TaxTMI 
TaxTMI 
1991 (11) TMI 221
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....ale of motor vehicles and spare parts of motor vehicles and excavators. Their manufacturing units are at Pune and Jamshedpur outside the Thane municipal corporation limits. They have a bonded warehouse within the municipal limits in which they bring and stock motor vehicle parts and excavator parts from their own factories at Pune and Jamshedpur. They also bring in parts manufactured by their ancillaries within India and also parts imported from abroad. These products or parts are brought in bulk and thereafter taken or sent out from the municipal limits in smaller packings depending on the requirements of the customers in various parts of the country. It is stated that the parts imported or purchased from others and brought in are relatively very small in quantity and the major portion of the activity related to their own factory produced parts. On and from 1st October, 1982, with the notification under section 3 of the Bombay Provincial Municipal Corporation Act, 1949, the Thane Municipal Council became a municipal corporation (hereinafter called "the Corporation"). Prior to the constitution of the Corporation it was a municipality and was governed by the Thane Municipal Counc....
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....ction of the claim was either on one or more than one or all the grounds mentioned above. The appellants filed a writ petition under article 226 in the High Court of Judicature at Bombay contending that the action of the Municipal Corporation in refusing refund is unconstitutional and illegal and for certain other reliefs. The Division Bench of the High Court which heard the same dismissed the writ petition on the 26th August, 1988. It is against this judgment that the present appeal has been filed. It appears that during the hearing of the writ petition the learned counsel appearing for the Corporation did not counter the contention of the company that the rejection under rule 25(3)(d) was not correct and the learned Judges have also recorded the same in the judgment. But the learned counsel for the respondent before us stated that it is not correct to say that he had conceded any point and that since he could not argue that point in view of the decision of another Division Bench of the same High Court in Khandelwal Traders, Akola v. Akola Municipal Council AIR 1985 Bom 218, which was binding on the Bench which heard the writ petition, and also in view of certain observations o....
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....ation-cum- application for written permission in form 11 to the Superintendent of Octroi to export such goods. Rule 25(3)(d) states that no such intimation shall be accepted unless: "the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership." The case of the Corporation was that there was a change in the ownership of the goods since a sale in law had taken place inside the octroi limits though the purchaser was residing and carrying on business outside the octroi limits and under the sale the goods were intended to be and in fact exported for the purpose of consumption and use outside the octroi limits. Section 127 of the Bombay Provincial Municipal Corporations Act, 1949, and the corresponding section 105 of the Maharashtra Municipalities Act, 1965, authorises the municipality to levy "octroi". Both these Acts define octroi as meaning a tax on the entry of goods into the municipal area "for consumption, use or sale therein". The Maharashtra Municipalities (Octroi) Rules, 1968, made under the Maharashtra Municipalities Act, 1965, provides for the levy, collection and refunds of octroi duty on the goods....
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.... in that sense, no matter by whom, they satisfy the requirements of the Boroughs Act and octroi is payable." "....................The goods must be regarded as having been brought in for purposes of consumption when a person brings them either for his own use or consumption, or to put them in the way of others in the area, who are to use and consume." And concluded holding: "In our opinion, the company was liable to pay octroi tax on goods brought into local area (a) to be consumed by itself or sold by it to consumers direct and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumers bought them for use in the area or outside it. The company was, however, not liable to octroi in respect of goods which it brought into the local area and which were re-exported." The ratio is thus not a mere sale inside that attracts octroi but a sale intended for consumption of the goods inside the octroi area though ultimately the person to whom it was sold for consumption does not consume the goods inside but does the same outside the limit. After consideration of the judgment in Burmah-Shell Co.'s case [1....
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....ransport passes: Provided that in computing the octroi duty payable under sub-rule (4), the goods transported outside the municipal limits shall be lessened only if such goods have not been sold within the municipal limits and if they have been exported out of such limits within a period of six months from the date of their import in such limits." Relying on this provision the municipality in that case contended that if the sale had taken place within the octroi limits though the sale was not for consumption or use within the octroi limits, duty was payable and no refund could be claimed. The learned single Judge who heard the matter in the High Court did not permit the importer to raise the question that the sale took place only outside the octroi limits of Jodhpur and proceeded on the footing that the sale of product in question took place within the octroi limits of Jodhpur. He, however, accepted the contention of the Indian Oil Corporation (importer) that the sale to the dealer was for the purpose of export and the dealer did export the goods outside the octroi limits and that, therefore, even if the sale was said to have been effected within the octroi limits no octroi w....
