P L D 1967 Supreme Court 299 (PLP)

HAMOODUR RAHMAN, J.‑This appeal, by special leave, is directed against the judgment and order of a Division Bench of the High Court of West Pakistan at Karachi, whereby the octroi duty imposed by the appellant Municipality on excisable articles with effect from the 16th February 1960, has been declared to be illegal and the Municipality has been directed by a writ of mandamus not to charge any octroi duty on excisable goods. The first respondent, who is a licence‑holier under the Sind Abkari Act for the import and sale of liquor within the limits of Sukkur Municipality, had challenged the imposition of the said duty by a writ petition in the High Court on two grounds, namely; (i) that under certain orders of Government no octroi duty was at all leviable on excisable goods, and (ii) that the appellant Municipality had before imposing the duty failed to observe the procedure laid down by sub‑clause (b) of section 75 of the Sind Municipal Boroughs Act, 1925. The High Court found that the claim of total exemption was not established, as the said respondent had failed to prove any Government resolution granting such exemption, but upheld the secord contention in so far as the Municipality had failed, in its' view, to publish any rules as required by sub‑clause (b) of section 75 of the afore‑mentioned Act. The provisions of the said section were considered to be mandatory and, as such, a duty levied without observing the procedure therein prescribed was held to be bad. The precise violation found was that the Municipality had failed to publish the rules along with a notice ins the form of Schedule II prefixed thereto. Leave was granted, in this case, to consider whether the High Court was right in taking this view and whether it was incumbent on the Municipality, while purporting to only amend the Schedule of a 'tax, to publish the rules at the same time. It appears that in the present case the then Administrator of the Sukkur Municipality had on the 15th December 1958, passed an order for issuing a public notice which purported to be only for the revision of the Schedule to the Terminal Tax Rules then prevailing within the municipal limits of the said Municipality. This notice was published on the 3rd January 1959, and it notified the citizens living within the Municipal limits of Sukkur that it was proposed to "amend the current rates of the terminal tax and to enforce the new schedule in place of the present one." This notice ex facie appeared to have been issued under clause (b) of section 75 of the Sind Municipal Boroughs Act, 1925 and it also invited objections, if any, to be filed within a month, i.e., up to the 3rd of February 1959 (vide page 33 of the paper book). This recital in the publication was, however, clearly a mistake, since the Commissioner of Khairpur Division had, it appears, on the 18th November 1958, actually circulated a "model octroi schedule" and proposed the introduction of an octroi duty on the basis of the said model and the notice published on the 3rd January 1959, was intended to be a notice of the model octroi schedule but was erroneously described as a notice for the revision of the existing terminal tax schedule. This is also apparent from the letter sent by the Administrator of the Sukkur Municipality on the 25th February 1959 (vide page 48 of the paper book) to the Commissioner, Khairpur Division, for his sanction. This letter actually enclosed the Schedule published on the 3rd January 1959, as also some 32 objections received in answer to the said notice for the consideration of the Commissioner. Thereafter, on the 6th July 1959, the Commissioner, Khairpur Division, again forwarded to the Deputy Commissioner, Sukkur, a draft of the model octroi rules and bye‑laws in order to bring about uniformity in the various rules and bye‑laws prevailing in the Municipalities and notified area Committees in the Division. The Administrator of the Sukkur Municipality adopted the aforesaid model octroi rules and bye‑laws by a resolution of the 23rd July 1959. These were again duly published in accordance with the provisions of clause (b) of section 75 of the Sind Municipal Boroughs Act, 1925, on the 28th July 1959, and objections were also invited thereto within a month of the aforesaid publication. No objection was, however, received within the said period. The Municipality, therefore, on the 21st September 1959, moved the Government to accord sanction to the proposed rules and bye‑laws which were also to cancel "the existing terminal tax rules and bye‑laws." In the meantime the Schedule published on the 3rd January 1959, was also sent to the Government for its approval and it was approved on the 6th January 1960 (vide page 53 of the paper book). This was again notified on the 15th January 1960, and was to come into force with effect from the 16th February 1960, (vide page 50 of the paper book). The octroi rules and bye‑laws were ultimately approved by the Government on the 15th February 1960, and these rules were notified on the 7th March 1960, and were to come into effect from the 10th April 1960. It would thus appear that while the octroi Schedule was notified on the 15th January 1960, to come into effect from the 16th February 1960, the rules and bye‑laws were separately notified on the 7th March 1960, to come into effect from the 10th April 1960. The main question, therefore, is as to whether this constituted sufficient compliance with the provisions of the Sind Municipal Boroughs Act, 1925, or whether they required simultaneous publication of both the rules and the Schedule. The procedure for the imposition of a fresh tax under the said Act is laid down in sections 75, 76 and 77 thereof. It is to