TMI Blog1981 (2) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted various buildings on his land for use as godowns and has rented them out to various transport companies engaged in bringing good from other States and storing them before their transhipment to Delhi and other States beyond Delhi. The trucks carrying the goods for various destinations pass along the G.T. Road and move into Tuli s land. It is not disputed that after the trucks enter the land, the goods are unloaded into the godowns, sorted out and reloaded into the respective trucks meant for various destinations. Thereafter the trucks move out of the land and passing through the Union Territory of Delhi after crossing the border line, proceed to their destinations. The Municipal Corporation of Delhi (hereinafter referred to as the Corporation,) by its Orders dated May 23, 1975 and July 7, 1975 (hereinafter referred to as the impugned orders ) directed that a Terminal Tax post be sets up at the entrance to Tuli s land in order to collect terminal tax on goods carried into that land. The Ghaziabad Nagar Palika also purported to levy terminal tax on such goods but this levy was neither assailed before the High Court nor has been challenged before us and is therefore left out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied on all goods carried by railway or road into the Union Territory of Delhi from any place outside thereof, a terminal tax at the rates specified in the Tenth Schedule. (Emphasis supplied) The crucial words which have to be interpreted are: goods carried by railway or road into the Union Territory of Delhi from any place outside Delhi . The contention of the appellant is that the words goods carried into the Union Territory clearly indicate that the final destination of the goods must be Delhi and by virtue of this fact, the natural consequence would be that the goods should be carried from other places either by rail or by road into the territory of Delhi. This argument was reinforced by the words terminal tax used in s. 178 which imply that the terminus of the journey of the goods must be Delhi and only in that event the Corporation would be competent to levy a terminal tax. This argument was sought to be rebutted by the respondents on the ground that the words carried into the Union Territory of Delhi should be interpreted independently and literally so as to indicate that even if the goods passed through Delhi, the moment they entered into the territory o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the construction to be placed on the term should be the one that favours the tax-payer, in accordance with the principle of construction of taxing statutes, which must be strictly construed and in case of doubt must be construed against the taxing authorities and doubt resolved in favour of the taxpayer. ... ... ... The legislative history of this tax thus shows that octroi was leviable on the entry of goods in a local area when the goods were for consumption, use or sale therein. The substituted tax was terminal tax on goods imported into or exported from a local area and by rules this tax in the case of Wardha Municipal Committee was imposed on certain class of goods imported and on others exported by railway or road. ... ... ... ... That by the substitution of terminal tax on goods imported into a local area the nature of the tax had not been altered from what it was when octroi was in force or when instead of terminal tax octroi (without refund) was substituted ..... Therefore terminal tax on goods imported or exported is similar in its incidence and is payable on goods on their journey ending within the municipal limits or commencing therefrom and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an area administered by a local body like a municipality, a district board, a local board, a union board, a Panchayat or the like. In Burmah Shell Oil Storage Distributing Co. India Ltd. v. The Belgaum Borough Municipality this Court again fully discussed the matter and Hidayatullah, J., speaking for the Court stressed the essential distinction between octroi and terminal tax in the following words: Octrois and terminal taxes were different taxes though they resembled in one respect, namely, that they were leviable in respect of goods brought into a local area. While terminal taxes were leviable on goods imported or exported from the Municipal limits denoting thereby that they were connected with the traffic of goods, octrois, according to the legislative practice then obtaining were, leviable in respect of goods brought into a Municipal area for consumption or use or sale. .. .. .. The history of these two taxes clearly shows that while terminal taxes were a 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 consumptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a different area is frustrated or defeated, they may be exigible to terminal tax. (4) Where the goods enter into a local area which is also the destination of the goods either temporarily or otherwise, the terminal tax would be leviable. For instance, if A consigns goods from Patna in Bihar to Delhi in the name of X and X after having received the goods at Delhi re-books or reloads the same on a transport for Chandigarh in the name of Y, terminal tax would be leviable by the Corporation at Delhi because the goods in the first instance was Delhi and that by itself would attract the imposition of terminal tax. The fact that X rebooks them to Chandigarh would not make any difference because the act of rebooking by X at Delhi would constitute a fresh transaction by which the goods after having been carried into Delhi are further exported to Chandigarh. On the other hand, when there is one continuous journey of the goods from Patna to Chandigarh without any break, the final destination would be halted in Delhi for the purpose of unloading, sorting and reloading and may have to be kept in Delhi for a reasonable time. In such a case terminal tax would not be exigible. These princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate transportation, it is subject to state or local laws, including inspection laws......On the other hand, if the entry of goods into a warehouse is a convenient in termediate step in the process of getting them to their final destination, they remain in interstate or foreign commerce until they reach those points . In the case of Champlain Realty Co. v. Town of Brattleboro one important aspect of the matter has been dealt with, viz., the fact that if the goods halt in an intermediate State whilst on their journey to their destination for a long period due to circumstances beyond the control of the owner, whether or not the goods lose the nature of the interstate transaction and could be free from the state taxation, was clearly highlighted by he following observations:- Longs of pulp wood which have been placed in a river to be floated into another state are in interstate commerce, so as to be free from state taxation, although, because of the high water in a connecting river into which they will ultimately pass, it is unsafe to permit them to enter that river, and they are temporarily held in a boom near the mouth of its tributary . In the same case, C.J. Taft indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the godown of Tuli, will naturally depend on the special features or circumstances of each case, viz., the nature of the goods, the time taken in loading, sorting and unloading, the obstacles or difficulties which may be faced by the transporters and similar other factors. Normally, a time of two to three days or even a week should be sufficient to clear the goods for its journey to the ultimate destination. It may sometimes happen that goods may have to be kept in the godowns in the territory of Delhi for circumstances beyond the control of the consignee or the consignor, e.g., while the goods are lying in a godown at Delhi a dispute occurs between the concerned parties as a result of which an injunction is issued by a court restraining the transporters from moving the goods. In considering what is reasonable time these circumstances would have to be taken into consideration. It, was however, argued before us that according to the Terminal tax Rules framed under the Act, Rule 26 exempts goods from terminal tax if the same are exported immediately and are declared to be intended for immediate export. In view of the interpretation we have placed on s. 178 it is obvious that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the goods was not Delhi but as the goods were carried through the territory of Delhi, they would still be exigible to terminal tax. In the impugned Judgment the High Court, however, seems to have laid undue emphasis and special stress on the fact that the goods were carried into the Union territory of Delhi, the moment they passed through it even though the destination of the goods may be some other area. This appeared, according to the High Court. the real purport and intention of s. 178. We are, however, unable to agree with this view which is patently wrong and does not at all flow from the plain and unambiguous language of s. 178 of the Act nor does s.178 warrant such an interpretation. Thus, our conclusions are follows:- (1) The High Court was wrong in interpreting s. 178 of the Act so as to justify imposition of terminal tax even on goods which merely passed through the territory of Delhi, although their destination is not Delhi but places beyond Delhi. (2) The High Court was wrong in holding that merely because the goods after having been unloaded in the godown of appellant Tuli are sorted, reloaded in different trucks and thereafter pass through the territory o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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