1983 (4) TMI 240

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.... area under section 283 of the Act. Under clause (ii) of sub-section (2) of section 77, the municipal council is authorised to impose octroi on the animals and goods brought within the octroi limits for consumption, use or sale therein. The Notified Area Committee, R.S. Pura, has been authorised by the Government to levy a tax called "dharat" resembling "octroi" on animals and goods brought within the notified area limits for consumption, use or sale, therein. The petitioners are the owners of the rice mills situated within the limits of notified area, R.S. Pura. In the course of their business, the petitioners purchase paddy and bring it inside the notified area limits for the purpose of converting it into rice in their respective mills....

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....cipality but came to be "exported" therefrom. The court relying on its earlier decision in Burmah Shell case AIR 1963 SC 906 opined that such goods were not liable to levy of octroi duty. In Burmah Shell case AIR 1963 SC 906 it was held that the expressions "consumption" and "use" together "connote the bringing in of goods and animals not with a view to taking them out again but with a view to their retention either for use without using them up or for consumption in a manner which destroys, wastes or uses them up".   The question inevitably arises whether it can be said that the petitioners consume the paddy when they convert it into rice by merely subjecting it to the process of dehusking at their mills. This was exactly the quest....

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....they had manufactured "other goods" out of paddy and hence section 6(i) was not attracted. The contention was accepted by the High Court. On appeal, their Lordships of the Supreme Court expressed a contrary view and held that paddy and rice were two distinct commodities. Their Lordships further observed:   "There is no merit in the submission made on behalf of the assessees that they had not consumed paddy when they produced rice from it by merely carrying out the process of dehusking at their mills. Consumption in the true economic sense does not mean only use of goods in the production of consumers' goods or final utilisation of consumers' goods by 'consumers involving activities like eating of food, drinking of beverages, wearing....