FERTILIZER CORPORATION OF INDIA LTD., GORAKHPUR versus NAGAR MAHAPALIKA, GORAKHPUR

Citation: [1996] SUPP. 1 S.C.R. 707 · Decided: 24-04-1996 · Supreme Court of India · Bench: M.M. PUNCHHI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

FERTILIZER CORPORATION OF INDIA LTD., GORAKHPUR 
A 
v. 
NAGAR MAHAPALIKA, GORAKHPUR 
APRIL 24, 1996 
[M.M. PUNCHHI AND SUJATA V. MANOHAR, JJ.] 
B 
U.P. Town Areas Act, 1914: Section 14 
Municipalities-Octroi-Power to levy-Held : town areas not em-
powered to lery octroi after amendment of S.I4 of Act-Tax collected by C 
Notified Area Committee after amendment could not be sustained--U.P. 
Municipalities Act, 1916-U.P. Urban Local Self-Government Laws (Amend-
ments) Act, 1987, S.18. 
U.P. Nagar Mahapalika Adhiniyam, 1959: Sections 3 and 4. 
Municipalities-O_ctroi-Automatic levy of-/n newly included 
area-New area included in city by notification--Levy of octroi in city-Held 
:automatically leviable in such area:--Following of procedure under ss.l99 to 
219 not necessary--Lery of octroi prior to insertion of S. 3(4) valid as such 
insertion was retrospective. 
Municipalities-Octroi-Continuance of-Octroi levied by municipality 
under U.P. Municipality Ac~ 1916--Municipality succeeded by Mahapalika 
under Adhiniyam-Held: Octroi levied by municipality remained in force even 
without following procedure for its levy under Adhiniyam. 
D 
E 
The appellant-Corporation carried on the business of manufactur-
F 
ing fertilizers. It had a factory situated in an area which was outside the 
city limits. This area was governed by U.P. Town Areas Act, 1914 and it 
had a Notified Area Committee constituted under the Act. At that time the 
city had a Municipality constituted under the U.P. Municipality Act, 1916. 
By reason of a notification issued under Section 3(1) of the U.P. Nagar G 
Mahapalika Adhiniyam. 1959, the city ceased to be governed by the U.P. 
Municipalities Act, 1916 and became a Nagar Mahapalika governed by the 
Adhiniyam of 1959. 
Thew<tfter the area in which the appellant's factory was situated was 
brought within the limits of the city by a notification issued under Section H 
707 
708 
SUPREME COURT REPORTS [1996) SUPP. 1 S.C.R. 
A 
3(2) of the Adhiniyam of 1959. ConseQuently, the area in which the 
appellant's factory was situated came under the jurisdiction of the Nagar 
Mahapalika of the city. Octrni was recovered from the appellant by the 
Notified Area Committee and Nagar Mahapalika of the city. Unable to 
succeed before the High Court, the appellant had filed the present appeal 
B 
challenging the said recovery of octroi. 
c 
Allowing the appeal in part, this Court 
HELD : 1.1. Prior to the Uttar Pradesh Urban Local Self-Govern-
ment Laws (Amendment) Ordinance, 1979, the Notified Town Area Com-
mittee, under Section 14(1) (g) of the U.P. Town Areas Act, 1914 had the 
power to impose any tax mentioned in Section 128(1) of the U.P. 
Municipalities Act, 1916. This included the power to levy octroi which was 
provided for under Section 128t1)(viii) of the U.P. Municipalities Act, 
1916. By reason of the amendment made by Section 3 of the said Or-
dinance, the power to levy a tax mentioned in Section 128(1)(viii) of the 
D U.P. Municipalities Act, 1916 was taken away from the Notified Area 
Committees under the U.P. Town Areas Act, 1914. Therefore, after the 
commencement of the said Ordinance, the Notified Area Committee had 
no power to levy and collect octroi from the appellant. This position 
continued up to the date when the area which was under the jurisdiction of 
E 
the Notified Area Committee became a part of the Nagar Mahapalika. 
Clearly, therefore, the sum which had been collected by the Notified Area 
Committee from the appellant for the period prior to the commencement 
of the said Ordinance was without the authority of law. [712-B-E] 
1.2. Once the area in which the appellant's factory was situated was 
F 
included in the city, by a notification under Section 3(2) of the U.P. Nagar 
Mahapalika Adhiniyam, 1959, by reason of Section 3(4) of the said Ad-
hiniyam of 1959, all notifications, rules, bye-laws etc of the city in force, 
automatically apply to the freshly included area; and all taxes, fees· and 
charges imposed under the Adhiniyam can be levied and collected from 
G the newly included area. [713-D] 
13. Section 18 of the Uttar Pradesh Urban Local Self-Government 
Laws (Amendment) Act, 1987, being U.P. Act 3 of 1987, validated only a 
purported levy and collection of octroi under the provisions of the prin-
cipal Acts referred to in Chapters IV or V of the Amending Act 3 of 1987. 
H These two chapters of the said U.P. Act 3 of 1987 deal with the said 
F. C. I. LTD. v. NAGAR MAHA.P ALIKA 
709
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