MUNICIPAL BOARD, BAREILLY versus BHARAT OIL COMPANY AND ORS.

Citation: [1989] SUPP. 2 S.C.R. 376 · Decided: 04-12-1989 · Supreme Court of India · Bench: K.N. SAIKIA · Disposal: Appeal(s) allowed

Judgment (excerpt)

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MUNICIPAL BOARD, BAREILLY 
V. 
BHARAT OIL COMPANY AND ORS. 
DECEMBER 4, 1989 
[K.N. SAIKIA AND M. FATHIMA BEEVI, JJ.] 
U.P. Municipalities Act 1916/U.P. Municipal Account Code 
1925/U.P. Octroi Rules, 1925: Section 128/Chapter X/Rules 131-
231-0ctro'i-c-Levy of on mineral oil-Permissibility of. 
The appellant is a Municipal Board governed by the provisions of 
the U.P. Municipalities Act, 1916. Section 128 of the Act provides for 
imposition of taxes by the Board. In exercise of the powers under Sec-
tions 131 to 135 and 296 of the Act, the Government of the United 
Provinces framed octroi rules. The said rules were included in the 
Municipal Account Code (Chapter X rules 131 to 231). The proviso to 
Rule 13 l-provided thaf octroi shall not he levied on certain articles 
which included mineral oil. The rule was amended vide notification 
dated the 2nd November 1953 and for the words "the mineral oil" in 
the proviso, the words "mineral oils classified as motor spirit, kerosene 
or diesel oil" were substituted. 
Separate rules for the assessment and collection of octroi in the 
Bareily Municipality were framed by the Govt. of U.P. The draft rules 
were notified vide notification dated the 16th February 1963. Final 
rules were notified vide notification dated the 7th May 1963 and 
published in U.P. Gazette dated the 11th May 1963. By a notification 
dated the 24th July 1963, published in U.P. Gazette dated the 3rd 
August, 1963, the appellant Board imposed octroi duty on goods and 
animals brought within the Q\'lroi limits of Bareily Municipality for 
consum1>tion, use and sale at the rates shown in the Schedule subject to 
certain exceptions mentioned therein. The said notification'cal!!l'.\into 
operation from November 16, 1963 and thereafter the levy of octroi in 
Bareily Municipality was governed by 1963 rules. The amendments 
were made in the octroi schedule both in the rates as well as in the 
exemption and as a result whereof motor spirit, kerosene and diesel oil 
· were removed from the exemption clause and were subjected to the 
octroi duty @ I paisa per liter vide notification dated August 
27, 1969. 
The respondents challenged the validity of the notification dated 
376 
MUNICIPAL BOARD v. BHARAT OIL CO. 
377 
the 27th August 1969 by means of a writ petition before the High Coun 
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on the ground that 1925 rules took away the power from all Municipal 
Boards to impose octroi duty on mioeral oils and until such power is 
restored under a contrary notification issued under section 128 of the 
Act, the Board did not have any justification to assess or collect octroi 
duty on mineral oils. The appellant Board contended that Rule 131 was 
superseded by the 1963 rules which now governed the imposition of B 
octroi by the appellant Board. The single Judge of the High Court who 
heard the petition came to the conclusion that Rule 13 l restricted the 
power of the Board to impose the octroi and the subject-matter of the 
rule was not covered by the 1963 rules. The appellant's appeals prefer-
red before the Division Bench were dismissed which took the view that 
the bar under Rule 131 regarding the imposition of octroi duty on c 
mineral oils continued notwithstanding the 1963 Rules. Hence these 
appeals by the Municipal Board. 
Allowiog the appeals, this Court, 
HELD: The rule making power under section 296 read with Sec-
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tion 300(2) Of the Act enables the State Government to except any one 
municipality from the operation of the general rule by express provision 
in that behalf. When the identical authority in exercise of its rule mak-
ing power duly frames the rules in respect of the same matter expressly 
providing that the new rules shall apply to a particular municipality in 
supersession of the existing rules, it must be deemed that existing rules E 
are repealed.to that extent. [384C-DJ 
The 1963 rules had been framed under Section 296 of the Act in 
supersession of the existing rules after the publication by the State 
Government, in the Gazette as provided under Section 300 and there-
fore rule 131 in the 1925 rules ceased to have any operation in respect of F 
the matters dealt with therein so far as the Bareilly municipality is 
concerned. 13840] 
Mir; Central Distillery Chemicals Works Ltd. & Ylnr. v. State of 
U.P. & Ors., [1980"] All L.J. 62, approved. 
Municipality of Anand v. State of Bombay, AIR 1962 SC 988; 
Municipal Board, Hapur v. Raghuvendra Kripal & Ors., [1966] l SCR

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