy and sendhi. The Court rejected the argument that 'beverage' is ejusdem generis with 'fruit juice.'5. Legality of the Levy of Octroi Duty on Toddy and Sendhi:The Court upheld the levy of octroi duty on toddy and sendhi, stating that the duty is imposed on goods entering the city for consumption, use, or sale therein, as per the definition in Section 2(37) of the Act. The levy was deemed consistent with the provisions of the Act and Schedule H.6. Whether Toddy and Sendhi are Exempt from Octroi Duty as Government Property:The petitioners contended that toddy and sendhi, being government property, are exempt from octroi duty under Section 254 of the Act. The Court rejected this argument, stating that the government merely grants licenses to contractors for the sale of toddy and sendhi and does not own the goods. Therefore, the exemption under Section 254 does not apply.7. Legality of the Government's Directions to the Municipality:The Court examined the government's directions to the Municipality to levy octroi on toddy and sendhi. It held that the government was within its jurisdiction under Section 677 of the Act to issue such directions, ensuring that the Municipality performed its duties efficiently.8. Competence of the Hyderabad Municipality to Collect Octroi Duty on Goods Meant for Secunderabad:The petitioners argued that only the Secunderabad Municipality could levy octroi on goods meant for consumption in Secunderabad. The Court noted that Section 100 of the Act allows municipalities to enter into agreements for the collection of octroi on behalf of each other. The agreement between Hyderabad and Secunderabad Municipalities for a single agency to collect octroi was deemed valid.9. Basis for Calculating Octroi Duty on Toddy and Sendhi:The petitioners contended that the basis for calculating octroi duty on toddy and sendhi was different from other commodities. The Court acknowledged the difficulty in determining the cost price of toddy and sendhi and suggested that the petitioners could request the authorities for a proper assessment or approach the government for redress.10. Availability of Alternative Remedies under Section 282 of the Act:The Court highlighted that aggrieved parties have the remedy of appeal under Section 282 of the Act, which allows appeals against any rateable value or tax fixed or charged under the Act. The Court emphasized that this remedy should be pursued, especially when the cost price basis for octroi duty is in question.Conclusion:All the writ petitions were dismissed with costs, and the Court held that the levy of octroi duty on toddy and sendhi was valid and within the legislative competence of the Hyderabad Municipal Corporation Act, 1956. The Court also noted that the petitioners should seek alternative remedies available under the Act for any grievances related to the calculation of octroi duty.