Lab. Ltd. Vs. Municipal Council, Ropar  Insc 741 (2 November 2006)
Ar. Lakshmanan & Tarun Chatterjee
SLP(C)No.12343/2005) Dr. AR. Lakshmanan, J.
above appeal is directed against the final judgment/order dated 18.2.2005
passed by the High Court of Punjab & Haryana at Chandigarh in R.S.A. no.704 of 2005. The
unsuccessful plaintiff is the appellant in this appeal. The respondent is the
Municipal Council, SAS Nagar, Mohali.
have perused pleadings and the judgments of all the three courts and heard the
arguments of Mr. Arun Jaitley, learned Senior Counsel for the appellant and Mr.
A.P. Bhandari, learned counsel for the respondent.
issue which arises for consideration in the present appeal is whether an entry
in a tariff schedule which after specifying the subject matter of the entry and
illustrating it with examples by using the word 'like' can be construed as
being limited to only the items listed by way of illustration or includes all
such products as answer the classification of the entry and further whether the
revenue can change the classification of the product from the specific
enumerated entry, which was accepted for 13 years to the residuary clause
without any change of circumstance and without discharging the burden of proof
cast on the revenue to show that the particular product falls in the residuary
tariff item and not in the specific enumerated entry.
plaint, in paragraph 4, it has been mentioned that the description of
Annexure-'A' itself shows that the quantity of the Heavy Commercial Chemicals
is brought to the factory premises in bulk, for example, in a period of nine
months from April to December 29, 1995 the receipts of Commercial Heavy
Chemicals like Ascetic Acid Glacial - 3,06,415 kg, Caustic Lye - 6,82,205 kg,
Ethyl Acetate - 3,65,270 kg., Hemane - 3,45,094 kg., Hydrochloric Acid -
39,22,195 kg., Methylene Chloride - 7,82,203 kg. Penicillin G-4,32,812 Bous,
Pen V Acid- 1,75,027 kg. The quantities as highlighted above would show that
the Heavy Commercial Chemicals are being brought to the factory premises by the
appellant/Plaintiff is bulk.
case of the appellant, according to the learned Senior Counsel, is covered for
the purposes of payment of octroi duty only under clause (a) of Entry 40 as
mentioned in the heading of the plaint which reads as under and the appellant
is liable to pay octroi duty @ =% only on Heavy Commercial Chemicals.
commercial chemicals like Sulphur, refined soda, caustic soda, acids, bleaching
power, carbonates excluding sodium carbonate, bicarbonates of ammonia, calcium,
zinc and sodium, etc. magnesium chloride and soda silicate." It is the
further case of the appellant that the appellant has been paying octroi duty on
Commercial Heavy Chemicals brought by it to its factory under clause 40(a)
right from the beginning when octroi duty was imposed, without any difficulty.
Some of the receipts of last five years wherein octroi duty has been charged
under clause 40(a) were attached with the plaint. Thus, it is submitted that
keeping in view the nature of the Commercial Heavy Chemicals brought by the
appellant to the factory premises which is situated within the municipal limits
of the respondent's Committee, the appellant is liable to pay octori duty only
at =% and not more than that. It is the further case of the appellant that
there has been no trouble in payment of octroi duty as per the schedule during
the last six years as it was being charged rightly so much so that the
appellant was extended O-4A facility for making the payment. But of late the
respondent had started claiming that the appellant is liable to pay octroi duty
not under clause 40(a) but under clause 40(e) which is altogether illegal and
has even threatened to withdraw O-4A facility. It is further submitted that the
respondent is bound to charge and levy only octroi duty as per the schedule
mentioned above and is under obligation not to make any illegal false claim
thus the appellant cannot be made liable to pay something for which the
appellant is not liable at all.
it is submitted by the learned Senior Counsel that the appellant is entitled to
the injunction as prayed for in the plaint.
A.P. Bhandari, learned counsel appearing for the Municipal Council submitted
that the appellant is using different types of chemicals; some of them are
heavy commercial chemicals and some of them are fine chemicals and that the
chemicals which are heavy chemicals are having more weight and they are in
crude form and for those chemicals, the octroi will be charged at a =% whereas
the fine chemicals are those chemicals which are mainly produced in
comparatively small quantities but are costlier and for those chemicals, the octroi
is being charged @ 1%. It is further submitted that the Taxing Authority or a
Taxing Statute does not debar to ractify the wrong which has already been done.
that the appellant prayed to charge 1% octroi for taking the goods in its
factory and was submitting the Form-0(4A) which means that they were sending
themselves suo motu the octroi of =% which naturally escaped from the Taxing
Authority of the respondent, because at that time, the tax was being paid by
the appellant on his own so the wrong could not be detected earlier. It was
however submitted that if the wrong done, this does not mean that the same
cannot be set right, and as in this case, it has escaped in the initially from
the respondent and as and when it came to the notice, they rectified its wrong.
The learned counsel further submitted that the High Court has correctly
appreciated the distinction between two entries i.e. 40(a) and 40(e) and that,
therefore, it does not require for this Court any interference.
have perused the judgment of the High Court and considered the rival claims.
The High Court has not discussed many important issues raised by the
appellant-plaintiff and also by the respondent-defendant.
High Court has not decided as to whether the onus or burden of proof to show
that a product falls within a particular item is on the department or the assessee.
High Court has also not properly interpreted the Entries which is contrary to
the settled principles of interpretation. It is settled by catena of decisions
of this Court that the burden of proof to show that a product falls within a
particular tarrif item is always on the revenue. In our view, the respondent,
Municipal Council has failed to establish and justify the burden of proof, the
taxability ingredient of the appellant's goods under Entry 40, sub-clause (e).
As rightly pointed out by the learned counsel for the appellant, the High Court
has failed to appreciate that it is the respondent- Revenue Authority which is
cast with the duty of assessing octroi to be imposed on the appellant and that
the said respondent, Municipal Council has for 13 continuous years assessed the
goods in question under Entry 40(a) of the Schedule as heavy commercial
the High Court disposed of the Second Appeal at the admission stage and without
notice to the respondent, we feel that the interest of justice would require
that another opportunity should be given to both the parties to argue the
appeal afresh and on merits.
High Court, in cases like this, ought to have ordered notice to the respondent
and disposed of the matter after hearing both the parties and after
ascertaining as to which rate of duty Entry is applicable and payable for the
product in question.
therefore, have no other option except to set aside the judgment dated
18.02.2005 and remand the matter to the High Court for fresh disposal of the
Second Appeal in accordance with law and after affording opportunity to both
the Second Appeal is remitted to the High Court for fresh disposal, the High
Court is requested to frame the substantial questions of law in accordance with
the Section 100 C.P.C. and decide the matter on merits.
stated by learned counsel for the appellant that the appellant had the benefit
of stay during the pendency of the proceedings before the Trial Court and also
the Appellate Court. We, therefore, direct the appellant to pay a =% duty for
the product till the disposal of the Second Appeal. The Respondent - Municipal
Council is directed to receive the same without prejudice to the rights and
contentions in the Second Appeal and the final outcome of the Second Appeal.
result, the judgment passed by the High Court in R.S.A. No. 704 of 2005 is set
aside and the High Court is requested to dispose of the Second Appeal as
expeditiously as possible.
Civil Appeal is disposed of accordingly. No costs.