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....inding of the High Court. It is not necessary for us, however, to consider this aspect and we would for the purpose of this case proceed on the assumption that technically the sale in law had taken place inside the municipal limits. Since the goods were sold by the company to outside purchasers and the goods under the transactions of sale, were intended to be exported and were in fact exported, for consumption or use outside the municipal limits no octroi duty was leviable and the octroi duty paid on entry into the municipal limits was, therefore, liable to be refunded. Accordingly the rejection of the refund claims on the ground that rule 25(3)(d) had not been strictly complied with is illegal and could not be sustained. Such of those claims which were rejected only on the grounds of contravention of rule 25(3)(d) shall now be taken up by the respondent and passed for payment. In the case of impost of octroi the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area. Mere physical entry into the octroi limits would not attract levy of octroi. When the goods are brought in not for consumption within the area but for temporary det....
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....tside the octroi limits. He is required to deposit an amount in accordance with the scale fixed under clause (b) of sub-rule (1) of rule 5. On such deposit being made a receipt is given in the form prescribed by the Entrance Naka Inspector and a written permission-cum-transit pass issued by the octroi officer. On arrival of the goods at the exit naka and on surrender of the written permission-cum-transit pass the deposit amount is refunded. In the third category of cases, the importer makes an application to the octroi officer at the entrance naka for a written permission to deposit such goods at the bonded warehouse maintained by the Corporation. The octroi officer then makes an entry on the application that the importer is allowed to proceed with the goods to the bonded warehouse. The officer-in-charge of the bonded warehouse will receive the goods and keep them in the bonded warehouse until exported. When the importer wants to export the goods he is required to apply for a written permission-cum-export pass in the prescribed form and also deposit an amount equal to the octroi leviable therein. On such deposit made a written permission-cum-export pass is issued. When the goods ar....
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....ll call upon the importer or the driver of the vehicle or conveyance or the person incharge of the pack-animal or other persons bringing the goods- .......................... (d) to make a declaration in form 1, in respect of the goods intended for temporary detention with himself and eventual export; (e) to make a declaration in form 5, in respect of the goods imported by, or on behalf of, any person, mercantile firm or body which has been permit- ted by the Council to keep an account current under section 142............;" "15. Procedure for assessment and recovery of octroi.- .......................... (4) On receipt of a declaration in form 5 under the last preceding rule, the octroi officer shall ascertain whether the name of the person, mercantile firm or body on whose behalf the goods are being imported is on the list of persons, firms or bodies allowed to keep an account current, and if so, check the goods with the details entered in the declaration and fill up the certificate below the declaration and issue a pass in form 6. The octroi officer shall forward all such declarations together with a list in duplicate thereof to the Central Octroi Officer for f....
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.... the goods produced for inspection and intended to be exported are, subject to the provisions of sub-rule (2) of the last preceding rule, identical with what they were at the time of import. (d) the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership. Note.-The requirement of clause (c) shall not be applicable in the case of dutiable goods to which sub-rule (3) or (4) of the last preceding rule applies. (4) On receipt of such intimation-cum-application and on arrival of the goods intended for export, at the Central octroi office or branch office, the Superintendent of Octroi or any officer authorised by him shall- (a) satisfy himself that all the conditions prescribed above are fulfilled; (b) verify that the goods actually produced for inspection are as described in the intimation-cum-application and in the relevant import invoice, if any, or in the import declaration in form 4, and seal and mark such goods whenever deemed necessary; and (c) issue a written permission-cum-refund export pass in form 12 after obtaining a specimen signature of the importer or his authorised agent on such pass. ....
