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PETITIONER: THE TOWN MUNICIPAL COMMITTEE, AMRAVATI

       Vs.

RESPONDENT: RAMCHANDRA VASUDEO CHIMOTE AND ANOTHER

DATE OF JUDGMENT: 03/03/1964

BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA SINHA, BHUVNESHWAR P.(CJ) WANCHOO, K.N. GUPTA, K.C. DAS SHAH, J.C.

CITATION:  1964 AIR 1166            1964 SCR  (6) 947  CITATOR INFO :  R          1964 SC1172  (12)  R          1964 SC1903  (32)  D          1978 SC1803  (9)  RF         1990 SC1927  (42)  E&F        1991 SC 274  (2,3)  RF         1991 SC1676  (59)

ACT: Terminal  Tax-Imposition of terminal tax by Municipality  on silver  and  silver jewellery, gold and gold  jewellery  and precious  stones  in 1960-These taxes not levied  before  by Municipality-Whether saved by Art. 277 of the  Constitution- "Continue  to  be  levied  and to be  applied  to  the  same purposes"-Meaning  of-C.P.  and  Berar  Municipalities  Act, 1922,  s.  55-Government  of India  Act,  1935,  s.  143(2)- Constitution of India, Art. 277. 948

HEADNOTE: A   terminal  tax  on goods imported by  road  or  rail  was imposed  by  the  Amravati  Municipality  by  virtue  of   a notification  dated  August  10,  1916.   This  notification exempted  silver,  bullion and coins from the  operation  of this  tax.   When terminal taxes on goods imported  by  rail were  assigned exclusively to the Federal Centre  under  the Government   of  India  Act,  1935,  the  municipality   was authorised by s. 143 to continue to levy the terminal  taxes which  were  actually levied before the enforcement  of  the Act.   Likewise,  the  terminal taxes imposed  by  the  pre- Constitution  notification  were allowed to  be  levied  and collected  even  after the Constitution came into  force  by virtue  of  Art.  277  of the  Constitution.  In  1960,  the Municipality levied terminal taxes on three new items, viz., silver  and  silver jewellery, gold and gold  jewellery  and precious stones. In a writ petition filed under Art. 226 of the Constitution, the   validity  of  the  newly  imposed  terminal  tax   was challenged  by the respondent who was carrying on  business, within  the limits of the Municipality, in gold, silver  and

