Holding

The imposition of octroi under section 131(1)(kk) of the Orissa Municipal Act, 1950 is valid and the inclusion of Ektali village within Jharsuguda Municipality is lawful; therefore the appeal fails.

Summary

Bhaskar Textile Mills Ltd., a company situated in the village of Ektali, challenged the Jharsuguda Municipality’s inclusion of the village within its limits and the subsequent levy of octroi duty on cotton. The municipality had extended its jurisdiction through notifications dated 31 July 1973 and 12 August 1975 under the Orissa Municipal Act, 1950, and imposed a 1% ad valorem octroi under section 131(1)(kk). The appellant argued that the inclusion was ultra‑vires because the village remained a Gram Panchayat, the statutory proviso requiring two‑thirds of adult males to be engaged in non‑agricultural work was not satisfied, its objection under section 4(2) was ignored, the octroi was not applicable to goods brought for manufacturing, the rate was unreasonable, and the bye‑laws were not properly published. The Supreme Court held that the proviso to section 4(1) applied only to clause (a) and not to the inclusion under clause (c), that the objection had been considered, that the octroi was valid as the goods were brought for “use”, that the rate was not excessive, and that the bye‑laws were presumed valid under section 392. Consequently, the appeal was dismissed.

Issues considered

The validity of the inclusion of Ektali village into Jharsuguda Municipality under section 4 of the Orissa Municipal Act, 1950.
Whether the statutory proviso to section 4(1) requiring two‑thirds of adult males to be employed in non‑agricultural pursuits applies to the inclusion of the village.
Whether the objection filed under section 4(2) was duly considered by the State Government.
Whether octroi under section 131(1)(kk) can be levied on goods brought into the municipal area for manufacturing purposes.
Whether the octroi rate of 1% ad valorem is unreasonable or violative of Article 19(1)(g) of the Constitution.
Whether the octroi bye‑laws were validly promulgated in accordance with section 392 of the Municipal Act.

Legislation cited

Constitution of Indias. Article 133(1), s. Article 19(1)(g), s. Article 226, s. Article 227
Orissa Grama Panchayat Act, 1964s. 3(1), s. 3(2)
Orissa Municipal Act, 1950s. 131(1)(kk), s. 392, s. 4(1), s. 4(2), s. 4(3), s. 5

Subjects

OctroiMunicipal lawInclusion of areaGrama PanchayatArticle 19(1)(g)TaxationSpecial leaveMunicipal ActConstitutional challenge

Judgment

..
401 A

BHASKAR -TEXTILE MILLS LTD.

,•-· v.
JHARSUGUDA MUNICIPALITY & OTHER.
B
january, fl, !984
[R S. VENKATARMIAH AND .R. B. MISRA; JJ;J

Octroi dufy 1 imposition of-Validitf of-t~e- i~position of Octroi. duty 'under
secfio"n 131(1)(kk) OJ-the Orissa Municipal Aci, 1950 to. a-village constituted as ·a
Grama earlier under Section 3 .of the Orissa Gram P!Afi:hayat Act, 1964_ but la,_ter ,C
included in an.area of a MuniCip'ality under Section 4 of the-1950 Act-Constitution
oflqJfia, 1950, Article 19(1)g. • ' -

The appellant Textile Mills is a COn1pan; duly.incorporated u~der tfe Indi.an'
Companies Act 1956, having its mi~l~ located at ·Village Ektali ui:ider the" Jharsu-
guda police station in distriCt Sambalpur, Orissa. The company mainly carries
D
on. sPinning of Cotton which in the 'Il"Ui.nUfacturing process is. transformed from
IoOse ·fibfes into finished yarll The area undeir the Ektali village 1n which the
appellallt's factory .was located was earlier.OOnstituteci as a Gra~a by a declaration
mad(:~der Section· 3 of the OriSsa Grama Panch3.yat Act 1964.~ .On or about
March 25, 1976 Jha~uguda Municipalit)' passed a resolution· for ·ihe inciusion-
of the Ektali and other villages within ~ts jurisdiction: After considering the objec~
tiOns aad representations aga~nst. the inclusion ·of EktaH viliage in the Municipal E
Limit and after follo\ving once again the othC_r statutory requireriient of furtheF
notice.etc., .·the ·stite 9overnment p~bliscd·.:in the O.rissa Gazette "dated 1i;8.1975
a notification ·aiJl)rovirig. the inclusion. Soon thereafter on September .1. 1975.
the said Jharsuguda M~nicipalitY. sent a-)etter to' the appellallt 'dirdcting. it to .pay
octroi ·d~ty at the rate of .1_ percent ad valorem on cotton as so~n as it entefed
the Municipal check µOst for the purpose of its being spun into yarn;

