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TMI Blog2001 (3) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... trace the origin of this levy in this part of the State of Rajasthan. From the records and materials placed before us, it transpires that in 1860 A.D. the late Ruler of Kota, claimed to be the sovereign authority to make even laws, imposed, though on the basis of also a volition expressed by the traders in the locality to pay one such, the levy of dharmada on the traders of "Nandgaon" (the ancient name of Kota city), as a compulsory levy by the authority of the said law made by the Ruler. The schedule of rates of dharmada, so imposed, was said to have continued till 1894 when it came to be sanctioned also by the resolution dated November 6, 1894, of the municipality committee. This seems to have in succession been followed by another schedule of octroi dated November 22, 1922, issued by the Superintendent of Custom and Chief Excise Officer, Kota State, revised subsequently in 1923. It is also disclosed that prior to 1929 cases of evasion of chungi/dharmada were entertained and decided in the Court of Magistrate, Kota State, under section 106 of the Customs Act, then in force and evasion of octroi and dharmada were said to have been made even as a penal act punishable under the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following schedule from the date of publication of the schedule : SCHEDULE ------------------------------------------------------------------------------------------ Name of goods Specified rate Per quantity ------------------------------------------------------------------------------------------ Serial Nos. 1 to 101 : Dharmada: 1. Grains all types 0.02 np per quintal Up to Serial No. 18 : Animals and birds, etc.: Serial Nos. 19 to 31 : Inflammable and cleaning materials for use as fuel, etc. Serial Nos. 32 to 40 : Building and construction materials: Serial Nos. 41 to 49 Medicines, chemicals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that there is no provision in any of the entries contained in List II of the Seventh Schedule to the Constitution for imposing dharmada tax and in the absence of any specific law made by the State Legislature, there can be no legal basis for the levy of dharmada tax by the municipality. Though, as noticed earlier, in the judgment of the Division Bench, the English translation of the notification issued in 1962 has been extracted, reference is also made in the plaint to the notification dated May 13, 1968, with a brief mention of the contents thereof by stating that under the said notification the appellant has been authorised to levy-octroi tax on goods brought within the municipal limits for sale, consumption and use at the rates specified in the schedule to the notification from the date of its publication in the Official Gazette and that so far as "dharmada" is concerned, below the caption of the word "dharmada" various articles have been enumerated and found divided into 14 categories and in every such category not only the names of the articles but the rate of dharmada on each category of those goods are also specified therein. It is also one of the objections of the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him though upheld the claim for prohibitory relief, yet applied the doctrine of undue enrichment and on the view that the respondent-companies have already realised the dharmada tax paid by passing over the same to the customer, the company also ought not to be allowed to retain the same and consequently instead of ordering refund to the company directed refund of the amounts collected (within six months) to the State of Rajasthan with a further direction as to the manner in which such amount has to be utilised by the State. It is in such circumstances these appeals have been filed before this court by the Municipal Council, Kota. Mr. Altaf Ahmad, learned Additional Solicitor General appearing for the appellant, strenuously contended that whatever be the nomenclature in substance, the levy and collection under the heading of dharmada being a levy on the entry of goods brought within the limits of the municipality for consumption, use and sale therein, it is essentially an "octroi" covered by entry 52 of List II of the Seventh Schedule to the Constitution of India and the mere fact that for historical reasons and administrative purposes, different names and/or labels were given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same taxable event as long as all such levies or rates put together is not shown or substantiated to be either expropriatory or irrational. Dr. A. M. Singhvi, learned senior counsel for the appellant in C. A. No. 4152 of 1991, apart from adopting the submissions of the other senior counsel, noticed supra, further contended that as long as the levy satisfied the ingredients of the tax authorised to be imposed, it is irrelevant as to by what name the same is called or identified and that the dharmada levy in question having had its origin in pre-constitution laws at any rate is also saved and protected by virtue of article 277 of the Constitution of India as well as section 2 of both the 1951 and 1959 Acts. Reliance has also been placed on section 