( 1 ) THE petitioners are cloth merchants at Davanagere. They challenge the validity of the levy of octroi on handloom goods ( 2 ) THE Town Municipal Council Davanagere is levving and collecting octroi on all the foods except handloom goods manufactured within the State of mysore bearing the seal of the Department of Industries and commerce, including pure silk goods which are exempted from the lew of octroi. The exemption to that extent was provided by the bye-law framed by the Municipal Council and approved by the State Government But the petitioners are importing varieties of handloom goods. Their case is all such goods are exempted from the levv of octroi in view of the Order of the State Government in No Cl 26 CHD 70 dt 9th February, 1972. ( 3 ) THE decision in this case turns upon the legal effect of the said order and I, therefore think it necessary to set out the same hereunder : -"order No Cl 26 CHD 70. Bangalore dt. 9th February 1972. Read :-1 Letter No HAS 79/67-68 dt 7th August 1970 from the director of Industries and Commerce Bangalore 2. Unofficial Note No. 2290 dt. 28-8-1970 from the Health and municipal Administration Department, preamble -The Director of Industries and Commerce in his letter No. HAS 79/67-68 dt 7th August 1970 has stated that at present the exemption from levy of octroi is restricted to handloom goods produced in the co-operative sector. He has suggested to extend this exemption even to the handloom goods produced outside the co-operative sector and has stated that this is the position that is in vogue in the neighbouring states of Andhra Pradesh and Tamil Nadu. The proposal is also supported by the Mysore Chamber of Commerce and the Mysore state Handloom Board order government direct that the goods produced by handlooms even outside the co-operative sector be exempted from the payment of octroi duty. This order issues with the concurrence of Finance Department, vide their Unofficial Note : no. FD. 3289,cw-11/71 dt. 7-12-1971. By order and in the name of the President of India, sd/. M. A. Renukaradhya, under Secy, to Govt. , Commerce and Industries Dept. "it is clear from the above Government Order that the goods produced by the handlooms even outside the co-operative sector should be exempted from the payment of octroi duty. FD. 3289,cw-11/71 dt. 7-12-1971. By order and in the name of the President of India, sd/. M. A. Renukaradhya, under Secy, to Govt. , Commerce and Industries Dept. "it is clear from the above Government Order that the goods produced by the handlooms even outside the co-operative sector should be exempted from the payment of octroi duty. If that order is binding on the Municipal Council, the petitioners should succeed in these petitions. If it is not binding, then, the Municipal Council would be competent to levy and collect octroi on those handloom goods. ( 4 ) MR. B. K. Ramachandra Rao, learned Counsel for the Municipal council submits that the said order is not binding on the Municipal council. ( 5 ) IT is therefore necessary to refer to the relevant provisions of the karnataka Municipalities Act (Act 22 of 1964) (hereinafter referred to as 'the Act'), bearing on the question. S. 94 of the Act provides :" 94. Taxes which may be imposed.- (1) Subject to the general or special orders of the Government, a Municipal Council, (a) after observing the preliminary procedure required by section 95, and, (b) with the sanction of the Government and at rates not exceeding those specified in Schedules I to VII, may levy any one or more of the following taxes: - (i) a tax on buildings or lands or both situated wihin the municipality; (ii) an octroi on goods specified in Schedule II entering the muni- cipal limits fox consumption, use or sale therein; - (3) The taxes specified in sub-sec. (1) shall be assessed, levied and collected in accordance with the provisions of this Act and the rules made by the Government under Section 323. . "sec. 95 provides the procedure preliminary to imposing tax. S. 96 provides power to sanction, modify and impose conditions by the Government. S. 97 states that once the Government Sanctions the proposal to levy octroi and that has been published in the Gazette, such publication shall be conclusive evidence that the tax has been imposed in accordance with the provisions of the. Act and the rules made thereunder. Sec. 323 confers power on the Government to make rules. Sub-sec. S. 97 states that once the Government Sanctions the proposal to levy octroi and that has been published in the Gazette, such publication shall be conclusive evidence that the tax has been imposed in accordance with the provisions of the. Act and the rules made thereunder. Sec. 323 confers power on the Government to make rules. Sub-sec. (1), (e) of S. 323 states that the Government may make rules prescribing the assessment, levy and collections of taxes in the municipality, the circumstances in which exemption will be allowed, the conditions on which and the extent to which remissions will be granted, etc. S. 324 authorises the municipal council to make bye-laws. Under sub-sec. (1) (m) of that section, the municipal council may make bye-laws providing for the exhibition of tables of octroi, refund of octroi and requiring a license to be obtained for the sale of any article liable to octroi, etc. The bye-laws framed should be approved by the Government and the government while approving a bye-law may make any change therein which appears to it to be necessary, and, sub-sec. (7) of S. 324 provides" Every bye-law as approved by the Government shall be published in the, prescribed manner and shall come into, force, from such date as may be specified by the municipal council and where no date is specified, on the date of such publication. "when byei-laws are brought into force, the Government cannot direct any modification thereof, unless they follow the procedure provided by section 319 which reads :" 319. Power of Government to cancel or modify bye-laws of municipal councils.