The l~vy of octroi was challenged b;
:tiling. a ."j,etiti~n under Ar.ts. 226 cind
F
227 of the Constitution ·on Various grounds. but :the writ PetitioO: .was, dismissed.
Petition .seeking :Permission for issu8J?.~ of a ce-rtificate under Article 133(1) of
-- . the Constitution was also dismissed. ·Hence the appeal aftci: phtaining SpeCiaI Leave·
· of the Court. - -
Dismissing the apPeal · the Cou.11.
,G
'. HELD : 1.. cOnSidering fhe case from any -aspect" the imposition of octroi
duty under sOOtion 5 ·of the. Orissa Municipal Act, .1950 does not stiffer from any
infirmity [ 413 HJ ·

2; The levy~ being neither an unrea"so.Oable one nor alsO exeessive, cailnot
- 'he cb~ll~nged on the grourld that there is violation o.f Article 19(1)(g) .of the Con· H
stitution. [4130]- ·
402
..
. S.UPRBME COURT.REEPORTS [1984] . 2.s.c.R,:

3. It is tr.ue that when a duly constituted Grama unde; sub-section (1) of
A Sectio~ 3 of the Grama Panchayat Act is to go out of existence an order of the·
Magistrate cancel_lin,g the Notification in tenns of sUb-section (2) of Section 3 of the
said Act is a pre-requisite. ·But in the instant case the Grain Pallchayat Dever
challellged the No~ification of inclusion of the Village Ektali in Jharsuguda Munici-
palit)'. Rather..on the. other ~and the grain panChayat was -0onsUiteci•before the
fmpugned notifi"¢ation dated 12th August 1975 was issued.' [ 406 H; 407 .Al
B
..
4. ·rhe prOviso. to sub-section 1 of Scctioil' 4 o( the Orissa Municipal Act,
1950 has no application to the present 9ase and th(lt cannot be taken to be a ground
· rO~ging thC.No-tific-ation fo2 inclusion of Village Ektau "in th;JhITTs~gUda ·
•
Municipality.. A bare pcrsUal of the proviso clearly indicates that the requircme.nt
is that t"'.O·thirds of the adult . ,in1l~ population of the- to\v"n ·to which it ;efers should
be engaged in non·agricultural pursuits The proViso applies not to all the caluses
of sU.b-section (1) of sccton.fit.' but it applies only to clau~ (a) of sub·section (1) of
c Section 4, bocause it is clause (a) of·section4 (1) which talks of town. . .
[408 E-Fl ·
5. The contention that the .~bjection"'faised by the appellant agaimfi;fthe
inclu~io2,_ of the. village in qu~sti~n i~to M~nicipality has nOt beei1 consider_ed by •
the Sta~s no ,force. The obJectlon 1S required to be made through. the Magistrate
of the Di~trict. Naturally the District Magistrate. while f0rwarding the objection
to. the State GOvernmerit made his comment. The Revenue Divisional Officer who
D intervenes. in the ch.annal of communication between the District Magistrate-and the
Stat.e Government.had an occasion to process- the n1atter. The ~tate Government
while dealing With·the matter_ consulted the ·panchayai Raj Departrnent and ...ulti-
mately notified in terms of the notification dated August 12, 1975. [408H; 40!lA-Bl
. .
6. Section 131(1} of the Municipal Act e1npower the Municipal Council to
impose various kinds of taxes which includes octroi as provided in Clause (kk)
-
E witli the sanctio~ of the Govern1nent si~ce the.go~ds 3.re brought into the municipal
~limits at· least for the purpose of use" ~ne of the three conditions laid down in
clause(~k· -theimpositionofoctroi is valid.· . .- . . .
Burmah Shell Oil-Storage & Distribution Co. v. The Belga1n.JJ.orough .\1un1c1pal1ty
[1963) Sapp 2 SCR 21~ referred to and held inapplicable. [409 D-EJ·
7:1... T~ere is a statutory presumption under .section 392.of the Orissa Muni-
cipal Act. 1950 that the publication of the rules or regulations or bye laws in the
F Gazette shall be evidence ,that' the rule or regulation or bye law has been. made
as required by the section Therefore the court wiil assu1ne that the· bye Jaw has ·
been made in acCordance with law in the absence of anything inofe f~om the si l
of the appellant.. [410 F-GJ
· · 7:i. The argument th~t · even assuming that tQ.c. bye.:.Iaws yvhen initially
-
eh{orced Might be presumed to be in accordance With law ill the absence of similar
G ~teps being taken at the time of extcrttion of bye laws to the new~y added area, t~e
bye laws are not enforceable in the new areas is not correct as it has, proceeed tn
. utter obliVion of the pfo~isions of secti(Jn S of th Municipal Act. [410 H; 411 A]

