Octroi on raw materials used in milling applies when paddy is consumed in dehusking, even if rice is sold outside the area.

Paddy brought into a notified area for dehusking into rice was treated as "consumed" for municipal octroi purposes, because consumption includes use of raw material in the manufacturing process and is not limited to final personal use. The fact that the resulting rice was intended for sale outside the notified area did not affect taxability. The municipal levy under the relevant provisions was therefore described as valid on the paddy brought in for milling, and liability arose when the goods entered the area for that use.

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Issues: Whether dharat leviable under the Municipal Act was payable on paddy brought into the notified area for dehusking into rice, even when the resultant rice was intended for sale outside the notified area.

Analysis: Section 77(2) empowered the municipal authority to levy octroi on goods brought within limits for consumption or use, and section 284 extended a similar taxing power to notified areas. The decisive question was whether paddy brought in for milling was "consumed" within the meaning of the taxing provision. Applying the principle that consumption is not confined to final personal use but includes use of raw material in manufacturing, the conversion of paddy into rice by dehusking was treated as consumption. The destination of the resultant rice did not alter the taxability of the paddy brought into the notified area for that process.

Conclusion: The levy was valid and the petitioners were liable to pay tax on the paddy brought into the notified area for dehusking.

Final Conclusion: The writ petitions were rejected because the taxing event occurred when paddy was brought into the notified area and consumed in the milling process.

Ratio Decidendi: Goods brought into a taxing area are liable to octroi or a similar levy when they are consumed as raw material in manufacture, even if the finished product is later taken outside the area for sale.

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