MUNICIPAL BOARD, BAREILLYversusBHARAT OIL COMPANY AND ORS.

                     MUNICIPAL BOARD, BAREILLY
A                                       V.
                   BHARAT OIL COMPANY AND ORS.

                             DECEMBER 4, 1989

B             [K.N. SAIKIA AND M. FATHIMA BEEVI, JJ.]

          U.P. Municipalities Act 1916/U.P. Municipal Account Code
     1925/U.P. Octroi Rules, 1925: Section 128/Chapter X/Rules 131-
     231-0ctro'i-c-Levy of on mineral oil-Permissibility of.

          The appellant is a Municipal Board governed by the provisions of
c   the U.P. Municipalities Act, 1916. Section 128 of the Act provides for
    imposition of taxes by the Board. In exercise of the powers under Sec-
    tions 131 to 135 and 296 of the Act, the Government of the United
    Provinces framed octroi rules. The said rules were included in the
    Municipal Account Code (Chapter X rules 131 to 231). The proviso to
D   Rule 13l- provided thaf octroi shall not he levied on certain articles
    which included mineral oil. The rule was amended vide notification
    dated the 2nd November 1953 and for the words "the mineral oil" in
    the proviso, the words "mineral oils classified as motor spirit, kerosene
    or diesel oil" were substituted.

E         Separate rules for the assessment and collection of octroi in the
    Bareily Municipality were framed by the Govt. of U.P. The draft rules
    were notified vide notification dated the 16th February 1963. Final
    rules were notified vide notification dated the 7th May 1963 and
    published in U.P. Gazette dated the 11th May 1963. By a notification
    dated the 24th July 1963, published in U.P. Gazette dated the 3rd
F August, 1963, the appellant Board imposed octroi duty on goods and
    animals brought within the Q\'lroi limits of Bareily Municipality for
    consum1>tion, use and sale at the rates shown in the Schedule subject to
    certain exceptions mentioned therein. The said notification'cal!!l'.\into
    operation from November 16, 1963 and thereafter the levy of octroi in
    Bareily Municipality was governed by 1963 rules. The amendments
G were made in the octroi schedule both in the rates as well as in the
    exemption and as a result whereof motor spirit, kerosene and diesel oil
  · were removed from the exemption clause and were subjected to the
    octroi duty @ I paisa per liter vide notification dated August
    27, 1969.

H          The respondents challenged the validity of the notification dated

                                       376
                MUNICIPAL BOARD v. BHARAT OIL CO.                     377

the 27th August 1969 by means of a writ petition before the High Coun
                                                                             A
on the ground that 1925 rules took away the power from all Municipal
Boards to impose octroi duty on mioeral oils and until such power is
restored under a contrary notification issued under section 128 of the
Act, the Board did not have any justification to assess or collect octroi
duty on mineral oils. The appellant Board contended that Rule 131 was
superseded by the 1963 rules which now governed the imposition of            B
octroi by the appellant Board. The single Judge of the High Court who
heard the petition came to the conclusion that Rule 13 l restricted the
power of the Board to impose the octroi and the subject-matter of the
rule was not covered by the 1963 rules. The appellant's appeals prefer-
red before the Division Bench were dismissed which took the view that
the bar under Rule 131 regarding the imposition of octroi duty on
mineral oils continued notwithstanding the 1963 Rules. Hence these           c
appeals by the Municipal Board.

      Allowiog the appeals, this Court,

      HELD: The rule making power under section 296 read with Sec- D
tion 300(2) Of the Act enables the State Government to except any one
municipality from the operation of the general rule by express provision
in that behalf. When the identical authority in exercise of its rule mak-
ing power duly frames the rules in respect of the same matter expressly
providing that the new rules shall apply to a particular municipality in
supersession of the existing rules, it must be deemed that existing rules E
are repealed.to that extent. [384C-DJ

