1996 (3) TMI 431 - SC - VAT and Sales Tax

Supreme Court Upholds Exemption of Mineral Water Bottles from Octroi Levy

Nagar Mahapalika Versus Prem Nath Monga Bottlers Pvt. Ltd. and Another

The Supreme Court affirmed the High Court's decision in a case concerning the levy of octroi on empty bottles brought into a local area for filling with a ... Whether the mineral water bottled by the company would be taxable under item 138 of the VII Schedule and it can only escape octroi if it is shown that it is to be found in the list of exempted articles? Held that:- Appeal dismissed. The decision of the High Court was rendered on January 13, 1983. It may be noted that the learned District Judge was also of the same opinion. We are inclined to presume that the High Court and the learned District Judge were aware of the factual situation obtaining in that State both in 1956 and in 1975 and that at this distance of time, it would not be proper and advisable to interfere with their opinion. They have pointed out that the said notification of 1975 was preceded by a notification of 1956 and that in 1956 mineral water as we know today was not known in commercial circles and, therefore, when the notification used the expression 'mineral water', it meant aerated water or the cold drinks. This course we are adopting also because it is stated that after 1987 this question would not arise Issues:Levy of octroi on empty bottles brought into a local area for filling with a drink and sale outside the area; Interpretation of exemption clause in a notification regarding taxable and exempted articles; Classification of empty bottles as mineral water bottles exempt from octroi.Analysis:The case involved an appeal by Nagar Mahapalika, Meerut, against the dismissal of their writ petition by the Allahabad High Court regarding the levy of octroi on empty bottles brought into the local area for filling with a drink and sale outside. The dispute arose under the Uttar Pradesh Municipalities Act, 1960, concerning the interpretation of the Act in relation to octroi levy.The appellant-corporation sought to levy octroi on empty bottles brought into Meerut for filling with a drink, claiming they were 'articles made of glass' subject to entry tax. The respondent, a company running a bottling plant, resisted the levy on the grounds that the bottles were not brought for 'use' within the meaning of the Act and were covered by an exemption clause in a notification.The High Court upheld the respondent's contention that the empty bottles fell under the exemption clause, considering them as mineral water bottles exempt from octroi. The Court noted that the term 'mineral water' in the notification referred to aerated waters and cold drinks, as understood in 1975 when the notification was issued. The Court declined to interfere with the High Court's decision, considering the historical context and commercial understanding of the term 'mineral water.'The Court emphasized that the factual situation prevailing in 1956 and 1975, as understood by the High Court and District Judge, supported the interpretation that mineral water referred to aerated drinks and cold drinks. As the issue would not arise after 1987 due to changes in relevant entries, the Court dismissed the appeal without costs, concluding that the entry of empty bottles for filling with drinks did not require further examination under the Act.In conclusion, the Supreme Court dismissed the appeal, affirming the High Court's decision based on the historical context and commercial understanding of the term 'mineral water' in the exemption clause of the notification. The Court declined to delve into the question of whether the entry of empty bottles constituted 'use' within the Act, given the specific interpretation of the exemption clause and the evolving circumstances post-1987.