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4. Mr. M. R. Kotwal, the learned Government Pleader, has mainly relied on the provisions of Article 285(1) of the Constitution of India under which, according to the learned counsel, there is a blanket exemption of the properties of the Union from all taxes imposed by a State or by any authority within a State unless provisions to the contrary is made by a law of Parliament The learned Government Pleader therefore contended that goods brought within the municipal limits by the catering establishment of the Railway Administration were the property of the Union and since there was no law made by the Parliament providing for those goods being allowed to be taxed by the Local Authority, the Octroi Duty could not be levied by the Municipal Council on the articles in question, Mr. Abhyankar appearing on behalf of the Municipal Council had relied mainly on the provisions of Article 285(3) of the Constitution of India and the argument advanced before us was that goods brought within the municipal limits have already been made subject to tax by virtue of Notification Exhibit 88 and therefore such tax would be saved by the provision of sub article (2) of Article 285. The learned counsel pointed out that Notification of 1997 enabled the Municipal Council to levy Octroi Duty and that Notification continued to be effective even after the coming into force of the Government of India Act 1985 because the power to levy Octroi Duty was preserved in the Municipal Council by the proviso to Sec. 154 of the Government of India Act 1935, According to the learned counsel, as Octroi Duty was levied since 1907 and it continued to be levied even after the commencement of the Constitution, the Union of India could not avoid its liability. Now, admittedly, so far as the Notification of 1907, is concerned, it was revoked by another Notification dated 8th Oct., 1953 Exhibit 9. That Notification expressly stated that the Central Government revokes the Notification of the Government of India "in the Department of Commerce and Industry No. 9977-Rys. Dated the 29th Nov., 1907 issued under Clause (1) of the said Section" The learned counsel contended that the Octroi Duty was legally levied till 6th Oct., 1953 and that since that Railways have been treated as liable to pay Octroi Duty even therefore, even though the levy may be illegal, the Union of India would be illegal, the Union of India would be liable to pay Octroi Duty. It may be pointed out at this stage that the dispute with regard to the liability to pay Octroi Duty was for the first time raised by the Union of India in Aug., 1969.

12. We may now refer to two decisions of the supreme court in which the scope of Article 285 has been considered. In union of India owner of the Eastern Railway v.commissioner of Sahibaganj municipality (AIR 1973 SC 118) a notification was issued on 24th August 1911 under section 135 of the Railways Act declaring that the Administration of East India Railway shall be liable to pay in aid of the funds of the local authorities set out in the schedule thereto annexed the taxes specified in the second column thereof. The taxes in question were house rate and latrine fees. Out of the buildings in question some were constructed after 31st mar. 1937 and some after 25th Jan.1950. the Union of India contended that it was not liable to pay municipal tax by virtue of provisions contained in S. 154 of the Government of India Act 1935 and Article 285 of the constitution. The High court had held that the 1941 Act was a Federal Law within the meaning of section 154 of the Government of India Act and section 4 of the 1941 Act rendered the buildings liable to taxation. Reversing the decision of the High court it was pointed out by the supreme court that the High court overlooked the effect of section 3 of the 1941 Act which required a notification declaring a liability to pay and that the notification under 1941 Act created a liability for railway property coming into existence after 1941 Act but no such notification was issued. Pointing out that section 4 of the 1941 Act did not provide for payment of taxes in respect of railway property and that there was no law contemplated by Article 285 providing for taxation of railway property the supreme court observed as follows (at p. 187):-

14. We may also point out that the supreme court in the Bellary municipality,s case has taken the view that the provisions of the 1941 Act are not saved by Article 285 of the constitution because, it was not a law made by the parliament as contemplated by article 285(2) Referring to the provisions of the 1941 Act in the context of Art. 285 and Article 372 of the constitution the supreme court has observed as follows (para 8):-

"The Act of 1941 creating the liability of the Railways to taxation by local authorities was passed by then central Legislature which was a Federal Legislature of India. The present central Legislature, namely, the parliament has not enacted any law after coming into force of the constitution making any provision affecting the exemption of the property of the union from all taxes imposed by a state or by any authority within a state. The 1941 Act is repugnant to clause (1) of Article 285. It is neither a law made by parliament nor a law made by the central Legislature after he advent of the constitution. In either view of the matter it is not a law covered by the phrase 'save in so far as parliament may by law otherwise provide' occurring in clause (1) of Article 285."

It therefore appears to be clear to us that Octroi Duty which was permitted to be levied by the notification of 1907 could not have been levied on goods brought by the Railways after 1st April 1937 because of the bar under the main part of section 154 of the Government of India Act and because such a tax was not saved by the proviso to section 154. The Octroi Duty could also not be levied after the commencement of the constitution because of the express bar in Article 285(1) and further because there was no octroi Duty which could be claimed under Article 285(2).