Vishakhapatnam:-Municipqlity ~- Kandregu/a Nukarajau & Ors. [1976] ,1 ~-C~R.
544;.Atlas Cycle Industries Ltd. v. State of Haryana and Anr:, [1912] l S.C.R.
· 127; Bagalkot City.Municipality v · Baga/kot Cement, [1963] 2 Supp S.C.R. 710;
distinguished

l
. llHASKAR TEXTILE v.. IHARSUGUDA MUN!CIPALJTY (Misra, J.) · . 403

CJ\\'1r: APPELLATE JuRISDICTION : Civil Appeal No; 487 of 1977. A·
' . ' .
-f Appeal by Special leave from the Judgment and Order dated
. the 5th January, 1977 of the Orissa High Court in O.J.C. No. 810
o( 1976 .. · •

V.S. Desai, Parveen Kumar and A.shok Mathur for the Appellant. B
C. V. Murty, Y. Prabhakar ·Rao and C.'¥. Murty for the Res-
• pondents.·

R.K. Mehta for Respondent No. 3.

-. B.D. Sharma for Respondent No. 2.
. . .
The Judgment of the Court. was delivered by
c

~· MISRA J. The present appeal by special ieilve is directed against
the judgment of the High Court of Orfasa dated 5th January 1977 D
dismissing a petition under Arts. 226 and 227 of the Constitution
for quashing imposition of octroi under s. 131(1)(kk) of the Orissa
Municipal Act, 1950 (hereinafter referred to as .the 'Act') and for .
a declaraiion that the notifications dated 31st July 1973 and 12th
August, 1975 issued by the State Government in exercise of powers
•· ~ vested under s.4 of the Act arc illegal and unenforceable and for a E
further declaration that the Octroi Bye-laws of the Jharsuguda Muni-
.
cipal Council are also void and inoperative.

-.. /~

-¥
• · · Jharsuguda MuniCipality; respondent No. I, is ·a municipality
incorporated under the Act. In March 1962 the. Stat~ Government
·accorded sanction for the imposition. of octrc°i in terms of s.131(1)
of. the. Act. A set of octro( bye-laws were framed by the Municipal
F

Council in terms of s.388 of the Act and the same were also appro.ved
by the State Government in exercise of powers under s.390 of the
Act on 19th March, .1968. Octroi was levied. for the first ·time after
31st March 1962 when the State G~vernment accorded sanction under .
G
sJ3l{i)(kk) of th' Act.

The appellant is a compa~ny duly incorporated under the Indian
Companies Act, 1956 having ·its mi!Js located at viJJagc Ektali under
the Jharsuguda poli.ce station ii) District Sambalpur, Orissa. The
said area of the village was included within the Ektali Panchayat. H
The company mainjy ca.rries on fillinning of cotton which in the manu·
404 SUPREME COURT REPORTS [1984) 2 S.C.R.

. facturing proc.ess is transformed from loose fibres into finished yarn.
A ..
The area under the Ektali village in which the appellants' fa~tory
was located was constituted, along with other viJlages as a Gram by
. a declaration made under. s.3 of the Oris'sa Grama Panchayat. Act, .
1964.. On or ab0ut. 25th Much, 1970 Jharsuguda Municipality'.
passed a resolution for the inclusion of Ektali and other viilages in
B
the· Jharsuguda Munfcipality and t.hus extending the area of the said . ·
Munic'pality. Against the proposed extension t.he ·appellant made •
a r.epresentation to the ·state Goveniment inter alia on the ground
that the said village Bkta!i could not· und.er the relevant rules be
included in the Municipaiity under s.4(I)(c) of the Orissa Municipal
c 1 Act; 1950 in view of the proviso to s.4(1) which contemplates that a

declaration shall not be made under this,sub-section unless the State·
Gove.rnment.~re satisfied tha1 !wo-thi.rds ofthe ad,ultmale population
of the town to which it refers are chiefly employed in pursuits other
·than agriculture and that .such a town contains not less· than· 10,oOO ·
·-
•

inhabitants· and an average number of not less than 1000 inhabitants ..
to a square mlle of the area of such a town: The. appeliant alleged
that the male population of the ;aid village Ektali was 2640 as. per
1971 census report; out of which only 1586 were cniefly employed
- in pursuits other than agriculture and th~s twc-thirds of such male
population were not employed in non-agcicultural pursui5s. ·

