Chandigarh, April 29
Quashing the Acts abolishing octroi in the state of Punjab after holding these unconstitutional, Mr Justice Jawahar Lal Gupta and Mr Justice Ashutosh Mohunta of the Punjab and Haryana High Court today ruled that the state which once abounded in sugar was now sad saccharin due to the adoption of populist politics and other revenue sacrificing measures, including free power and water, besides abolition of octroi, house tax and revenue.

Delivering the verdict in the open court, the Judges also ruled that the “impugned Acts were an example of politics of staying in power at all costs. Basic tenets of good governance have been clearly ignored in the present case”. They further ruled that the present government, too, was following the policy of populist politics. “The state complains that the abolition of octroi was one of the major revenue sacrificing measure. Yet, the present government has chosen to support the action. It accused the previous government of following the path of populist politics. Still, it has chosen to stick to the beaten track. The present government has not changed the direction. The vice of the predecessor cannot be the virtue for the successor.”

The Judges added that the previous government started issuing statements regarding the abolition of octroi just as it was about to complete its term. “The elections to the Punjab Legislative Assembly were held in 1997. At that time, the Akali-BJP alliance made a promise to abolish octroi as part of its election manifesto. The petitioners alleged that the purpose was to woo the trading community. However, octroi was a major source of revenue. Thus, the promise was not kept. In 2001, when the government was about to complete the term, it started making statements regarding the abolition of octroi. These were reported in the press. It is human to grab gifts. As elections approach, people’s expectations rise. Demands are made. These are readily conceded. Such must be the situation even towards the latter half of last year. However, acceptance often brings repentance. Resistance is the only way to ensure a dignified existence. Wrong by wrong, one can never reach the right result”.

The judgement is significant as, according to the Judges, the impugned Acts passed by the state legislature had debarred municipal committees and corporations from collecting octroi, adversely affecting the working of local bodies. “The execution of even the ongoing projects had been affected. The working staff remained idle. Payment of wages for idleness is not an ideal situation or solution,” they noted.

In their detailed order, the Judges held: “The levy was abolished with an assurance and undertaking that some alternative sources shall be found and provided. In the interregnum, the state shall pay. However, the state’s financial position being bad, it was not in a position to keep its promise and to compensate the municipal committees and corporations for the inevitable loss that they had suffered on account of the impugned action…. From plenty to poverty is the sad story of the state of Punjab. Today, it is under a heavy debt in the region of Rs 62,000 crore”.

The Judges pointed out that during the hearing of the case, the “Advocate-General was more candid than candied. He unreservedly admitted that the state was in trouble and facing financial difficulties. He also stated that on account of the impugned Acts, the municipal committees would lose approximately Rs 430 crore. The state of Punjab had taken loan from the Central government for fulfilling its commitment to pay the municipalities. The committee constituted by the state government was required to make its recommendations with regard to the alternative sources of revenue within 15 days. Despite a lapse of more than two months, no recommendation has been made so far. It is not in a position to make further payments: no solution is in sight. Can we still say that the state is taking measures needed to improve the financial position of the municipalities? Do the Acts of legislature conform to the constitutional requirement? The inevitable answer is no…. The Acts defeat the very object which Parliament had in view while amending the Constitution. The court cannot put its seal of approval to such an action”.

Speaking for the Bench, Mr Justice Gupta observed: “In the present case, the state has robbed Peter to pay Paul. The municipal bodies were looking for funds. Instead of providing these, the state has deprived them of even what was necessary for their sustenance. The state could have made a law to endow the local bodies with power and authority, to enable them to function as institutions of self-government. Endow means to enrich, to enhance — not deprive. Fiscal fitness is essential for effective functioning. The legislature could have made a law to furnish institutions with an income. It was required to enhance; not abolish. The state had to give; not to take away what the municipalities were already getting”.

Mr Justice Gupta added: “The state is the best judge of its needs. But it has to be remembered that we are spending our children’s inheritance. Some are getting something for nothing. Some are getting nothing even when they are paying a plenty.