Shah, J. - (1.) On May 3, 1966 the Municipality of Raichur imposed octroi duty on goods specified in Sch. II to the Mysore Municipalities Act 22 of 1964, entering the municipal limits for consumption, use or sale. The respondents who are traders in cloth at Raichur moved the High Court of Mysore by petitions under Art. 226 of the Constitution challenging the levy and collection of octroi duty on goods described in Sch. II of the Act in pursuance of the notification dated May 3, 1986. The High Court of Mysore held that the tax was properly imposed, but in their view collection of the tax was not authorised by law. The High Court accordingly issued a writ of mandamus restraining the Municipal Council, Raichur from recovering the octroi duty levied in pursuance of the notification dated May 3, 1966. The Municipal Council, Raichur, has appealed to this Court against the orders passed by the High Court.
(2.) The relevant provisions of the Mysore Municipalities Act 22 of 1984 and the Bye-Laws may be summarised. By S. 94 the Municipal Council is authorised, subject to the general or special orders of the Government, and after observing the preliminary procedure prescribed by S. 95, to levy among other taxes, octroi on goods specified in Sch. II entering the municipal limits for consumption, use or sale therein. By sub-sec. (3) of S. 94 it is provided that the taxes specified in sub-s. (1) shall be assessed, levied and collected in accordance with the provisions of the Act and the rules made by the Government under S. 323. Section 95 prescribes the procedure preliminary to imposition of tax. A municipal council has by resolution passed at a general meeting to "elect for the purpose one or more of the taxes specified in S. 94 and in such resolution to specify the classes of persons or of property or of both which the municipal council proposes to make liable and to prescribe exemptions which it proposes to make, the amount or rate at which the municipal council proposes to assess any such class, and in the case of octroi, the octroi stations. The resolution must be published in the official Gazette and in such other manner as may be prescribed. Any inhabitant of the municipality may within one month from the publication of the notice submit his objection to the imposition of the tax or to the amount or rate proposed, or to the classes of persons or property to be made liable, or to any exemptions proposed. The municipal council must take into consideration the objections and submit to the Government of the State such objections with its opinion thereon and any modifications proposed in accordance therewith together with a copy of the notice. A resolution sanctioned by the Government together with a notice reciting the sanction and the date and number thereof may then be published by the municipal council in the official Gazette, and the tax as prescribed by the resolution shall be imposed accordingly. Sub-section (2) of S. 97 Provides: "The publication of a notice under this section shall be conclusive evidence that the tax has been imposed in accordance with the provisions of this Act and the rules made thereunder." Section 123 provides that every municipal council when submitting for sanction a proposal for the imposition of octroi, shall submit therewith for sanction bye-laws for the purposes of Cl. (m) of sub-s. (1) of S. 324 or adopt model bye-laws made for the said purposes. Section 124 deals with "non-liability for octroi and refund of octroi on goods in transit". Section 195 invests the municipal council with power to exempt articles liable to octroi duty, and S. 126 relates to the presentation of bills for octroi and prescribes penalties for evasion of payment of octroi. Section 127 prescribes the penalty for selling articles liable to octroi without a licence, or for being in possession of any such article on which octroi has not been paid. Section 323 authorises the Government to make rules for carrying out all or any of the purposes of the Act and to prescribe forms for any proceeding for which it considers that a form shall be prescribed. Exercising the authority conferred by S. 323 the Government of Mysore published on September 2, 1965, the Mysore Municipalities Taxation Rules, 1965. Rules 25 to 32 deal with the collection of octroi. Rule as deals with the mode of collection, R. 26 with payment of octroi; R. 27 with the assessment and collection of octroi at octroi station and R. 28 with the procedure in case where octroi is leviable ad valorem. Rule 31 requires the municipal council to maintain a list of traders and public bodies allowed to have an account current, and R. 32 requires a trader or public body allowed to have an account current to present a declaration in Form VII. Section 324 authorises the municipal council to make, alter or rescind byelaws, subject to the provisions of the Act and the rules made thereunder. Clause (m) provides, insofar as it is material: "providing for the exhibition of tables of octroi, requiring a licence to be obtained for the sale of any article liable to octroi and prescribing the conditions on or subject to which such licence may be granted, refused, suspended or withdrawn, regulating, subject to any general or special orders which the Government may make in this behalf, the system under which refunds are to be made on account thereof when the goods on which the octroi has been paid, or article manufactured wholly or in part from such goods, are again exported and the custody or storage of goods declared not to be intended for use or consumption or for sale within the municipality; * *". Section 325 (2) provides that a municipal council may by resolution adopt in respect of any matter the model bye-laws made by the Government under sub-s (1) of S. 325 in respect of matters specified in S. 324. Sub-section (3) of S. 325 provides: "If a municipal council proposes to adopt the model bye-laws in respect of any matter subject to any modifications, the procedure specified in sub-sections (4) , (5) and (6) of Section 324 shall be followed as if the modifications were bye-laws proposed to be made by the municipal council. The modifications as approved by the Government shall be published in the prescribed manner and the model bye-laws shall subject to such modifications come into force from such date as may be specified by the municipal council and where there no date is specified on the date of such publication." Sub-sections (4) and (5) of S. 324 set out the procedure to be followed by the municipal council in the making and publication of bye-laws. Sub-section (6) authorises the local Government while approving the byelaws to make any changes therein which appear to it to be necessary.
(3.) In the present case the Municipal Council adopted the model bye-laws framed by the Government. It appears, however, that the table of rates in model bye-law 16 relating to the levy of storage fee and charges on goods placed in the bonded warehouses was left blank. The Municipal Council has however by resolution prescribed a table of rates of storage fee and charges in respect of deferent classes of articles stored in the bonded warehouses.;