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precious  stones on the ground of legislative  incompetence. The  writ  petition was granted by the High  Court  and  the appellant  came to this court after obtaining a  certificate of fitness from the High Court. Dismissing the appeal: Held:     The  newly  imposed terminal taxes on  silver  and silver  jewellery,  gold  and gold  jewellery  and  precious stones had never been imposed by the Municipality and  hence it could not be said that those were "being lawfully levied" by  the  Municipality  and "applied to  the  same  purposes" before  the commencement of the Constitution as required  by Art. 277 of the Constitution.  Art. 277 was not intended  to confer  an  unlimited legislative power to  impose  what  in effect were new taxes, though of the same type or nature  as existed before the Constitution. Rama  Krishna Ramanath v. The Janpad Sabha,  Gondia,  [1962] Supp.  3 S.C.R. 70 and Chuttilal v. Bagmal  and  Balwantrai, I.L.R. [1956] M.B. 339. referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 598 of 1962. Appeal  from the judgment and order dated March 18, 1961  of the  Maharashtra  High  Court (Nagpur Bench)  at  Nagpur  in Special Civil Application No. 30 of 1960. WITH Civil Appeals Nos. 695 and 700 of 1962. Appeals from the judgment and orders dated October 12,  1961 and March 18, 1961 of the Madhya Pradesh High Court in Misc. Petitions Nos. 122 of 1961 and 319 of 1960 respectively.  949 M.   C.  Setalvad and S. Shaukat Hussain, for the  appellant (in C.A. No. 598/62). W.   S. Barlingay and A. G. Ratnaparkhi, for respondent  No. 1    (in C.A. No. 598 of 1962). S.   G.  Patwardhan, Udai Pratap Singh and M. S. Gupta,  for the appellant (in C.A. No. 695/62). A.   N. Goyal, for respondent No. 1 (in C.A. No. 695/ 62). 1.   N. Shroff, for respondent No. 2 (in C.A. No. 695/62). M.C.  Setalvad and M. S. Gupta, for the appellant  (in  C.A. No. 700/62). G.   S. Pathak, J. B. Dadachanji, O. C. Mathur and  Ravinder Narain, for the respondents Nos.  1 to 4 and 6 to 9 (in C.A. No. 700/62). 1.   N. Shroff, for respondent No. 10 (in C.A. No. 700/62). March 3, 1964.  The Judgment of the Court was delivered by AYYANGAR,  J.-These three appeals which are on  certificates of fitness granted by the High Courts-the first by the  High Court  of  Bombay at Nagpur and the two others by  the  High Court  of Madhya Pradesh-raise a common question as  regards the  construction  of Art. 277 of the Constitution  and  the validity of certain terminal taxes imposed by the respective appellant-municipal  authorities under notifications  issued under Ch.  IX of the C.P. & Berar Municipalities Act,  1922, subsequent to the coming into force of the Constitution, and so have been heard together. Civil Appeal 598 of 1962 is an appeal from the High Court of Bombay  at  Nagpur  and  has been  filed  by  the  Municipal Committee  of Amravati against a decision of the High  Court allowing  the 1st respondent’s petition under Arts. 226  and 227  of  the  Constitution.   The  Municipal  Committee   of Amravati has been established under the 950 C.P.  & Berar Municipalities Act, 1922 (C.P. & Berar Act  II

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of 1922) hereinafter referred to as the Act.  Chapter IX  of the Act deals with the imposition, assessment and collection of taxes which might be imposed by the Municipal  Committee. Section  66  specifies  the  taxes  which,  subject  to  the provisions  of the Chapter, the Committee may from  time  to time impose.  Its first sub-section specifies in its several clauses  15  varieties of taxes and among them  is  cl.  (o) which reads:               "The terminal tax on goods or animals imported               into  or  exported  from  the  limits  of  the               municipality provided that terminal tax  under               this clause and an octroi under cl. (e)  shall               not  be  in force in any municipality  at  the               same time-,’ The other sub-clauses which are relevant for the  considera- tion  of  the question arising in the  appeal  are  sub-cls. (2),(3)   and (4) of s. 66 and they read :               (2)   The State Government may, by rules  made               under  this  Act, regulate the  imposition  of               taxes  under this section, and impose  maximum               amounts of rates for any tax.               (3)   The   first   imposition  of   any   tax               specified  in subsection (1) shall be  subject               to   the  previous  sanction  of   the   State               Government.               (4)   Subject  to  the control  of  the  State               Government,  a committee may abolish  any  tax               already  imposed and specified in  sub-section               (1) clauses (a) to  (in)  inclusive,  or  may,               within  the limits imposed  under  sub-section               (2), vary the amount or rate of any such tax :               Provided that in the case of any  municipality               indebted  to the Government, the abolition  of               any  tax or a reduction in the amount or  rate               thereof  shall  be  subject  to  the  previous               sanction of the State Government." 951 Section  67  lays down the procedure for the  imposition  of taxes and it provides :               "67.  (1)  A  committee  may,  at  a   special               meeting,  pass  a resolution  to  propose  the               imposition of any tax under section 66.               (2)   When such a resolution has been  passed,               the  committee  shall publish,  in  accordance               with  rules  made  under this  Act,  a  notice               defining  the class of persons or  description               of  property proposed to be taxed, the  amount               or  rate  of  the tax to be  imposed  and  the               system of assessment to be adopted.               (3)               (4)               (5)   The State Government, on receiving  such               proposals, may sanction or refuse to  sanction               the  same,  or sanction them subject  to  such               modifications  as it may think fit, or  return               them    to   the   committee    for    further               consideration.               (6)   No modification affecting the  substance               shall  be made under sub-section  (5),  unless               and  until the modification has been  accepted               by the committee at a special meeting.               (7)               (8)   A  notification of the imposition  of  a               tax  under  this section shall  be  conclusive               evidence  that  the tax has  been  imposed  in

