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2014 (10) TMI 986 - HC - Indian LawsLevy of Local Body Tax in lieu of Octroi - Legality and validity of Section 127(2)(aaa), Section 99 (partly) and Section 152T of the Bombay Provincial Municipal Corporations Act, 1949 - vires of Part IXA of the Constitution of India and particularly Articles 243W and 243X - position and status of the Municipalities under the Constitution of India. Held that:- It is evident that subject to the provisions of the Constitution, it is the Legislature of a State and which may by law endow the Municipalities with such powers and authority as may be necessary to enable them to function as Institutions of self Government. That law may contain provisions for the devolution of powers and responsibilities upon the Municipalities and that is how various aspects of planning, economic development, social justice and functions and duties in relation thereto have to be performed by the Municipalities. They have been entrusted to them. There is force in the contentions of Ms.Karnik that the provisions of every law and by which the powers, authorities and responsibilities have been endowed on the Municipalities must be construed in such a way so as to make existence of the Municipalities meaningful and purposeful. That it is an institution of self Government is, therefore, abundantly clear. That such Institution must have certain freedom, autonomy and independence is also apparent. It is the Legislature of the State and which makes the law by which Municipalities are authorized to levy, assess, collect and appropriate such taxes, dues, tolls and fees in accordance with such procedure and subject to such limits. There could be assignment of duties to the Municipalities. The State Government may assign to a Municipality such taxes, duties, tolls and fees levied and collected by the State Government for such purposes and subject to such conditions and limits. Therefore, when the Legislature of the State has to endow the Municipalities and by law with powers and authority so as to enable them to function as institutions of self Government effectively, then, that position is in no way affected merely because the law authorizes the State to impose the taxes. Eventually, the Municipality derives it's power and authority to impose the tax from the law made by the Legislature. That such law obliges the Corporation to impose the property tax and tax on vehicles, boats and animals, therefore, cannot be said to be encroaching on it's independence and autonomy. The prayers in the Writ Petition and if carefully perused are not that this proviso should be declared as unconstitutional, null or void nor is there any plea, elaborate or otherwise, to be found in the grounds in the Writ Petition, which would denote that prior to imposition of Local Body Tax the power conferred by the proviso can be termed as unconstitutional. What has been emphasized before us and during the course of argument is that when it comes to Section 127(2) (aaa), there is no such proviso. In other words, there is a contention raised that the proviso below clause (aa) confers discretion in the State Government to direct levy of cess on entry of the goods into the limits of the city for consumption, use or sale therein, in lieu of octroi whereas in comparison clause (aaa) does not contain any such proviso. That the absence of any proviso to clause (aaa) would show that once the State directs that Local Body Tax should be imposed, then, the Corporation has no choice or option, but to so impose it. Merely because a power is conferred in the State Government to issue instructions or directions, does not mean that the State would exercise it frequently and indiscriminately or as per it's whims and fancies. The power in the State is coupled with a duty. The provisions relating to levy, collection and recovery of cess in lieu of octroi, contained in Chapter XIA shall mutatis mutandis apply to levy and collection of Local Body Tax. There, the levy and incidence of cess, certain goods not liable or exempt from cess, liability of cess in certain cases, cess authorities, registration, memorandum of sales or purchases, liability to maintain and produce accounts, production and inspection of accounts and documents and search of premises, seizure of books of accounts and goods, etc. are some of the matters and all the provisions in relation thereto as are to be found in Chapter XIA are made applicable to Local Body Tax. The Local Body Tax regime is, therefore, not such as could be termed as destructive of the constitutional scheme. Whenever the State calls upon the Municipal Corporation to levy the Local Body Tax it is not imposing it on the Municipal Corporation, but reminding it to levy, assess and collect the tax which is more friendly and serving all people including traders. That the Local Body Tax has to be then levied, assessed and collected by the Municipal Corporation does not mean that the State takes an unilateral decision in all matters connected with the levy. Though the State takes a decision the Municipal Corporation is not overlooked and as understood above. Therefore, the determination of the rate of levy, selection of articles and goods, manner of levy, assessment and recovery though controlled by the State, but the Municipal Corporation has definite role to play in the same. Its role is by no means diluted or diminished. It is eventually the Local Body Tax and to be levied, assessed and recovered by the local body. Therefore, the State Government being empowered by the various provisions noted above to direct levy, to regulate and control its assessment and recovery, does not mean that the autonomy and independence or status and position of the Municipal Corporation is in any manner threatened leave alone defeated or frustrated. There is no hesitation in rejecting the submissions of the Petitioners to the contrary - the Constitutional Scheme is in no way affected by the amendments made to the said Act. Petition dismissed - decided against petitioner.
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