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TMI Blog1985 (8) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... from that date by reason of the extension of the local limits of the said Municipal Committee by the Notification No. MCII (XIII)-II 61/31330 dated August 10, 1965 issued under section 5(3) of the Punjab Municipal Act, 1911 (Punjab Act No. III of 1911) (hereinafter referred to as 'the Act') by the then Punjab Government, the factory premises came within the municipal limits of Bhiwani. The said Notification was published in the Punjab Government Gazette dated August 13, 196 and with effect from that date the Municipal Committee of Bhiwani commenced to impose and collect octroi from the appellant in respect of the guar imported by the appellant into its factory within the extended municipal limits of Bhiwani from outside. The appellant resisted the levy of octroi. When its attempts to get exemption from payment of octroi failed, it filed a writ petition under Article 226 of the Constitution before the High Court of PunJab and Haryana in Civil Writ No. 2743 of 1968 questioning the imposition of octroi on several grounds one of them being that without complying with the legal formalities necessary for the imposition of octroi in the extended area o the municipality, it was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed by section 62 of the Act was complied with. The High Court distinguished the above decision from the present case by relying upon sub-section (4) of section 5 of the Act which prescribed that when any local area was included in a municipality under sub-section (3) of section 5 of the Act, and, expect as the State Government may otherwise by notification direct all rules, bye laws, orders, directions and powers made, or conferred under the Act and in force throughout the whole municipality at the time, would apply to such area. The High Court noticed that in the Bombay District Municipal Act, 1901 which governed the Bagalkot City Municipality's case (supra) there was no provision corresponding to sub Section (4) of section 5 of the Act and it took the view that by virtue of section 5(4) of the Act all taxes, octroi etc. which were being levied within the municipal limits of Bhiwani before the extension of the municipal limits came to be applicable automatically to the extended area of the municipality. On the above basis the Writ Petition was dismissed on May 18, 1970. Along with the said writ petition the High Court also dismissed some other writ petitions which had been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections and powers and does not significantly mention 'notification'. It is apposite to consider section 6, 7 and 8 of the Act which deal with the effect of exclusion of local area from the municipality. In the case of exclusion of an area from the Municipality it is provided in section 8(1) (a) of the Act that This Act and all notifications, rules, bye laws, orders, directions and powers issued, made or conferred under the Act, shall cease to apply thereto. When the Act provided for notifications ceasing to apply in the case of exclusion of local areas, and in the immediately preceding section 5 refrained from using the word 'notifications' becoming applicable in the case of inclusion of areas the legislative intent is unambiguous and crystal clear that notifications could not become applicable to an included area on the strength of section 5(4) of the Act. The word 'notification' cannot be said to be synonymous with rules, bye-laws, orders, directions and powers for two reasons. First, the Act in the present case speaks of notifications for imposition of tax and uses the word notification' separately from the other words rules, bye laws, orders, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sign rules, notification and further providing that those words and sign should be deemed always to have been substituted. By reason of this amendment the expression 'notification' should be deemed always to have been present in section 5(4) of the Act including the date on which the municipal limits of Bhiwani were extended bringing within them the factory of the appellant also. By section 4 of the Amending Act, the levy of octroi against and collection from the appellant and others within the extended limits of all the municipalities in Haryana were validated. Section 4 of the Amending Act read thus:- 4. Validation: (1) Notwithstanding any judgment, decree or order of any court or other authority to the contrary.................................. any octroi levied, charged or collected or purporting to have been levied, charged or collected before the commencement of this Act and any action taken or thing done before the commencement in relation to such assessment, reassessment, levy or collection under the provisions of the principal act and the rules made thereunder shall be deemed to be as valid and effective as if such assessment, re-assessment, levy or col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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