Court upholds Gov't order on octroi tax, power subject to orders, no discrimination, mala fides dismissed.

The Court upheld the Government's order prohibiting the municipality from levying an octroi tax on milk, stating that the power to tax is subject to Government orders, and the term "impose" refers to the actual levy of the tax. The Court found no discrimination in the order, as all municipalities were prohibited from collecting the tax on milk. The allegation of mala fides was dismissed, with the Court noting the Government's prior request to drop the tax for valid reasons. The appeal and writ petition were both dismissed, with costs awarded against the appellant municipality.

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Issues Involved:
1. Validity of the Government's order prohibiting the municipality from levying an octroi tax.
2. Interpretation of the term "impose" in Section 59 of the Bombay District Municipal Act, 1901.
3. Whether the Government's order was discriminatory.
4. Allegation of mala fides in the Government's order.

Detailed Analysis:

1. Validity of the Government's Order Prohibiting the Municipality from Levying an Octroi Tax
The appellant municipality challenged the validity of the Government of Bombay's order dated April 4, 1955, which prohibited the municipality from levying an octroi tax on milk. The municipality argued that once the tax was sanctioned by the Government and imposed following the procedures laid down in Sections 59 to 62 of the Bombay District Municipal Act, 1901, the Government had no power to issue such an order.

The Court held that the Government's order was valid. The power to tax under Section 59 is always subject to any general or special orders of the Government. The term "impose" in Section 59 refers to the actual levy of the tax, not merely the acquisition of the power to levy it. Therefore, the Government can prohibit the imposition of the tax at any time by issuing a general or special order.

2. Interpretation of the Term "Impose" in Section 59
The appellant municipality contended that the term "impose" in Section 59 should be interpreted as the acquisition of the power to levy a tax by following the procedures in Sections 60 to 62. The Court rejected this interpretation, stating that "impose" refers to the actual levy of the tax after acquiring the authority to levy it through the prescribed procedures. The Court emphasized that the imposition of the tax is always subject to the Government's general or special orders, even after the rule prescribing the tax has been sanctioned.

3. Whether the Government's Order was Discriminatory
The appellant argued that the Government's order was discriminatory because no other municipality had been prohibited from collecting a similar tax. The Court found no evidence of discrimination, noting that the Government had prohibited all municipalities from levying any octroi tax on milk. Furthermore, it had not been shown that all municipalities were on the same footing regarding milk.

4. Allegation of Mala Fides in the Government's Order
The appellant alleged that the Government's order was mala fide, intended to benefit a co-operative union dealing in milk. The Court found this allegation baseless, noting that the Government had earlier requested the municipality to drop the tax on the grounds that milk was being purchased for the Government, which was not liable to be taxed by a municipality. Even if this ground was not justified, it did not indicate mala fides. Since similar orders were issued to all municipalities, the question of mala fides did not arise.

Separate Judgment by Ayyangar J.
Ayyangar J. concurred with the judgment delivered by Sarkar J., emphasizing that the power to impose a tax is a continuing power. The imposition of a tax derives its vitality from the ongoing authority to impose it. Therefore, the Government's power under Section 59 to issue general or special orders remains effective even after a tax has been initially imposed. Ayyangar J. also dismissed the arguments regarding discrimination and mala fides, agreeing with the reasons provided by Sarkar J.

Conclusion
The appeal was dismissed with costs, and the Court upheld the Government's order prohibiting the municipality from levying the octroi tax on milk. The writ petition raising the same points was also dismissed without any order as to costs.

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