Shinghal, J. - (1.) This appeal by special leave is directed against the judgment of the Allahabad High Court dated March 26, 1976. It related to the validity of the imposition of octroi with effect from July 15, 1950, on certain goods brought within the Maunath Bhanjan Municipality, hereinafter referred to as the Board.
(2.) The challenge to the imposition was made by the Swadeshi Cotton Mills Co. Ltd., hereinafter referred to as the Company. The Company started constituting a textile factory, a part of which at any rate, fell within the area of the Board. It applied for an obtained exemption from the levy of octroi on its building material on the ground that it was a new concern. It however started bringing more articles within its premises, and the Octroi Superintendent made a demand for the payment of octroi on June 25, 1969. The Company tried to avoid the levy on the basis of the order of exemption, but the Executive Officer of the Board repeated the demand on May 30, 1970, and June 16, 1970. The Board also wrote to the State Government for permission to realise octroi from the Company. The Government gave the permission to realise the tax. The Company thereupon challenged the levy of the octroi in the High Court by a writ petition. The High Court took the view that the initial imposition of the octroi was illegal, allowed the writ petition, and issued a mandamus directing the Board not to realise the tax. The Board feels aggrieved and has come up in appeal to this Court.
(3.) It appears that the Company took four grounds for challenging the levy of octroi, but the High Court examined only the following ground, as it took the view that it was enough for the Company's success in the petition, and did not examine the other grounds,- "that the procedure prescribed for the imposition of taxes by municipal boards under Sections 131 to 135 of the U. P. Municipalities Act, 1916, was not followed by the Municipal Board." Counsel for the parties have accordingly confined their arguments to the finding of the High Court in favour of the Company on this ground.;