Chandurkar, J - (1.) The short question, which arises in this appeal filed by the Union of India is whether goods imported within the limits of municipality by the Railway Administration are liable to Octroi Duty which the respondent Bhusawal Municipal Council is seeking to recover under a Notification issued under Section 135 of the Railways Act, 1890, on 29th November, 1907.
(2.) Facts in this case are not in dispute. The Catering Department of the Railway Administration admittedly brought within the limits of the Bhusawal Municipal Council certain articles required by them for catering administration at the Bhusawal Railway Station during the period from 2nd November 1963 to 1st November 1966. The Railway Administration not having paid the necessary Octroi Duty which, according to the Municipal Council, the Railway Administration was liable to pay for those articles brought within the municipal limits, a suit came to be filed for the recovery of the amount of Octroi Duty to the tune of Rs. 7,766.14 along with interest amounting toRs. 2,611.21. Thus, in the suit filed on 6th February 1969 a sum of Rs. 10,377.35 was claimed from the Union of India. The plaint itself does not refer to the Notification date 29th November 1907 but it is common ground that liability to pay Octroi Duty is fastened on the Union of India, according to the Municipal Council, by the Notification dated 29th November 1907 (Exhibit 85). This Notification reads as follows: "In pursuance of Clause (I) of Section 136 of the Indian Railways Act, 1890 (IX of 1890) and in suppression of the notifications of the Government of India in the Public Works Department, No. 279, dated the 12th June, 1890, and No. 190, dated the 5th Apr., 1893, the Governor General in Council is pleased to declare that every railway administration in British India shall hereafter be liable to pay, in respect of property within any lost area, every tax which may lawfully be imposed by any local authority in all of its funds, under any law for the time being in force." Two defenses were raised by the Union of India to this claim, According to the Union of India, it was not liable to pay any duty in the absence of any Notification in the Official Gazette declaring the Railway Administration to be liable to pay such taxes and that the Union of India was further protected under the provisions of Section 3 (1) and Section 4 of the Railways (Local Authorities Taxation) Act, 1941 (hereinafter referred to as the 1941 Act), According to the Union of India, the provisions of the 1941 Act will be saved by Article 372 of the Constitution of India. The issue of limitation was also raised. It appears that the plea that a Notification under Section 135 of the Railways Act relating to Octroi tax was not issued was not specifically taken probably because in the plaint taken probably because in the plaint no such Notification was disclosed. The questions involved in the suit were essentially questions of law, the facts essentially questions of law, the facts having been admitted. The oral evidence in the case, therefore, does not become very material.
(3.) The trail Court took the view that Section 135 of the Railways Act regulated the levy of taxes by a Local Authority and unless a Notification was issued under Section 6 of the 1941 Act, the property of the Railway Administration cannot be subjected to tax by the Local Authority. The trail Court further took the view that Exhibit 86 indicated that the Railways Authority was liable to pay taxe connected with immovable properties connected with immovable properties such as house tax, water tax, conservancy tax, latrine tax, wheel tax and water rate, etc, and that there was no Notification in respect of Octroi on goods brought within the Municipal limits. With reference to the provisions of Article 285 of the Constitution of India, the trial Court took the view that under the Bombay Municipal Borough Act, 1925, when the Bhusawal Municipality had approved and levied Octrol since 1932 and the Octroi Rules were inforce even before the Constitution came into force, the authority to impose Octroi Duty did not cease simply because the Constitution came into force. The trail Court found that the State Government has not framed any rules exempting the catering unit of the Railways from Octroi Duty. The trial Court took the view that the Railway Administration had paid Octroi Duty in the pest and the articles were rightly taxed under the Octroi rules as there was no exemption, With regard to the limitation, the trial Court held that the claim in respect of all the items was within the period of limitation. A decree for Rs. 10,377,35 was thus being passed against the Union of India. This appeal has not been filed by the Union of India challenging the decree of the trial Court.;