the effect that the Municipality shall first by resolution select one or other of the taxes specified in section 73 and approve rules prepared for the purposes of clause (j) of section 58 prescribing the taxes selected and in such resolution and in such rules specify the classes of persons or property or both proposed to be taxed, exemptions if any, the amount or rate at which the tax is proposed to be assessed and such other matters which the Provincial Government may require to be specified therein. When such a resolution has been passed the Municipality is required to publish the rules so approved with a notice in the form prescribed in Schedule II prefixed to the rules. By this notice objections are also to be invited in writing. The objections are then to be considered by a Committee which is to make a report thereon and then the notice, the proposed rules, the objections and the opinion of the Municipality thereon are all to be forwarded to the Provincial Government for its sanction. Under section 76 the Provincial Government is given the power to approve the rules with or without modification. It may also refuse sanction or may return the rules to the Municipality for further consideration, but if it grants sanction then under section 77 the sanctioned rules are again to be published by the Municipality together with a notice reciting the sanction and specifying a date, not being less than one month from the date of publication of such notice, from which the tax or duty shall be levied. The High Court has taken the view that the provisions of section 75 have not been complied with, firstly, because the Schedule originally published on the 3rd of January 1959, was merely a schedule to amend "the current rates of terminal tax" and secondly, because in its view the Schedule had to be published as a part of, and along with, the rules, for, "in the absence of the rules the inhabitants of the Municipal Borough could not properly file their objections." Section 75 of the Act is in the following terms:‑ "

75. A Municipality before imposing a tax shall observe the following preliminary procedure: (a) it shall, by resolution passed at a general meeting, select for the purpose one or other of the taxes specified in section 73 and approve rules prepared for the purposes of clause (i) of section 58, prescribing the tax selected, and in such resolution and in such rules specify‑ (i) the classes of persons or of property or of both, which the Municipality proposes to make liable, and any exemptions which it proposes to make; (ii) the amount or rate at which the Municipality proposes to assess each such classes; ‑ (iii) in the case of a rate on buildings or lands or both, the basis, for each class, of the valuation on which such rate is to be imposed; (iv) all other matters which the Provincial Government may require to be specified therein. (b) When such resolution has been passed the Municipality shall publish the rules so approved with a notice in the form of Schedule II prefixed thereto. (c) Any inhabitant of the municipal borough objecting to the imposition of the said tax or to the amount or rate proposed or to the classes of persons or property to be made liable thereto or to any exemptions proposed may, within one month from the publication of the said notice, send his objection in writing to the Municipality; the Municipality shall take all such objections, into consideration, or shall authorise a committee to consider the same and report thereon; and unless it decides to abandon the proposed tax, shall submit such objections with its opinion thereon and any modifications proposed in accordance therewith, together with the notice and rules aforesaid to the Provincial Government. Explanation.‑In the case of lands the basis of valuation may be either capital or annual letting value." Under this section it is no doubt necessary that the rules, must specify the classes of persons or properties or both proposed to be taxed as also the amount or rate of tax proposed for each class but this does not, in our opinion, prohibit the specification of the classes of persons and properties and the rates in a schedule to be attached to the rules, provided the rules specify that taxes will be levied on the persons or properties mentioned in the schedule and at the rates therein mentioned. Normally, the rules and the Schedule would no doubt be prepared at the same time but it cannot be said that under these provisions it is pot possible to frame the rules first and then prepare the Schedule subsequently or vice versa. The main object of this section appears to be that the rate payers must be given adequate notice with sufficient detail in order to enable them to object to the proposed tax or duty. This cannot, it is true, be effectively done unless the classes of persons or properties proposed to be taxed and the rates at which the tax is proposed to be levied are also known. But it does not, in our view, require simultaneous publication of both the rules as well as the Schedule, provided both are published and the rate‑payers are given sufficient opportunity of objecting to them. To make the tax effective, however, both must be published and until both are published the tax cannot be enforced. Indeed the tax can come into force only from the date specified under section 77 after both the rules and the Schedule have been approved by the Provincial Government under section