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             accordance with the provisions of this Act."               The  procedure for the variation of the  taxes               is to be found in s. 68 and it reads               "68.  (1)  A  committee  may,  at  a   special               meeting,  pass  a resolution  to  propose  the               abolition  of  any tax already imposed,  or  a               variation in the amount or rate thereof.               (2)               952               (3)   If  the  proposal  is  to  increase  the               amount or rate of any tax, the committee shall               publish,  in  the manner prescribed  by  rules               made  under  this  Act, a  notice  showing  in               detail the effects of the proposal.               (4)   Any   inhabitant  of  the   municipality               objecting to the proposed increase may, within               thirty  days  from  the  publication  of   the               notice, submit his objection in writing to the               committee.               (5)   The  committee shall take  the  proposal               and  all  objections  received  thereto  )into               consideration  at a special meeting,  and  may               modify the proposals as it may think fit,  and               may pass a final resolution on the proposal.               (6)   If  the proposal requires  the  previous               sanction  of  the State Government  under  the               provisions  of section 66, sub-section (4)  or               sub-section  (5), the committee shall  forward               it  to  the State Government and it  shall  be               dealt  with in the manner provided in  section               67, sub-sections (4), (5) and (6). (7).................... (8)....................               (9)   The publication in the manner prescribed               of the abolition or variation of any tax under               this  section shall be conclusive  proof  that               such  abolition or variation has been made  in               accordance with the provisions of this Act." From even before the constitution of the municipality  under the  Act  and  at a time when the  municipal  committee  was governed  by  the Berar Municipal Law of 1886 which  was  in force  prior to the Act and whose taxation  provisions  were continued  by  the  Act of 1922, a  terminal  tax  on  goods imported  by  road or rail had been imposed by  the  Munici- pality by virtue of a notification dated August 10, 1916  on several   specified  kinds  of  goods.   This   notification exempted silver, bullion and coin from the operation of this tax.  This was superseded by a notification of June 2,  1921 under which the Schedules were modified and the terminal tax  953 imposed was confined to goods imported into or exported  out of  the  Municipal area by rail.  The notification  of  June 1921  was  amended from time to time by  other  items  being added  and  the  rates being increased  but  no  change  was effected in the taxes imposed after 1936.  Under the  scheme of  the distribution of taxing powers between the  provinces and  the  Central Government under the Government  of  India Act,  1935  terminal  taxes on goods carried  by  rail  were assigned exclusively to the Federal Centre under item 58  of List  I  to  Sch.  VII, but the validity  of  the  levy  and collection  of  the terminal tax in force,  before  the  1st April,  1937  was continued by s. 143 of the  Government  of India  Act,  1935 and it was by virtue of  this  continuance that these taxes were continued to be levied after April  1, 1937 Their continuance after January 26, 1950 when after the

