TaxTMI 
TaxTMI 
2026 (4) TMI 425
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....setting up of an IT & ITES Sector Specific Special Economic Zone [SEZ] at Kharadi, Pune. The Government of Maharashtra had also recommended that such approval be granted to the Petitioner Company. The State Government's policy regarding setting up of Special Economic Zones in Maharashtra issued on 12.10.2001 specifically provided that the developers of the SEZs and Industrial Units and other establishments within the SEZ would be exempted from all States and local taxes and levies including Octroi. The Petitioner Company had paid octroi between 2005-2011 to the Pune Municipal Corporation [hereinafter referred to 'PMC'] under protest. They demanded refund of the octroi as per the policy of the State Government. The Petitioner pursued the issue of exemption of octroi with the PMC, but, vide letter dated 21.7.2012, the Petitioner Company was informed that the PMC was not giving any exemption from paying octroi. The Petitioner company was directed to import the goods only after paying the octroi. 4. The Petitioner has challenged this communication. There are other prayers in the Petition for directions to frame appropriate rules and for granting exemption from payment of octroi. One....
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....ection 4 provided for establishment of Special Economic Zones and granting approval and authorisation to operate it to the developers. Section 50 provided for the powers of the State Government to grant exemption. It was brought into force w.e.f. 10.2.2006. Section 51 gave over-riding effect of this Act to any other law for the time being in force. 9. On 10.2.2006, the Special Economic Zones Rules, 2006 (hereinafter referred to as 'the SEZ Rules') were brought into force. Rule 5 thereof provided for the requirements for establishment of SEZ and sub-rule (5) thereof referred to exemption from the State and Local taxes which the State Government was expected to make available in the State to the proposed SEZ Units and developers. 10. The Petitioner Company sent a proposal for setting up of SEZ in the Private Sector a product specific IT & ITES at Kharadi MIDC Knowledge Park, Pune. The proposal was for over forty-five acres of land. Vide letter dated 29.9.2005 issued by the Joint Secretary to the Government of Maharashtra, Industries, Energy & Labour Department and addressed to the Additional Secretary, Department of Commerce, Ministry of Commerce and Industry, Government of Ind....
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....mmissioner, PMC asking them to send a proposal for amendment in the Rules for levying octroi under the Maharashtra Municipal Corporation Act, 1949 (old Bombay Provincial Municipal Corporation Act, 1949) (hereinafter referred to as 'the MMC Act'). 16. However, there was no amendment to the Octroi Rules under the MMC Act. No steps were taken either by the PMC or the State Government in that behalf; and finally, vide the impugned communication dated 21.7.2012 the Petitioner was informed by the Pune Municipal Corporation that the Petitioner was not given any exemption from octroi and that he had to pay octroi for bringing the goods. In this background, the Petitioner has approached this Court for the reliefs mentioned hereinabove. 17. The Respondent No. 3 referred to the correspondence made by them with the State Government and referred to the communication sent by the State Government asking to send proposal for amendment in the MMC Act. In response, the General Body of PMC on 23.4.2008 resolved to direct to place the submission before it through the Law Committee the independent proposal for modification of Octroi Rules. The Chief of Octroi, PMC by his submission recommended th....
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....dmitted that as per the provisions made in the State Policy dated 12.10.2001 the Petitioner Company was entitled to octroi exemption. However, the octroi exemption came under the Urban Development Department and in the present case the PMC would be the implementing agency for the same. 24. During the course of arguments, the Respondent Nos. 1 & 2 filed one more affidavit-in-reply dated 9.3.2026. The stand taken in this affidavit was that the amount which the Petitioner was claiming to be reimbursed was collected by the PMC and it was utilized by the PMC. They were the PMC's independent funds and, therefore, the State Government was not liable to reimburse the same to the Petitioner. The octroi payment by the Petitioner was never remitted or transferred to the State Government by the PMC and, therefore, the State Government was not liable to reimburse the same to the Petitioner. The PMC never informed the State Government about the non-approval of the proposed amendment in the Octroi Rules in the present case and, therefore, in the absence of any resolution, the State Government could not have exercised its power under Section 451 of the MMC Act. As of today, the octroi is discon....