105(i), (ii), (iii) and (iv) to justify the levy in question. Both learned counsel appearing for the appellants also relied upon the doctrine of prospective overruling by contending that the High Court ought not to have interfered with the levy and collections made for the period prior to the declaration of law by the court and, at any rate should not have ordered for the refund of the tax already collected and spent on various charitabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies, half of the dharmada tax due with effect from the date of the High Court judgment with a further condition that in the event of the appeal being dismissed the amount recovered should be refunded to the company with interest at 12 per cent. per annum. Consequently, it is contended that the appellants must be made to refund the tax collected in terms of the orders of this court once their claims in the appeal fail and no plea based either on the "doctrine of undue enrichment" or the principle of "prospective over-ruling" could be permitted to be even raised. In traversing the claim of the appellant based on articles 277 and 376 of the Constitution of India, it has been urged that those articles will have no relevance or application to the cases on hand. Reliance has been placed upon the decision reported in CIT v. Bijli Cotton Mills (P.) Ltd. [1979] 116 ITR 60 (SC), to substantiate the stand based upon the nature and character of dharmada sought to be levied and collected. We have carefully considered the submissions of learned counsel appearing on either side in the light of the case law placed before us for our consideration. The main issue that looms large for considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption. In the Boroughs Act the definition of 'octroi' includes terminal tax. Terminal tax, as the Indian Statutory Commission points out, formerly meant in Indian fiscal terminology a tax which was levied at railway stations and collected by the railway administration on all goods imported or exported from the station. It was also collected from passengers in some municipalities. We also learn from the report that on the recommendation of a committee appointed in 1908 terminal tax took the place of octroi in a large number of municipalities at first in the united provinces and then in others. At first the Government of India were not in favour of such a change. Octrois were levied on goods brought into a local area for consumption, use or sale and were indirect taxes but terminal taxes were regarded as direct. On July 6, 1917, the Government of India by a resolution reversed their former policy and agreed that the conversion was not a change from indirect to direct taxation. Terminal taxes were of the nature of octrois, but were not quite the same. The main differences were, that there was no system of refunds under the Terminal Tax Rules (Terminal taxes as Findlay Shirras tells us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad a description of the tax was mentioned in entry No. 49, which has been quoted already, and which read 'cesses on the entry of goods into a local area for consumption, use or sale'. This Scheme has been repeated in the Constitution with the difference that the entry relative to terminal tax now reads 'terminal taxes on goods and passengers carried by railway, sea or air', and the word 'taxes' replaced the word Icesses' in the entry relative to octrois. 19. The history of these two taxes clearly shows that while terminal taxes were a kind of octroi which were concerned only with the entry of goods in a local area irrespective of whether they would be used there or not ; octrois were taxes on goods brought into the area for consumption, use or sale. They were leviable in respect of goods put to some use or other in the area but only if they were meant for such user. When the Government of India Act, in its Scheduled Tax Rules, mentioned 'octrois', it intended to give the power to levy taxes in this well-understood sense, namely, on the entry of goods in a local area for consumption, use or sale . . ." There is no challenge in these cases to the levy of octroi as such but what is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Government an octroi on goods and animals brought within the limits of the municipality for consumption, use or sale therein. The levy of tax envisaged under section 104 as a whole, has been classified as "obligatory tax" with a duty to levy, once notified by the Government, unless specifically got exempted from doing so from the Government by means of a notification therefor under the proviso thereto. The notification under challenge issued in the undoubted and undisputed exercise of powers under section 104(2) of the Act provides a schedule numerating the class or category of goods and the rate of tax obligated to be levied by the municipal board. In the said schedule, apart from specifying the levy to be made as "octroi", provision has been made to levy also shaharnama dharmada and nirkhi shaharnama with a specific enumeration and description of the class or category of goods, as and when such goods are brought into the municipal limits for consumption, use or sale therein and the rates as well. The scheme