G.C.Mathur, J. - (1.) THE petitioner company constructed a textile factory in the district of Azamgarh in the year 1968-69. According to the petitioner, the factory falls outside the limits of the Municipal Board, Maunath Bhanjan, but its office and gate fall within the limits of the Municipal Board. THE Municipal Board has imposed octroi tax on certain articles including cotton, in the year 1950. THE petitioner was granted an exemption from the payment of octroi duty on cotton imported by it for its factory for a period of five years. After the expiry of these five years, the petitioner again applied for exemption but exemption was refused. THE Municipal Board started demanding octroi duty from the petitioner. THE imposition of octroi duty and the liability of the petitioner to pay the same have been challenged in this writ petition on several grounds. Some of the grounds, on which they are challenged, are- 1. 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.
(2.) THAT the goods, on which octroi is being demanded by the Municipal Board, are not consumed within the limits of the Municipal Board as the factory of the petitioner is situated outside its limits; That the imposition of octroi duty violates Articles 301 to 304 of the Constitution; and That the rate of octroi duty on cotton is excessively high and the rules imposing octroi tax being delegated legislation are void as they are unreasonable. As, in our opinion, the petitioner is entitled to succeed on the first point, we do not propose to deal with the other points raised. 2. Maunath Bhanjan, which is popularly known as Mau, was formerly a notified area, but later it was converted into a Municipal Board. The proposal for imposing octroi tax originated at the time when the notified area was in existence but it was finalised at a time when the Municipal Board had been constituted. The District Magistrate, Azamgarh, was at all material times the Administrator of the Municipal Board and all actions were taken by him on behalf of the Municipal Board. 3. There is no dispute that the Municipal Board was competent to impose octroi tax. Sections 131 to 135 prescribed the detailed procedure which must be followed for imposing a tax by a Municipal Board. Sub- section (1) of Section 131 empowers a board, if it desires to impose a tax, to frame proposals by special resolution. The sub-section specifies the matters which the proposals are to contain. The petitioner has not challenged the framing of these proposals by special resolution. Sub-section (2) requires the board to prepare a draft of the rules which it desires the State Government to make in respect of matters referred to in Section 153. Sub-section (3) requires the board to publish the proposals and the draft rules in a particular manner. The petitioner has not asserted that sub-sections (2) and (3) have not been complied with. There is thus no dispute regarding compliance with the provisions of Section 131. 4. Section 132 prescribes the procedure for the filing of objections to the proposals or the rules, for the consideration of those objections and for the modification, if necessary, of the proposals and/or the rules. The petitioner has not asserted that any of the provisions of Section 132 has not been followed.
(3.) SECTION 133 deals with the power of the State Government or the Prescribed Authority to reject, sanction or modify the proposals. The Municipal Board, Maunath Bhanjan, not being a city board, its proposals were required to be considered by the Prescribed Authority who was the Commissioner. The finalised proposals were submitted to the Prescribed Authority and on April 1, 1950; it sanctioned the proposals. There is no complaint of non-compliance with the provisions of SECTION 133 also. The main complaint of the petitioner is regarding non-compliance with the provisions of Sections 134 and 135. It is, therefore, necessary to set out these two sections. They read as follows: "134. Resolution of board directing imposition of tax- (1) when the proposals have been sanctioned by the Prescribed Authority or the State Government, the State Government, after taking into consideration the draft rules submitted by the board, shall proceed forthwith to make under Section 296 such rules in respect of the tax as for the time being it considers necessary. (2) When the rules have been made, the order of sanction and a copy of the rules shall be sent to the board, and thereupon the board shall by special resolution direct the imposition of the tax with effect from a date to be specified in the resolution. 135. Imposing of tax - (1) A copy of the resolution passed under Section 134 shall be submitted to the State Government if the tax has been sanctioned by the State Government and to the Prescribed Authority in any other case. (2) Upon receipt of the copy of the resolution the State Government or Prescribed Authority, as the case may be, shall notify in the Official Gazette, the imposition of the tax from the appointed date, and the imposition of a tax shall in all cases be subject to the condition that it has been so notified. (3) A notification of the imposition of a tax under sub-section (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this Act.";