SWADESHI COTTON MILLS CO , LTD , REPRESENTED BY THE SECRETARY Vs. COMMUNE OF PONDICHERRY REPRESENTED BY THE MAYOR OF PONDICHERRY COMMUNE AND ANR

JUDGEMENT

(1.) The petitioner in both the Writ Petitions is Swadeshi Cotton Mills Company, Limited, Mudaliarpet Commune, Pondicherry. It is a public limited company which took over the quondam Savana Mills in the year 1956. For the purpose of its business the Mills obtained most of its raw materials and other stores from outside the Pondicherry State. Amongst other things it purchased cotton from various States in our own. country and also imported the same from abroad. In addition, various materials like colour chemicals, sizing materials, packing materials, kerosene oil lubricants, spare parts, stationery and building materials etc., and fuel are all purchased by the petitioner from outside the Pondicherry State. Mudaliarpet commune is not served either by railway or by road transport. The petitioner company has no railway station of its own and hence the goods purchased from outside Pondicherry have to be brought into Pondicherry commune by rail or by transport companies. If the goods are sent by rail, they have to be cleared at the Pondicherry Railway Station on payment of what the petitioner initially called "octroi duty" but what latterly transpired to be a municipal cess or tax or fee levied by the Pondicherry commune in exercise of its powers under the Municipal Law of 1880. Even so when the goods are sought to be brought to Mudaliarpet Commune through the roads of the Pondicherry Commune, they are checked at the Commune boundary and a similar tax or fee is levied for the circulation of such goods in the Commune. The petitioner says that the Pondicherry Commune or the Pondicherry Municipality by its resolutions dated 5th May, 1961 and 12th May, 1961 enhanced the duty on several articles or goods brought into the Pondicherry Commune and such resolutions are said to be without jurisdiction. The petitioner also challenges the power of the Pondicherry Commune to impose such a tax. On the basis that the duty was equitable to octroi the petitioner avers that as the goods, whatever be the nature of the same, are not intended for consumption in the Pondicherry Commune but only in the Mudaliarpet Commune, the levy is illegal and unauthorised. The petitioner also complains that a similar duty is being levied by the Mudaliarpet Commune as well, as the goods re-enter the latter Commune wherein the petitioner's registered office and factory are situate. In the net analysis the petitioner would state that the goods suffer a duty in the hands of the Pondicherry Commune and again in the hands of the Mudaliarpet Commune, and when they go out of the factory as finished products, they are again subjected to a similar levy in the hands of the Pondicherry Commune. In the reply affidavit an. alternative case is set up. It is stated that even if the levy is not octroi, it. would still be illegal and beyond the competence of the Pondicherry Commune as the provisions of the Municipal Act of 1880 authorises the levy under the caption of "weighing, measuring and gauging charges" only. As this is in the nature of a fee, it ought to be commensurate with the services rendered. It is also suggested that such weighment measurement or gauging was optional and it was left to the citizen concerned to secure such service or not and in this, behalf also the levy is attacked. On the fact that it is only the State that cam bring any such impost, the jurisdiction of the Municipality is attacked. A challenge is made as against the power of the Municipality to change the nomenclature of the levy as well.

(2.) The respondent contending contra maintains that the levy in question, whether it is a tax or a fee, was a levy made in exercise of lawful power of the Pondicherry Municipality and the provisions of law did authorise the Municipality to bring in the impost and enforce the same and that there is no option left to traders bringing goods into the Commune to escape such a levy. The various provisions of the prior State law and the latterly introduced municipal law are referred to sustain the power of the Commune to levy the tax or fee and change its nomenclature. It is contended that at no time there was any increase or variation of the fee which was lawfully levied and actually collected prior to the historic date of the de jure transfer of Pondicherry State to the Union of India. The respondents after setting forth in detail the various factual and legal contentions touching upon the levy in question urge that these Writ petitions are misconceived and the prayer for a refund of the duty already collected is absolutely unsustainable.

(3.) The contention of Sri K.K. Venugopal appearing for the petitioner can be summarised thus. The droit in question was not lawfully levied by the Communes within the French Settlement in India and whether it is a fee or a tax, it is not in presenti exigible under Section 7 of the Pondicherry (Administration) Act, 1962 (Act XLIX of 1962), hereinafter, referred to as the Act. Though Section 7 of the said Act postulates the continuance of a tax or levy or fees when it has a lawful origin or has been lawfully levied prior to the date of the de jure transfer, it is claimed that the fee in the instant case was not so lawfully levied prior to 16th August, 1962 when such a transfer took place. The Commune of Pondicherry had no power at any time to levy the droit as it was only the State as a primary organ of administration which in this case is the metropoll of France which reserved such a power to itself and the Municipality of Pondicherry cannot claim any such power even after the promulgation of the Municipal law of 12th March, 1880. It is suggested that the delegation referred to in the Arrete dated 29th November, 1881 which extended the levy in question to the Pondicherry town, did not contemplate a delegation of power to the Municiplaity as such to levy the impost and the Arrete could at best be interpreted as extending the State's power to impose the droit even within a Commune's territorial limits. Even assuming that the droit is a valid levy, it is leviable only in certain peculiar circumstances when the importer of the various scheduled goods into the Communes of Pondicherry seek the assistance of the municipality for weighing, measuring or gauging the articles, and not otherwise. Therefore it is said that the levy is not of general operation and is not attracted by the incidence of the articles brought into the Pondicherry Commune for circulation. A challenge is made against the power of the Municipality to change the nomenclature of the impost. Faintly it is stated that after 16th August, 1962, which is the crucial date for sustaining a pre-existing lawful levy, the rate of fee was changed and in this behalf it cannot be said that even if it was a lawful levy the present droit is a legal impost, for there is a snapping in the continuity of the character and the content of the levy. I may at once state that though the pleadings refer to the levy as octroi, the petitioner did not address arguments on this aspect as the learned Government Pleader made it clear that droit is not octroi duty.