BAGALKOT CITY MUNICIPALITY Vs. BAGALKOT CEMENT CO

JUDGEMENT

(1.) This is an appeal against a judgment of the High Court of Mysore which held that the respondent was not liable to pay any octroi duty to the appellant municipality in respect of dutiable goods brought to its factory as on a proper interpretation of the appellant's by-law fixing the octroi limits, the respondent's factory was outside those limits. The question that arises in this appeal is one of the interpretation of that by-law.

(2.) The appellant municipality was constituted under the Bombay District Municipal Act, 1901. Section 4 of the Act gives power to the Government to declare any local area to be a municipal district and to extend, contract, or otherwise alter the limits of any municipal district. Section 9 provides that there shall be a municipality for every municipal district. Section 59 of the Act inter alia provides that a municipality may subject to certain conditions impose "an octroi on animals or goods, or both brought within the octroi limits for consumption, use or sale therein." In exercise of its powers under this section, the appellant municipality imposed an octroi duty on certain goods. Section 48 of the Act gives a municipality power to frame by-laws for various purposes including that of "fixing octroi limits". The appellant municipality framed a by-law under this section fixing octroi limits, in these terms:"The Octroi limits of the Municipal District shall be the same as the Municipal Districts." The dispute is as to the Meaning of the words "Municipal Districts" in this by-law.

(3.) The respondent is a company owning a factory which prior to September 3, 1959 was outside the municipal district of the appellant municipality as such district was till then constituted. There is no dispute that the respondent has all along been bringing into its factory goods of the variety specified in the rule imposing the octroi duty for consumption and use therein but no duty was payable so long as the respondent's factory was outside the municipal district and therefore also admittedly, outside the octroi limits as defined by the aforesaid by-law. By a notification issued on August 25, 1959, the Government of Mysore extended the municipal district of the appellant municipality with effect from September 3,1959 and as a result of this extension the respondent's factory came to be included within that district. On such extension the appellant municipality demanded octroi duty on goods brought into the respondent's factory contending that the factory had thereupon come within its octroi limits as defined by the by-law. The respondent disputed this contention and moved the High Court of Mysore under Art. 226 of the Constitution for a writ of mandamus directing the appellant municipality to forbear from collecting the duty. The High Court did not accept the appellant municipality's contention and issued the writ.