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....hat the Petitioner did not have any other efficacious remedy. The Petition is pending since 2013 and it would not be proper to relegate the Petitioner to other remedies. 26. Learned Government Pleader reiterated the stand taken by them in their three affidavits. She submitted that since the octroi is levied and used by the PMC, only the PMC was liable to pay the refund. On their part, the State had asked the PMC to send a proposal for amendment of the Rules. It was for the PMC to have amended the Rules. Failure on the part of the PMC cannot act to the detriment of the State Government. 27. Shri Kumbhakoni, learned Senior Counsel on behalf of the PMC on the other hand submitted that the levy of any tax is permissible under the statute and, therefore, it can be lifted, suspended or withdrawn only by the statute and only in the manner prescribed by the statute. In the present case, there was no amendment to the statute or to the Rules for granting exemption of octroi which was paid by the Petitioner and, therefore, in the absence of any provision granting exemption of octroi specifically mentioned in the statute it was not possible to direct the PMC to refund the octroi paid by ....
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....of Municipal Corporation of Greater Bombay Vs. Bombay Tyres International Ltd and others (1998) 4 SCC 100 has observed that in ascertaining what is the reasonable time for claiming refund, the Courts have often taken note of the period of limitation prescribed under the general Law of Limitation for filing suit for recovery of amount due to them. Reasons and conclusions: 29. We have considered the submissions made before us by all the learned Counsel. The most important document in this case is the State Government's Policy regarding setting up of the Special Economic Zones in Maharashtra. The policy was issued on 12.10.2001 by the State Government vide Resolution No. SEZ2001/(152)/IND-2. The preamble of the said Policy refers to the concept of Special Economic Zones introduced by the Government of India in the year 2000 through a revision in the Export-Import policy 1997-2002. The preamble of the Policy mentions that the SEZs were specifically delineated duty-free enclaves treated as a foreign territory for the purpose of industrial, service and trade operations, with exemption from customs duties and a more liberal regime in respect of other levies, foreign investment and o....
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....in that context, the octroi was not mentioned, in the present case the octroi could not be refunded to the Petitioner. We are unable to agree with this submission. Reference to the refund of state taxes was made when it was not advisable to grant direct exemption because of tax system constrains. There was no such tax system constrains as far as octroi was concerned and the rules and regulations in that behalf provided under the Maharashtra Municipal Corporations Act could have been easily amended to bring them in consonance with clause (6) of this policy. This particular clause makes a definite promise that the developers will be exempted from octroi. This clause is in furtherance with the objective of this policy mentioned in the preamble and, therefore, it was the duty of the State Government to ensure that the Petitioner, who was an approved developer of the SEZ got benefit of exemption from levying the octroi. We are informed that as of today, the same policy is in existence in relation to all the SEZs in Maharashtra. 30. The Special Economic Zones Act, 2005 was brought into force from 10.02.2006. The Statement of Objects and Reasons of the said Act referred to the then pre....
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....plied with this requirement. Its inaction in fact is contrary to the object not only of the SEZ Act, 2005; but of the object mentioned in the preamble of the State Government policy itself. Therefore, it was the duty of the State Government to ensure that the Petitioner got such exemption regarding payment of octroi. 33. Interestingly the affidavit dated 27.11.2017 affirmed by the Deputy Director (Industries), the Directorate of Industries categorically admits in paragraph-4 as follows : "4. I state that as per the above provision made in the State Policy dtd. 12.10.2001, the Applicant EON Kharadi Infrastructure Pvt.Ltd., is entitled to Octroi exemption." (Emphasis supplied) This averment, in turn, accepts that the Petitioner is entitled for such exemption and thus meaning thereby the Petitioner is entitled to get relief in this behalf in this Petition. The question is who shall pay the amount claimed by the Petitioner which was paid as octroi duties. 34. Shri Kumbhakoni, learned Senior Counsel appearing for the Pune Municipal Corporation vehemently argued that in the absence of modification to the MMC Act and to the Rules made thereunder, there was no pr....
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....icy in the public interest. But even that was not done. Section 457 subsection (7)(c) refers to the tax leviable under Section 127(2) of the MMC Act which, in turn, referred to octroi. Therefore, the power of the State Government under Section 456 is quite wide. Section 456 reads thus : "456. Power of State Government to make rules. (1) The State Government may at any time require the Corporation to make rules under section 454 in respect of any purpose or matter specified in section 457; (2) If the Corporation fails to comply with such requisition within such reasonable time as may be fixed by the State Government, the State Government may after previous publication made such rules and the rules so made shall, on final publication in the Official Gazette, have effect as if enacted in this Act." 37. Therefore, the State Government could have taken steps under these powers to ensure that their own policy that included exemption from paying octroi was properly implemented by granting exemption from octroi as far as the Petitioner was concerned. Section 456-A gives special powers to the State Government to make Rules consistent with the provisions of the ....