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repeal  of  the Government of India Act, 1935,  the  Consti- tution came into force with the same scheme of  distribution of  taxing  power on the relevant item identical  with  that under the Government of India Act, was by reason of Art. 277 which  was  practically in the same terms as s. 143  of  the Government  of  India Act, 1935.  The taxes imposed  by  the pre-Constitution  notification could, therefore, be  legally levied  and collected even after the Constitution came  into force. Subsequent  to January 26, 1950 there was a notification  on December 1, 1959, under which to the list of goods liable to terminal tax imported into or exported out of the  Municipal area, not merely by rail, but also by road were added  three new  items-silver  and  silver  jewellery,  gold  and   gold jewellery,  and precious stones, and these  three  specified items  were  subjected to the tax at the same rates  as  had been  imposed on other articles by the  notifications  which were  in  force from before the  Constitution.   Before  the notification was issued the procedure indicated by s. 67 was gone  through and the Government accorded their sanction  to the rules made by the Municipal Committee for the imposition of the tax on the newly added articles.  The validity of the tax  imposed by this notification was challenged by the  1st respondent  who  was carrying on  business  within  Amravati municipality in gold, silver and precious stones, 954 on  the  ground of legislative incompetency  which  had  not been saved by Article 277 of the Constitution, in a petition under Article 226.  The learned Judges of the High Court  by a majority accepted the contention raised by the  respondent and  allowed  the  petition but  granted  a  certificate  of fitness  and hence this appeal.  The facts of the other  two appeals are nearly similar but we shall refer to them  after dealing  with  the, common question which  arises  in  these appeals. It is common ground that the right to levy a terminal tax is now  vested  in the Union Parliament under Entry 89  of  the Union List which reads :               "Terminal taxes on goods or passengers carried               by railway, sea or air; taxes on railway fares               and freights", so that if the levy by the appellant of the terminal tax  on the newly added items, and the same principle would apply to an  increase  in the rate of the duty, had to  rest  on  the independent  taxing power of the State, the same would  have to  be  struck  down for  want  of  legislative  competence. Besides  it  is  necessary to add  that  whereas  under  the notifications in force prior to 1st April 1937-when Part III of  the  Government  of India Act was  brought  into  force, articles imported into or exported out of the municipal area by  road  were  not subject to the tax, and  that  state  of affairs continued till long after the Constitution came into force,   a  terminal  tax  was  imposed  by   the   impugned notification of December 1959 on goods imported or  exported by road- a tax which it was not open to the State to  impose even with the aid of Art. 277.  But ignoring this feature of the  impugned notification, insofar as it brought  in  goods carried by road within the scope of the terminal tax, it  is admitted  that  the  validity of the  imposition  cannot  be justified  if it was a fresh imposition.  What is,  however, urged  in support of the validity of the imposition is  that the same is saved by Art. 277 which runs:               "277.   Any  taxes,  duties,  cesses  or  fees               which, immediately before the commencement  of               this Constitution, were being lawfully  levied

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             by the  955               Government of any State or by any municipality               or  other  local  authority or  body  for  the               purposes of the State, municipality,  district               or other local area may, notwithstanding  that               those  taxes,  duties,  cesses  or  fees   are               mentioned  in the Union List. continue  to  be               levied and to be applied to the same  purposes               until  provision  to the contrary is  made  by               Parliament by law." If  learned  Counsel  for  the appellant  is  right  in  his contention ’that the impugned tax which he is now seeking to sustain,  ’was the tax which "was being lawfully levied"  by the municipality before the commencement of the Constitution he  would certainly be well-founded in the  submission  that the fact that the terminal taxes are under the  distribution ,of  taxing  powers under the Constitution assigned  to  the Union would make no difference for the valid continuance  of the levy.  The question, therefore, is whether this was -the tax which was being levied by the municipal authority before the  Constitution  and  for whose  continuance  the  Article provides. The first submission of Mr. Setalvad for the appellants  was that this condition would be satisfied whenever a  ,terminal tax (without reference either to the article on which it was levied  or  the  rate)  was being  lawfully  levied  by  the municipality prior to the commencement of the  ,Constitution and  as  in this case admittedly a terminal  tax  was  being levied  on  certain articles that condition  was  satisfied. His argument was that the words ’tax or duty’ in the opening part  of  Art. 277 should be read as meaning a tax  or  duty under  a specified legislative Entry, and if such a  tax  or duty  was  being  levied before  the  commencement  ,of  the Constitution other duties of the same type or falling within the  same category might be imposed after  the  Constitution notwithstanding that such duties or taxes were mentioned  in the Union List by reason of the words "shall continue to  be levied".   Secondly, he said that the word ’levy’ meant  not merely the ascertainment, i.e., assessment and collection of the tax but included its imposition, i.e., also the charging and if that expression were understood in that wide sense it would comprehend a case where other 956 items than those originally specified were brought into  the fold of the taxing provision.  The learned  Attorney-General who  appeared  for  the State and  supported  Mr.  Setalvad, however,  went a step further and submitted that it was  not even  necessary  that  a terminal  tax  should  be  actually imposed  and was being collected prior to the  Constitution, but that it was sufficient if the State enactment had vested in  the municipality a power to levy such a tax.  The  argu- ment  of the learned Attorney-General has to be rejected  as lacking  any  substance,  for on no  construction,  wide  or narrow, of the expression ’levy’ in the phrase ’continue top be  levied’ can such a case be comprehended.  From the  mere fact that a State enactment has authorised a municipality to levy a tax it cannot be said that a tax which had never been imposed was "being lawfully levied" by the municipality, not to  speak  of the tax etc. collected being "applied  to  the same  purposes" before the commencement of the  Constitution as contemplated by the concluding portion of the Article. Coming  next to what one might term the narrower  submission of Mr. Setalvad we do not find it possible to agree with  it either.   His  first submission may be expanded thus  :  The

