- (1.) This is an appeal from the judgment and order of the High Court at Nagpur, made on a reference under S. 83 (2), Central Provinces Municipalities Act II [2], of 1922, by the Extra Assistant Commissioner, Nagpur. The appellant is a trader in Kamptee who manufactures bidis. On 30th November 1945, he brought to Kamptee from outside tobacco to make bidis. A declaration form signed on his behalf stated that the 254 bags of tobacco liable to octroi duty, which had that day arrived at octroi post No. 3, had been brought for use and consumption within the limits of the Municipality. He, however, put on record his protest against the recovery of the duty which was fixed at Rs. 1,128-2-0. Against the order claiming the amount the, appellant filed an appeal to the Extra Assistant Commissioner with revenue appellate powers, Nagpur. He contended that the municipality claimed to levy the duty under S. 66 (1)(e) of the Municipal Act, but they had no right to do so as under S. 3, Central Excises and Salt Act, 1944, that excise duty was levied on tobacco by the Central Government and the levy of the octroi duty on the tobacco in question was covered by the excise duty and therefore not permissible. The Appellate Assistant Commissioner in making the reference to the Nagpur High Court expressed his opinion that the appellant's contention that as the bidis were not sold within the municipal limits, duty was not leviable, was unsound. He however thought that because under S. 3, Excise Act, excise duty was levied by the Central Government the levy of the octroi duty was not in consonance with S. 100, Government of India Act, 1935, and was ultra vires the Provincial Government. The High Court rejected the appellant's contention and disagreed with the view of the Appellate Commissioner. The High Court however granted a certificate under S. 205 (1), Constitution Act, and the appellant has come in appeal to this Court.
(2.) The Central Provinces Municipalties Act was passed in 1922 and the relevant notifications fixing the rates of octroi duty were issued in 1928. No question about the validity of the Act when passed, or of the notifications issued in pursuance thereof has been raised before us. The argument on behalf of the appellant is that as under the Central Excises and Salt Act, I [1] of 1944, tobacco became excisable goods under Item 9 in Sch. I to that Act and continued to be so till it got converted into bidis, the Central Government alone was entitled to levy excise duty on it till then. According to the definition of 'manufacture' in the Excise Act that duty could be levied at any stage in the manufacture of bidis and therefore any tax imposed, while tobacco was being converted into bidis, was excise duty. Legislation in connection with excise duty is within the exclusive province of the Central Legislature as shown by Entry 45 of List I in Sch. VII, Constitution Act. The impost of octroi duty in pursuance of the Municipal Act, before, tobacco was made into bidis, is it was argued in conflict with the legislative powers of the Centre. In this connection, our attention was drawn to Administrator, Lahore Municipality v. Daulat Ram Kapur, 1942 F.C.R.31 : (A. I. R. (29) 1942 F. C. 14), in which it was held that the levy of octroi duty on salt was not within the powers of the Provincial legislature. It was argued therefore that under S. 100, Government of India Act, octroi duty levied on tobacco under the legislative powers of the Provincial Government was invalid. The only way to reconcile the two Entries, namely, Entry 45 in List I and Entry 49 in List II of Sch. VII, was to read the words "for consumption or use" in Entry 49 as meaning "for consumption or use except for manufacture of excisable articles". So read the levy of octroi duty on the facts of this case was invalid. In reply to the argument that S. 292, Government of India Act kept alive the old Provincial legislation, namely, the Central Provinces Municipalities Act, and the right to levy octroi duty was saved under S.148, Constitution Act, it was urged on behalf of the appellant that the provisions of the Excise Act were contrary to the right to levy octroi duty and as that Act was passed in 1944 the right to levy octroi duty saved by S. 149, Constitution Act had lapsed. It was argued that although there was no express provision in the Excise Act to that effect, the definition of "excisable goods" and "manufacture" read with Entry 9 in Sch. I and the charging S. 3 in the Act led to that conclusion. It is clear that both parts of this argument are thus based on the plea that the impost of any duty at any stage before bidis are manufactured is excise duty and therefore the levy of octroi duty is illegal.
(3.) Section 66 (1) (e), Central Provinces Municipalities Act, 1922, runs as follows : "an octroi on animals, or goods brought within the limits of the municipality for sale, consumption or use within those limits:";