1998 (5) TMI 400 - SC - Indian Laws

Supreme Court grants refund for octroi duty on re-exported bottles from 1980-1987

M/s ACQUEOUS VICTUALS PVT. LTD. Versus STATE OF U.P. & ORS.

M/s ACQUEOUS VICTUALS PVT. LTD. Versus STATE OF U.P. & ORS. - 1998 AIR 2278, 1998 (3) SCR 290, 1998 (5) SCC 474, 1998 (4) JT 195, 1998 (3) SCALE 622 Issues Involved:1. Liability to pay octroi duty on the weight of glass bottles containing beverages.2. Interpretation of relevant provisions of the U.P. Municipalities Act, 1916.3. Determination of whether the bottles were brought within municipal limits for consumption, use, or sale.4. Refund of octroi duty paid on the weight of bottles.5. Examination of unjust enrichment in the context of refund claims.Issue-wise Detailed Analysis:1. Liability to Pay Octroi Duty on the Weight of Glass Bottles Containing Beverages:The core issue in the appeals was whether the writ petitioner was liable to pay octroi duty on the weight of the glass bottles containing beverages from 1980 to 1987. The High Court had ruled that the octroi duty could be imposed on the weight of the bottles as they were used within the municipal limits for storing liquids until consumed. The Supreme Court examined this contention and noted that the bottles, after being emptied, were sent back to the writ petitioner for recycling, implying that they were not imported for consumption, use, or sale within the municipal limits.2. Interpretation of Relevant Provisions of the U.P. Municipalities Act, 1916:Section 128(1)(viii) of the Act allows Municipal Boards to impose octroi on goods brought within the municipality for consumption, use, or sale. The Supreme Court emphasized that the bottles were not consumed or used within the municipal limits if they were re-exported after being emptied. The Court also referred to Rule 4 of the Nagarpalika Moradabad Octroi Rules, 1978, which states that octroi is calculated on the gross weight of consignments, including packing. However, the Court clarified that this rule must align with the charging provision of Section 128(1)(viii).3. Determination of Whether the Bottles Were Brought Within Municipal Limits for Consumption, Use, or Sale:The Court noted that to levy octroi, it must be shown that the commodity was brought within the municipal limits for consumption, use, or sale. The writ petitioner argued that the bottles were not sold within the municipal limits and were returned for recycling. The Court referred to the Constitution Bench decision in Burmah Shell Oil Storage & Distributing Company India Ltd. v. The Belgium Borough Municipality, which held that goods must be brought into the local area for consumption or use and must remain there without being re-exported.4. Refund of Octroi Duty Paid on the Weight of Bottles:The Court held that if the writ petitioner proves that the bottles were re-exported after being emptied, they would be entitled to a refund of the octroi duty paid on the weight of these bottles. The petitioner must follow the procedure laid down by the Municipality for refund claims and show that the burden of the disputed octroi duty was not passed on to consumers.5. Examination of Unjust Enrichment in the Context of Refund Claims:The Court emphasized that the writ petitioner must prove that they did not pass on the burden of the octroi duty to the consumers to avoid unjust enrichment. This principle was reinforced by the Constitution Bench decision in Mafatlal Industries Ltd. & Ors. v. Union of India & Ors., which mandates examining unjust enrichment in refund claims.Conclusion and Directions:The Supreme Court allowed the appeals to the extent that the writ petitioner could lodge claims for refund of octroi duty paid on the weight of re-exported empty bottles from 1980 to 1987. The petitioner must submit relevant evidence within 12 weeks, and the authorities must decide on the claims within another 12 weeks. The judgment and order of the High Court were set aside, and the writ petitions were granted in these terms.