TMI Blog1989 (11) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... e disposal of other appeals. In the said writ petition, the petitioner prayed for a direction or an order restrain- ing the respondents therein from realising any tax on die- sel, etc. which are supplied to the respondent herein at Dangiawas by the Indian Oil Corporation. being the respond- ent No. 2 herein. It was further prayed that the respondents therein be ordered to refund the octroi tax as mentioned in the Schedule to the said petition which, it was alleged, had been illegally realised from the petitioner. It was further prayed that the respondent No. 1 be directed to provide transport passes to the Indian Oil Corporation under rule 13 of the Rajasthan Municipal Octroi Rules, 1962 read with section 133 of Rajasthan Municipalities Act. It was the case of the petitioner in the High Court, respondent No. 1 here- in, that the Municipal Council had no jurisdiction to levy octroi tax on the goods brought within the municipal limits but not sold, consumed or used therein and subsequently exported outside the said limits. The case of the respondent No. 2 was that H.S.D. (diesel) which was brought by the Indian Oil Corporation within the local limits of Jodhpur Municipality was ultim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from any mercantile firm or public body to be made at the time when the articles in respect of which it is leviable are introduced within the octroi limits of the municipality, at any time direct that an account current shall be kept on behalf of the board of the octroi so due from any such firm or body as the board specifies in this behalf. (2) Every such account shall be settled at intervals not exceeding one month and such firm or public body shall make such deposit or furnish such security as the board or any committee or officer authorised by it in this behalf shall consider sufficient to cover the amount which may at any time be due from such firm or body in respect of such dues. Every amount so due at the expiry of any such interval shall, for the purposes of Chapter VIII be deemed to be and shall be recoverable in the same manner as amount claimed on account of any tax recoverable under the same Chapter. The Rules, being Rajasthan Municipal Octroi Rules, 1962, framed thereunder are relevant and rule 13 of the said Rules provided as follows: 13. FACILITIES FOR CURRENT ACCOUNTS: (1)The Board shall maintain a list, in Form 6, of all persons whether firms Or individu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less the total amount of goods transported outside the Municipal limits as shown by the transport 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. (5) Payments by such person shall be made strictly in advance, and at the expiry of his period for which facilities have been given, the name of the person shall immediately be struck off. Rule 6 deals with the payment of octroi duty and provide as follows: 6. PAYMENT OF OCTROI DUTY: No goods liable to payment of octroi shall, except as otherwise provided in these rules, be brought within the Municipal limits until the octroi duty levi- able in respect of such goods has been paid at the octroi out-post situated on the route of entry as notified by the Board from time to time for the purpose. Rule 9 deals with the declaration of goods brought into the Municipal limits and provides as follows: 9. DECLARATION OF GOODS BROUGHT INTO TH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Division Bench of the High Court and by its judgment and order dated 1st February, 1980, the Division Bench dismissed the Special Appeal Nos. 9 and 13 filed by the appellant herein. The special appeal filed by M/s Parekh Automobiles was partly allowed. It was directed that the Municipal Council would have to refund to the Indian Oil Corporation the amount of octroi duty paid on the petroleum products re-exported by it to Dangiawas outlet for supply to the writ petitioner who would recover the same from the Indian Oil Corporation. It is not necessary for the purpose of this appeal to deal with the facts agitated and found by the High Court. We will, however, refer to the same in brief. Respondent No. 1 had been allotted retail outlet allotted by the respondent No. 2, Indian Oil Corporation, for sale of petroleum products such as diesel oil, mobile, iii, etc. at Dangiawas, which was outside the limits of Jodhpur Municipal Council, appellant herein. The respondent No. 2 had its depot ear Raikabag Station at Jodhpur where it stored petroleum products. The respondent No. 2 from its depot at Jodhpur supplied the petroleum products to various pump stations situated within the limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted current account facilities under s. 133 of the Act to the respondent No. 2 should charge octroi on the basis of petroleum products imported by respondent No. 2 minus the goods exported by it to its other distributing centres in Rajasthan. The respondent No. 1 also made representation to the appellant challenging its right to realise octroi on the petroleum products which were received at the depot of the respondent No. 2 at Jodhpur but were transported by it to its retail outlets but of no avail. The case of the respond- ent No. 1 was that the goods were not sold at Jodhpur but actually the sale took place at Dangiawas, the retail outlet of the respondent No. 1 Secondly, even if the sale was held to have taken place at Jodhpur merely on that account octroi could not be levied unless the goods so sold Were meant for the use or consumption of the consumers within the octroi limits. Respondent No. 2, Indian Oil Corporation, supported the case of respondent No. l. Respondent No. 2 is a public sector undertaking and has got vast network of retail out- lets, i.e., distribution centres for distribution of petro- leum products throughout