E · : The State Government,. however, by a notificafon dated 31st·
July 1973 dedarcd their intention under s.4(I)(c) of the Municipal
Act, ·1950. t·1 include withi11 the Jharsuguda Mu~icipality, the local

F
area of a number of viilages including the village· Ektali. By the said •
notification published in Orissa .Gazette Extraordinary dated 22nd
August,· 1973 tlle Gov~rnment iilvited obj~ctions within_ six week$
from the date of pubiication. - The appellant did. file objection to.
: the said notification. Objection was also filed by Grama Panchayat
·-
of__Ektali. to. the effect that the ·Ektali Grama was duly constitutted
by the State .Government in Com1nunity Development and Panchayat ...
Raj Department in exercise of powers under s.3(1) of the Orissa Grama .
P~nchayat Act and in the absence of any notification µnder s.3(1)
G and s.149 of the Grama Panchayat Act, village f\ktali .still continues
to be a Grama. · · j

•
The objections were examined by the District Magistrate,
'Sambalpur and the Revenu~ Division Commissioner.Northern Divisio'n,
H Sainbalpur an<j the'.same were rejected.· On 12th August, . 1975e,
notification :under s.4(3)(b) declaring the•inclusion. of the said vj1!agsa
.
BHASKAR. TEXTILES v. JHARSUGUDA MUNJCIPAUTY (Mirsa, J.) 40?

including the villa~e Ektali, into Jharsuguda Municipality was iSsued. A
. Sooil thereafter on 1st 'September, 1975 the said Jharsuguda' Munici-
- . '1 pality sent 'a letter to the appellant directing it t<; pay octroi as per
provisions of s.5 of the Orissa Municipal Ac.t.. · Tie said octroi was
payable at the rate· of 1 per.cent_ ad-va!tJ1:em on cotton as soon as it
entered the municipal check-post for· the purpose of its being spun.
into yarn. B
'. The levy of octroi duty was challenged_ by filing a petition -under
Arts. 226 and 227 of the Constitution ·0•1 various grounds viz.,(a} the
inclusion. of village Ektali in the area of Jharsuguda Municipality
was illegal and ultra. vires' the proviSions of the Orissa M~niCjpal

- A~t, and (b) the levy of octroi duty at the rate of 1. per cent ad valorem
was arbitrary, coercive~nd violative of Art. _301 of the Constitution·
·:and, therefore, the appellant prayed for. quashin.g the nctification.s
referred- to above·.
c

The writ petition was, however, dismissed by. a .Division Bench
of the Orissa High Court hy it_s o.fder _dated 5th January, I 977. The D
appellant filed an application under Art: 133(1) of the Constitution
for the grant of a certificate-for leave tc appeal to this Court, which
was dimissed by the High Courr by its order <lated 19th January,
1977._ The appellant has_ now filed the-present appeal after obtaining
special leave from this Court. • ·
' .... E
.. The learned counselforthe appellant raised the following con-
tentions : · · ·

I. In·the absence ofa notification canceiling the declaration
constituting Ektali village. as part of Grama, it was not··
legally permi.ssible · for t.he. State Government acting .F
Under the·Onssa Municipal Act 1950 to include within
the area of the municiphlity the area of the said Grama .

. 2. · Themandator;' requ.irements of proviso to:sub-s.(J) of sA ·
of the Orissa Municipal Act, 1950 have pot been satisfied.
G
3. The objectio1; filed by the appellant uiider sub-'s.(2) of
s.4 has not been considered by the State ~vernment.
•·
4. (a) The li~bility to .ocfroi arises when any of the three
alternatives mentioned in s.Bl(l)(kk) of the Munici- H.
pal Act is satisfied viz., wlien, the, goods are brought·
....
406 SUPREME ·CClURT REPORTS [1984] 2 s.c.R.
A within ·the mu\1icipal limits f9r (i) consumption,
·.
.•
(ii) use, or (iii) sale .

