1985 (8) TMI 377 - SC - Indian Laws

Summary

Issues Involved:
1. Legality of the imposition of octroi without complying with legal formalities.
2. Validity of retrospective amendment and validation of octroi levy.

Summary:

1. Legality of the Imposition of Octroi:
The appellant, a limited company, challenged the imposition of octroi by the Municipal Committee of Bhiwani after the extension of municipal limits by Notification No. MCII (XIII)-II 61/31330 dated August 10, 1965, issued u/s 5(3) of the Punjab Municipal Act, 1911. The appellant contended that the imposition was invalid as the necessary legal formalities were not complied with. The High Court dismissed the writ petition, distinguishing the case from Bagalkot City Municipality v. Bagalkot Cement Co. by relying on sub-section (4) of section 5 of the Act, which allowed automatic application of all rules, bye-laws, orders, directions, and powers to the extended area.

2. Validity of Retrospective Amendment and Validation of Octroi Levy:
The Supreme Court initially would have allowed the appeal based on its decision in Atlas Cycle Industries Ltd. v. State of Haryana, which invalidated the automatic imposition of octroi without a specific notification u/s 62(10) of the Act. However, the Haryana Legislature amended the Act through the Punjab Municipal (Haryana Amendment and Validation) Act, 1971, inserting the word "notification" in sub-section (4) of section 5 with retrospective effect. This amendment validated the levy and collection of octroi in the extended municipal limits. The Court held that the amendment satisfied the requirements for a valid validating law as laid down in Shri Prithivi Cotton Mills Ltd. v. Broach Borough Municipality, thus neutralizing the effect of the earlier decision in Atlas Cycle Industries Ltd. The appeal was dismissed, affirming the High Court's order but on different grounds, validating the retrospective levy and collection of octroi.

Conclusion:
The Supreme Court dismissed the appeal, upholding the retrospective amendment and validation of octroi levy by the Haryana Legislature, thereby affirming the legality of the octroi imposed by the Municipal Committee of Bhiwani.