Indian including Rajasthan. For the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the respondent No. 2 delivered its products at the dealers' retail outlets out- side the municipal limits as per the terms of the dealers' agreement. The appellant, Municipal Council, had, however, disputed the aforesaid position. It contended that whenever the sale was made at the Jodhpur depot at Jodhpur, Octroi was chargeable irrespective of the fact where it was con- sumed or used. It was further contended that whether a contract of sale had taken place at Jodhpur or retail outlet is a question of fact and unless the contracts (agreements) were placed on the record by the respondent No. 1, the Court should not decide whether the sale by the respondent No. 2 had taken place at Jodhpur or at Dangiawas. Rule 13(4) of the said Rules would be operative only in those cases where the goods had not been sold within the Municipal limits or if they had been exported out of such limits within a period of six months from the date of its import. The Municipal Council's further case was that the respondent No. 2 sold the goods at Jodhpur. The respondent No. 2 never submitted its declaration as required by rule 9 of the said Rules and, therefore, the goods brought within the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the limits of the municipality for consumption, use or sale therein, is liable to be charged by the State Government. It was con- tended on behalf of the respondent No. 1 that the taxable event in respect of the goods supplied at its real outlet at Dangiawas had not taken place within the limits of the appellant. It was submitted that the goods brought by the respondent No. 2 and exported to the respondent No. 1's retail outlet at Dangiawas were in the first place not sold at all within the Municipal limits; secondly, even if the sale of the goods so exported was held to have taken place within the Municipal limits than too the taxable event had not taken place as such goods were not meant for sale or use or consumption of the ultimate consumer residing within the local limits of the appellant but were meant for the con- sumption of the ultimate consumer residing outside the local limits of the appellant. It was contended that the word 'sale' occurring under s. 104 of the Act cannot be read without reference to use or consumption. Sale simplicitor by itself did not attract the levy of octroi, it was submitted, unless the goods were meant for use or consumption of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court specifically clarified that the word 'sale' was included only in 1954 in order to bring the description of the octroi in the Act in line with the Con- stitution of India. While doing so this Court further ob- served that the expression 'consumption' and 'use' together 'connote' the bringing in of the 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 con- sumption in manner which destroys, wastes or uses them up. This Court further observed in that case that octroi and terminal tax resemble each other in the sense that they are both leviable in respect of goods brought into a local area. Otherwise, these are quite different from each other. While terminal taxes are leviable on goods 'imported or exported' from municipal limits denoting thereby that they are con- nected with the traffic of goods, octrois are leviable in respect of the goods brought into a municipal area for consumption or use or sale. The history of these two taxes showed that while terminal taxes were a kind of octroi which were concerned only with the entry of goods in a local area i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this view of the mat- ter, it was not necessary for the municipality to follow the procedure for imposing taxes when the section was amended. The tax still remained the same. Its nature. incidence or rate were not altered. The aforesaid observations were approved by this Court in Hiralal Thakorlal Dalal v. Broach Municipality Ors., (supra). On the basis of the aforesaid decisions of this Court, the Division Bench of the High Court in the instant case in appeal filed from the aforesaid judgment of the learned Single Judge held that sale simplicitor would not attract the levy of the octroi. The word 'sale', in this context, has to be read in reference to the use or consumption, according to the Divi- sion Bench and 'sue, consumption and sale' have to be read in disjunctive manner. Reference, in this connection, was made to rule 6 of the said Rules, which provides that no goods liable to payment of octroi shall except as otherwise provided in these Rules be brought within the Municipal limits 'until the octroi duty leviable in respect of such goods have been paid at the octroi outpost situated on the route of the entry as notified by the Board from time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The division bench of the High Court also referred to sub-rule (3) of rule 13, which has been set out before. The High Court held that rule 13 is a special provision in regard to the persons who had been granted current account facilities and this rule is not subject to either rule 6 or rule 9 but is a over-riding rule independent of rules 6 and 9. The High Court found that respondent No. 2 had been granted current account facilities and, therefore, the octroi duty shall be charged from it under sub-rule (4) of rule 13 on the goods brought by it in the Municipal area minus the goods transported by it outside the Municipal limits. Therefore, the contention of the appellant herein on rules 6 and 9 was rejected. It is, therefore, necessary for these appeals to consider the validity or otherwise of the said findings of the High Court in these appeals. The High Court dealt with the contentions based on sub- rule (4) of rule 13 and considered if the sale of the goods had taken place