Wholema Construction Private Limited vs. The State Of Bihar
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Cause title — parties, addresses and appearances
ORAL ORDER 5 25-08-2026 In the order no. 4 dated 27.07.2026, the paragraph 6 be read as paragraph no. 9. 2. Heard Mr. S.B.K. Mangalam, learned counsel for the petitioner, Mr. Amit Shrivastava, learned Senior Counsel for the Arwal, Nagar Parishad and Mr. Sanjay Kumar Tiwari, representing the State.
2/12
The present petition has been preferred for the following relief/s: (i) for issuance of an appropriate writ in the nature of CERTIORARI for quashing the letter dated 21.04.2026 issued under the signature of the Respondent no.3 and contained in his letter no.1363 dated 21.04.2026 , whereby and where under the Respondent no.3 has been pleased to direct the Respondent no.7 to stop any collection of tax from the commercial vehicle against the loading and unloading within the territorial juri iction of Arwal Nagar Parishad with immediate effect. (ii) for issuance of an appropriate writ in the nature of CERTIORARI for quashing the letter dated 21.04.2026 issued under the signature of the Respondent no.7 and contained in his letter no.1257 dated 21.04.2026, whereby and where under in issued compliance of the letter dated 21.04.2026 under the signature of the Joint Secretary of the department (Respondent no.3), the Respondent no.7 has been pleased to direct the petitioner to stop any collection of tax from the commercial vehicle against loading and unloading of goods within the area of 3/12 Arwal Nagar Parishad with immediate effect. (iii) for a declaration that the letter dated 21.04.2026 issued under the signature of Respondent no.3 and contained in his letter no.1363 dated 21.04.2026, it refers to the departmental letter dated 05.05.2016 and 12.06.2008 for the purposes of stopping the petitioner from collecting the tax, the direction issued under the aforesaid letter dated 21.04.2026 is thoroughly misconceived and denied since vide letter no.2961 dated 05.05.2016, the decision was taken by the State Government not to realize entry tax from the commercial vehicle passing through the municipal area, therefore, the said letter does not have any application for settlement of Sairat is concerned. (iv) for issuance of an appropriate writ in the nature of MANDAMUS ,commanding and directing the Respondent Authorities to allow the petitioner to collect tax from commercial vehicle loading or unloading goods including sand etc. within the territorial juri iction of Arwal Nagar Parishad in view of the agreement dated 31.03.2026 signed by the petitioner and the Respondent no.7 for 4/12 the period for which the settlement has been made with the petitioner in accordance with law. (v) for issuance of any other appropriate writ/writs, order/ orders, direction/directions for which the writ petitioner would be found entitled under the facts and circumstances of the case.
The Nagar Parishad, Arwal came out with a short term settlement notice no. 01 of 2026 under the signature of the Executive Officer, Nagar Parishad, Arwal on 13.02.2026 for the settlement of amongst the other, the Arwal Bus Stand, the realization of taxes from commercial vehicle which comes there for loading/unloading, for the functioning of Muktidham and for the fixation of hoarding. The petitioner was successful bidder pursuant to the letter no. 1030 dated 06.03.2026 issued by the Executive Officer, Nagar Parishad, Arwal and accordingly, he deposited Rs. 38,47,200/- so far as the realisation of tax from vehicle which are/were supposed to load-unload within the juri iction of Nagar Parishad, Arwal. This followed the agreement for the period 01.04.2026 to 31.03.2027. 5. However, to the surprise of the petitioner, within the next ten days, in came, the letters in question by which on the instructions sought for by the District Magistrate, Arwal vide its letter dated 11.04.2026 (Annexure P/7 to the petition), ‘the 5/12 Department’ replied on 21.04.2026 informing that the Executive Officer, Nagar Parishad, Arwal needs to submit show cause as to under which provision, the said settlement has been made. This followed another letter no. 1257 dated 21.04.2026 issued by respondent no. 7 by which the petitioner was asked to stop collection.
Aggrieved, the petitioner preferred petition.
Mr. Mangalam, representing the petitioner submits that it is not an entry tax and when a commercial vehicle comes within the juri iction of the Nagar Parishad, Arwal, loading/unloading tax were levied and unless the Nagar Parishad gets economic independence, it cannot function.
The submission is that the petitioner has been made to serve as a pendulum as on the one hand, a notice for settlement comes out, he is the successful bidder, the amount sought for was deposited but within three weeks, he was forced to stop the said realization. This has affected his economic ability.
On different dates, this Court wanted response of both the Nagar Parishad, Arwal as also the State Government and found that both are coming with contrary view to put the entire story to rest. On 27.07.2026, the Court directed the Head of the Department (the Principal Secretary, Urban Development and Housing Department, Bihar, Patna) to clarify the matter and file 6/12 personal affidavit.
Paragraph nos. 5 to 8 of the order dated 27.07.2026 stands recorded hereinbelow:
On the one hand, the Department’s stand is that the imposition of any tax is illegal, on the other hand, the Executive Officer, Nagar Parishad, Arwal submits that the Parishad has the power to levy taxes.
In that background, let the Additional Chief Secretary, Urban Development and Housing Department, Government of Bihar, Patna file his/her personal affidavit clarifying the matter as it is not possible to adjudicate the case when both the Department and the Executive Officer, Arwal are at loggerheads and further, it will have repercussion across the State.