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.... form 13 by the importer himself or by his duly authorised agent in this behalf in writing on any working day during the hours fixed for money transactions by the Council at the Central octroi office within one month from the date of the actual export. If the last day for claiming refund falls on a public holiday such application shall be accepted on the next working day. (2) Such application shall be accompanied by the duly certified relevant written permission-cum-refund export pass and shall contain reference to the connected export intimation-cum-application already given by the importer. There shall be a separate application for each written permission-cum-refund export pass. (3) If the refund application is in order and satisfies all the conditions specified in the last preceding rule, the amount of the refund shall be correctly determined subject to the limitation prescribed in the next succeeding rule." "30. Value, weight, etc., of goods for purposes of refund.-When the refund is claimed in respect of goods on which duty is leviable ad valorem, the value for the purposes of refund shall be the value as per invoice on the strength of which the duty was originally pa....
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....ntal charges declared, is correct. The taxable weight/quantity/value of the goods is ......... and the rate of octroi ............ Date ........... Inspector/Clerk The amount of Rs. ........ on account of deposit has been recovered under receipt No. .......... dated ........... Date ............ Inspector/Clerk FORM 5 (Rules 14 and 15) Declaration in respect of the dutiable goods imported on behalf of person, firm, or body allowed to keep an account current. To The Octroi Officer, Octroi Naka No. .......... ....... Municipal Council. I, ............... (insert the full name and address of the importer) hereby declare that the below mentioned goods are being imported into the Municipal octroi limits on behalf of ......... (insert name of persons, firm or body allowed to keep an account current) and that the below mentioned value and weight/quantity of the goods is true and correct and is according to the original invoice, true copy of which is filed herewith. The said invoice fully covers all the goods imported by me today as per Bill of Entry/Railway Receipt/Goods Transport Memo/Air Consignment....
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....| | | | | | | | | | | | Date ........... Date .......... Entrance Naka Inspector/Clerk Entrance Naka Inspector/Clerk FORM 11 (Rules 25 and 26) Intimation-cum-Application for Written Permission for Export of Goods Temporarily detained with the Importer To The Superintendent of Octroi, ........ Municipal Council. Sir, I, ........... (insert the full name and address of the importer) hereby declare my intention to export the goods to ......... through Naka No. ........ as detailed below. The certified copy of original invoice/invoices under which these goods were imported are appended herewith. I have produced the goods for actual verification. Kindly grant me the permission to carry the goods to the said naka. Sl. | Description | Quantity | Date of | Import | Deposit | Gross No. | of the | (Number | Import | invoice | receipt | weight | goods | of bags | and No. |No. and | number | | | or cases | of | date | and date | | | |entrance | | | | | | Naka | | | ------|-------------|----------|---------|---------|----------|--------- 1 | 2 | 3 | 4 | 5 | 6 | 7 ------|-------------|- ....
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.... Date .......... Signature of the Exit Naka Officer Naka No. ......... * This fee should be levied in accordance with the bye-laws framed under Section 338 for granting permission to take the goods from the Central Octroi Office or Branch Office to the Exit Naka. FORM 13 (Rule 29) Application for Refund of Deposit To The Superintendent of Octroi, ........ Municipal Council. Sir, I, .............. the resident of ........... hereby apply for refund of deposit as per enclosed Written Permission-cum-Refund Export Pass No. ......, dated ........., as the goods mentioned in the pass were exported on ....... under my intimation-cum-application, dated ..... I, therefore, request you to grant the refund of Rs. .......... and oblige. Enclosure Dated ............. Signature of Importer On a reading of these rules it appears to be that rules 24, 25 and 28 in terms would apply only to cases falling under category four, stated above. The declaration in form 4 referred to in rule 24 and deposit of the amount equivalent to octroi duty payable at the entry point, production of the goods for v....
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....e other than the production of invoices that should satisfy the rules. The invoice as such has no bearing on the liability of the goods for octroi or the right of the company for refund. So far as the production of the original invoices are concerned, the learned counsel for the company pointed out that the goods are brought from their own manufacturing units at Pune and Jamshedpur and it will only be a stock transfer and this requirement of producing original invoice could not be complied with and is not applicable. Under the current account procedure the invoices, if any and all the other documents are verified when the goods reach the warehouse with reference to the description of the goods, weight/quantity, value and other particulars and it is only after verification the octroi duty leviable is determined and amount is debited in the account current and the demand also is issued. The learned counsel for the appellant also referred to certain documents to show that for every category of article, the company has given a distinctive number and the goods are easily identifiable and the number of items or quantity imported are all recorded in the register and computeri....