within the Municipal limits to see if the octroi shall be leviable or not. The High Court felt that the rule had to be construed in consonance with s. 104 of the Act As mentioned hereinbefore, section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were at the risk of respondent no. 2. It was, therefore, contended that till the goods were delivered at Dangiawas, there was no contract for sale. The contract for sale, it was contend- ed, had taken place at Dangiawas where the goods were delivered at the respondent no. 1's outlet and receipt was obtained from the respondent no. 1's outlet acknowledging the delivery of the goods at that place. In this connection, reference was made to para 25 of the model agreement Ex. B. 1. According to para 25, the quantity of petroleum and other allied products shall be delivered by the Corporation as measured by the Corporation's measuring device and a receipt signed by or on behalf of the dealer at the time of delivery by the Corporation would be conclusive evidence that the petroleum products mentioned therein were in fact delivered to the dealer. It was submitted that the delivery was made by the respondent No. 2's tankers at Dangiawas and the receipt obtained there. On the other hand before the High Court. as mentioned hereinbefore, it was contended on behalf of the appellant that this question involved disputed questions of facts. which was beyond the pale of jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no privity of obligation between respondent No. 1 and the appellant and therefore, respondent No. 1 had no right to ask for a refund of the octroi. Secondly, it was urged that the respondent No.1 had realised the amount of octroi while selling the petroleum products to the retail consumers by adding the same in the retail price charged from the consumers. So far as the first contention is concerned, the division bench found that there was no privity of obligation between re- spondent No. 1 and the appellant. The same had not been realised from the respondent No. 1. It was, therefore, held that there being no privity of obligation between respondent No. 1 and the appellant, the respondent No. 1 could not ask for a refund of the money which it has not paid to the appellant. There was no provision for refund in the Act or in the Rules which enabled the respondent No. 1 to claim refund from the appellant even though it had been paid by the respondent No. 1 indirectly. There was, however, an undertaking given to the High Court by the appellant on 3rd February, 1976 in the High Court. On that date, the appel- lant had given an undertaking that the appellant would refund the octroi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that s. 133 of the Act confers power on the Board to direct that current accounts may be kept on behalf of the Board with the firm or public body in lieu of octroi on introduction of goods. The Division Bench was of the opinion that s. 133 of the Act along with rule 13 of the said Rules left no doubt that no conclusive presumption of the goods having been brought within the municipal limits for consumption, use or sale therein, could be drawn in cases where special current account facilities were given to a person. In the instant case, special facilities for cur- rent accounts had been given to the respondent No. 2. There- fore, rule 9 had no application according to the Division Bench. Learned counsel for the respondent No. 1 had contend- ed before the Division Bench that at the time of entry of petrol or diesel, it was not possible for the Indian Oil Corporation to give a declaration as to how much would be re-exported to retail outlets situated outside the Municipal limits. The Division Bench found that the argument on behalf of the Municipal Council regarding necessity of giving a declaration was vital. The appeal filed by the Municipal Council was, therefore, dismissed. Comi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question which required consideration is that assuming that current account facilities in favour of respondent No. 2 existed, whether by reason of such, respondent No. 2 was exempted from complying with the rules 6 and 9 of the said Rules. Council submitted that it was strange that the respondent No. 1 was purporting to make out a case that the current account facility to the respondent No. 2 by the appellant was not withdrawn and the same was still continuing. An affidavit in support of this contention was filed by one Shri R.C. Parekh after the conclusion of the hearing in this case on the 30th September, 1988. The case was reargued again in Feb. 1989. It was contended that the Writ Petition in M/s Parekh Automobiles' case showed beyond doubt that the writ petition was made on a positive case that all of a sudden on 25th July, 1975, the appellant had suspended the current account facilities in respect of also the goods which were exported out of Jodhpur Municipal limit by the respondent No. 2 and supplied to respondent No. 1 at Dangia- was. It was further the case of M/s Parekh Automobiles that upon suspending such current account facility the municipal- ity was charging oct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded by the appellant, failed to appreciate the implica- tion of the aforesaid provisions of law and the fact that in respect of the period in question, admittedly, the current account facility was not available with the Indian Oil Corporation and as admittedly, the Indian Oil Corporation did not file any declaration under rule 9 of the said Rules, the petroleum products brought within the Municipal limits by the Indian Oil Corporation were to be presumed to be for consumption, use or sale and as such liable to octroi duty. The High Court, according to Shri Ray for the appellant, should have appreciated that the questions raised, gone into but the questions decided by the High