Tax notification must be explicit before octroi can extend to newly included municipal areas; liability cannot arise by implication.

Section 5(4) of the Punjab Municipal Act, 1911 extended existing municipal rules, bye-laws, orders, directions and powers to newly included areas, but not an octroi notification, because the statute treated notification as the operative act creating tax liability. The 1942 octroi notification therefore did not automatically apply to the later included area, and collection could not be justified without a fresh statutory notification under section 62(10). The section 62 procedure for proposing and sanctioning taxes could not be bypassed, and the Article 14 challenge failed because the inclusion process itself allowed objections before taxation took effect. Tax liability cannot be imposed by implication.

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Issues: (i) Whether section 5(4) of the Punjab Municipal Act, 1911 caused an octroi notification already in force for the municipality to apply automatically to an area later included within municipal limits; (ii) Whether the municipality could levy octroi in the included area without following the objection procedure contemplated by section 62, and whether such levy offended Article 14 of the Constitution of India.

Issue (i): Whether section 5(4) of the Punjab Municipal Act, 1911 caused an octroi notification already in force for the municipality to apply automatically to an area later included within municipal limits.

Analysis: Section 5(4) extended to included areas only the rules, bye-laws, orders, directions and powers made or conferred under the Act and then in force throughout the municipality. The provision did not mention notifications, while the Act separately used the expression notification for the statutory act of imposing tax under section 62(10). The scheme of exclusion in section 8, which expressly referred to notifications ceasing to apply, reinforced the conclusion that their omission in section 5 was deliberate. A taxing provision must be construed strictly and liability cannot arise by implication. The octroi notification of 1942 was therefore not carried into the newly included area merely by section 5(4).

Conclusion: Section 5(4) did not make the octroi notification automatically applicable to the included area, and the levy was not justified on that basis.

Issue (ii): Whether the municipality could levy octroi in the included area without following the objection procedure contemplated by section 62, and whether such levy offended Article 14 of the Constitution of India.

Analysis: The procedure in section 62 governs the proposal, consideration, sanction and notification of taxes. The sanctioning orders contemplated by that section are not themselves the source of levy; the levy arises only when the State Government issues the statutory notification under section 62(10). Since notifications were not attracted to included areas by section 5(4), the section 62 procedure could not be bypassed to support collection from the appellants. The Article 14 challenge also failed because section 5(2) allowed inhabitants proposed to be included to object to the inclusion, thereby affording an opportunity to contest the incidence of taxation resulting from inclusion.

Conclusion: The municipality could not collect octroi from the included area without a valid statutory notification, and the Article 14 challenge failed.

Final Conclusion: The municipal levy of octroi on the appellants' factory area was unsustainable, the High Court's contrary view was set aside, and mandamus was issued restraining collection of octroi from the appellants.

Ratio Decidendi: Where the statute makes notification the operative source of tax liability, a general clause extending existing municipal powers to newly included areas does not by itself extend a tax notification unless the statute expressly says so; taxation cannot be imposed by implication.

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