It is made clear that the affidavit has to be signed by the Additional Chief Secretary, Urban Development and Housing Department, Bihar, Patna himself/herself and copies be served upon both the learned counsel for the petitioner as also the learned Senior Counsel representing the Executive Officer, Nagar Parishad, Arwal before the matter is taken up 7/12 for hearing.
A clear stand of the Department shall be applicable across the State and thus it is necessary to throw light on the entire episode as it is not one off instance. Thus, in the opinion of the Court, to bring uniformity across the State, the respondents may come up with a proper notification/order which if issued be part of the affidavit to be filed by the Additional Chief Secretary, Urban Development and Housing Department, Bihar, Patna. Failure to file an affidavit within four weeks, a cost of Rs.3,000/- is to be deposited with the Patna High Court Legal Services Committee.
Pursuant thereto, the Principal Secretary of the said department has filed his affidavit under his own signature and it is important to incorporate paragraph nos. 14 to 17 which read as under:
“14. That, in this backdrop, any attempt an Urban Local Body by introduce, to re-an in substance, commercial octroi/entry-tax-like vehicles, charge on merely by describing it as a fee on "loading/unloading" rather than as a tax on "entry" or "plying", would run directly contrary to the 8/12 scheme and the constitutional underlying object of the GST regime, and would, if permitted, also result in double taxation of the very same commercial transaction (supply of goods) that already stands subjected to GST. This furnishes yet another, independent and additional ground, over and above the absence of Rules under Section 127 (3) and the absence of any other enabling provision, for holding the impugned Sairat settlement to be unsustainable in law.
That the Department also reiterates and relies upon the consistent view of the Courts Hon'ble that municipal/local bodies cannot levy transit or local fees on the mere transport, loading or unloading of minor minerals such as sand, which are governed by the Mines and Minerals (Development and Regulation) Act, 1957, a field occupied by the State/Central legislation, also held by as the Hon'ble
That, accordingly, the clear, 9/12 considered and consistent stand of the Department, applicable uniformly across the State of Bihar and not confined to the facts of the present case, is as follows- i. No Urban Local Body in the State of Bihar shall levy or collect any toll, tax, fee or charge on commercial vehicles for plying on public streets, or for loading/unloading of goods, or any charge of a similar or analogous nature, howsoever described or nomenclatured, until appropriate Rules Regulations are framed under Section 127 (3) read with Section 127(1)(k) and/or Section 128 of the Bihar Municipal Act, 2007, and duly notified; ii. Any Sairat settlement, tender, bandobasti or similar arrangement already made or purported to be made by any Urban Local Body for collection of such charges, in the absence of such Rules, is void and of no legal effect, and shall stand discontinued with immediate effect; iii. That, in compliance with the direction, and without prejudice to the rival contentions recorded by this Hon'ble Court, the Department has issued Order No. 2811 dated 17.08.2026, clarifying, 10/12 for uniform across all Urban application Local Bodies of the State, that no tax under Section 127 (1) of the Bihar Municipal Act, 2007 may be levied or collected without the Rules and Regulations required under Section 127 (2) having been framed, and that, where applicable, no toll on heavy/commercial vehicles may be levied 127(1)(k)(ii), under Section nor any tax outside the Section 127 (1) list under the residuary power Section 127(3), without in a specific order/prior approval of the State Government. A copy of the said Notification/Order is being annexed and in compliance with the said direction of this Hon'ble Court.
That in view of the aforesaid, the action of Respondent No. 7 in settling the Sairat in question with the petitioner vide agreement dated 31.03.2026, for collection of fee on loading/unloading of goods by commercial vehicles, was wholly unauthorized, without juri iction and contrary to the standing instructions of the Department, and the impugned Departmental Letter No. 1363 dated 21.04.2026 as well as the consequential letter No. 1257 dated 21.04.2026 11/12 issued by Respondent No. 7 have rightly directed discontinuance of such collection.”
The letter no. 2811 dated 12.08.2026 issued under the signature of the Joint Secretary of the said Department and addressed to Municipal Commissioners of all the Municipal Corporations, Bihar as also the Town Executive Officers, Nagar Parishad/Nagar Panchayat, Bihar records that till the rules comes, under Bihar Municipal Act, 2007, there shall not be any realization of amount as a road tax and failure to do so, appropriate steps shall be taken.
In that background, the dust have now been settled, the head of the Department has come up with the clarification, the parties, if so want, can agitate the matter by filing appropriate petition before appropriate Court.
To be fair to the petitioner, he has suffered in the matter. The Executive Officer, Arwal, Nagar Parishad issued tender, he qualified. The huge payment to the tune of Rs. 38,47,200/- was made and within a month, he had to stop his activity.
Learned counsel for the petitioners submit that he qualified in the tender on 06.03.2026. The agreement thereafter, was signed between the parties on 31.03.2026 for the period 01.04.2026 to 31.03.2027 and on 21.04.2026, the Executive 12/12 Officer, Nagar Parishad, Arwal vide letter no. 1257 dated 21.04.2026 directed him to stop realising the tax. Thus, in principle, he realised the taxes only for the period of 21 days.
This Court is of the view that if he has realized taxes only from 01.04.2026 to 21.04.2026, the petitioner is entitled to the return of the amount for the rest of the period along with the statutory interest which has to be cleared within period of four weeks from today as the order is being passed in the presence of learned Senior Counsel representing the Arwal, Nagar Parishad.
With the aforesaid observation, the writ petition stands disposed of.
Sanny/- (Rajiv Roy, J) U
Reproduced from the public record of the Patna High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.