Court were not germane to the issue and as such were not required to be gone into the decided. On this aspect, it was submitted that the appeals should be allowed so far as refund was concerned, and the impugned decisions of the High Court should be set aside. It was further submitted that an analysis of law while dealing with this point would indicate that a declara- tion under s. 133 of the Act read with rule 13 of the said Rules cannot be interpreted as one dispensing with the requirement of the declaratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n outside the municipality or for temporary detention within the municipal limits. Referring to the scheme of the Act and the rules, it was submitted on behalf of the appellant that an analysis of s. 133 and the current account facility therein indicate that only on the goods for use consumption or sale octroi is leviable. Grant of current account facility does not mean providing facility to bring within Municipal limits which are liable to payment of octroi without complying with the other rules specifically applicable in respect of Such goods. It was submitted that respondent No. 1 knew well that current account is in respect of those goods which are brought within the Municipal limits for use, consumption and sale. In this connection, reference was made to certain paragraphs in the pleadings. There was no current account facility, according to the appellant. It was submitted that when the writ petition was moved at the particular point of time the current account facility stood suspended. Xerox copy of the Order Sheet of the Trial Court was relied upon. It would appear from that the trial court did not grant any stay because there was nothing to be stayed as by the time the writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncil, Jodhpur itself current facilities as provided under s. 133 of the Act were never withdrawn and therefore, any submissions made by the Municipal Council to the contrary are totally unfounded. It could not have been withdrawn unilaterally without notice to the Indian Oil Corporation. According to the deponent, the petitioner never stated that the current account facility provided to the Indian Oil Corporation had been withdrawn by the Municipal Council. It only stated in paragraph 9 of the writ petition that sudden- ly on 25th July, 1975, the Municipal Council, Jodhpur sus- pended the export facilities provided to the respondent No. 2 and informed the respondent No. 2 that henceforth octroi tax would be charged from the respondent even on those goods which were exported outside the Municipal limits and which were not used or consumed within the municipal limits. The export facility, i.e., facility on the issue of transport passes under rule 13 of the said Rules was only with the object to ascertain that quantity of petroleum products that have been exported out of Jodhpur Municipal limits and it did not amount to withdrawal of current account facilities. The object of current a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, unable to accept these contentions. If the goods were brought within the municipal limits for the purpose of sale (sale means passing of the title to the purchaser), then different considerations might have ap- plied. But in view of the facts of this case, the title passed to the goods outside the municipal limits even in respect of the petroleum products which were sold within the municipal limits. It was contended by Shri Sorabjee that rule 13 had no application. Shri Sorabjee drew our attention to certain paragraphs of the writ petition, in particular to paragraph 18(b) where it was stated that it is obligatory for the respondent No. 1 to grant respondent No. 2 transport passes and it had no jurisdiction to withdraw that facility. It was submitted with reference to that and other paragraphs that it was the case of the respondent No. 1 that facility was withdrawn and suspended and prayer was made for restoration of that facility. It was, therefore, submitted on behalf of the appellant that in the absence of facilities being grant- ed under rule 13, it was incumbent on the parties to make a declaration under rule 9 of the said Rules. As no such declarations had admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, there is no dispute regarding diesel exported to Dangiawas from Jodhpur Municipality. The Municipal Council has not refuted in its reply in para 11 at p. 117 of the paper book, the quantity of petroleum products exported to Dangiawas as mentioned in Schedule 'A' (p. 104 of paper book) from 25th July, 1975 to date of writ peti- tion. The Municipal Council gave an undertaking to refund the octroi tax charged from the petitioner on the diesel exported to Dangiawas outside the limits of Municipal Coun- cil, Jodhpur as will be clear from the order of the learned Single Judge dated 7th February, 1976. It was also stated that the Division Bench vide its order dated 1st April, 1977 has already ordered that respondent No. 2 would deposit the octroi tax on diesel exported to Dangiawas. Thus, the octroi tax which became due on diesel exported to Dangiawas from 1st April, 1977 upto date is being deposited in the Bank account and there is no dispute regarding quantity of diesel exported to Dangiawas. Thus, it appears to us that the controversy raised by Municipal Council referring to cancel- lation of transport passes is unfounded. The object of the transport passes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt have been correctly applied by the High Court in the facts and the circumstances of the case. The octroi duty is, there- fore, not chargeable on the transactions mentioned herein. We are further of the opinion that in view of the confused state of the pleadings and averments, it is not possible to hold that current account facilities were withdrawn or cancelled. If