(b). Th!!' tax alre.11dy imposed within the limits of the
Municipality oj Jharsuguda could riot be ·automati- ..
cally made ·applicable to the extended limits of the -
B • municipaiity without obtaining the sanction of.the
State Governm'ent under s.131(1) (kh) of the Act.

(c) ·The rate leviediis per se unreasonable an'a arbitrary.
..
1
We take up th ese grounds seriatim. . . . ·.

c Admittedly village Eki:lli where. the facto~y of \he appellant is
located was a part of the d1:1ly constituted Ektali Orama Panchayat
prior to 1973, within the meatffng of s.3 of the Orissa Orama Panchayat
Act.· Sub-section (1) of. s'.3 authorises· the State Government to
constitute any village. or gro1'.1p of contiguous villages as a Orama by
. ,,;

-
a. declaration notified in the C)iazette arid assign to such Gram·a a name
D which shall be of one of the ·villages. comprised w.ithin the· Grama.
Sub-section (2) of s.3 provi~es that· whenever the State Government
deems it fit so to do, they rr:.ay cancel any notification in respect of a
Orama under sub-s.· (l)'or rnay alter the area co"mpriscd in a Orama
. by. reducing. or adding to t'he number of villages comprised within
·s.tich Orama by a dec!aiation notified in the Gazette constituting
E such· altered area or areas ~s a· Orama or Gramas, as the case may
be. ·

The. precise contentioi1 raised on behalf of the appellant is that
there was a declaration b}· notification for the constitution of th_e
Orama within the meaning!of sub-s.(I), but there has been.no notifi-
F
cation as tequired by sub-s'.(2) of s.3 for
taking village Ektali out of
.Grama panchayat and, therefore, vi'llage Ektali continues to be a
Orama and the inclusion o!' village. Ektali in Jharsuguda Municipality
by notificati'ons dated 31st July, 1973 and 12th· August; 197) will have

G
no. effect.
.. · ·

This contention has' considera bie force. When a duly cons-
tituted Orama is;,o go out ofexiste~ce an order pf the Magistrate
cancelling the notification ,i11 terms of ~ub-s.(2) of s.3 of the Grarria
Panchayat Act is necessar:( But there are circumstances whkh take
H away the force of the argument. The Orama Panchayat never
chaHenged .the notijication of mclusion of the village ·Ektali in
Jhar-
#

•
BHASKAR TEXTILE v. JHARSUGUDA MUNICIPALITY (Misra,!.) 407
'
suguda Municipality. From un-controverted averment made in A
para 6 of the counter-affidavit of the State filed before the High Court
it appears that the Gra;,,a Panchayat was consulted befote the impu-
gned not'fication. Therefore, we do not feel persuaded to accept
the contention at the instance of the appelJant. This leads us to
the second ground.
B
In order to appreciate the second ·ground it is appropriate at
this stage to refer t<i the provisions of s.4 in so far as it is relevant for
the purposes of the case :

"4.(1) The State Government may, by notification declare
their intention- c
(a) to constitute any town, together with, or exclusive of,
any railway station, village, land or building in the
vicinity of any such town, a municipality under this
Act; or
D
(b) ................................................. .

(c) to include within a municipality any local area .contiguous
to the same and defined in the notification ; or
E
(d) ............... .

/~ (e) ............... .

(f) .............. .. •
F
' (g) .............. ..

• (h)

Provided that a declaration shall not be made under
this sub-section unless the State Government are satisfied G
that two-thirds of the adult male population o( th_e town to
which it refers, are chiefly employed in pursuits other than
agricultural. and that such town contains nor less than ten
thousand inhabitants and an average number of not less
than one thousand inhabitants to the square mile of the area H
of such town.
!.

408 SuPREME COURT REPORTS • , . [1984J2.s.c.R ..

A (2) Any inhabitant of the town or local area, or any,,
.· · rate-payer of the rnimicipality, in respect of which an~,·:
' such notification has been- published urider sub-section (1) . ·
·may, if he ~bjects to anything contained in the notificatfo~ •.
· submit his objection in writing to the State Government,,:
through the Magistrate of the district within six weeks from,
B: . the date of the publication of the notification and the State.
Government shall take his objections into consideration .
.'
(3) ........ "

· . The emphasis of the appellant is .that two-third of the aduh ,.--..'<
male popu)ation 'or the Grama sho'uld be ch.iefly employed in pursuits · j ,
·other than agricultural. The appellant has referred to 1971 census
· · figures,.: On the basis or' these cerisus figures it is argued that out of . ,
the.total male population of 2640 of Grama Ektali only 1586 adults
were.engaged in non-agricultural pursuits but the requirement of law
was that two-third of the male population should have been employed 'P
in the non-agricultural pursuits, which. comes to 1760.

