Bharat Bhushan Vyas vs State of M.P. and Others

S.P. Khare, J.

This is a petiton under Article 226 of the Constitution of India challenging order dated 24.12.1997 (Annexure P-12) of the Respondent No. 1 and the consequential orders based thereon by which the demand of compounding duty at the rate of 30% is being made from the Petitioner.

The Petitioner is proprietor of Bharat Talkies in Bina, District Sagar. He has been given the facility of paying "compounding duty" as per Section 4 (2) (d) of the M.P. Entertainments Duty and Advertisements Tax Act, 1936 as amended by the Act of 1990 (hereinafter to be referred to as the Act), in lieu of the entertainment duty. There are three slabs for calculation of the compounding duty depending upon the population of the local area. This duty is payable at the rate of 25% if the population of the local area is 25001 to 50000 and at the rate of 30% it the population of the local area is 50,001 to 1,00,000. The local area is defined in Section 2 (cc) of the Act. That means a Municipal area within the meaning of the M.P. Municipalities Act, 1961. As per 1991 census (Annexure R-2) the population of Bina-Etawa Municipal area is 41,612 and of Bina Railway Colony (non-municipal) is 8631. The total area of Binal-Etawa Agglomeration is thus 50,243. The notification dated 9.3.1984 issued u/s 29(1) (b) of the M.P. Municipalities Act. 1961 (Annexure P-8) also shows that Bina Railway Colony is not included in any of the wards of Bina-Etawah Minicipality.

The Petitioner''s case is that he is covered by the slab of 25% as his talkies is within the Municipal area having a population of 41,612 only. According to him the population of the Railway Colony which is non-municipal area cannot be included for the purpose of computing the population of the local area. Therefore, the demand of compounding duty at the rate of 30% is illegal.

As per return submitted by the Respondents Bina Municipal area includes the Railway Colony area also. For that reliance has been placed on the notification (Annexure R-1) issued u/s 1 (2) of the Act by which the provisions of Sections 3 to 11 of the Act have been extended to Bina Railway Colony area from 15.1.1949.

After hearing the learned Counsel for both the sides this Court is of the opinion that the contention of the Respondents is wholly misconceived and untenable. By the notification u/s 1 (2) of the Act the provisions of the Act have been extended to Bina Railway Colony also with effect from 15.1.1949. That has no relevance for construing the definition of "Local Area" as given in Section 2 (cc) of the Act which has been inserted by the Amendment Act of 1990. According to this definition the local area shall mean a Municipal area within the meaning of the M.P. Municipalities Act, 1961. This is a definition by incorporation or reference. For determineing the Municipal area it is necessary to refer to the meaning given to it in the M.P. Municipalities Act, 1961. That has been clearly expressed in Section 2 (cc) of the Act. There is no doubt of ambiguity on that point. Therefore, reference to the notification u/s 1 (2) of the act is not apposite. The population of Bina Railway Colony which is a non-municipal area cannot be clubbed with the population of Bina-Etawah Municipal area so as to determine the population of the local area u/s 4 (2) (d) of the Act. The population of Bina-Etawah Municipal area being 41,612 has to be taken as the population of the local area. Thus serial No. 2 of the Table given in Section 4 (2) (d) is applicable in the present case and the compounding duty would be 25% of the entertainment duty. It would not be 30% as given in serial number 3 of the Table.

In the impugned order dated 24.12.1997 (Annexure P-12) of the commercial Tax Department no reasons have been given for inclusion of the the population of Bina-Railway Colony and on the basis of this order the subordinate authorities have taken follow-up action. Even in an administrative order where the question of interpretation of a statutory provision is involved reasons must be given to support it. This is one of the principles of natural justice. Speaking order is necessary if the judicial review of an administrative action is to be effective. The party who is to be affected by such order must know why and on what grounds an order has been passed against him. The giving of reasons in one of the fundamentals of good administration. Reasons introduce clarity and exclude arbitrariness and satisfy the party concerned against whom the order is passed. They disclose how the mind is applied to the subject matterfor a decision, whether it is purely administrative or quasi-judicial. Sir William Wade in his book on Administrative Law, 7th Edition at page 542 has remarked: "Unless the citizen can discover the reasoning behind the decision, he may be unable to tell whether it is reviewable or not and so he may be deprived of the protection of the law. A right to reasons is an indispensable part of a sound system of judicial review. Natural justice may provide the best ruberic for it, since the giving of reasons is required by the ordinary man''s sence of justice. It is also a healthy discipline for all who exercise power over others". In the present case no reasons have been assigned in the order dated 24.12.1997 and, therefore, it is difficult to ascertain what was the basis for rejecting the contention of the Petitioner. That order is now sought to be supported by relying upon a notification which has no relevance to resolve the present dispute.

The petition is allowed. The order dated 24.12.1997 of the Respondent No. 1 (Annexure P-12) is quashed. The orders dated 13.2.1998 (Annexure P-13) of the Collector, Sagar, dated 30.3.1998 of the Excise Commissioner (Annexure P14) and order dated 3.9.1998 of the District Excise Officer, Sagar (Annexure P-17) are also quashed. The compounding duty at the rate of 25% instead of 30% shall be charged from the Petitioner. The Respondents shall pay the costs of the Petitioner. Counsel''s fee is fixed at Rs. 1000/-.