that is the position, then there is no ques- tion that the High Court was right in the order it passed and the direction it gave. In view of the aforesaid, appeals must fail and are accordingly dismissed. In the facts and the circumstances of the case, however, we make no orders as to costs. RANGANATHAN. J. I have gone through the judgment pro- posed to be delivered in the above cases by my learned brother Sabyasachi Mukharji, J. I agree but I would like to add a few words on one of the questions raised. The controversy before us--I shall refer only to the facts in CA. 1552/1981 for purposes of the discussion--relates to the claim of the Municipal Council, Jodhpur (appellant) to octroi on the petroleum products sent from the depot of the Indian Oil Corporation (IOC) at Jodhpur, to retail outlets at Dangiawas whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracted in the judgment of my learned brother. Under sub-rule (1) of this rule, every person bringing his goods within the municipal limits should make a declaration in terms thereof. In the present case, it is common ground that no such declaration had been made. It is, therefore, urged that by virtue of the closing words of rule 9(2), the goods in question should be treated as having been brought within the Municipal limits for consumption, use or sale therein and thus attract the charge of tax under clause 2 of sub-section (1) of section 104 of the Rajasthan Municipalities Act, 1959 (hereinafter referred to as 'the Act'). The respondents have attempted to counter this argument by urging that this provision regarding declaration does not apply in their case. Their argument is that their case is covered by sec- tion 133 of the Act read with rule 13 of the rules. The argument is that rule 13 is a special provision applicable to a class of persons which has been allowed current account facilities under section 133 of the Act and that the proce- dure under rule 13 overrides the requirements of rule 9. This argument has been accepted by the High Court. The question is whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h we are not concerned). Where, however, the goods are not immediately to be transported outside the Municipal limits but are to be temporarily detained within the Municipal limits and eventually transported outside the Municipal limits, rule 12 is attracted. In the case of such goods they have to be sent to a bonded warehouse. The goods may be withdrawn from time to time either on payment of octroi in the event of their being consumed, used or sold within the Municipal limits or without any payment of octroi duty in case of their being transported outside the Munici- pal limits. This procedure is outlined in rules 12 and 16 to 22. But one important condition is that the maximum period for which the goods can be placed in the bonded warehouse is 6 months. If the goods are not removed within the said time limit, they are liable to be sold by public auction and the warehouse charges and octroi recovered from the sale pro- ceeds. This is the normal procedure for the assessment and collection of octroi duty. It is in respect of this proce- dure that the declaration in rule 9 becomes important. The terms of the declaration determine the incidents of the duty. Regarding the first cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intendent, after verification, files the certificates of export separately in respect of each such body or firm. The amount of octroi payable in these cases is based on the total amount of octroi on the goods shown by the entry passes less the goods transported out under the transport passes. In other words, in the case of persons who have the current account facilities, the duty is calculated on the basis of the total amount of goods that have. come in as reduced by the total amount of the goods that have gone out, the balance being presumed to have been consumed, used or sold within the Municipal limits. In order to ensure that there is a correspondence between the goods that have come in and those that have gone out, the proviso to sub-rule (4) of rule 13 provides that, in computing the octroi duty payable, the goods transported outside the Municipal limits shall be lessened only if (a) such goods have not been sold within the Municipal limits and (b) they have been transported out of such limits within a period of 6 months from the date of their import. A comparison of the above two sets of provisions will make it clear that they are two independent and mutually exclusive mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and entered in the transport passes of the IOC should be exclud- ed from deduction under sub-rule (4) of rule 13. But this construction, in my view, cannot be accepted. The expres- sions used in the proviso to sub-rule (4) cannot be inter- preted differently from the words used in section 104, on the basis of which chargeability to duty arises. If, as we have held, there can be no octroi duty at all levied by the Jodhpur Municipality in respect of the goods solo by the IOC within, but clearly intended to be transported for use or consumption outside, the Municipal limits, then this statu- tory limitation cannot be defeated by interpreting the proviso in such a way as to make all goods sold within the Municipality liable to duty even if the sale is in pursuance of a clear intention that the goods are to be despatched outside. The terms of the proviso and the main section have to be read harmoniously. The result of the above discussion is that the present case is governed by the terms of rule 13 and the IOC is entitled to go on paying octroi duty on the basis of the goods brought by it within the Municipality less the goods transported outside the Municipality even where the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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