··· The argument ·proceeds on the ass~ption· that the proviso to
' s.4(1) applies. 8ut a bare persual of the proviso clearly indicates.
that the requirement is that two-thirds of the adult male population
of the town to which it refers should be engaged in non-agrlculturar · ""
pursuits. The proviso, to our mind, applies not to all the clauses of >
sub-s.(I) of s.4 but it applies only to cl.(a) of sub-~.(!) of s.4, because
it is cl.(a) of s.4(1) which ta1ks of town. Therefore, the proviso, in ,.;_
our opinion, has no application to the present case and that ean~ot f"..)
be taken to be a ground for challenging the notification for inclus10n
of village' Ektali in the 1harsuguda Municipality. This takes ·us to
Fi the third ground.

'The appellant had filed an objection under sub-s'.(2) of s.4. The
said objection was examined by the District Magistrate, Sambalpur
and the Revenue Divisional Commissioner fNorthern Division),
Sarnbalpur: They over-ruled the objection treating it to be of general
nature. Thereafter, the Community Development and the Panchayati
Raj· (Grama Panchayat) Department were consulted to agree with
this proposal, to which they agreed, and it was thereafter that the
•
Urban Development Department issued a final notification dated
12th August, 1975 to include the above village into the municipal
H '' limits -0f 1harsuguda .Municipality. The contention of the appellant
that the objection had not been considered by the State Government

I
BHASKAR TEXTILE r. JHA.RSUGUDA MUNICPALITY (Mirsa, J.) 409
.
cannot be accepted in as mnch as the objection is required to be made A
through the Magistrate of the district. Naturally, the District
M1gistrate while forwarding the objection to the State Government
made his comment. The Revenue Divisional Commisioner inter-
venes in the channel of communication between the District Magistrate
and the State Government and he, therefore, had an occasion to
process the matter. The State Government while dealing with the B
• matter consulted the Panchayati Raj Department and ultimately
.... . · notified in terms of notification dated 12th August, 1975. In the
c·ircumstances it cannot be accept~d that the objection filed by the
. '(~appellant had not been considered by the State Government.

• It was next contended that the liability for qctroi arises when c
any of the three alternatives mentioned in s.13l(l)(kk) of the Muni-
cipal Act are satisfied, namely, when the goods are brought within
the.municipal limits for (i) consumption, (ii) use, or (iii) sale. Section
131(1) of the Municipal Act empowers the Municipal Council to
impose various kinds of taxes within the limits of the Municipality
with the sanction of the State Government. One of the taxes con- D
templated by s.313 (!) is octroi, .as provided in cl. · (kk).
According to the appellant the .goods are brought into the
municipal area not for the purpose of sale or for consumption but for
the purpose of manufacture of yarn. The appellant took support
from Burm2h Shell Oil Storage & Distribution Co. India Ltd. v. The
Belgam Boro2f;h,Municipa/ity 11 l in which this Court had an occasion E
to consider the word 'consumption'. This Court took the view that
the word 'consumption' in its· primary sense means the act of con-
suming and in ordinary pariance means the use of an article in a way
which destroys, wastes or uses up that article, but in some legal con-
texts, the word 'consumption' has a. ·wider meaning, and that i.t is
not necessary that by the act of consumption the commodity must be F
destroyed or used up. On the strength of this authority it is con-
• tended that the goods were brought into the municipal limits neither
. for consumption, nor for sale. Assuming the contention to be correct1,
there is no escape from the conclusion that the goods are brought
into the municipal iimits at least for the purpose of use. In this view
of the legal position the imposition ··of octroi by' the Municipality G
•
cannot be challenged on this ground.

The next ground of attack is based on s,372 of the Orissa Muni-
cipal Act. Section 392 pertinently reads .: ..
H
{I) [1963] Supp. 2 S.C.R, 216 .
•

l
'
410 SUPREME COURT REPORTS [1984] 2 S.C.R.

