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of <h1>Supreme Court rules taxes not automatically applicable to new areas, issues mandamus restraining municipality.</h1> The Supreme Court set aside the High Court's decision, ruling in favor of the appellants. The Court held that taxes were not automatically applicable to ... Whether the notification dated November 3, 1942, imposing octroi within the limits of the Sonepat Municipality became applicable by reason of the provisions contained in section 5(4) of the Punjab Municipal Act, 1911 ? Held that:- The High Court was wrong in holding that the municipality was competent to levy and collect octroi from the appellants by reason of the provisions contained in section 5(4) of the Act. The judgment of the High Court is set aside. The appeals are allowed. The applications of the appellants are allowed and writs of mandamus will go to the respondent municipality restraining the municipality from levying against and collecting from the appellants any octroi in respect of raw materials, components and parts imported by the appellants into the factory of the appellants. Appeals allowed. Issues Involved:1. Inclusion of Industrial Area within Municipal Limits2. Imposition and Levy of Octroi3. Applicability of Section 5(4) of the Punjab Municipal Act, 19114. Procedural Requirements under Section 62 of the Act5. Article 14 of the Constitution and Right to Object6. Interpretation of Notifications, Rules, Bye-laws, Orders, Directions, and PowersDetailed Analysis:1. Inclusion of Industrial Area within Municipal LimitsThe appellants' factories, located in the Industrial Area of Sonepat, were included within the municipal limits by a notification dated August 11, 1967, published in the Haryana Government Gazette. This inclusion was challenged by the appellants, who had previously objected in writing to the proposed inclusion under section 5(2) of the Punjab Municipal Act, 1911.2. Imposition and Levy of OctroiFrom August 18, 1967, the Municipality of Sonepat began imposing, levying, and collecting octroi on raw materials, components, and parts imported by the appellants into their factories. The municipality relied on section 5(4) of the Act, which they argued made the existing octroi rules applicable to the newly included area.3. Applicability of Section 5(4) of the Punjab Municipal Act, 1911The respondent-municipality contended that section 5(4) of the Act extended all existing rules, bye-laws, orders, directions, and powers to the newly included area, thereby justifying the imposition of octroi. However, the court found that section 5(4) does not mention 'notifications,' which are essential for the imposition of taxes. The court emphasized that the legislative intent was clear in not making notifications automatically applicable to newly included areas.4. Procedural Requirements under Section 62 of the ActThe appellants argued that the procedural requirements of section 62, which include inviting objections from inhabitants and obtaining the necessary sanctions, were not followed. The court agreed, stating that section 62(10) mandates a notification by the State Government for the imposition of tax, specifying a date on which the tax shall come into force. In the absence of such a notification, the municipality was not competent to impose, levy, or collect octroi.5. Article 14 of the Constitution and Right to ObjectThe appellants contended that the imposition of octroi without following the proper procedure violated Article 14 of the Constitution, as it denied the right to object. The court noted that section 5(2) of the Act provides inhabitants the right to object to the inclusion of their area and the resulting tax implications. However, this right was not adequately addressed in the context of the procedural lapses under section 62.6. Interpretation of Notifications, Rules, Bye-laws, Orders, Directions, and PowersThe court clarified that the term 'notification' is not synonymous with 'rules, bye-laws, orders, directions, and powers.' The Act specifically uses the term 'notification' for the imposition of tax, and its absence in section 5(4) indicates that notifications do not automatically apply to newly included areas. The court also referenced the General Clauses Act, which distinguishes between notifications and other forms of statutory instruments.Conclusion:The High Court erred in holding that taxes became automatically leviable in new areas under section 5(4) of the Act. The Supreme Court set aside the High Court's judgment, allowing the appeals and issuing writs of mandamus restraining the municipality from levying and collecting octroi from the appellants. The court emphasized the necessity of clear and express language for tax imposition and the requirement of a notification under section 62(10) for the tax to come into force. Each party was ordered to bear their own costs. Appeals allowed.
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