Bikaner Petroleum Agency, Bhadohi, Distt.Varanasi and another vs State of U.P.and others

Ravi S. Dhavan, J.—The two petitioners'' M/s. Bikaner Petroleum Agency, Bhadohi, district Varanasi and M/s. Ramesh Auto Centre, Bhadohi, district Varanasi have filed the present writ petition with a grievance that Octroi on petroleum and diesel cannot and ought not to be charged by the respondent No. 4, i.e., the Municipal Board, Bhadohi, for the simple reason that this was not a tax which was permitted to be charged for the duration when the Municipal Board, Bhadohi, stood superseded. The contention is that if this was a tax which had been sanctioned by an elected body representing the Municipal Board, then, such tax could be continued to be levied and charged by this respondent. But, if it was a tax to which the elected representatives had not given a sanction for being levied, it could not be created as a fresh charge and even if there was an existing tax it could not be revised by a superseded municipality as the sanction to accord the levy of a tax or its revision vests only with municipal legislation which is born out of elected representatives representing a municipality.

The petitioners submit that compatible with the submissions which have been made, a circular was issued by the State Government to all the Commissioners of the various Divisions of the State, all the District Magistrates and the Administrators of the superseded Municipalities cautioning them to the effect that they ought to refrain from imposing fresh taxes or revising the existing ones. The reason given for this circular of the State Government was that the elections to the local bodies were expected in the near future. The implication was that levy of fresh taxes or the revision of them is best left or elected representatives. The context is the directions of the State Government No. 43928/11982/30992, appended as Annexure1 to the Writ Petition. The petitioners also submit, that, even otherwise, in paragraph 131 of the Uttar Pradesh Municipalities Manual, reference the Proviso following Item No. 17 declares that octroi shall not be levied on certain items mentioned. ''Mineral oil'' is mentioned at subclause 3 to the proviso. On this aspect, a Full Bench of the Allahabad High Court has declared that the stipulations as may have been referred to in the Municipalities Manual may not be taken to be as binding. Even if this were so, a satisfactory answer is not coming from the State respondents to justify the charge of octroi in the face of a superseded municipality and despite instructions of the government not to charge fresh taxes or revise them and leave such matters to the consideration of the municipalities or the local bodies as will be manned by the elected representatives. Also, even though the stipulations made in the Municipalities Manual may not be binding, nevertheless, it is on record that mineral oil was given an exemption from being considered as not being subjected to tax.

The counter affidavit sworn on behalf of the Nagar Palika, Bhodohi, is unsatisfactory. It is submitted that for some reason the State government could not hold the elections because of unavoidable reasons. This aspect, in the facts and circumstances of the present case, is not relevant. The only aspect which is relevant is that the municipalities had been superseded and in these circumstances could a superseded municipality without elected representatives and in the face of the State government''s instructions not to levy fresh taxes or revise existing taxes, the Nagar Palika, Bhadohi, (a) revise existing and/or (b) raise fresh taxes?

The Court is of the opinion that Article 265 of the Constitution of India is very simple in its declaration when it says that no tax shall be levied or charged except by authority of law. The authority which the Nagar Palika Bhadohi, apparently had, had been negatived in the absence of elected representatives. The State government was itself cautioning the Administrators to refrain from revising existing taxes or raising fresh ones and to leave such exercise for the return of the elected representatives. In these circumstances, the High Court, at the time when the petition had been brought, had rightly granted an ad interim order, to the effect, that during the pendency of this writ petition, the respondents would be restrained from realising octroi from the petitioners on Petrol oil, diesel oil, mobil oil and other allied petroleum products in which the petitioners are dealing, subject to the petitioners'' keeping regular accounts of all the transactions entered into by them in respect of the above commodities and further furnish a statement of the accounts regarding the sale of petroleum products, mentioned above, quarterly, to the Nagar Palika, Bhadohi, respondent No. 4. The petitioners were made liable to pay the octroi duty in respect of the above sales in case the writ Petition fails.

In the facts and circumstances of the present case, the High Court is of the view that it was inappropriate for the Nagar Palika, Bhadohi, to have raised fresh taxes without any authority and without awaiting the return of the elected representatives upon which it had received sufficient guidance from the State Government itself. The writ petition, thus, succeeds.

The Nagar Palika, Bhadohi, will itself examine the matter of the issues which were brought in the present writ petition and render a decision, whether in the circumstances, it had the authority of law and sanction to levy octroi which was the subject matter of issues in the present petition. The Nagai Palika, Bhadohi, shall keep in mind the fact that the State government had given caution to refrain from charging new taxes until the return of the elected representatives and despite that a levy was attempted to be made from the petitioners.

Insofar any fresh tax in the nature of octroi is concerned, now that the elected representatives have returned, it will be entirely another matter not connected with issues of this writ petition.

Counsel for the petitioners and the Standing Counsel have jointly submitted that insofar as the octroi is concerned, as of date, it stood abolished in all respects from the State of Uttar Pradesh a few years ago. The issue, thus, is confined in the context of and in the circumstances of this writ petition.

The writ petition, thus, succeeds with the directions, as above.

There will be no order on costs.