Ltd. Vs. Municipal Corporation of Aurangabad & ANR  Insc 767 (17 December
N. Santosh Hegde, B.P.
Singh & S.B. Sinha Interlocutory Application No.2 In Civil Appeal No.5341 of
1996 Santosh Hegde,J.
In CA 5341/1996 a dispute had arisen between the applicant herein and
Municipal Corporation, Aurangabad in regard to the rate of octroi that could be
charged on rectified spirit imported into the municipal limits by the
applicant-appellant for its distillery to manufacture potable alcohol. A
3-Judge Bench of this Court in the said appeal held that the rectified spirit
fell under residuary Entry 86 of Clause IX of the Schedule attracting octroi
duty at 2% and not at the rate at which it was being levied and collected from
the applicant-appellant. In the said appeal the court gave the following direction
"Given the facts and reasons stated above, we allow this appeal, set
aside the impugned judgment and order and hold that the appellant was liable to
pay octroi duty at 2% on the rectified spirit imported. The respondent (sic) is
entitled to recover the difference of octroi duty. No costs." The use of
the word 'respondent' therein is a typographical error and there is dispute
that the entitlement to recover the differential duty is that of the
In the present application seeking clarification the applicant has
complained that inspite of the aforesaid directions the respondent Municipality
is not repaying the excess amount collected by it as directed by this Court.
Therefore it has sought for the following reliefs :
(a) clarify the order dated 17.4.2002 and direct the Respondent to refund
the excess octroi of Rs.3,51,94,471/- along with interest @ 12% ; and/or (b)
alternatively direct the Respondent to set off the above amount against
Appellant's future liabilities of Octroi; and (c) pass such other further
order(s) which this Hon'ble Court may deem fit and proper in the interest of
In reply to the same the respondent-Municipality has contended that the
applicant is not entitled to claim refund in view of the fact that the
applicant has passed on the excess octroi collected by the Municipality to the
ultimate users of the potable alcohol therefore demand for refund of the excess
octroi claimed by the applicant would amount to unjust enrichment and relying
on the judgment of this Court in the case of M/s. McDowell & Co.
Ltd. v. Commercial Tax Officer (1985 3 SCC 230) the Municipality has pleaded
that the burden of proof that such an octroi has not been passed on to the
purchaser of its product rests on the applicant which burden it has not
discharged therefore the applicant is not entitled to the refund.
Noticing the above objection of the respondent on 5.4.2004 this Court
directed the applicant to produce materials to show that during the relevant
period i.e. from 1983 to 1986 it did not pass on the additional octroi to the
Pursuant to the said directions issued by this Court, the applicant has
filed a detailed statement supported by the auditor's report and certificate of
the chartered accountant which the Municipality has not controverted by any
counter affidavit or other material in spite of the opportunity granted to it.
The material produced by the applicant clearly shows that the applicant has not
passed on the additional octroi collected from it to its consumers.
Even that apart as stated hereinabove in the 3-Judge judgment from which
this application has arisen it is in very clear terms stated that the applicant
is entitled to recover the difference of octroi duty and from the material on
record it is clear that there is no dispute that excess duty was in fact
collected by the Municipality; the argument of unjust enrichment is being
raised for the first time before this Court in opposition to this application
and we find no merit in the same.
For the reasons stated above we allow this application and direct the
respondent Municipal Corporation of Aurangabad to refund the excess octroi
amount which has been computed at Rs. 3,51,94,471/- with interest at 6%. Since
the principal amount and the interest comes to a substantial sum and in view of
the fact that the respondent Municipality has pleaded that the amount collected
by them has been used for public benefit we think it appropriate that the said
sum should be refunded to the applicant in 24 equal monthly instalments ; first
of which to be paid on or before 1.2.2005. The application is allowed.