A "392. The State Government before making any rules
under sub-section (2) of section 81 and section 387, and a
municipal council, before making any regulation or by-laws
under section 388, shall publish, in such manner as the State
Government deem sufficient for giving information to persons
interested, the proposed rules or regulations or by-laws
B together with a notice specifying a date on or after which
the same will be taken into consideration; and shall before •
making such rules or regulations or by-laws, receive and
consider any objection or suggestion which may be made
by any person with respect to the same before the date so
•
c
specified.

Every such rule or regulation or by-law shall be published
in the. Gazette in English and in Oriya and such publication
-
shall be evidence that the rule or regulation or by-law has
been made as required by this section." ~

D It is· contended tliat the mandatory requirements having not
been complied with the imposition of octroi is vitiated on this account.

The appellant in para 3 of the Writ petition had alleged that
the bye-laws were not published in the State Gazette either in Oriya
or in Englis]1. This allegation has, however, been controverted
E
by the State Government in para 18 of the counter-affidavit. It was
specifically averred that the bye-laws were approved and ·confirmed
by the Government in Urban Development Department vide order
No. 1903/Legis-43-67/UD dated. nill published in. Orissa Gazette
for information of the general public on 23rd May, 1969 at pages 691
to 697. There is a statutory presumption under s.372 of the Act
F
that the publication of the rules or regulations or by-laws in the Gazette
shall be evidence that the rule or regulation or bye-law has been made
as required by this section. Jn view of this statutory presumption
the Court will assume that the bye-law has been made in accordance
with law in the absence of anything more from the side of the appel-
G lant.

As a second limb to this argument it was contended by the
app·ellant that even assuming that the bye-laws when initially enforced
might be presumed to be·in accordance with law, in the absence of
H similar steps being taken at the time of extension of bye-laws to the
newly lidded area, the by~-laws are not enforceable in the new area.

I
J

I
BHASKAR TEXTILE v. JHARSUGUDA MUNICPALITY (Mirsa, J.) 411

This argument has proceeded in utter oblivion of the .provisions of A
..., s.5 of the Municipal Act. It reads :
-1 .
"5. When any local area is jncluded in a municipality,
by a notification under clause (b) or (c) of sub-section (3) of
section 4, all the provisions of this. Act and of any rules,
by-laws, notifications, or orders made thereunder, which B
immediately before such inclusion were in force tl1roughout
, such municipality, shall be deemed to appli to such area,
• unless the State Government, 111 and by the notification,
otherwise direct."

.c The learned counsel for the appellant, however, has placed
strong reliance upon Visakhapatnam M¥nicipality v. Kandrequla
c
Nukaraju & Ors. 11 ' In that case the question that fell for considerac
· tion was whether the property tax which could lawfullv be levied
under the Dis.trict Municipalities Act 1929 can be levied after the
repeal of that Act, on property situated in the areas included within the
municipal limits after the constitution of the municipality. Section D
391(1) of the Andhra Pradesh Municipalities Act 1965 expressly
repealed the District Municipalities Act, 1920 from which it must
follow that ordinarily no action can be taken under the Act of 1920
after April I, 1966 when the repeal became effective on the coming
~ ... into force of the Act. It was, however, contended in that case that
cl. 12 of Schedule 9 of the Act keeps the repealed enactment alive E
for tax purposes and, therefore, the municipality had the authority
. to impose the property tax under the Act of J920 notwithstanding
.\il its repeal by the new Act. This Court, however·, took the view that
·" ~the provisions contained in the Schedule ~re of a transitional nature.
They were intended to apply during the period of transition following
upon the repeal of old municipal laws and the introduction of the F
~ ..- new law. The object of clause 1~ of Schedule 9 was to authorise the
levy of taxes which, on the commencement of .the Act, were levied
' • 'under the repealed laws. This Court further added that the muni.-
cipality might have been levying property tax since long on properties
situated within its limits, but until April I, 1966 the villages of Rama-
krishnapuram and Sriharipuram were outside those limits. Qua the G
areas newly included within the municipal limits, the tax was being
• imposed for the first time and ·therefore it was incumbent on the·
""' municipality to follow the procedure pres~ribed ]ly the first proviso
to section 81(2). Residents and tax payers of those areas never had
H
(!) [1976] I S.C.R. 544.
412
•
SUPREME COURT REPORTS [1984} .2 S.C.R.
A an ~pportunity to object to the i~position of the tax and that valua-
ble opportunity cannot be denied to them. It i's obligat~ry upon the
municipality not only to invite objections· to the proposed tax but
also to· consider the objec;tions 'received by it within the specified
period.