- (1) The Government may, at any time by notification repeal wholly or in part or modify any bye-law made by any municipal council : provided that, before taking any action under this sub-section, the government shall publish a draft of the proposed notification and communicate the same to the municipal council, fix a reasonable period for the municipal council and the members of the public to show cause against the proposal and consider the explanation and objections, if any of the municipal council and the members of the public" ( 6 ) LEARNED Counsel for the Municipal Council does not dispute the power of the Government under S. 94 to issue general or special orders on the question of levy of octroi on goods specified in Sch. II of the Act. II of the Act. But he contends that the Government have no power under S. 94 to prohibit the municipal Council from levying and rollerting octroi on any goods, after they approve the bye-laws relating to such levy under S. 324 (6) and accord sanction under S. 96 of the Act In such a case. be added that the government have to follow the procedure set out in S. 319 of the Act for a modification of the bye-laws with an opportunity to the Municipal council and not to unilaterally invoke the general power under S 94 of the Act. ( 7 ) TN my opinion, S. 94 cannot be construed so narrowly. In this context, the power of a Municipal Council to tax the property or vocations must be borne in mind The Municipal Council is virtually an instrumentality of the State. It has no inherent power to levy taxes. Its powers and the extent of those powers must be found in the statute which creates them and endows them with such powers (See Hardwara Municipality v. Raghubirsingh AIR. 1966 SC. 1502, 1504. . It is the State's power to tax that has been delegated to the Municipal Councils and that power has to be always exercised subject to the limitations provided under the Act itself. ( 8 ) WITH these principles in mind, I must look at the provisions of the Act. The power of a Municipal Couuncil to levy tax or octroi is located in S. 94 (3) of the Act. S. 94 begins with the words "subject to the general or special orders of the Government" and then proceeds to state that a Municipal Council, after obseiving the preliminary procedure and with the sanction of the Government may levy a tax. The extent of power conferred upon the Government to issue general or special orders is not restricted in any manner. There is no limitation provided under the Act. Therefore, the Court ought not to restrain the language of the section by holding that that power could be exercised before the Government accords sanction for the levy of tax and not subsequent thereto. It may be a case of hardship for the Municipal Council in this case as the Government had already sanctioned the levy and the bye-laws connected with it. It may be a case of hardship for the Municipal Council in this case as the Government had already sanctioned the levy and the bye-laws connected with it. But the fundamental rule of construction of any statute is that ifs meaning and intention must be collected from the plain and unambiguous expression used therein and it is not open to the Court to narrow or whittle down the operation of the Act by any considerations of hardship. ( 9 ) IN my view, the, Government Order dt. 9-2-1972 was issued clearly wider S. 94 (1) of the Act. The order directs that the handloom goods produced even outside the co-operative sector should be exempted from payment of octroi duty. It appears that the goods produced by hand- looms through the co-operative sector were, previously, exempted from the levy. The benefit of that exemption has been now extended to all kinds of handloom goods. Such a direction must be held to be binding on all the municipal councils, because the power of the municipal councils to levy and collect taxes is not absolute or unfettered but always subject to the power of the Government to issue any general or special orders in that regard. If a municipal council refuses to levy any tax or an octroi, the government cannot compel the, imposition by issuing any order under s. 94 (1), but the levy and collection of any tax specified in S. 94 (1) could always be regulated or prohibited by general or special orders of the government. ( 10 ) A question similar to the one before me came up before the supreme Court in Municipality of Anand v. State of Bombay AIR. 1962 SC. 988. In that case, the City Municipality of Anand which was governed by the bombay District Municipal Act (Act III of 1901), resolved to levy octroi on milk brought within its octroi limits for consumption, use or sale therein. It had by a resolution duly passed by it, made a rule under S. 60 of that Act. On November 29, 1954, the Government of Bombay had given its sanction to the rule under S. 61. The Municipality, thereafter, published the rule and the sanction as required, by S. 62, and, the octroi was accordingly