Holding

Section 60 of the Cantonment Act, 1924 permits a cantonment board to levy taxes that may be imposed by any municipality in the State, and a Municipal Corporation is deemed a municipality within that meaning.

Summary

The Secunderabad Cantonment Board levied octroi on goods entering the cantonment and the levy was challenged on the ground that the Board lacked authority under Section 60 of the Cantonment Act, 1924 because no municipality in the State imposed octroi and because there was no machinery for assessment. The High Court upheld the challenge, holding the levy void for lack of assessment provisions. On appeal, the Supreme Court examined whether a Municipal Corporation, specifically the Hyderabad Corporation, falls within the meaning of "any municipality in the State" contemplated by Section 60. Relying on the broad constitutional definition of municipality under Articles 243‑P and 243‑Q, the Court held that a municipal corporation is a municipality and therefore the Board could levy octroi. Consequently, the High Court’s order was set aside and the matter remitted to the Division Bench for fresh consideration. The appeal was allowed.

Issues considered

Whether a Municipal Corporation is included within the expression "any municipality in the State" under Section 60 of the Cantonment Act, 1924.
Whether the absence of a specific assessment mechanism renders the octroi levy invalid.

Legislation cited

Cantonment Act, 1924s. 60, s. 84
Constitution of Indias. Article 243-P, s. Article 243-Q

Subjects

OctroiCantonment BoardMunicipal CorporationSection 60Taxation powerConstitutional interpretationArticles 243-PArticles 243-QAssessment machinery

Judgment

A T{-IE CANTONMENT BOARD, SECUNDERABAD
v.
G. VENKETRAM REDDY AND ORS.

MARCH 22, 1995

B [R.M. SAHAI AND S.B. MAJMUDAR, JJ.]

Cantonment Act, 1924:

S.6o-Municipal Corporation established under the Act-Whether
C comes within the purview of 'any Municipalitj in the State'-Whether could
exercise power to levy octroi-Held: Yes.

Constitution of Indi4, 1950:

Articles 243 P, 243-Q-Meaning of 'Municipalities'-Expression
D 'Municipality in the State'-to be read in a broad and larger sens~To include
Corporation.

The jurisdiction and power of the Cantonment Board of
Secunderabad to levy and collect octroi was challenged before the High
Court, and the Single Judge upheld the challenge as there was no +
E machinery provided for the assessment of octroi. It was held that the
provision for appeal against any imposition under S.84 of the Cantonment
· Act, 1924 did not remove the infirmity as in absence of any provision for
assessment the right of appeal was illusory and non-existent.

In appeal the Division Bench held that S.60 of the Act empowered
F the Board to levy any tax, but since no octroi was levied by any
Municipality in the State and it was levied only by the Corporation of
Hyderabad which could not be held to be a Municipality, the Board could
not impose any octroi in exercise of its power under S.69 of the Act. Hence
this appeal by the Board.
G Allowing the appeal, this Court.

· HELD: 1. The word 'Municipality' has a wide connotation. The
Constitution also understands it in broad sense. Chapter (IX- A) deals
with the Municipality. Clause (e) of Article243-P defines Municipality. Art.
H 243-Q also indicates that a Corporation or a Municipal Council or Nagai'
938
)
C. BOARD v. G.V. REDDY 939
Panchayat is constituted on strength of population and .the area or place A
where it is constituted namely rural or urban. But all the three are deemed
to be municipality. A Municipal Corporation with a larger area is as much
a municipality as a council with smaller area. The expression,
'Municipality in the State' thus has to be read in broad and larger sense.
The Hyderabad Corporation which came into existence in 1956 is as much B
municipality as any other municipality in the State. Since Corporation is
imposing octroi the Board could in exercise of power under Section 60 levy
octroi. (940-H, 941-D-E]
\-
~
2. The order passed by the High Court is set aside. The case is
remitted back to the Division Bench to restore the appeal to its original C
number and decide the same in accordance with law. (941-EJ

Webster's New Dictionary; and Black's Law Dictionary, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 774 of
1986. D
From the Judgment and Order 12.12.85 of the Andhra Pradesh High
Court in W.A. No. 627 of 1977.

