TMI Blog1962 (11) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... y deals in petrol and other petroleum' products which it manufactures in its refineries situated outside the octroi limits of Belgaum Municipality It brings these products inside the said area either for use or consumption by itself or for sale generally to its dealers and licensees who in their turn sell them to others. The Company also directly sells its products to Government both Civil Military, and to local bodies and big private concerns. The Company has a Divisional Office and Depot in Belgaum and the petition in the High Court was filed ,by the Divisional Manager in- charge of that area. The Company in the normal course of its business operations appoints dealers and licensees and typical forms of agreement between the Company and such dealers and licensees have been exhibited in the case. According to the Company, the goods, brought by it within the octroi limits can be divided into four separate categories as follows 1 . Goods consumed by the Company 2. Goods sold by the Company through its dealers or by itself and consumed within the octroi limits by persons, other than the Company; 3. Goods sold by the Company through its dealers or by itself inside- the oct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mptions to be granted, the amount or rate at which the tax is to be levied and any remission or refund to be allowed together with the conditions under which such exemption, remission or refund would be granted. There are other matters which the rules cover but it is not necessary to mention them here. After the resolution is passed the Municipality publishes the rules together with a notice informing all persons concerned. Any inhabitant of the Municipal Borough objecting to the imposition of the tax, or its amount or the rate proposed or the classes of persons or property to be made in able or to any exemption proposed may object within one month. The Municipality then considers the objection, records its opinion upon them and forwards the notice, the objections, its opinion upon them and the rules with modifications, if, any, in view of the objections, to the State Government. Section 76 then lays down that the State Government may refuse to sanction the rules submitted or to sanction them with or without modification and under section 77 the rules are once again published along with the sanction and from the date prescribed by the rules so published the tax is imposed. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ramed nor was the procedure under section 76 read with section 58 followed to impose octroi on animals and goods sold within the octroi limits. Rule 4 (1) also continued as before. The Company which had paid octroi on all its products brought within the octroi limits of the Belgaum Municipality. before the amendment including , the goods not consumed by itself but sold to others started a correspondence saying that in 'as much as the law was newly amended to include sale in the description of octroi , the Rules and By-laws ought to have been framed again and the procedure under section 76 read, with section 58 (j) followed. As this was not done, the Company contended, the tax could not be collected on goods which were merely sold but not consumed inside-the octroi limits. In the course of this correspondence, the Company did not object generally to the levy of octroi on goods brought inside the octroi limits for consumption, use or sale but asserted that octroi on goods which were sent out of the said limits was liable to be refunded. This the Municipality was prepared to grant subject to the rules. Even before the High Court the learned Advocate appearing for the Municip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act defines octroi in section 2 (12)- octroi shall include a terminal tax. In clause (v) of section 73 (1) terminal tax is mentioned separately and section 61 (1) (0) gives the power to fix terminal tax limits And stations and other ancillary matters. The proviso to section 73 (1) is material and it reads: provided that, save as provided in clause (xiv) no such tax shall be leviable in boroughs in which an octroi was not levied on or before the 6th July, 1917. Clause (xiv) says that the Municipality may impose any other tax which under the Constitution the State Legislature has power to impose in the State. The entries in the Legislative Lists which have been cited from the Government of India Act 1935 and the present Constitution and the definition of octroi as including terminal tax need some explanation. The definition of octroi is subject to the context and may not apply to enlarge the ambit of octroi. But the reason underlying the extended definition gives us the true meaning of octroi as described in section 73 (1) (iv). The Boroughs Act was passed in 1925 and replaced art earlier Act of 1901. The Boroughs Act, therefore, was prior to the Government of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Indian Statutory Commission points out, formerly meant in Indian fiscal, terminology a tax which was levied at Railway Stations and collected by the Railway Administration on all goods imported or exported from the Station. It was also collected from passengers in some Municipalities. We also learn from the Report that on the recommendation of a Committee appointed in 1908 terminal tax took the place of octroi in a large number of Municipalities at first in the United Provinces and then in others. At first the Government of India were not in favour of such a change. Octrois were levied on goods brought into, a local area for consumption, use or sale and were indirect taxes but. terminal taxes were regarded as direct. On July 6, 1917, the Government of India by a Resolution reversed their former policy and agreed that the conversion was not a change from indirect to direct taxation. Terminal taxes were of the nature of octrois, but were not quite the same. The main differences were : that there was no system of refunds under the Terminal Tax Rules (Terminal taxes as Findlay Shiffas tells us were sometimes known as 'octrois without refunds'.) and for octroi to be levie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been quoted already, and which read Cesses on the. entry of goods into a local area for consumption, use or sal This scheme has been repeated in the Constitution with the difference that the entry relative to terminal 'tax now reads terminal taxes on goods and passengers carried by railway, sea or air , and the word taxes replaced the word cesses in the entry, relative to octrois. The history of these two taxes clearly shows that while terminal taxes were kind of octroi which were concerned only with the entry of goods in a local area irrespective of whether they would be used there or not octrois were taxes on goods brought into the area for consumption, use or sale. They were leviable in respect of goods put to some use or other in. the area but only if they were meant for such user. When the Government of India Act, in its Scheduled Tax Rules, mentioned octrois , it intended to give the power to levy taxes in this well-understood sense, namely, on the entry of goods in a local area, for consumption, use or sale. The Boroughs Act, which was enacted in 1925 mentioned only consumption and use. ,, Ever since its enactment, no dispute seems to have been raised by any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd 'consumption , as has been shown above, must receive. a larger meaning than merely the act of consuming in the generally understood sense. Recently, in M/s . Anwarkhan Mahboob Co. v. The State of Bombay(1) while dealing with the Explanation to Article 286(1), this Court observed as follows In answering that question it is unnecessary and indeed inexpedient to attempt an exhaus- tive definition of the word consumption as used in the explanation to Art. 286 of the Constitution. The act of consumption with which people are most familiar occurs when they eat, or drink or smoke. Thus, we speak o f people consuming bread, or fish or meat or vegetables, when they eat these articles of food ; we speak of people consuming tea or coffee or water or wine, when they drink these articles ; we speak of people consuming cigars or cigarettes or bidis, when they smoke these. The production of wealth, as economists put it, consists in the creation of utilities. Consumption consists in the act of taking such advantage of the commodities and services produced as constitutes the 'utilization' thereof. For each commodity, there is ordinarily what is generally considered to be the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area of the municipality. It is sufficient if the goods are brought inside the area to be delivered to the ultimate consumer in that area because the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area. Indeed, the consumer may never consume them as, for example, a motorist buys a tin of oil and finds that it does not suit his vehicle and leaves it lying on his shelf. 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. In this process the act of sale is merely the means for putting the goods in the way of use or consumption. It is an earlier stage, the ultimate destination of the goods being 'use or consumption'. The earlier stage, namely, the sale by him, does not save the person who brought the goods into the local area from liability to the tax if the goods were brought inside for consumption or use. In other words, a sale of the goods brought inside, even though not expressly mentioned in the description of octroi as it stood formerly, was implicit, pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
