Decided on July 21,1978

I.T.C. Limited And Anr. Appellant
Puri Municipal Council And Ors. Respondents


N.K. Das, J. - (1.) THE Municipal Council of Puri imposed octroi tax on marine fish including prawns and also on prawns brought from Chilka side to Puri and fish caught from sea. The case of the Petitioners is that Petitioner No. 1 is a company which carries on the business of exporting prawns to various foreign countries which is one of the items of its business. It procures prawns from the catchers and after processing the same, sends to foreign countries. The procurement of prawns is through its commission agent. This commission agent collects prawns from inside the limits of the Puri Municipality and therefrom carries the same to the processing plant at Gopinathpur which is situated outside the limits of Puri Municipality. The prawns are processed at that place, then refrigerated in vans and are thereafter sent to Calcutta Port by road for export. None of the prawns either procured or carried by the firm and processed at the factory is ever sold, used or consumed or otherwise disposed of either within the limits of the Puri Municipality, or anywhere else in India. The entire quantity is exported outside India. The prawns are caught by fishermen from the sea who bring the same into the municipal limits and they are purchased by the firm inside the municipal limits and when the firm carries the prawns to its processing unit, the municipality is charging octroi tax at the exit point and has been collecting the same. The municipality has also in the meanwhile enhanced the rate of octroi tax. The Petitioners challenge the imposition of such tax as well as the provisions for imposition of the same on the ground that the provisions of Section 131(1)(kk) of the Orissa Municipal Act are ultra vires the Constitution and as such the bye -laws framed thereunder are illegal. The provisions under the bye -laws are also contrary to law. Even assuming that the provisions of the bye -laws are not contrary to law, the demand and collection of octroi tax of the exit point, as is being done by the municipality, are not envisaged under the bye -laws and are ultra vires the Municipal Act. The scheme of levy of octroi tax envisages that such tax is payable when article arrives at a check post before entering into the limits of the municipality and at that point octroi tax is to be assessed and imposed. The municipality has no authority to demand octroi tax in respect of prawns purchased by the Petitioners at the exit point at Atharnala Check Post. The Municipality has been compelling the Petitioners to pay octroi tax at the exit point. It is contended that Section 13(l)(kk) of the Orissa Municipal Act is ultra vires and suffers from the vice of excessive delegation as it amounts to abdication of essential legislative functions. There is no provision in the Act for authorising the municipality to fix a particular rate of octroi tax and as such the rate that may be fixed by the municipality is without jurisdiction and void. The bye -laws framed by the municipality are not in accordance with the provisions of the Orissa Municipal Act. The provisions of the Act and the bye -laws thereunder do hot authorise the municipality to demand and collect octroi tax on exit of goods outside the limits of the municipality. If the bye -laws are interpreted to authorise the municipality to collect octroi tax at the exit point, then the same ultra vires Entry 52 of List II of the 7th Schedule of the Constitution of India. The bye -laws are unreasonable and imposition of octroi tax is without authority and infringe the provisions of Article 31(1) and Article 265 of the Constitution of India and as such are without jurisdiction, void and unenforceable. The Petitioners pray for a declaration that the Orissa Municipal Act of 1950. as amended thereafter, insofar as it imposes octroi on them and in particular the provisions of Section 13(1)(kk) and the resolutions of the municipality as well as the bye -laws of the municipality are unconstitutional and void. They have further prayed for refund of the octroi taxes already collected from them.
(2.) OPPOSITE parties 1, 3, 4 and 5 in their return have controverted the assertions of the Petitioners. It is contended by them that fishes and prawns are brought from sea to the municipal area for sale and as such are liable to be taxed since the sale takes place within the municipal limits. The provisions of Section 131(1)(kk) are not ultra vires to Constitution and are in accordance with the relevant entries in the Constitution of India. The bye -laws are also in consonance with the provisions of the Act. The municipality passed resolutions according to the provisions of the Act and the bye -laws. The same have also been approved by Government. Besides Atharnala Check Post, a temporary check post has also been set up at Chakratirtha Road during winter season. These check posts are not exclusively exit posts. Host of the goods enter into the municipal limits through Atharnala Check Post and it cannot be said to be at the exit point only. The collection made from the Petitioners at the Atharnala Check Post is not illega1. As the prawns procured by the Petitioners are subjected to sale within the municipal limits and octroi tax is not realised in respect of such goods at any earlier point of time, the same can be assessed and tax can be collected at the Atharnala Check Post. According to the bye -laws tiny person found in possession of goods is liable for tax and if tax has not been realised earlier the municipality has authority to collect the same at any point of time. In other words, the goods in question are subjected to tax when found in possession of Petitioner No. 1 or his agents or servants because they had been brought into the municipal limits for the purpose of sale and the Petitioners or their agents purchase the same within the municipal limits. The tax is on goods which enter the municipal limits for the purpose of sale and is not ultra vires. The provisions of the bye -laws are reasonable and sufficient opportunity is provided to the person on whom the tax is levied. The vires of Section 131(1)(kk) of the Orissa Municipal Act are no longer res integra. This question was first raised in The Orissa Ceramic Industries Ltd. mothers v. Executive Officer, Jharsuguda Municipality and Ors. : A.I.R. 1963 Ori 171 It was contended therein that the section suffers from excessive delegation as the minimum or maximum limit of tax that may be levied has not been indicated and unfettered discretion has been given to the municipality. The Section was also attacked on the ground that the amount collected as such tax is not expended for the limited purpose as mentioned in Section 117(1) of the Act. The rates to be fixed are absolutely unfettered. All these points have been negatived by this Court. This question was again raised in Sridhar Patnaik and Ors. v. Keohjhar -Garh Municipality and Anr., 1972 (1) C.W.R. 105, and the decision in Jharsuguda Municipality case was upheld. In Bhaskar Textile Mills Ltd. v. Jharsuguda Municipality and Ors., I.L.R. 1977 Cutt 48 Section 131(l)(kk) of the Orissa Municipal Act was challenged on the ground of being violative of Article 301 of the Constitution. This Court has reaffirmed its previous decisions. Also in Sridhar Patnaik easel, referred to above, the points raised by the Petitioners have been answered. In view of the aforesaid consistent decisions of this Court which are binding on us, Mr. Choudhury, the learned Counsel for the Petitioners, has not argued the point of ultra vires of Section 131(l)(kk) of the Orissa Municipal Act, without abandoning the same.
(3.) THE main contention of Mr. Choudhury is that imposition of octroi is the Event of entry info the municipal limits. The Petitioners are purchasers from catchers and the purchase takes place inside the municipal limits. When they go out of the municipal limits at Atharnala Check Post, octroi is demanded from them. Accordingly, his contention is that the provision for such demand in the bye -laws is illegal and void.;

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