NAGAR PANCHAYAT,UNA versus UNA TALUKA SAHAKARI KHARID VECHAN SANGH LTD.

Citation: [1971] 2 S.C.R. 407 · Decided: 17-09-1970 · Supreme Court of India · Bench: J.C. SHAH, A.N. GROVER · Disposal: Appeal(s) allowed

Judgment (excerpt)

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NAGARPANCHAYAT,UNA 
v. 
407 
UNA 'fALUKA SAHAKARI KHARID VECHAN SANGH 
LTD. 
September 17, 1970 
[J. c. SHAH, AND A. N. G1lOVU, JJ.] 
G11jarat Panclrayat Act, 1961, s. 307(e) and (k}-NalJ<Ir Pa11chay<1t 
contl1'1dng to collect occrol under Sauraslttra Termllllll Tax and Octrol 
Ordinance, 1949, previously collected by Municipality for the 6llme ar'ea 
conatituted under Bombay Municipal Act, 1901-i/ competent to do so. 
The Appellant. Nagar Pancbayat, Una, a local body, was constituted 
under the Gujarat Panchayat Act, 1961, which came into force from 
April 1, 1963. Prior to this enactment, the Bombay Municipal Act, 1901, 
as applied to Saurashtra, was in force in that region of the present State 
of Gujarat and under its provisions the Una Municipality was constituted. 
This Municipality was collecting octroi on commodities imported into the 
municipal limits of Una under the Saurashtra Terminal Tax· and Octroi 
Ordinance 1949. 
Section 3 of that Ordinance empowered the State 
Govemment to impose the tax mentioned thereunder in the cities and 
towns specified or included later in Schedule I. One of these taxes was 
a terminal tax on goods imported into or exported from the terminal 
tax limits. Section 4 gave powers to the Government to make rules by 
notification foe the purpose df carrying out the purposes of the Ordinance. 
Rule 4, which was framed in Gujarati language, provided that collection 
of octroi and terminal tax would be done through the "Sudhrai" of the 
area entered in the schedule to the Ordinance. 
Aftu the Act of 1961 came into force and the Nagar hnchayat 
replaced the Municipality, it continued to collect the octroi till 1967, when 
the respondent filed a petition under Article 226 challenging the ccimpe-
tence of the Nagar Panchayat to collect the octroi. The High Court held 
that since in the Rules promulgated under' the Ordinance in Gujarati the 
collectinc Agency had been descnDed as "Sudhrai" which means Munici-
.,.i;ty, the Napr Pancbayat waa not competent to collect the octroi under 
the Ordinance as it did not fall within the meaning or definition of the 
term "Municipality". 
On appeal to this Court, 
HELD : Allowing the appeal : The High Court -was in err<>r in coming 
to the conclusion that the Nagar Panchayat was not entitled to carry 
on the work of collection of octroi under the Ordinance even though the 
Ordinance which imposed liability to pay remained in force. 
Section 307 of the Act leave$ no room for doubt that Wl!Jlrever a 
Napr Panchayat was constituted in place Qf the municipality, the muni-
cipality disappeared and all its funds including the ·right to realise taxes 
etc. \-elted in the Nagar Panchayat. In other words it was the Nagar 
Panchayat which was to function as the local body in the area previously 
coaatitiited as a municipality. Clause (k} of s. 307 clearly saved all 
laws or rules which were applicable to the local area which fonned a 
municipality '1Ud they were to continue to apply and to remain in force 
in the area for which the Nagar Pancbayat came to be constituted. There 
waa no force In the contention that the Ordinance did not become appli-
cable to the cities .and towns specified in Schedule I which came to be 
constituted as Grams or Nagars under the Act. [ 410 CJ 
408 
SUPREME COURT REPORTS 
[1971] 2 S.C.R. 
Even if in the ruJes framed under the Ordinance certain expressioh 
created a difficulty that could not defeat the right and the power con-
ferred on the Nagar Pancbayat by the Act of realising and collecting the 
octroi which was being done under the Ordinance as saved by clause (k) 
of s. 307. [4!0 HJ 
CIVIL APPELLATE JURISDCCTION: Civil Appeal No. 1059 of 
1970. 
Appeal from the judgment and order dated February 18, 
19.70, o{ the Gujarat· High Court in Special Civil Application No. 
387 of 1968. 
. 
. 
D. V. Patel and Vineet Kumar .. for the appellant. 
I. N. Shroff, for the respondent. 
The Judgment of the Court was delivered by 
Grover, .J. 
This appeal by certificate arises out of a writ 
petition filed by the respondent which is a Society registered under 
the Bombay Cooperative Societies Act 1925 challenging the col-
lection of octroi by the appellant which 
is 
the Una Nagar 
Panchayat. 
The appellant is a local body constituted under the Gujarat 
Panchayat Act 1961, hereinafter called the "Act, which came into 
force with effect from April I. 1963. Prior to its enactment the 
Bombay Municipal Act 1901, as applied 

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