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expression  "taxes,  duties,  cesses" with  which  Art.  277 opens,  has to be read in the context of Part XII  in  which the  Article  occurs  and so read has to  be  understood  as referring  to  the  class or category of  taxes  which  were levied and collected by the State, municipality etc.  before the  commencement of the Constitution.  In other words,  the reference  here is to the entries in the  legislative  lists which permit such taxes to be levied, and so read and  taken in conjunction with the circumstance that the Article is one designed  to prevent the dislocation of the finances of  the State  or other local authorities, the terms of the  Article would be satisfied and the legislative power to continue  to levy  the tax would be conferred "notwithstanding  that  the tax, etc. are mentioned in the Union List".  This  argument, in our opinion, proceeds on ignoring the terms of Art.  277. If, as is admitted, the sole object sought to be achieved by this provision for "continuance" is to avoid dislocation  of the finances of the State and local authorities,  957 by  depriving them of the revenues which they were  deriving at the commencement of the Constitution, it would mean -that the  intention was to permit the existing range of taxes  to be  continued,  not  that  the  Article  conferred  on  them authority   to  expand  the  range  of  their  taxation   by subjecting new items to taxation or by increasing the  rates of  duty.  This consideration apart, it is not  possible  to read  the  words "notwithstanding that the  taxes  etc.  are mentioned  in  the Union List" as  conferring  an  unlimited legislative  power  to impose what in  effect  the  argument involves  new  taxes, though of the same type or  nature  as existed before the Constitution.  The question of the proper construction  of s. 143(2) of the Government of  India  Act, 1935 which is for all practical purposes identical with Art. 277  came  up for consideration before this  Court  in  Rama Krishna  Ramanath v. The janpad Sabha, Gondia(1).  There  it was  submitted on behalf of the  respondent-local  authority that by virtue of s. 143 (2) of the Government of India  Act the  Provincial Legislature was vested with a plenary  power to  legislate  in  respect  of every  tax  which  was  being lawfully   levied   by  local  authorities  prior   to   the commencement  of  the Government of India Act.   This  Court rejected that contention and observed               "Section 143 (2) which is a saving clause  and               obviously designed to prevent a dislocation of               the finances of Local Governments and of local               authorities by reason of the coming into force               of  the provisions of the Government of  India               Act  distributing heads of taxation  on  lines               different  from those which  prevailed  before               that   date,  cannot  be  construed   as   one               conferring  a  plenary power to  legislate  on               those  topics  till such time as  the  Central               Legislature  intervened.  Such a  construction               would  necessarily  involve  a  power  in  the               Provincial Legislature to enhance the rates of               taxation-a  result we must say from which  Mr.               Sanyal  did not shrink, but having  regard  to               the language of the section (1)  [1962] Supp. 3 S.C.R. 70. 958               providing  for  a  mere  continuity  and   its               manifest  purpose  this construction  must  be               rejected." No  doubt, even the words "continue to be levied and  to  be applied  to  the  same purposes" might import  and  imply  a

