KUNWAR RAM NATH AND OTHERS versus THE MUNICIPAL BOARD, PILIBHIT

Citation: [1983] 3 S.C.R. 321 · Decided: 02-06-1983 · Supreme Court of India · Bench: E.S. VENKATARAMIAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

y 
• 
321 
KUNWAR RAM NA Tii AND OTHERS 
v. 
THE MUNICIPAL BOARD, PILIBHIT 
June 2, 1983 
[E.S. VENKA'fARAMIAH AND V. BALAKRISHNA ERADI, JJ.) 
U.P. Municipalities· Act, 1916 (Act. No. 11of1916)-section 128(1) (viii)- · 
·Power to impose octroi on certain goods-Reatf with section 157(3')-Power to 
exempt from payment of tax. Exemption-granted by U.P. GoverntnLnt Order No. 
3613(1)/Xl-395 dated November 20, 1936 from octroi duty-Whether available 
after publication of new bye-laws on May 18, 1960. Order of exemption under 
s. iS7(3) is not the same as any general rule or special order referred ins. 128(1). 
Wori.'s & p!trases-Cess-lnterpretatian of-Whether tax or fee depends 
upon purpose of its levy. 
A 
B 
c 
Words and phrase.-Octroi-Intcrpretation of-Octroi exempted by 1936 
D 
order and levy of 1960 are both taxes levied under the Act. 
The respondent Municipal ~oard tiled a complaint in the tria.I court 
against the appellants under s. 155 of the U.P. Municipalities Act, 1916 
alleging that the appellants had brought by railway on November 30, 1967 at 
the railway ~iding in their sugar faCtory withjn the limits of the respondent for 
purposes of consumption or use certain quantity of sugarcane without paying 
octroi paya'!:>le under the new bye· laws of the respondent published on May .18, 
1960. The appellants pleaded that since the payment of octroi on sugarcane 
brought by railway at the railway siding situated inside their factory had been 
exen1pted by U.P. Government's order dated Noverhber 20, 19j6 passed under 
s: 157 (3) of the Act the prosecution should fail. As the respondent went on 
seeking adjournments and the case remained undisposed Qf for nearly four 
years, the appellants filed a petition under s. 561-A of the Code of Criminal 
Procedure, 1898 in the High Court for quashing the proceedings On the ground 
that" they were vexatious. The High Court dismissed the petition observing 
that after the commencement of the· Constitution there has been a material 
change in the nature of octroi levied under the Act and on account of the 
framing of the new bye·laws the exemption granted under s. 157(3) of the Act 
would no longer be available. The 1-Iigh Court held that since a petition filed 
by the appellants challenging the notification containing the new bye-laws was 
earlier dismissed by the High Court it was not open to the appellants now to 
contend that the exemption granted under the Order of 1936 was still 
available. 
• 
, In this appeal the respond~nt contended that the levy from which 
exemption had been given by·the Order of 19J6 was either a terminal tax or a 
fee and not a tax and since what was being levied as octroi from the year 1960 
E 
F 
G 
H 
A 
B 
c 
D 
E 
F 
G 
H 
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322 
SUPREME COURT REPORTS 
(1983) 3 S.C.R. 
under the new"' bye-laws was a tax, the drder of exemption would not be 
applicable to it. 
Allowing the appeal, 
HELD : The respondent was not entitled to collect octroi on sugarcane 
brought into i'ts municipal limits by the appellants by rail on the relevant date~ 
[336 BJ 
·The v.:ord 'octroi' ins. 128(1) (viii) of the Act is found in the group of 
taxes referred to in s. 128. The sum received by a ~unicipal Board on account 
Of octroi is ;ilso dealt with like any other tax. There iS no eiement of quid 
pro quo between the person who pays the octroi and the Muilicipal Board. Th• 
octroi Ieviab1e under ('fltry 49 of List Ir of the Seventh Schedule to the 
Government of India Act, 1935 was not a fee but was a tax. [332 B-C, 335 A] 
A cess may either be a tax or a fee. 
Whether a cess in a given context 
is a tax or a fee depends L•pon the pUipose for which it is Jevied. Jn entry 49 
of List II of the Seventh Schedule of the Government of India Act 1935 the 
expression 
1cesses' is used in the sense of 'taxes=. In entry 52 of List IT of the 
Seven'tlt Schedule of the Constitution the expression 'taxes' is substituted in 
th~ p1ace of the expression 'cesses' which was in the former entry 49 in the 
Government of India Act, 1935, but the nature and content of the _legislative 
powe·r under both are the san1e. 
{331 C, E-FJ 
When tax is clearly l~vied on goods when they are brought into a local 
area for purposes of use, sale or consumption, it doe! not cea~e to be a tax 
levied under s. 128(1) read with entry 49 of List II of the Seventh Schedule to 
the Government of India Act, 1935 merely because the municipalities concerned 
render no 5ervice with regard to it. [330 F, 3

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