Bharucha, J. - (1.) On 30th November/3rd December, 1990, when the State of Punjab (the appellant) was under President's Rule, an order was issued under the provisions of S. 71(1) of the Punjab Municipal Act, 1911, by the President of India exempting kapas (raw cotton), narma and oil seeds from the payment of octroi with immediate effect. On the same day, in exercise of powers conferred by S. 62-A of the said Act, the President was "pleased to direct all the Municipal Committees in the State of Punjab to impose Urban Development Cess on the sales/purchase of kapas (raw cotton), Narma and Oil seeds made within the respective Municipal Areas at the rate of 0.25 per cent ad valorem with immediate effect". Pursuant thereto, a Memo was issued on 5th December, 1990 by the appellant to Municipal Corporations, Municipal Committees and Notified Area Committees. It noted that the appellant had issued the notification for imposition of the cess on sales and purchases of kapas, narma and oil seeds to compensate for the loss likely to be suffered on account of the abolition of octroi. The Memo gave directions in regard to the manner in which the cess was to be collected. It appears that, without more, the cess was sought to be levied and recovered. Writ petitions were, therefore, filed in the High Court of Punjab and Haryana challenging the levy and collection. By the judgment and orders under appeal, the writ petitions were allowed and the appellant was directed to refund the cess that had been collected by it with interest at the rate of 12 per cent per annum. These appeals by special leave arise out of the judgment and orders. At the stage at which special leave was granted, the judgment and orders under appeal were stayed subject to the condition that, in the event of it being held that the respondents were entitled to refund, the amounts collected from them would be refunded with interest at the rate of 12 per cent. per annum.
(2.) Section 62A(1) and (3) of the said Act are relevant, and read thus: 62-A. Power of Government in taxation. (1) The State Government may, by special or general order notified in the official Gazette, require a Committee to impose any tax mentioned in section 61 not already imposed at such rate and within such period as may be specified in the notification and the Committee shall thereupon act accordingly. ********** (3) If the Committee fails to carry out any order passed under sub-section (1) or (2) the State Government may by a suitable order notified in the official Gazette impose or modify the tax. The order so passed shall operate as if it were a resolution duly passed by the Committee as if the proposal was sanctioned in accordance with the procedure contained in section 62." Section 62, sub-sections (1), (10) and (12) read thus: "62. Procedure to impose taxes.- (1) A Committee may, at a special meeting, pass a resolution to propose the imposition of any tax under section 61. ********** (10)(a) When a copy of order under sub-section (6) and (7) has been received, or (b) When a proposal has been sanctioned under sub-section (8) the State Government shall notify the imposition of the tax in accordance with such order or proposal, and shall in the notification specify a date not less than one month from the date of notification, on which the tax shall come into force. ********** (12) A notification of the imposition of a tax under this Act shall be conclusive evidence that the tax has been imposed in accordance with the provisions of the Act."
(3.) Learned counsel for the appellant submitted that the cess had been imposed in lieu of octroi and that, by virtue of S. 62(12), the notification of the imposition of the cess was conclusive evidence that the cess had been imposed in accordance with the provisions of the said Act.;