Octroi levy on re-exported goods fails where the special current-account procedure governs assessment and destination lies outside the municipality.

Octroi under the Rajasthan Municipalities Act applies only when goods enter municipal limits for consumption, use, or sale there. Petroleum products brought in and re-exported for consumption outside the municipality were held not chargeable, because mere entry into the local area does not attract levy when the destination is outside. The special current-account mechanism for approved firms or bodies operated independently of the ordinary declaration-based procedure, and the balance of goods brought in against goods sent out governed assessment. On the facts, there was no clear basis to treat that facility as withdrawn, so the municipal demand could not be sustained.

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Issues: Whether octroi was leviable on petroleum products brought into the municipal limits and re-exported for sale and consumption outside those limits; whether the declaration requirement under the ordinary octroi procedure applied where current account facilities were granted under the special rule; and whether the municipal levy could be sustained on the facts of the case.

Analysis: Octroi under section 104 of the Rajasthan Municipalities Act, 1959 is attracted only when goods are brought within the municipal limits for consumption, use, or sale therein. The settled principle in the earlier decisions governing octroi is that goods re-exported for consumption or use outside the municipal limits do not attract the levy merely because they entered the local area or were sold there as part of a movement towards outside consumption. The special scheme under section 133 of the Rajasthan Municipalities Act, 1959 and rule 13 of the Rajasthan Municipal Octroi Rules, 1962 provides a distinct current-account method of assessment and collection for firms or public bodies granted that facility. That special procedure operates independently of the ordinary declaration-based procedure in rules 6 and 9, and the balance of goods brought in less goods transported out is the basis for levy. On the pleadings and facts, the Court found no clear basis to hold that the current account facility had been withdrawn, and the levy could not be justified by invoking the ordinary declaration rule against a person governed by the special procedure.

Conclusion: Octroi was not chargeable on the petroleum products re-exported for use and consumption outside the municipal limits, and the special current-account mechanism under rule 13 excluded the ordinary declaration consequence under rule 9 in the circumstances of this case.

Issue (ii): Whether the municipal council was entitled to recover octroi on the impugned transactions despite the special facility and the destination of the goods outside the municipal area.

Analysis: The levy had to conform to the statutory character of octroi and the governing rules. Since the goods were intended for and in fact moved towards consumption outside the municipal limits, and since the special procedure for current-account holders governed assessment, the municipal demand could not be sustained. The refund-related controversy did not alter the basic conclusion on non-leviability, and the Court accepted the High Court's approach on the factual and procedural position concerning the facility and the accounting mechanism.

Conclusion: The municipal council was not entitled to sustain the impugned octroi demand on these transactions.

Final Conclusion: The appeals were rejected in substance, and the High Court's relief against levy of octroi on the re-exported petroleum products was maintained.

Ratio Decidendi: Octroi is payable only on goods brought into a municipal area for consumption, use, or sale therein, and a special current-account procedure for approved firms or bodies excludes the ordinary declaration-based presumption where the goods are accounted for under that special statutory scheme and are re-exported for consumption outside the municipality.

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