      The 1963 rules had been framed under Section 296 of the Act in
supersession of the existing rules after the publication by the State
Government, in the Gazette as provided under Section 300 and there-
fore rule 131 in the 1925 rules ceased to have any operation in respect of   F
the matters dealt with therein so far as the Bareilly municipality is
concerned. 13840]
     Mir; Central Distillery Chemicals Works Ltd. & Ylnr. v. State of
U.P. & Ors., [1980"] All L.J. 62, approved.
       Municipality of Anand v. State of Bombay, AIR 1962 SC 988;            G
Municipal Board, Hapur v. Raghuvendra Kripal & Ors., [1966] l SCR
950; Moo/ Chandv. Municipal Board, Banda, AIR 1926 All. 517; Zaver-
bhai Amaidas v. The State of Bombay, [1955] I SCR 799 and The Muni-
cipality of Anandv. State of Bombay, (1%2] 2 Supp. SCR366, referred to
     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 993
                                                                             H
& 994 of 1976.
    378         SUPREME COURT REPORTS                [ 1989] Supp. 2 S.C.R.

A        From the Judgment and Order dated 16.9. 1974 of the Allahabad
    High Court in Sp!. Civil Appeal Nos. 622 & 623 of 1972.

          R.K. Virmani for the Appellant.

          M.V. Goswami and S.S. Khanduja for the Respondents.
B
          The Judgment of the Court was delivered by

          M. FATIDMA BEEVI, J. I. These two appeals by special leave
    are filed by the Municipal Board, Bareilly, against the judgment of the
    Allahabad High Court quashing the Gazette Notification dated
    August 27, 1969 amending the octroi schedule of the Bareilly Munici-
C   pality so as to impose octroi on "mineral oil".

           2: The respondents Bharat Oil Company and others filed writ
    petitions under Article 226 of the Constitution of India challenging the
    notification on the ground inter alia that the appellant, the Municipal
o   Board Bareilly (hereinafter referred to as 'the Board') had no autho-
    rity to impose octroi on mineral oil in view of the proviso to Rule 13 I
    of the octroi Rules contained in the U .P. Municipal Account Code,
     1925. This was countered by the appellant stating that the R. ltH was
    superseded by the 1963 rules which govern the imposition of octroi by
    the appellant Board. The Single Judge in allowing the Writ Petitions
B   took the view that R. 113 J~estricted the power of the Board to impose
    the octroi and the subject-matter of the rule is not covered by the 1963
    rules. The appeals preferred were dismissed by the Division Bench of
    the High Court agreeing that the bar under R. l3 t 1regarding the
    imposition of octroi duty on mineral oils continued notwithstanding
    the 1963 rules.
F
          3. The appellant is a Municip~l Board governed by the provi-
    sions of the U .P. Municipalities Act,' 19 \61(hereinafter referred to as
    'the Act'). Section 128 of the Act provides fur imposition of taxes by a
    Municipal Board. The relevant part of the said section reads as under:

G               "128. Taxes which may be imposed ( 1) Subject to any
                general rules or special orders of the State Government in
                this behalf, the taxes which a board may impose in the
                whole or any part of a municipality are-

                   (i) x                         x                         x
H
MUNICIPALBOARDv. BHARAT OIL CO. [M. FA1HIMABEEVl,J.]                  379

            (viii) an octroi on goods or animals brought without the
                   municipality for consumption, use or sale therein."       A

      4. Sections '131 to 135 of the Act contain provisions relating to
the framing of proposals for the imposition of taxes by the Municipal
Board, inviting objections to the said proposal, the approval of the
said proposal by the State Government, the framing of rules by the           B
State Government on the basis of such proposals, under Section 296 of
the Act and for the issue of a notification about the imposition of tax
from the appointed date.      ·

      5. Section 153 of the Act provides that assessment and collection ·
of taxes and other matters relating to taxes may be regulated by Rules.
Section 296 empowers the State Government to make rules in respect c
of matters described in Section 153.

     6.· In exercise of the powers under Sections 131 to 135 and 296 of
the Act, the Government of the United Provinces framed octroi rules
which were published vide notification dated the 25th October, 1925.         D
The said rules are included in the Municipal Account Code (Chapter X
Rules 131to231) published by the Government ofU.P.

