LexM/S. HINDUSTAN GUM & CHEMICALS LTD. versus STATE OF HARYANA & ORS.
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A B c D E F 630 M/S. HINDUSTAN GUM & CHEMICALS LTD. v. STATE OF HARYANA & ORS. AUGUST 19, 1985 [E.S. VENKATARAMIAll AND R.B. MISRA, JJ. J Punjab Municipal Act 1911, Section 5 and Punjab Municipal (Haryana Amendment and Validation) Act 1971, Sections 2 and 4 - Octroi - Levy of octroi in the extended area of a municipality declared invalid by the Supreme Court - Statute amended retros- pectively removing the defect found by the Court and validating the levy and collection of octroi - Legislature, Whether compe- tent to amend the statute effect of. Section 5(4) of the Punjab Municipal Act 1911 as it stood prior to the amendment prescribed: "When any local area has been included in a municipality under sub-section (3) of Section 5, this Act, and, except as the State Government msy otherwise by notification direct, all rules, bye-laws, orders, directions and powers made, issued or conferred under this Act and in force throughout the whole municipality at the time, shall apply to such area~ By a' notification dated August 10, 1965 issued under Section 5(3) of the Act, the area within which. the factory of .the appel- lant was situated was included within the municipality of . Bhiwani. Thereafter, the Municipal Coalllittee coaaenced to impose and collect octroi from the appellant in respect of the ~ imported by the appellant into its factory within the extended municipal limits of Bhiwani from outside. The appellant filed a Writ Petition in the High Court for restraining the municipality from levying and collecting the octroi on the ground that when an area of any municipality was extended, there could be no automatic imposition of octroi which was in force within the limits of municipal area before such extension in that extended G . area unless the procedure prescribed by Section 62 of the Act was complied· with. In another writ petition, the Atlas Cycle Industries Ltd. also raised a similar contention before the High Court. The High Court dismis.sed both the Writ Petitions by a COlllllOn judgment on 18th May, 1970 holding that by virtue of H section 5 (4) of the Act all tues, octroi etc. which were being levied within the municipal limits before the extension of the HINDUSTAN CilEMICALS v. STATE 631 municipal limits came .. to be applicable automatically to the extended area of the municipality •. The Supreme Court in an appeal filed by the Atlas Cycle Indus tries Ltd. , reversed the judgment of the High Court on August 11, 1971 holding that the notifica- tions under the Act are . the only authority and mandate for imposition and charge of tax, and since notifications are not made applicable to included areas under section 5( 4) of the Act, the High Court was wrong in holding that the municipality was competent to levy and collect octroi from the appellant by virtue of the provisions contained in Section 5(4) of the Act. After the llforeaaid decision in Atlas Cycle Industries Ltd., the State Legislature passed Punjab Municipal (Haryana Amendment & Validation) Act 1971. Section 2 of the Amending Act substituted the word "rules" in sub Section (4) of Section 5 of the Act by the words and sign "rules, notification" and further provided that those words and sign should be deemed always to have been substituted. By sectio~ 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. Dismissing the Appeal; HEW: 1. It is permissible for a legislature to overcome the effect of a decision of a Court setting aside the imposition of the tax . by passing a suitable legislation amending the relevant provisions of the statute concerned with restrospective effect and by validating assessments made earlier. (638 D-E) · In . the instant case, since the word . 'notification has now been inserted in Section 5(4) of the Act with retrospective effect, the basis on which the decision in ~ Cycle 1Dduat- rie8 Ltd. was rendered has been removed becsuse the deficiency in Section 5( 4) noticed by the Supreme Court has been made good and the lev)' and collection of octroi have alao been validated. The AiMudlng Act satisfies the teats laid down by Supreme Court in Sh. Pritbvi Cotton ll1lls case. The Amenc!in8 Act, thus, neutral! - ses the effect ·of the decision in Atlas Cycle Industries Ltd. which can no longer be relied upon after the 8!¥0clment of the
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