Octroi liability depends on commercial transformation; cutting cloth into smaller sizes did not amount to use or consumption.

Octroi is attracted only when goods brought into the local area are consumed, used, or sold there; mere entry is insufficient. Processing amounts to consumption only if it creates a commercially different commodity. Cutting cloth into smaller sizes within the octroi limits did not change its commercial identity, but only its dimensions, so it was not use or consumption for octroi purposes and the levy could not be sustained.

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Issues: Whether cloth pieces brought into the octroi limits and cut into smaller sizes within those limits were liable to octroi on the footing that they were used or consumed there.

Analysis: Octroi under the governing municipal law and the constitutional entry is attracted only when goods are brought into the local area for consumption, use, or sale therein. Mere physical entry is not enough. The relevant test applied was whether the goods were converted by processing into a commercially different commodity, because such conversion would amount to use or consumption. Earlier decisions on tobacco, salt, and packing of goods were distinguished on the basis that those cases involved, or did not involve, such commercial transformation. Cutting cloth into smaller lengths did not produce a new commercial commodity; it merely altered the size of the same commodity and did not add the kind of utility that amounts to consumption for octroi purposes.

Conclusion: The cutting of cloth pieces into smaller sizes did not amount to use or consumption, and octroi was not leviable.

Final Conclusion: The appeal succeeded and the levy of octroi on the cloth pieces could not be sustained.

Ratio Decidendi: Octroi is leviable only where goods brought into the local area are used or consumed there, and processing amounts to consumption only if it results in a commercially different commodity.

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