      7. Rule 131 provided that subject to the exceptions contained in
the proviso octroi may be ordinarily levied on commodities included in
the list set-out in the said rule. The proviso to this rule stated that      E
octroi shall not be levied on certain articles which included mineral oil.
Rule 131 was amended vide notification dated the 2nd November,
 1953 and for the words "the mineral oil" in the proviso the words
"mineral oils classified as motor spirit, kerosene or diesel oil" were
substituted.                                              •
                                                                             F
      8. Separate rules for the assessment and collection of octroi in
the Bareilly Municipality were framed by the Government of U .P. in
exercise of the powers conferred by Section 296 of the Act. The draft
rules were notified vide notification dated the 16th February, 1963 and
published in the U .P. Gazette dated 23rd February, 1963. The said
notification reads as under:                                                 G
            "No. -89-B/Xl-C-129-60. The following draft .of the rules
            for the assessment and collection of octroi in the Bareilly
            Municipality, in supersession of the existing octroi rules
            contained in the Municipal Account Code in so far as they
            apply to the said municipality, which the Governor of Uttar      H
        380         SUPREME COURT REPORTS               [ 1989] Supp. 2 S.C.R.

                   Pradesh proposes to make, in exercise of the powers con-
    A              ferred by Section 296 of the U.P. Municipalities Act, 1916
                   (U .P. Act No. II of 1916), is published as required by sub-
                   section (I) of section 300 of the said Act_ for the informa-
                   tion of all concerned with a view to invite objections and
                   suggestions in respect thereof'.
    B
             9. Final Rules were notifed vi de notification dated the 7th May,
        1963 and publishd by the Government in the U.P. Gazette dated the
        11th May, 1963 as required under S. 300 of the Act.

               10. By notification dated the 24th July, 1963 published in the
        U .P. Gazette dated the August 3, 1963 the appellant Board imposed
    c   octroi duty on goods and animals brought within the octroi limits of
        Bareilly Municipality for consumption, use and sale at the rates shown
        in the schedule to the said notification and subject to the exceptions
        contained therein. Item 29 of the exceptions contained in the schedule
,       related to "mineral oils" classified as motor spirit, kerosene and diesel
    D
        oil. The said notification came into operation from November 16,
         1963. Thereafter the levy of octroi in the Bareilly Municipality was
        governed by 1963 rules. The amendments were made in the octroi
        schedule both in the rates as well as in the exemption and as a result
        thereof motor spirit, kerosene and diesel oil were removed from the
        exemption clause and were subjected to the octroi duty @ 1 paisa per
        litre vide notification dated August 27, 1969.
    E
               11. The validity of the notification dated the 27th August, 1969
        was challenged before the High Court in the Writ Petitions Nos. 1805
        and 4696 of 1970 by respondents on the grounnd that 1925 rules take
        away the power from all Municipal Boards to impose octroi duty on
        mineral ,oils and until such power is restored under a contrary notifica-
    F
        tion issued under Section 128 of the Act, the Board did not have any
        justification to assess or collect octroi duty on mineral oils.

              12. The impugned judgment proceeded on the basis that Rules
        131 to 133 of the 1925 rules have been made by the State Government
        in exercise of the powers conferred upon it by the opening words of
    G
        Section 128(1) and they are not rules under section 153 for the assess-
        ment and collection of octroi. It was also held that the subject-matter
        of these rules is not covered by the 1963 rules and, therefore, the 1963
        rules cannot supersede R. 131 of the 1925 Rules. A Full Bench of the
        Allahabad High Court in Mis Central Distillery Chemicals Works Ltd.
    H   & Another v. State of U.P. & Others, l 1980] All L.J. 62 following the
MUNICIPAL BOARD v. BHARATOILCO. (M. FATHIMABEEVI,J.]                    381

decision of this Court in Municipality of Anand v. State of Bombay,
A.l.R. 1962 SC 988 ovrruled the impugned decision holding that the             A
special rules which are in relation to a particular tax and a particular
Municipal Board will override or supersede the general rules framed
by State Government under Section 153 read with Section 296. The
appellant's learned counsel relied on the Full Bench decision and
maintained that the rules framed by the Board prevail over the rules           B
contained in the Municipal Account Code and the notification is,
therefore, valid. In our view the approach made by the Full Bench of
the High Court in Mis Central Distillery Chemicals Works Ltd. v. State
of U.P., (supra) is correct and has to be approved.

