SAHLOT BROTHERS Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) THIS is an application under Art. 226 of the Constitution in the matter of the levy and collection of the octroi tax by the Municipal Board Rajsamand, opposite party No. 2. The Rajasthan State has also been impleaded as opposite party No. 1.

(2.) THE petitioners are residents of two towns named Rajnagar and Kankroli (Tehsil Rajsamand) which together are said to constitute the Rajsamand Municipality. According to the petitioners, this municipality, has been functioning as such since 1952, having been apparently established under the Rajasthan Municipalities Act, (No. XXIII) of 1951 (hereinafter referred to as the Rajasthan Act ). THE case of the petitioners is that the Municipal Board Rajsamand has introduced the octroi tax (see the Octroi Schedule and the By-laws Ex. 3) with effect from the 1st October, 1955, and with a view to achieving this result, the Board passed certain by-laws and rules including the schedule of octroi to be levied on various articles entering into this municipality. THE contentions of the petitioners briefly put are that the preliminary steps taken and the procedure adopted for the passing of the rules and the by-laws and the schedule of taxes are open to objections in essential respects and the relevant provisions of the Rajasthan Act have been disregarded. We refrain from stating their case in detail in the above respects in view of a more vital objection. That objection is that the limits of the Rajsamand Municipality were never defined by the State in accordance with law and that this latter defect goes to the very root of the matter. This objection was argued before us from a two-fold angle. Firstly, from the view point of area; and it was contended that as the boundaries of this municipality had not been laid down according to law, the local area over which this organisation was to function remained uncertain and indefinite and, therefore,any levy or collection of taxes therein was not a practical proposition. In the second place, it was contended that a municipality which is to be governed by an elected board but the limits whereof are not prescribed according to law, cannot be considered to be properly constituted or brought into valid existence for the important reason that owing to the lack of such definition of limits, the entire structure of the board is thereby inevitably affected and a body which springs out of such imperfect and uncertain source cannot be held to be a properly constituted body. THE prayer of the petitioners, therefore, is that the opposite parties be restrained from levying or collecting the octroi and that the rules and by-laws framed by the board be declared to be void and of no effect, and lastly that the Board be directed to refund the moneys collected by way of octroi from the petitioners. We may also state here that an application for an interim stay came before us on the 23rd January, 1956, and we agreed not to pass a stay order because the learned Government Advocate gave an undertaking before us that if the decision went against the municipality, the letter will refund to the petitioners all moneys collected from that date i. e. 23rd January, 1956 up to the date of our decision by way of octroi from the petitioners, and the case was directed to be posted for hearing at an early date.

(3.) THE result is that we allow this application and prohibit the Municipal Board, Rajsamand, as well as the State from levying and collecting the octroi tax in the Rajsamand municipality on the footing of the rules and by-laws framed or sanctioned before the 19th January, 1956. We also hold that these rules and by-laws are in operative. We further direct that that Municipal Board do refund the amount of octroi tax recovered from the petitioners between the period when we were asked to pass an interim stay order, that is, on the 23rd January, 1956 and the date of our decision ; but otherwise reject the prayer for refund and would leave the petitioners to seek their remedy in proper courts of law, if so advised. THE petitioners will be entitled to one set of costs from the opposite parties. .