Pith and substance controls fiscal character: dharmada collection on entry of goods was treated as authorised octroi.

A levy collected as dharmada was treated in substance as octroi because the taxable event was the entry of goods into municipal limits for consumption, use or sale. The label attached to the impost did not control its legal character; validity depended on pith and substance, not nomenclature. A levy earmarked for charitable purposes could still remain a tax within the authorised octroi power, and separate heads or rates in the schedule did not by themselves create impermissible double taxation. Questions about the use of collections did not affect the competence to impose the levy.

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Issues: Whether the levy collected as dharmada under the municipal notification was, in substance, an octroi within the power conferred by section 104(2) of the Rajasthan Municipalities Act, 1959, and whether the levy was invalid as double taxation or for want of authority.

Analysis: The levy was imposed on goods entering the municipal limits for consumption, use or sale, which is the taxable event of octroi. The label dharmada did not alter the real character of the impost, because the validity of a tax depends on its pith and substance, not its nomenclature. A levy imposed for specific charitable purposes may still be taxation, and the mere earmarking of collections for designated objects does not convert the impost into something outside the authorised octroi power. The schedule under the notification was issued in exercise of the statutory power to levy octroi, and the fact that some goods were classified under separate heads and rates did not establish an impermissible double tax. The Court also held that no constitutional or statutory prohibition barred the State from authorising such a levy and that questions about spending of the collections could not defeat the competence to impose the levy.

Conclusion: The dharmada levy was valid as octroi under section 104(2) of the Rajasthan Municipalities Act, 1959, and the challenge based on lack of authority and double taxation failed.

Ratio Decidendi: The real nature of a fiscal impost is determined by its taxable event and substance, not by its label, and a legislatively authorised levy on entry of goods for consumption, use or sale remains octroi even if collected under different heads or for specific purposes.

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