       13. As pointed out by this Court in Municipal Board, Hapur v.
Rqghuvendra Kripal and Others, [1966J I SCR 950 taxes raised by a              c
local authority are not imposed by it as a legislature but as a delegate
of the legislature. The tax is valid one if it is one of the taxes the local
authority can raise and the delegate imposes it in accordance with the
conditions laid down by the legislature. The taxes that can be raised in
exercise of delegated power are predetermined and procedure is                 D
prescribed by the Municipal Act. Thus Section 128 of the U .P.
Municipalities Act confers on the municipalities in the State the power
to levy taxes enumerated thereunder. The power conferred is not
absolute but is subject to any general rules or special orders of the
State Government in this behalf. Section 128( I) does not confer any
independent rule making power. The general rules referred to in that           E
Section can only be the rules in the matter of such levy specified in
Section 153 of the Act and framed in exercise of the power under
Section 296 of the Act. The State Government is empowered under
Section 296 to make rules consistent with the Act in respect of matters
described in Section 153. Rules framed under Seeton 153 constitute
the exclusive machinery for assessment and collection of taxes. The            F
relevant part of Section 153 reads as under:

            "153. Rules as to assessment, collection and other matters.
            The following matters shall be regulated and governed by
            rules except in so far as provision therefor is made by this
            Act, namely:                                                       G

            (a) the assessment, collection or composition of taxes,
            and, in the case of octroi or toll, the determination of octroi
            or toll limit;

                                                                               H
            382         SUPREME COURT REPORTS               [1989] Supp. 2 S.C.R.

                       (f) any other matter relating to taxes in respect of which
        A
                       this Act makes no provision or insufficient provision and
                       provision, is, in the opinion of the State Government
                       necessary."

            In prescribing the procedure for the impositon of taxes by the board,
        B   Section 131 of the Act requires the board while framing the proposal to
            prepare a draft of the rules which it desires the State Government to
            make in respect of the matters referred to in Section 153 and publish
            the same. When the proposals have been sanctioned the State Govern-
            ment makes the necessary rules in respect of the tax under Section 296.
            The rules referred to in Section 128(1) are rules thus framed by the
            State Government under Section 296 in respect of matters referred to
        c   in Section 153. Section 300(2) expressly provides that any rule or regu-
            lation made by the State Government may be general for all
.   '       municipalities or may be special for anyone municipality as it directs.

                  14. The Municipal Manual published by the Government
        D   contains the general rules made by the Government under the Act and
            general orders issued in Volume 1. The second volume contains the
            Municipal Account Code. The General Rules and orders are con-
            tained in Chapter I to XII of Part I. The Explanation in Chapter I
            reads as under:

        E              "The Rules in this Manual, which are printed in pica type,
                       together with their explanations, illustrations and excep-
                       tions, have the force of law, having been made by the Gov-
                       ernment in exercise of the powers conferred by section 296
                       of the Act, and, except where otherwise stated, are applic-
                       able to all municipalities. The. notifications in which they
        F              were published are referred to on the margins of the
                       pages."

            Part II contains the model rules, bye laws and regulations. Section A
            deals with Rules with reference to Section 153 of the Act thus:

        G              "The following model rules have been framed by the
                       Government for the assessment and collection of taxes
                       other than octroi under section 153 and 296 of the Act.

                             It is anticipated that they will be found generally
                       applicable to the circumstances of the municipalities of
        H              these provinces, and it is desirable that the model forms
MUNICIPAL BOARD v. BHARAT OIL CO. [M. FATHIMA BEEVI, J.)                383

            should be adhered to unless there are special reasons
                                                                               A
            justifying any divergence i'rom them.