imposed with effect from January 1, 1955. On November 29, 1954, the Government of Bombay had given its sanction to the rule under S. 61. The Municipality, thereafter, published the rule and the sanction as required, by S. 62, and, the octroi was accordingly imposed with effect from January 1, 1955. On April 4, 1955, the Government of Bombay passed an order directing that the octroi tax shall not be leviable by the Municipality. The Municipality challenged the validity of the said order in a writ petition under art. 226 before the High Court of Bombay. The, petition was dismissed by the High Court. The Municipality took up the matter in appeal before the Supreme Court. The contention urged before the Supreme court was this :"the Government had no doubt a power to prescribe and control by general or special orders the right of a municipality to impose, a tax. These general or special orders would again, no doubt, be subject to modification from time to time tot suit the changing needs of particular areas, or of particular interests which would be affected by the tax levy, but the exercise of the power of modiftcation or this power to prescribe conditions and restrictions is exhausted when a muunicipality does, by conforming to the orders then in force, impose a levy which has come into force under S. 62. "repelling that contention, the Supreme Court observed:"there is no dispute that the, levy of the duty by the municipality as and from January 1, 1955 was lawful because the requirements of ss. 59-62 were satisfied when the levy was made. No general or special order of the State Government stood in the way of the Municipality making the particular levy and the sanction at the State Government under S. 59 (1) (b) had been accorded to it and the relevant rules had conformed to the procedural and other requirements of these sections. The power of the municipality in- the matter of the levy of the, tax is, however not absolute but is made, subject apart from other provisions to which I shall advert, to such general and special orders as the State Government might pass by virtue of the opening words of S. 59 of the Act. " ( 11 ) IN the said case, the Supreme Court has clearly stated that the, government can at any time by any such order prohibit the imposition of any tax. " ( 11 ) IN the said case, the Supreme Court has clearly stated that the, government can at any time by any such order prohibit the imposition of any tax. the prqvisions of Ss. 59, 61 and 62 of the Bombay District municipal Act (Act III of 1901), are in pari material with the provisions of Ss 94, 96 and 97 of the Act. Therefore, the decision of the Supreme court in the said case is clearly applicable to the case on hand. ( 12 ) MR, Ramachandra, Rao, learned counsel for the) respondent, squgnt to distinguish the decision of the Supreme Court in Municipality of Anana v. State of Bombay by stating that the decision therein rested mainly on the provisions of S. 73 of the Bombay District Municipal act, and not on S. 59 of the said Act. He relied upon the observation at para 10 of the said decision. I have perused the said paragraph and I am unable to agree with him. The decision of the Supreme Court did not rest on the provisions of S. 73 of the Bombay District Municipal Act. The said section is similar to S. 140. Sec. 140 confers powers on the Government to suspend or prohibit levy of objectionable taxes, which are, obnoxious to the interests of the general public; whereas the power to issue general or special orders in the matter of levy of any tax is located under S. 94 of the Act. . When any order is issued under S. 94, it is always binding on the Municipal Council. The Government Order dated 9-2-1972 cannot be an exception to this principle. ( 13 ) I see, therefore, no justification to, accept the contention of Mr. Ramachandra Rao that the Government after according sanction under s. 96 to levy tax, must take recourse to the provisions of S. 319, for cancellation or modification of the bye-laws of the municipal council and not to invoke the power under S. 94 of the Act. The power conferred by S. 319 is to cancel of modify any bye-law of the municipal councils. That power has nothing tor do with the power of the Government to issue special or general orders in the matter of levying taxes by the municipal councils. The power conferred by S. 319 is to cancel of modify any bye-law of the municipal councils. That power has nothing tor do with the power of the Government to issue special or general orders in the matter of levying taxes by the municipal councils. Bye-laws may provide for procedures lor collecting octroi, refund of octroi and requiring of license for the sale of any article liable to octroi. That is evident from the prqvisions of S. 324 (1) (m) of the Act. Even without such bye-laws, the octroi could be levied and collected. The source of authority for the municipal councils to levy, assess and collect the taxes specified in S. 94 (1) would be S. 94 (3) of the Act and the rules framed thereunder. ( 14 ) IN the result, these petitions are allowed with a direction to the respondent-Municipal Council to forbear from levying and collecting any octroi on the goods produced by handlooms even outside the co-operative sector, and with a further direction to it to refund to the petitioners the petrol collected on handlopm goods from 9-2-1972. ( 15 ) THE petitioners are entitled to their costs. Advocate's fee Rs. 100. 00 one set. --- *** --- .