B For the State, however, reliance was placed in that case on
s.3(4) of the Act to contend that the inclusion of the two villages
within the municipal area attracts of its· own force every provision
of the Act with effect from the date on which the final notification is
published by the Govero,ment under s.3(3). In support of this con: '
tention it cited the decision of this Court in Atlas Cycle Industries
c Ltd. v. State of Haryana & Anr. (ll This argument on behalf of thtf )'
State was, however, repe!Jcd and the Court observed : ,

"Far from supporting the argument, we consider that
the decision shows how a provision like the one contained
in Section 3(4) cannot have the effect contended for by the
D appellant. In the Atlas Cycle case, section 5(4) of the
Punjab Municipality Act, 1911 provided that when any local
area was included in the municipality; "this Act and ... all
rules, bye-laws, orders, directions and powers made, issued
or conferred under this Act and i.n force throughout the
whole municipality at.the time, shall apply to such areas."."
E
But this Court took the view that since section 5(4) of the Punjab
Act did not, significantly, refer to notifications and since section 62(1)
of the Punjab Act spoke of "notification" for the imposition of taxes, ..t.,
it was not competent to· the municipality to levy a.nd collect octroi f ·
from the company on the stre11gth '!lerely of. the provision contained
in s. 5(4) of the Punjab Act. That case, however, is distinguishable
and cannot be of much assistance for solving the problem before us.
Section 5 of the Orissa Municipal Act makes all the provisions of the ~
-
Act and of any rules, by-laws, notifications, or orders made there-
under which immediately before· such inclusion ·were in force •
G throu~hout such municipality, applic~ble to such area, unless the
State Government, in and by the notification, otherwise direct. This •
section, therefore, includes not only the provisions of the Act, rules
and bye-laws but also includes notifications. This distingnishes the
present case from the Visakhapatnam Municipality's case (supra).
ff,
(I) [1972J I S.C.R. 127.
.'I.

... ''.BHASKAR TEXTILE v. -JHARSUGUDA MUNICIPALITY (Mirsa. J.) . 41J .•

- For the· appellant, next reliance was pl.aced upon Bag~!kot City
Municipality v. Bagalkot Cement.<" In that case also at the time o(
the imposition of the octroi duty the respondent's factory was situat.ed .
outside the municipal district and w:is not subject to the ectroi duty.
·Subsequently, the Government extended 'the municipal district so
A

that. t\1.e _factory ca.me to be included within that district. The appel-
lant ii1that case contended that upon such extension its octroi limits ..
also stood extended to include the factory and the respondent became
liable to pa.y octroi dnty in respect of goods brought into the factory.
The majority view was that the expression "municipal district" in
_the bye-law referred to the municipal district as existing when the
bye-law was framed. The context preventea ·the definition. of
· ·"mnnicipal district" in. the Act, naniely, the municipal district as c
from time to time existing from being applied und0-r s.20 of the Bombay
General Clanses Act to interpret the bye-law. The bye-law had been
made without being published to the respondent, and if it was so read
referring to the municipal district from time to time existing it would
be invalid for non-compliance with the provisions of s.48 of the Act.
this case again is distinguishable in view of the wording of s.5 of the D
Orissa Municipal Act.
'
Lastly it is urged that the octroi duty levied in this case by the
Municipality is unreasonable and excessive.· The Municipality is
required to provide certain amenities not only for the permanent .:E
residents within the municipality, but also even for .casual visitors
who may on occasions enter the limits of the . municipality. The
entry of large quantities of goods within the municipality almost daily
I
; from outside necessarily creates innnmerable problems such as pro-
visions .of water supply, lighting facilities, facilities for conservancy,
sanitation, maintenance of good roads and markets etc. which the . F
Jharsuguda Municipality has done and theie is no allegation to the
contrary by .tlie appellant. From the material placed before us we
are of the view that the levy is not an nnreasonable one. It is not
• also excessive. The imposition qf .octroi cannot, therefore, be
challenged on the ground that there is violation of Art. 19(1)(g) of
.. the Constitution. G

• Considering tlie case from any aspect the imposition of octroi
duty, in our opinion, does not suffer from any infirmity.
H
(!) (1963] Supp. I S.C.R. 710.
414 SUPREME COURT REPORTS [1984] 2 s.c.R.

A For the foregoing discussion the appeal cannot succeed. It
is accorrungly dismissed. In the circumstances of the case, h.owever, ]
we allow the parties to bear their own costs. ~ ,

S.R. Appeal dismissed.
B

,..
. '

. •

•