NAROTTAMDAS HARJIVANDAS AND CO AND MANIBHAI CHHOTUBHAI AND CO Vs. BULSAR TOWN MUNICIPALITY

JUDGEMENT

(1.) THESE appeals arise out of two suits against the Municipality of Bulsar. Suit No.85 of 1936, from which Second Appeal No.105 arises, was filed by two plaintiffs Messrs. Manibhai Chhotubhai & Co. and Shah Narottamdas Harjivandas &Co. to recover from the Municipality a sum of Rs. 180 as the price of six bags of sugar, which, it was alleged, were illegally attached and sold by the Municipality for recovery of terminal tax and Rs. 325 by way of damages. The second suit, No.87 of 1936, was filed by the firm of Shah Narottamdas Harjivandas & Co. for a declaration that the Municipality was not entitled to demand terminal tax or any other tax on goods which were not brought within the limits of the Municipality and to the naka appointed by the Municipality. In the alternative the plaintiff prayed 'for a declaration that the Municipality had no right to demand terminal tax or any other tax on goods landed at the Auranga river or at the Lilapur Dhakka or the Bhadeli Dhakka of the Auranga river. Plaintiff No.1 in suit No.85, Manibhai Chhotubhai & Co., is a firm doing business in sugar, tea, etc., in the village of Lilapur, situated on the northern bank of the Auranga river opposite to the town of Bulsar, which is situated on the southern bank, Plaintiff No.2 in that suit, Shah Narottamdas Harjivandas & Co., is a firm of commission agents doing business in Bulsar. It is alleged that on October 23, 1935, plaintiff No.2 had brought fifty bags of sugar from Bhavnagar on the ship, " Labhsavai". The bags were for the first plaintiff firm and were to be sent to them at Lilapur and were not intended to be landed in Bulsar. There were along with the consignment fifty other bags of sugar brought by the second plaintiff firm on the same ship for their own use. THESE were landed in Bulsar and the terminal tax on them was duly paid. A demand was made by the municipal naka clerk for terminal tax on the fifty bags which were to be sent to plaintiff No.1 at Lilapur. On this demand being refused,. the municipal clerk seized the six bags of sugar which had been unloaded from the ship into a cart, and attached them for recovery of the terminal tax. The amount claimed for the terminal tax was Rs.68. Three out of the six bags were sold and a, sum of Rs. 70-4-0 for the amount due for the tax and for expenses was credited to the Municipality, and plaintiff No.2 from whom the bags had been attached, was asked to take away the remaining bags of sugar and the balance of the sale proceeds. Plaintiff No.2 refused to take delivery of the unsold bags and of the balance alleging that the goods belonged to plaintiff No.1. The contention of both the plaintiffs was that the place where the goods were attached was outside the limits of the Bulsar Municipality which had therefore no right to levy terminal tax on the goods; that the goods were not brought into the limits of the Bulsar Municipality and were not intended to be so brought, and that they were not therefore liable to pay terminal tax to the Municipality. It was further contended that the seizure of the goods by the Municipality was illegal and also that it was excessive. Both the suits were tried together and were disposed of by the same judgment, both in the trial Court and in the lower appellate Court. The trial Court held that the Municipality was entitled to charge terminal tax on goods not brought to the octroi naka; that it was also entitled to levy the tax on goods which were unloaded on the southern bank of the Auranga river as well as on goods unloaded in carts standing in the middle of the river, and that the goods were seized within municipal limits. It therefore dismissed the plaintiffs' suit and directed that plaintiff No.2 should be entitled to the return of Rs. 6-4-0, the balance of the sale-proceeds of the three bags which had been sold, as well as the three unsold bags or their price, if they had been already sold because of the failure of the plaintiffs to take delivery of them. This judgment was confirmed in appeal by the District Judge of Surat, and the plaintiffs have come in appeal.

(2.) THE first contention urged before us is that the Bulsar Municipality had no power to levy terminal tax at all. This contention was not raised before the trial Court. It was first raised in the District Court, and being a pure point of law was allowed to be raised. Under Rule 3 of the Terminal Tax Rules and Bye-laws of the Bulsar Town Municipality, which were sanctioned by the Commissioner, N. D., in May, 1927, the Municipality is entitled to levy terminal tax on the goods specified in the Schedule, the tax being payable on import of the goods into the Municipality. Section 59 of the Bombay District Municipal Act, III of 1901, by which the Municipality in suit is governed, provides that subject to any general or special orders which the Governor in Council may make in this behalf, any Municipality (a) after observing the preliminary procedure required by Section 60 and (b) with the sanction of the Commissioner may impose certain specified taxes which are mentioned at items (i) to (x) of the Section and (x-a) " any other tax which, under rules made under Clause (a) of Section 80A, Sub-Section (3), of the Government of India Act, a local authority may be authorised to impose by any law made by the local Legislature without the previous sanction of the Governor-General." It is under the authority of this clause, which was introduced into the Bombay District Municipal Act by Act XXXVIII of 1920, that the Municipality has been levying the terminal tax. THE contention of the plaintiffs is that under the provisions of this clause the Municipality cannot levy this tax unless it has been specifically authorised to do so by a law made by the local Legislature. THE contention of the defendant Municipality is that Clause (x-a) itself is sufficient authority to enable the Municipality to impose the tax and it has imposed the tax as required by the Section with the sanction of the Commissioner. Section 80A of the Government of India Act, 1919, provides that: (3) THE local Legislature of any province may not, without the previous sanction of the Governor-General, make or take into consideration any law (a) imposing or authorising the imposition of any new tax unless the tax is a tax scheduled as exempted from this provision by rules made under this Act. THE Scheduled Taxes Rules, which came into force on December 16, 1920, provided inter alia that:

(3.) BOTH the trial Court and the lower appellate Court have rightly held that the jurisdiction of the Municipality extends up to the line of the medium high water mark of the river; but they have fallen into an error in interpreting these words, and have taken the medium high water mark of the river as toeing the same thing as the middle line of the river ad medium filum aqux, and it is this confusion which has led both Courts to the finding that the place-where the ship was standing and where the goods were attached was within the limits of the Bulsar Municipality.