                  In forwarding proposals for the imposition of addi-
            tional taxation, boards are reminded that the necessary
            rules for the assessment and collection of the taxes to be
            imposed should be forwarded at the same time as the tax            B
            proposals, and it will facilitate the disposal of such cases if
            any deviations from the model forms printed below ar~
            specifically referred to in the proposals submitted.

 Vol. II contains the Municipal.Account Code. Chapter X deals with
 octroi and provides in R. 131 that subject to the exceptions contained
 in the proviso octroi shall ordinarily be levied on commodities               c
 included in the list. In Moo/ Chand v. Municipal Board, Banda, AIR
 1926 All 517it was held that the rules contained in the Code have as
 much force of law as the Act itself. The octroi rules contained in
 Chapter X of the Municipal Account Code are general rules framed by
 the Sta\e Goverment in respect of matters referred to in Section 153 in       D
 exercise of power under Section 296 and refer to the levy and govern
 the assessment, collection etc. The rules are general for all municipali-
 ties. The 1963 rules are framed for the appellant board expressly
 superseding the general rules in so far as they apply to the appellant
 board. By framing the 1963 rules the government evinced the intention
 to cover the field which was covered by 1925 rules in so far as the           E
 Bareilly Municipality was concerned. The subject-matter dealt'whhin
  1963 rules is the same as th.at dealt with in 1925 rules. The intention to
 supersede the earlier rules is clearly expressed. The rule has the force
 of law. Rule 13 1 of 1925 rules has no longer any application in the
 matter of levying octroi by the appellant board. That rufe stands
 repealed in so far as the appellant Board is concerned. The rule can-
 not, therefore, be read as curtailing the power under Sectjon
  128( J)(viii) of the Act to impose octroi. Rules do not enlarge· or
 restrict the authority to impose tax. Authority is conferred by the
 section. Rules are only regulating the exercise of that po,;er. The
 impositici'n.of the tax and the regulation of its assessment and collec-
 tions are totally different matters and they are clearly distinguished. In    G
 Zaverbhai Amaidas v. The State of Bombay, p955] 1 SCR 799 this
 Court reiterated the rule of construction that if a later statute deals
.with the same subject-matter and varies the procedure the earlier
 statute is repealed by the later statute. In The Municipality of Anand v.
 State of Bombay, l1962] 2 Supp. S~R 366 construing ~59 of thes.
 Bombay District Municipal Act, 190 I which is in pari materia with            H
    384         SUPREME COURT REPORTS                [1989] Supp. 2 S.C.R.

A   s. 128 of the U.P. Municipalites Act, this Court said the word 'impose'
    in s. 59 meant the actual levy of the tax after authority to levy it had
    been acquired by rules duly made and sanctioned and this imposition
    was subject to the general or special orders of the government. The
    opending words of S. 128 are capable of similar construction and the
    imposition has to be understood as the actual levy subject to the
B   general rules and special orders contemplated under the other provi-
    sions of the Act.

         15. The rule making power under Section 296 read with Section
  300(2) of the Act enables the State Government to except anyone
  municipality from the operation of the general rule by express provi-
C siou in that behalf. When the identical authority in exercise of its rule
  making power duly frames the rules in respect of the same matter
  expressly providing that the new rules shall apply to a particular mun-
  icipality in supersession of the existing rules, it must be deemed that
  existing rules are repealed to that extent. The 1963 rules had been
  framed under Section 296 of the Act in supersession of the existing
D rules after publication by the State Government, in the Gazette as
  provided under Section 300 and therefor Rule 131 m the 1925 rules
  ceased to have any operation in respect of the matters dealt with
  therein so far as the Bareilly municipality is concerned.

          16. In this view of the matter, we hold that the appellant Board
E   had authority to levy octroi on mineral oils and challenge against the im-
    pugned notification is not sustainable. The High Court was clearly
    in error in quashing the same and restraining the Board from assessing
    and collecting the tax.

         We accordingly allow the appeal and set-aside the judgment of
F   the High Court. Jn the circumstances of these cases, we, however,
    make no order as to costs.

    Y. Lal