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....me." Paragraph 5 of appendix IV to this Act which we have noticed earlier states that the rules framed under the Municipal Act shall "in so far as it is not inconsistent with the provisions of this Act, continue in force". Rule 62 of Chapter VIII forms part of the Act. The learned counsel for the appellant, therefore, contended that rule 62 shall prevail and prior intimation of the intention to "breaking bulk" shall be enough and there was no necessity for the company to get the sanction of the Superintendent of Octroi or break the bulk in the presence of an officer deputed for the purpose as required under sub-rule (2) of rule 24. In other words according to the learned counsel rule 24(2) of the Octroi Rules is inconsistent with rule 62 of Chapter VIII of the Schedule to the Act and to the extent of inconsistency it shall be deemed to be not applicable. On the other hand the learned counsel for the respondent contended that rule 62(c) deals with prior intimation and rule 24(2) deals with the sanction and breaking of the bulk in the presence of an officer deputed for that purpose and both the rules can stay together and operate and there is no inconsistency. We are not im....
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....ing bulk" is not an expression of art and that meant only transferring the product from the drums by breaking the seal of the drums, to the bottles for the purpose of exporting or for taking them out of the municipal limits, and that would not amount to either use or consumption of the Horlicks powder within the municipal limits attracting the levy of octroi. The ratio of the judgment clearly is that merely on the ground that the goods are not exported in bulk as originally imported, the levy does not become valid or that the importer who exported the goods loses his right to a refund of the octroi paid. The goods neither lose their identity nor cease to be identifiable. Once we reach the conclusion that there is no consumption or use, octroi is not attracted and if any levy has been made and the amount collected, the same becomes legally refundable even when the goods are exported in parts and in smaller packages. This is particularly so because in the case of goods not consumed or used within the octroi area but exported there is a constitutional bar for the levy of octroi. In this connection we may also refer to another decision reported in Municipal Committee v. Dhannalal....
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....her the rules have been complied with will have to be tested having regard to the nature of the particular transaction and whether the object of the procedure provided is otherwise fully satisfied. Rule 28 also merely states that the refund shall be admissible if all the conditions in sub- rule (2) of that rule are satisfied. The object of requiring intimation or sanction and presence of an officer when breaking the bulk in the scheme of octroi levy and refund is to ensure that dutiable goods do not escape the assessment and refunds are made only in respect of goods exported. In other words the whole requirement relates to the identification of the goods. In that sense if the same is otherwise complied with the right to refund cannot be denied. These rules cannot be read as enabling the municipality to levy and collect octroi even in cases where the goods have not been imported for consumption or use. As held by this Court in Kirpal Singh Duggal v. Municipal Board, Ghaziabad [1968] 3 SCR 551 the octroi rules are intended to regulate the system on which the refunds shall be allowed and paid. What are merely matters of procedure which the municipality was entitled to require complian....
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.... months period could be determined on that basis. In any case in view of the interim direction given by this Court on 1st May, 1989, that may usefully be followed for the future also in this case. To sum up: Having regard to the nature and incidence of octroi unless the octroiable goods are consumed or used or are meant to reach an ultimate user or consumer in the octroi area no octroi is leviable. The words "sale therein" in the words "consumption, use or sale therein" in the definition octroi means sale of octroiable goods to a person for the purpose of consumption or use by such person in the octroi area. If sale was intended for consumption or use in the octroi area whether the purchaser actually consumed inside or outside the octroi area is irrelevant. Rules 24 to 30 and the forms in the system of levy of octroi are intended to regulate the procedure for collection, identification of dutiable goods and correlation of goods exported with the goods imported for the purpose of refunds of octroi collected. In view of constitutional bar, octroi is not leviable if the goods are not brought into the octroi area for purposes of consumption or use in the area but for export and in f....