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limited  legislative power in the State.  The scope of  this limited  power was also examined by this Court in  the  same case and it was stated :               "In the context the relevant words of the sub-               section  could only mean ’may continue  to  be               levied   if  so  desired  by  the   Provincial               Legislature’  which  is  indicated  by  or  is               implicit in the use of the expression ’may’ in               the  clause ’may be continued until  provision               to  the  contrary  is  made  by  the   Federal               Legislature.’  This  would therefore  posit  a               limited  legislative power in the Province  to               indicate  or express a desire to  continue  or               not to continue the levy.  If in the  exercise               of this limited power the Province desires  to               discontinue  the tax and effects a  repeal  of               the  relevant  statute  the  repeal  would  be               effective.   Of  course,  in  the  absence  of               legislation indicating a desire to discontinue               the  tax, the effect of the provision  of  the               Constitution  would be to enable the  continu-               ance  of  the power to levy the tax  but  this               does not alter the fact that the provision  by               its implication confers a limited  legislative               power   to  desire  or  not  to   desire   the               continuance   of  the  levy  subject  to   the               overriding power of the Central Legislature to               put an end to its continuance and it is on the               basis   of  the  existence  of  this   limited               legislative  power  that  the  right  of   the               Provincial Legislature to repeal the  taxation               provision  under  the  Act of  1920  could  be               rested.   Suppose for instance,  a  Provincial               Legislature desires the continuance of the tax               but considers the rate too high and wishes  it               to be reduced and passes an enactment for that               purpose, it cannot be that the legislation  is               incompetent and that the State Government  959               must permit the local authority to levy tax at               the same rate as prevailed on April 1, 1937 if               the latter desired the continuance of the tax.               If such a legislation were enacted to  achieve               a  reduction  of  the rate of  the  duty,  its               legislative   competence  must  obviously   be               traceable to the power contained in words ’may               continue  to be levied’ in s. 143 (2)  of  the               Government of India Act." Dealing  next with the import of the words ’may continue  to be levied’ the same was summarised in these terms : (1)  The tax  must  be  one  which was lawfully  levied  by  a  local authority for the purpose of a local area, (2) the  identity of  the  body  that collects the tax,  the  area  for  whose benefit  the  tax is to be utilised ’and  the  purposes  for which the utilization  is to take place continue to  be  the same, and (3)  the  rate of the tax is not enhanced nor  its incidence in any    manner altered, so that it continues  to be  the  same tax. It is obvious that if  these  tests  were applied the submission on behalf of the appellant cannot  be accepted. But  authority apart, we cannot, even if this decision  were put aside, accede to the construction for which Mr. Setalvad contends.  It is not disputed that in ultimate analysis  the answer to the question raised should turn on the meaning  of the  word  ’levied’ in the phrase ’continue  to  be  levied’

