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

JUDGEMENT

(1.) The Writ Appeal is directed against the judgment of Ramaprasada Rao, J., in W.P. No. 1574 of 1970(P). The appellant is Swadeshi Cotton Mills Co., Ltd., Mudaliarpet, Commune, Pondicherry, hereinafter called the Mills. 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 obtains most of its raw materials and other stores from outside the Pondicherry State. It purchases cotton from various States in the country and also imports the same from abroad. In addition it also purchases various materials like colour chemicals, sizing and packing materials, kerosene oil lubricants, spare parts, stationery, building materials and fuel etc. from places outside the Pondicherry State. Mudaliarpet Commune, in which the Mills are situate is not served by Railway and even the road transport could only be through the town of Pondicharry. The goods purchased by the Mills from outside Pondicherry State have, 'therefore, to be brought into Pondicherry Commune by rail or by lorries. If the goods are sent by rail they are cleared at the Pondicherry railway station on payment of what the petitioner initially called "octori duty" but which later transpired to be a Municipal tax or fee levied by the Pondicherry Commune in exercise of its powers under the Municipal Law of 1880. After such clearance of the goods from the railway station, when they are brought to Mudaliarpet Commune, through the roads, they are checked at the Commune boundary and a similar tax or fee is again levied. When, after the manufacture the Mills despatches the yarn, cloth etc. to various places outside the Pondicherry State they pass through Pondicherry Commune again, a similar tax or fee is levied on the goods despatched.

(2.) The Pondicherry Commune, by the resolutions, dated 5th May, 1961 and 12th May, 1961 enhanced that duty on several articles brought into Pondicherry Commune by rail or road. The appellant challenged the power of the Pondicherry Commune to impose such a charge on the goods which merely pass through that Commune on the ground that the nature of the duty being an "octroi" the Pondicherry Commune cannot levy any duty on goods which are not intended to be consumed therein and that the said levy is unauthorised and illegal. The appellant's further case is that even if the levy is not in the nature of "octroi" it would still be unauthorised, illegal and beyond the competence of the Pondicherry Commune, and that even if the provisions of the Municipal Act of 1880 are construed to authorise the levy under the caption "weighing, measuring and gauging charges", the levy in question which does not contemplate any quid pro quo cannot be justified.

(3.) The respondents, the Pondicherry Commune and the Union Territory of Pondicherry contended that the levy made by the Pondicherry Commune is legal and duly authorised, that the impost is only a tax and not a fee, that such taxes have been levied and collected practically from the year 1880 without any challenge from any quarter and that, in any event, the validity of the impost could not be attacked in view of Section 7 of Central Act XLIX of 1962.