S. Markandeya, H.P. Sharma, A.Singh and Ms. C. Markandeya for
the Appellant. E
Y.P. Rao, Adv. (NP) for the Respondents.

The following Order of the Court was delivered:

The question of law that arises for consideration in this appeal is F
,--t whether a Municipal Corporation established under an Act is, 'any
Municipality in the State' within the meaning of Section 60 of the Canton-
ment Act, 1924 (hereinafter referred as 'the Act').

It is the answer to this question that would determine the jurisdiction
and power of the Cantonment Board of Secunderabad (in brief 'the G
Board') to levy and collect octroi on substitute of ghee and all ~ of
food and drinks brought inside the cantonment for use, cons~10n and
sale. The challenge to the levy was upheld by the learned Single Judge as
there was no machinery provided for the 'assessment' of octroi. It was held
that the provision for appeal against any imposition under Section 84 of H
940 SUPREME COURT REPORTS (1995] 2 S.C.R.

A the Act did not remove the infirmity as in absence of any provision for
asses~ment the right of appeal was illusory and non-existent. In appeal filed
by the Board before the Division Bench under Letters Patent the order of
the learned Single Judge was maintained as· there was no power to levy any
octroi. It was held that Section 6Q of the Act empowered the Board to levy
. any tax which under any enactmi;nt for the time being in force could be
B imposed in any Municipality in the· State. But since no octroi was levied by
any Municipality in the State and it was levied only by the Corporation of
Hyderabad which could not be held to be Municipality the Board could
not impose any octroi in exercise of its power under Section 60 of the Act.

c Section 60 of the Act reads as under:-

"S.60 - General power of taxation:- (i) The Board may impose with
the previous sanction of the Central Government in any Canton-
ment any tax which under any enactment for the time being in
force may be imposed in any Municipality in the State wherein
D
such cantonment is situate".

A very perusal of it would indicate that this is a general power of taxation
which is enjoyed by the Board which can be exercised with the previous
sanction of the Central Government. There was no dispute that the octroi
+
E · was levied by the Cantonment Board after obtaining sanction of the Central
Government. But what has been found is that the ambit of the power being
restricted to only those taxes which for the time being in force could be
imposed by any Municipality in the State where.in such cantonment was
situated, the appellant was precluded from imposing octroi as no such
p octroi was being levied by any Municipality. in the State. How the expres-
sion, 'Municipality in the State' should be understood? The word
'Municipality' has been defined in Webster's New Dictionary as, 'a town,
city or borough which has local self government'. In Black's Law Dictionary
it is extencled to 'legally incorporated -or duly authorised association of
inhabitants of limited area for local governmental or other public purposes.
G A body politic created by the incorporation of the People of a prescribed .
locality invested with the__subordinate powers of legislation to assist in the
civil government cnfue State and to· regulate and administer local and
internal affairs of the community'. This word thus has a wide connotation.
The Constitution also understands it in broad sense. Chapter (IX-A) deals
H with the Municipality. Clause (e) of Article 243-P defines Municipality to
,
I

C. BOARD v. G.V. REDDY 941

mean, 'an institution of self- government constituted_under Article 243-Q' .. A
Article 243-Q reads as under:

"243-Q. Constitution of Municipalities :-

(1) There shall be constituted in every State, -
B
(a) a Nagar Panchayat (by whatever name called) for a transitional

.,_ area, that is to say, an area in transition from a rural area to an
urban area;
\
---r (b) a Municipal Council for a smaller urban area; and
c
(c) a Municipal Corporation for a larger urban area, in accordance
with the provisions of this Part:

Provided ..........."

This definition indicates that a Corporation or a Municipal Council or D
Nagar Panchayat is constituted on strength of population and the area or
place where it is constituted namely rural or urban. But all the three are
deemed to be municipality. A Municipal Corporation with a larger area is
as much a municipality as a council with smaller area. The expression,
'Municipality in the State' thus has to be read in broad and larger sense. E
The Hyderabad Corporation which came into existence in 1956 is as much
municipality as any other municipality in the State. Since Corporation is
imposing octroi the Board could in exercise of power under Section 60 levy
octroi.

In the result, this appeal succeeds and is allowed. The order passed F
by the High Court is set aside. The case is remitted back to the Division
Bench to restore the appeal to its original number and decide the same in
accordance with law. Since no one has appeared on behalf of the respon-
+- dent, there shall be no order as to costs.

G.N. Appeal allowed.