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which  is  the  operative  word  conferring  a  power.   Mr. Setalvad submits that ’levied’ is a word of wide and varying import and includes in its denotation not merely the  actual collection  of the tax, but the imposition in the  sense  of the  creation of the charge by the statute, as well  as  the ascertainment  of  the amount due from the tax  payer.   Mr. Setalvad  is right, for before a tax can be  collected  from any tax payer, its quantum must be ascertained and assessed, and  for this to be lawfully done there must be  legislative sanction-in other words an imposition of the charge -because it  is the charge under the Statute that is  quantified’  by the  authorities  acting under the  taxing  enactment.   The acceptance of this construction however does not lead to the result desired, for what can "continue to be levied" is what "was being lawfully levied" in the same sense of the, 960 word "levied", prior to the Constitution.  Admittedly, there was  no imposition of the charge now sought to be  recovered prior to the Constitution, i.e., the Act did not impose  the charge  by s. 66 but merely enabled the Municipal  Committee by appropriate procedure to impose the tax.  If, of  course, this power had been availed of and a charge had been imposed it  would be a different matter.  So long as  the  Municipal Committee did not pass the necessary resolutions and  impose the tax there was no charge levied on the commodity, so that it  could  not  be said that the  tax  "was  being  lawfully levied"  before the commencement of the  Constitution.   The words  "was  being  lawfully  levied’  obviously  mean  "was actually  levied" and it would not be sufficient to  satisfy those words that the Municipal authority could lawfully levy the tax, but had not availed itself of that power. There is another circumstance to which also reference may be made.  The last portion of Art. 277 uses the words "continue to be levied" and "to be applied to the same "purposes".  By reason  of this collocation between the concept of the  levy and  of  application  of  the  proceeds  of  the  tax-,  the Constitution makers obviously intended the word ’levy’ to be understood  as including the collection of the ,tax, for  it is  only  when a tax is collected that any question  of  its application  to  a particular purpose would  arise.   It  is apparent  that if the word "levied" were understood  in  the sense  which  Mr.  Setalvad  contends,  there  could  be  no "application"  of the proceeds of the tax to the  same  pur- poses  as at the commencement of the Constitution.   For  ex concessis at that date there were no proceeds to be applied. In  this  connection  learned  Counsel  for  the  respondent referred  us  to  the decision in Chuttilal  v.  Bagmal  and Balwantrai(1)  where the relationship between the  levy  and the application of the tax has been referred to as an aid to the  construction of the expression "continue to be  levied" in Art. 277.  We find ourselves in agreement with the  views there expressed. The  decision of the High Court is, therefore,  correct  and "the appeal fails. (1)  I.L.R. [1956] Madhya Bharat 339.  961 CIVIL APPEAL No. 695 OF 1962. In  this appeal a notification was issued under sub-ss.  (5) and  (7)  of s. 67 of the C.P. & Berar  Municipalities  Act, 1922,  on December 9, 1960 imposing a terminal tax  on  gun- powder  imported into or exported out of the municipal  area by  rail.  It is admitted that previous to the  Constitution there  was  no tax imposed on gun-powder.  The  position  in this case is, therefore, identical with that in Civil Appeal No.  598  of  1962 which we have just  disposed  of  and  it

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follows that this appeal also fails and should be dismissed. CIVIL APPEAL No. 700 OF 1962. In  Civil  Appeal  700 of  1962  the  original  notification imposing  terminal taxes in respect of goods coming into  or going out of the municipal area by rail was one dated  March 17,  1926 which was operative from April 1, 1926.  This  was amended by a notification under s. 67 (5) of the C.P.  Berar Municipal  Act, 1922 dated September 23, 1960 by  which  new articles were included to the list of items imported into or exported  from  the municipal area by rail  subject  to  the terminal  tax and besides the rate of tax on the  previously existing items was also increased.  It was this inclusion of new   articles  for  the  levy  of  terminal  tax   by   the notification of 1960 and the increase in the rate of duty on articles, already subjected to tax, that was impugned in the writ petition filed by the respondent before the High Court. On  our  reasoning on the basis of which we  have  dismissed Civil  Appeal 598 of 1962 it would follow that  this  appeal should  also  fail.  We can see no  difference  between  the inclusion of new items and the increase in the rate of  duty because  if  there  is an increase it would not  be  a  mere continuance of the duty which had been lawfully levied which is the only purpose and function of Art. 277.  The  judgment of  the  High  Court  allowing  the  writ  petition  of  the respondent was therefore correct. In the result, ;all the three appeals fail and are dismissed with  costs of the contesting respondent or respondents.  in each appeal. Appeals dismissed. 134-159 S. C.-61 962