TMI Blog1992 (10) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... its of the Municipal Corporation. These petroleum products are meant: (i) either for use or consumption by the IOC within the limits of the Municipal Corporation; or (ii) for sale by IOC though its dealers or by itself for consumption within the octroi limits, by persons other than the IOC; or (iii) for sale by the IOC through its dealers or by itself inside the octroi limits and the vendee, after completion of sale, take those production outside the octroi limits to outside the octroi limits for sale, use or consumption; and (iv) for export by the IOC from its depot inside the octroi limits to outside the municipal limits, to its dealers for sale, use and consumption by persons other than the IOC, outside the octroi limits. The Municipal Corporation raised a demand on the IOC for octroi for the period September 7,1983 to May, 1984. The demand was to the tune of ₹ 40,26,230.17. The IOC challenged the demand notice by filing a writ petition in the High Court of Punjab and Haryana. Since the IOC had approached the High Court with first exhausting the statutory remedies under the Punjab Municipal Act, The High court allowed the appellant to file a statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets of its dealers, located outside the municipal limit. The precise case of the appellant-IOC was that the property in such of the petroleum products passes to the dealers only at their premises and not at the depot of the IOC and, as such it could not be said that any transaction takes place within the municipal limits of the Municipal corporation for the use, consumption or sale of the imported petroleum products. It was emphasised that the petroleum products in such transactions only entered the area of the Municipal Corporation for the purpose of being re-exported to the place of business of its dealers/ agents and it was asserted that the transaction could not attract imposition of any octroi duty for no `sale, use or consumption' took place within the octroi limits. The case of the Municipal Corporation on the other hands as pleaded and argued before the High Court was that though no octroi duty is leviable or lived in respect of articles brought by the IOC within the municipal limits of the Municipal corporation for purposes other than consumption use or sale therein, transactions in the instant case by the IOC were sale, simplistor at their depot within the municipa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Ligislature could not empower the municipal committees to levy tax only on the entry of goods within the local area when those goods were not meant for consumption, use or sale within that area. It rightly held that the authority of the state Legislature in those matters is subject to the restrictions imposed by Entry 52 and since source of power of section 113 of the Municipal Act is traceable to Entry 52, the wide language employed in section 113 of the Municipal Act had to be read down to mean that the Municipal corporation could levy octroi on articles and animals imported into a local area for consumption, use or sale therein and construing the provisions of section 113 in that manner held the same to be intra-vires. We are in agreement with the High Court that the provisions of section 113 of the Municipal Act are not beyond the competence of the state Legislature and the same are to be read alongwith Entry 52 of List II of schedule VII of the Constitution. Entry of goods within the local for area for consumption, use or sale therein is made taxable by the state Legislature on the authority of Entry 52 of List legislature and it obviously cannot have any authority m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of the transaction could not be said to be 're- export' With a view to resolve the controversy, we shall have to examine the agreement executed between the IOC and its dealers and other relevant material produced before the authorities as also the pleadings of the parties. We must, however, hasten to add that the pleadings, both before the High Court as also before the appellate authority, were neither clear non specific on this issue and left much to be desire. But mere vagueness of the pleadings or their confused state cannot relieve us of our obligation to sift the material and ascertain the true nature of the transaction. The High Court referred to the copy of the Memorandum of Agreement between the IOC and its dealers, which had been filed by the Municipal corporation as Annexure R-7 to the written statement and observed that the agreement did not contain any clause which could lead to the conclusion that the property in the goods did not pass to the dealers when the goos contacted to br supplied were separated from the main bulk and located in the tank lorries. Observed the High Court that the goods, on their separation from the unascertained bulk, became ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied at the responsibility of IOC or that any loss or damage in the transportation was to be made good by the IOC till they reach the dealer. No material was placed by the Municipal Corporation to controvert the averments made in the affidavits of the dealers. The appellate authority, however, did not express any opinion on the correctness or otherwise of those affidavits. it virtually ignored the same without assigning any reasons. much less satisfactory ones. Even the High Court did not advert to, much less consider and discuss, the effect of the affidavits. In the affidavits , it had been clearly stated that the goods were transported from the depot to the outlets of the dealers at the risk of IOC and the property in the goods palled on to the dealers only on delivery of the products at their place of business and at no point of time prior thereto. This evidence had a material being on the case and deserved proper consideration and in the absence of any rebuttal should have been considered in its correct perspective. IN the writ petition, in para(5) also, it had been asserted by IOC that the goods were sold outside the municipal limits and delivered to the dealers at the ris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t did not deal with the pleadings at all and dismissed the case of the petitioners by simply stating that we are not impressed . We cannot concur with the approach. The High Court should have considered the totality of the material on the record including the pleadings and other material on the record including the pleadings and other material, before coming to any final conclusion. The observation that the agreement (Ex. R-7) did not have any clause from which it could be said that the title in the goods passed on at the outlet of the dealers or that the IOC was under no obligation to make good any loss incurred during transportation of the goods from the depot to the places of business of the dealers, is not justified on a careful reading of the terms of the agreement. The terms of the agreements executed between the IOC and its dealers (Ex. R-7) and particularly paras 25, 26 and 34 which read as follows: 25. The quantities of petroleum and other allied products stated to be delivered by the Corporation as measured by the Corporation's measuring devices of means shall be final and binding upon the parties hereto. A receipt signed by or on behalf of the Dealer at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. A Constitution Bench of this Court held that the company which dealt with petroleum products was liable to pay octroi tax on goods brought into the local area (a) to be consumed by itself or sold by it to consumers and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal limits irrespective of whither such consumers brought him for use in the area or outside it but that the company was not liable to octroi in respect of goods which it brought into the local area and which were re-exported. Again, in Municipal Council, Jodhpur v. M/s Parekh Automobiles Ltd. and ors., [1990]1 SCC 367, the precise question which was involved was as to whether octroi was leviable on the goods imported within the municipal limits, stored in its depot there and exported therefore for use or consumption of the ultimated consumer outside the municipal limits. That case related to the sale of petroleum products by the IOC from its depot within the municipal limits of Jodhpur, Rajasthan, to its dealers outside the municipal limits. After considering the facts and circumstances of the case and various clauses of the agreement (which is identical to the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and circumstances of this case. On the basis of the material on record, we are satisfied that the transaction covered by category (4) above, viz., where the petroleum products transported to the depot of the IOC are meant for export from its depot inside the octroi limits to outside the municipal limits to its dealers for sale, use and consumption of re-export and that the appropriation of the goods does not take place at the depot but at the outlets of the dealers or the agents outside the municipal limits. The octroi duty is , therefore, not chargeable on such a transaction. The levy and collection of the octroi duty on such goods by the Municipal Corporation is, therefore, not justified. The judgement in writ petition No. 3361 of 1984 is, therefore, set aside and the appeal accordingly allowed but without any as to order as to costs. Before parting with the appeal, we would however, like to take note of the submission made on behalf of the Municipal Corporation with regard to the question of refund of the octroi duty, already deposited by the appellant. The question of refund, in our opnion, does not arise. The IOC has collected the octroi duty from its dealers and agent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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