Octroi exemption for new industrial units runs from commercial production date, with refunds limited to the exempt period.

Section 188A of the Orissa Municipal Act, 1950 and the 25 June 1997 notification limited octroi exemption to new industrial units set up on or after 1 March 1996. Machinery and equipment qualified on entry into the municipal area, while spare parts, raw materials and packing materials were exempt for five years from commencement of commercial production. Because octroi liability arises when goods enter the local area, the relevant date for entitlement was the unit's commencement of commercial production on 26 August 1997. The unit was therefore eligible for five years' exemption from that date, and octroi collected during that exempt period was refundable; no refund was due for collections made before that date.

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Issues: Whether the petitioner's new industrial unit was entitled to exemption from octroi on machinery, equipment, spare parts, raw materials and packing materials, and whether octroi collected after commencement of commercial production was refundable.

Analysis: Under section 188A of the Orissa Municipal Act, 1950 and the Government notification dated June 25, 1997 issued thereunder, exemption from octroi was available only to new industrial units set up on or after March 1, 1996. The exemption for machinery and equipment applied on entry into the municipal area, while spare parts, raw materials and packing materials were exempt for five years from the date of commencement of commercial production. Since octroi liability arises at the time of entry of goods into the local area, the relevant date for the petitioner's entitlement was the date on which its unit commenced commercial production. The petitioner's unit began commercial production on August 26, 1997.

Conclusion: The petitioner was entitled to octroi exemption for five years from August 26, 1997, and octroi collected during that period was refundable; no refund was payable for collections made before that date.

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