G.C. Mathur, J. - (1.) In these two writ petitions some petrol dealers of Bareilly have challenged the imposition of octroi duty by the Municipal Board, Bareilly, on motor spirit, kerosene and diesel oils.
(2.) The imposition of octroi duty on these articles is challenged on the simple ground that the Municipal Board had no power to impose octroi duty on these articles. Sec. 128 of the U.P. Municipalities Act, 1916, confers power on Municipal Boards to impose taxes. The relevant part of this Sec. reads thus - 128(1). Subject to any general rules or special orders of the State Government, in this behalf, the taxes which a Board may impose in the whole or any part of the Municipality are.... (viii) an octroi on goods or animals brought within the Municipality for consumption, use or sale therein; It will be seen that this provision permits a Municipal Board to impose octroi duty. But this power is subject to any general rules or special orders of the State Government. Sec. 153 provides that the assessment, collection or imposition of taxes and in the case of octroi, or toll, the determination of octroi or toll limits shall be regulated and governed by rules. Sec. 296 confers powers on the State Government to make rules. By a notification dated October 24, 1925, the Governor in exercise of the powers Under Sec. 296 of the Act made certain rules for the assessment and collection of octroi by all Municipalities. These rules are contained in Ch. X of the Municipal Account Code (Volume II Municipal Manual). Rule 131 of these rules provides that subject to the exceptions contained in the proviso, octroi shall ordinarily be levied on commodities included in that rule. The proviso to this rule states that octroi shall not be levied on certain commodities including mineral oils. By an amendment dated November 2, 1953, the expression "Mineral Oils" was substituted by the expression "Mineral oils classified as motor spirit, kerosene or diesel oils". The proviso to this rule, thus, took away the power of the Municipal Boards to impose octroi duty on these commodities. Rule 131 is apparently relateable to the power conferred on the State Government by the opening words of Sec. 128. According to the Petitioners, this prohibition against the Municipal Boards levying octroi duty on mineral oils was in force at the time when the Municipal Board, Bareilly, imposed octroi duty on these commodities.
(3.) By a notification dated May 7, 1963, the U.P. Government published certain rules for the assessment and collection of octroi in the Bareilly Municipality. These rules were made Under Sec. 296 of the Act. They have been filed as Annexure "1 -B" to the additional counter -affidavit of Sri Ashraf Ali in writ petition No. 1805 of 1970. By a notification dated July 24, 1963, published in the U.P. Gazette dated August 3, 1963, Under Ss. 135(2) and 136 of the Act, the Municipal Board, Bareilly, imposed octroi duty on goods and animals brought within the octroi limits of Bareilly Municipality. This notification was amended from time to time. After the schedule of rates the notification sets out exemptions from octroi duty. Item 29 of the Exemptions relates to "Mineral oils classified as motor spirit, kerosene and diesel oils." At some stage, which does not appear from the records of these two writ petitions, an item No. 11 was introduced in Class III, which provided for imposition of duty on oils excluding motor spirit, petrol, kerosene and diesel oils. Thus, under this notification, as it stood on the date of the impugned notification, Mineral oils classified as motor spirit, kerosene and diesel oils were not subject to octroi duty. The impugned notification (Annexure 'G' to the writ petition) dated August 27, 1969, was issued Under Sec. 135(2) read with Sec. 136 of the Act. It purported to amend the octroi schedule published in the notification dated July 24, 1963, as amended from time to time. Amendments were made both in the rate schedule as well in the exemptions contained in the earlier notification. From item II of Glass III words "excluding motor spirit, petrol, kerosene oil and diesel oil" were deleted. From the list of exemptions item No. 29 was deleted. Thus, the impugned notification sought to take away the exemption in favour of Mineral oils and further sought to subject them to octroi duty. It is this notification which is challenged by the Petitioners.;