76. Reading these sections together it appears to us that the do not specify that the rules and the Schedule must be published) simultaneously. These are provisions vesting powers and on general principles whatever can be done as a whole can also be done piecemeal and from time to time. There can be no hard and fast rule that everything must be done at once or not at all. All that is necessary is that the entire process or procedure must be complied with so that the rate‑payers should have had a sufficient opportunity to object both to the rules as also to the Schedule. In the present case, this opportunity was not denied. The Schedule as well as the rules were published in accordance with the procedure provided under this section and in fact as many as 32 objections were received in answer to the notice published regarding the Schedule. The Schedule was published in Urdu and in this publication it was stated as follows:‑ "Chungi" normally means octroi duty, but the learned counsel appearing for the first respondent contends that it may also mean terminal tax and the notice read as a whole indicates that it was the existing "Chungi" schedule which was proposed to be amended. There was no octroi duty levied by the Municipality before the impugned one but there was a terminal tax schedule and reading even the Urdu notice, it is stated, the impression the rate‑payers could gather was that what the Municipality proposed to do was to amend the terminal tax schedule. This, however, as we have already pointed out, was merely a mis‑description, for, it was really on the basis of the draft model octroi schedule that this publication was made and the Government itself when granting sanction described the same as the octroi duty and this it did after considering the objections that were sent along with the letter requesting it sanction. In the final notification under section 77 it was also notified as an octroi duty . In the absence of any evidence to show that any rate prayer was, in fact, misled by this mistake we are unable to agree that the duty should be held to have been illegally imposed. The only dispute now is as to the date from which the octroi duty legally came into force. So far as this is concerned we are clearly of the opinion that it could not have taken effect until the full procedure prescribed by section 75 had been complied with, i.e.. the rules and the schedule had both been published, objections invited, sanctioned by Government and ultimately notified to come into force from a specified date. If the rules and the Schedule were not published simultaneously then this notified date must be the date on which the last publication was made, and the date specified in the later notification will be the relevant date. In the present case sine the rules and bye‑laws were published later and came into force later the octroi duty became effective from the date specified therein, Le., from the 10th April, 1960. Learned counsel for the respondent has also contended that liquor which was liable to excise duty was altogether exempt from octroi duty and has in support of this contention filed a copy of a Memorandum issued by the Government of Sind on the 23rd June 1942, as also a copy of a letter written by the Revenue Commissioner for Sind on the 17th of July1948, to the Deputy Commissioner, Excise Sind, saying that excisable goods were not liable either to octroi duty or to terminal tax, because it was not a subject included In any one of the list in the Seventh Schedule to the Government of India Act, 1935, and as such, unless the Governor‑General by a public notification under section 104 of the said Act empowered the Provincial Government to impose the duty this could not be done. This legislative scheme was, however, changed by the late Constitution, for, under that the residuary powers of legislation vested in the Provinces and not with the Centre by reason of the provisions of Article 109 of the late Constitution. In April 1960, when the present tax came into force the Laws (Continuance in Force) Order, 1958, applied and under Article 5 thereof the Provincial Governor was subject to the directions given to him by the President or by the Chief Administrator of Martial Law, or by any person having authority from him to have the same powers as he would have had under Article 193 of the late Constitution to legislate by Ordinance within the limits laid down by Article 106 and clauses (1) and (3) of Article 102 thereof. By reason of this change the bar imposed by section 104 of the Government of India Act, 1935, was no longer applicable, for, the residuary powers were on the relevant date with the Provinces. This contention is, accordingly, without any force. The fact that the Sind Municipal Boroughs Act, 1925, has now been repealed and the Sukkur Municipality is governed by the Municipal Administration Ordinance, 1900, does not also make any material difference, for, under subsection (2) of section 4 of the said Ordinance any tax imposed under the repealed law shall, so far as it is not inconsistent with the provisions of the Ordinance, be deemed to have been imposed under the Ordinance itself. Octroi duty is a tax leviable under the Ordinance and therefore, it continues to be in force even after the repeal of the Act of 1925. For the reasons given above, we are of the opinion that the octroi duty imposed by the Sukkur Municipal Committee was lawfully imposed after due compliance with the provisions of the Sind Municipal Boroughs Act with effect from the 10th April 1960 and the High Court was wrong in taking the view than there had to be simultaneous publication of both the rules and the Schedule. This appeal is, accordingly, allowed, the judgment the High Court is set aside and the writ issued by it is recalled to the extent it directs the appellants not to charge any octroi duty even after the 10th April 1960. But having regard to the fact that the success is divided we leave the parties to bear their own respective costs. A. H. Appeal allowed.