underlying the notification issued in exercise of the powers under section 104(2) of the Act seem to be to provide for an additional levy and collection of octroi on ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows : "The appellants' contention that though directly imposed by the Legislature, the bridge tax is not a land tax, was supported by argument founded in particular on two manifest facts. The bridge tax does not extend to land generally throughout New South Wales, but to a limited area comprising the city of Sydney and certain specified shires, and the purpose of the tax is not that of providing the public revenue for the common purposes of the State but of providing funds for a particular scheme of betterment. No authority was vouched for the proposition that an impost laid by statute upon property within a defined area, or upon specified classes of property, or upon specified classes of persons, is not within the true significance of the term a tax. Nor so far as appears has it ever been successfully contended that revenue raised by statutory imposts for specific purposes is not taxation." A Division Bench of the Allahabad High Court, in a decision reported in Roza Buland Sugar Co. Ltd. v. Municipal Board, AIR 1962 All 83, had an occasion to consider the nature and character of an impost levied by the name "water tax", when the power was to levy "tax on buildings". The Div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haracter of the levy which has to be adjudged, with reference to the charge viz., the taxable event and the incidence of the levy. We are convinced on the indisputable facts on record that the levy sought to be imposed and recovered as "dharmada" being only on the goods brought within the municipal limits of Kota for consumption, use or sale therein the same in truth, reality and substance is only an "octroi" for the purpose of carrying out the several public charitable objects statutorily enjoined upon the municipal board and enumerated in sections 98 and 99 and those undertaken pursuant to the stipulations contained in sections 101 and 102 of the Act. The mere fact that it is called by a different name (all the more so when the word "octroi" itself is not found used in entry 52 of List 11 of the Seventh Schedule) for historical reason and administrative needs or exigencies by the draftsmen of the notification does not in any manner either undermine the nature and character of the levy or render it any the less a levy envisaged under entry 52 of List 11 of the Seventh Schedule. The various charitable objects and ameliorative schemes and projects for which the taxes realised under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been enacted in the Act of 1961. Sections 182 and 183 correspond substantially to section 23(5) except that the old section did not have a provision similar to sub-section (4) of section 182. After 1956, there fore, so far as registered firms are concerned the tax payable by the firm itself has to be assessed and the share of each partner in the income of the firm has to be included in his total income and assessed to tax accordingly. If any double taxation is involved the Legislature itself has, in express words, sanctioned it. It is not open to any one thereafter to invoke the general principles that the subject cannot be taxed twice over." In Avinder Singh v. State of Punjab, AIR 1979 SC 32 1, this court has once again held as follows : "A feeble plea that the tax is bad because of the vice of double taxation and is unreasonable because there are heavy prior levies was also voiced. Some of these contentions hardly merit consideration, but have been mentioned out of courtesy to counsel. The last one, for instance, deserves the least attention. There is nothing in article 265 of the Constitution from which one can spin out the constitutional vice called double taxation. (Bad eco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the levy is specific, definite and positive in terms, with a definitely disclosed object leaving no room for any doubt or any exercise to clear such assumed doubts. We have carefully gone through the original notification in the vernacular published in the Gazette dated May 13, 1968, noticed supra, and we find that the rates of the levy under challenge have been notified as part and parcel of one and the same schedule to the said notification and not by any different or more than one schedule and that too by means of a simultaneous exercise of powers under section 104(2) of the Act and not on different occasion or time. Though it is seen that some of the classified items or commodities enumerated in various entries overlap those found in the other entries under different captions including dharmada, they are not mere mechanical repetitions in toto, viewed either from their classification, enumeration or determination of the rates as well as the measure or quantity with reference to which the actual levy is to be made and collected. Therefore, the mere stipulation of plurality of rates in respect of some or the other of the commodities/goods under different classified groups for d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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