- (1.) This appeal by special leave is directed against a judgment, dated July 17, 1968, of the Bombay High Court (Nagpur Bench). It arises out of these facts. The appellant herein, Municipal Council, Pusad was constituted as a Municipal Committee under the Central Provinces Municipalities Act. 1922. There-after, on January 9, 1932 the appellant with the sanction of the local government, imposed a tax known as Boja Tax and Bale Tax under Section 66 (1) (b) read with Section 67, sub-sections (5) and (7) of the C. P. Municipalities Act on ginning and pressing cotton. The rate fixed was Annas 2 for each Boja of 392 Ibs, and Annas 4 for each Bale of 392 Ibs. The respondents M/s. Gokaldas Dossa and Co. Ltd. were doing the business of ginning and pressing cotton by mechanical processes within the limits of the said Municipality. In pursuance of the aforesaid Notification of January 9, 1932 imposing the tax, the appellant on November 22, 1966 issued demand notice and a bill for Rs. 3,971.75 in respect of Boja and Bale Tax for the year 1965-66 requiring the respondents to pay that amount of tax. The respondents submitted objections to this demand on Mar. 28, 1967. The objections were rejected by the appellant on April 7, 1967.
(2.) Aggrieved, the respondents filed a writ petition on April 9, 1967 in the High Court under Article 226 of the Constitution seeking a declaration that the Boja and Bale Tax imposed on them was ultra vires and unconstitutional. They prayed that the Bale (Sic) (Bill ) and Demand Notice be quashed. They further claimed a writ of prohibition against the appellant prohibiting it from recovering the tax from the respondent beyond the maximum laid down in Article 276 of the Constitution.
(3.) The High Court by its order, dated April 29, 1967 granted an interim stay of the recovery of the tax from respondent No. 1. Thereafter, by its judgment under appeal, the High Court allowed the writ petition and quashed the Demand Notice on the ground that the tax was in excess of the ceiling limit of Rs. 250 per annum fixed in Article 276 of the Constitution.;