LexASSOCIATED CEMENT COMPANIES LTD. versus STATE OF MADHYA PRADESH AND ANR.
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: ;, . ~,· ·_,, .. A ASSOCIATED CEMENT• COMPANIES LTD. v. STATE OF MADHYA PRADESH AND ANR. APRIL 5, 2005 B [RUMA PAL, ARIJIT PASAYAT AND C.K. THAKKER, JJ.] Muni<;ipal council : . _,. Madhya Pradesh Municipalities Act, 1961-Sections 127, · 129, 131- C Terminal Tax (Assessment and Collection) on the Goods exported from Madhya Pradesh Municipal Limits Rules, 1996-Terminal tax levied by the Municipal council.on price ofcement-Government passed order reducing the terminal tax-Justification of-Held: The power to levy the terminal tax· under Section 117 is exercised by municipality by delegation-Since levy was a legislative D function of the municipality, the State 'Government did not have a statutory power to interfere with the levy. . . ·, J _,· J ,:.,; . Municipal C~u~cH issued a Notifkation· dated .2.5~199t levying --~· terminal tax @ 0.50% on price of the Cement. State Government accorded . · sanction for imposition of terminal tax in terms of clause (xvi) ~f 5ub -~· . E Section (i) of Section 127 of Madhya Pradesh Municipalities Act, 1961. · Thereafter, State Govel'nment issued Cfrcular/GovernmentOrder dated 15.U.1995 indicating that there must be uniformity in the rates of terminal tax all over the State of M.P. and prescribed the rate of 0.20%1 on the price of cement. Appellant has been engaged in manufacture of cement and _ F paying tax @ 0.20%. Demand was raised@.().50%and the appellantwas . , ,,. ~:.. directed to pay the differential amount .. Agg~ieved appellant preferred . . .. '· Writ Petition and Single Judge held that Municipal Council was bound by Government Order and there is no justification on the part of Municipal Council in making the impugned demands on the basis of rates fixed by it .. Division Bench reversed· the. finding of Single Judge holdin·g G that levy was a legislative function of the Municipality and the State Government did not have a statutory power to interfere with the levy. Hence the present appeal. Dismissing the appeal, the Co~rt H 258 I, . -- - --- ASSOCIATEDCEMENTCOMPANIESLTD.v.STATEOF M.P. 259 HELD : 1. The judgment of the Division Bench that the Circular A dated 15.12.1995 did not bind the Municipal Council does not suffer from any infirmity. (269-BI 2. There was no proposal by the Municipal Council for reduction of the rate of tax. In terms of sub-section (1) of Section 127, the power to impose the tax has to be exercised by the Council which is of course subject B to any general or special order of the State Government. The Municipal Council exercises the power as a delegatee and the power exercised under Section 127 is a delegated legislation. Since the Municipal Council has not proposed for any variation in the rate of tax the question of the State Government passing any general or special order in that regard is not C contemplated. [268-D-El 3. So far as Section 129 is concerned, there is no question of any suo motu fixation of rate by the State Government. In fact while acting on the proposal by the Municipal Council, the State Government can direct modification affecting the substance of the proposal. But the same cannot D be given effect to unless and until the modification has been accepted by the Council at a special meeting. In the instant case that contingency has not arisen. Though in terms of Section 131 the State Government can initiate action for reduction in the rate that can only be done if the enumerated circumstances exist. That situation has also not arisen in the instant case and admittedly the State Government has not acted in terms ,E of Section 131 of the Act. Therefore, the Division Bench is right in its view that tile Circular of the State Government dated 15.12.1995 is really of no consequence. Further changes under Section 127 can be introduced in terms of sub-section (2) of Section 127 by framing rules. In the instant case, the rules were framed in March 1997 and did not have any p retrospective effect. [268-F-H; 269-A] CIVIL AP PELLA TE JURISDICTION : Civil Appeal No. 24 I 5 of 2000 . .From the Judgment and Order dated 10.9.99 of the Madhya Pradesh . •. '"' . High Court at Jabalpur in LP.A. No. 375 of -1998. G Rajive Shakdher, U.A. Rana, Ms. K. Sumathi, Madhup Singhal, and S. Chatterjee for Mis. Gagrat and Co. for the Appellant. · Prakash Shrivastava, Sakesh Kumar and Satish K. Agnihotri for the Respondents. H 260 SUPREME COURT REPORTS [2005] 3 S.C.R. A The
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