Hiralal Thakorlal Dalal Vs. Broach
Municipality & Ors [1976] INSC 116 (15 April 1976)
SHINGAL, P.N.
SHINGAL, P.N.
RAY, A.N. (CJ) BEG, M. HAMEEDULLAH SARKARIA,
RANJIT SINGH SINGH, JASWANT
CITATION: 1976 AIR 1446 1976 SCR 82 1976 SCC
(3) 398
CITATOR INFO :
RF 1992 SC 645 (4,11)
ACT:
Bombay Municipal Boroughs Act 1925 S.
73(i)(iv)-Scope of-Octroi duty-If could be levied on "through
consignments".
HEADNOTE:
Section 73(i)(iv) of the Bombay Municipal
Boroughs Act 1925 empowers a municipal borough to impose octroi on animals or
goods or both brought within the octroi limits for consumption, use of sale
therein. The appellant imported certain consignments of goods within the octroi
limits of the municipality and exported them, the consignments being termed as
"through consignments" or "goods in transit" or "goods
for export". Octroi duty was imposed on the goods and the appellant filed
a petition before the High Court challenging the levy. The High Court held that
the expression 'sale' used in the definition of "through
consignments" in the rules had the same connotation as in the Sale of
Goods Act and, therefore, if a consignment was brought within the octroi limits
and if the municipal authorities were satisfied that the consignment had been
brought in for the purpose of sale, then the consignment did not become a
through consignment.
Allowing the appeal to this Court,
HELD: The law on the subject has been clearly
laid down in Burmah Shell Oil Storage and Distributing Company (India) Ltd. v.
The Belgaum Borough Municipality and the present case is governed by that
decision. It was held in that case that the company was liable to pay octroi on
goods brought into the local area, if the goods are:
(a) to be consumed by the Company itself or
sold by it to consumers direct and (b) for sale to dealers who in their turn
sold the goods to consumers within the municipal area and irrespective of
whether such consumer bought them for use in the area or outside it; but it was
not liable to octroi in respect of goods which were brought into the local area
and were re-exported. [86 C-D] Buimah Shell Oil Storage and Distributing Co.
India Ltd. v. The Belgaum Borough Municipality [1963] Suppl. 2 S.C.R. 216,
explained and applied
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1823 of 1969.
Apeal by Special Leave from the Judgment and
Order dated the 27th/28th/30th January, 1967 of the Gujarat High Court in
Special Civil Application No. 163 of 1962.
B. R. Agarwala for the Appellant.
I. N. Shroff for the Respondents.
Dr. L. M. Singhvi, Advocate General,
Rajasthan, V. S.
Dave and S. M. Jain for Intervener, Municipal
Council, Jodhpur.
The Judgment of the Court was delivered by
SHINGHAL, J.-This appeal by special leave arises from the judgment of the
Gujarat High Court dated January 27, 28 and 30, 83 1967. The two petitioners
before the High Court were firms trading in certain commodities within the
limits of the Municipal Borough of Broach. The grievance in one of the
petitions was that the Municipality had collected certain amounts wrongfully,
and the grievance in the other petition was that the Municipality had refused
some amounts even though they were refundable under its byelaws. Both the
petitions concerned goods which were "imported" within the octroi limits
of the Municipality but came to be "exported" therefrom. The first
petition was in respect of a consignment which was designated as a through
consignment, and the second petition concerned goods in transit and goods for
export other than those which could be called goods in transit. The amounts in
dispute related to the levy of octroi under section 73(i) of the Bombay
Municipal Boroughs Act, 1923, hereinafter called the Act, which provides as
follows:
"73 (i) Subject to any general or
special orders which the State Government may make in this behalf and to the
provisions of sections 75 and 76, a Municipality may impose for the purposes of
this Act any of the following taxes, namely:- * * * * * (iv) an octroi on
animals or goods or both, brought, within the octroi limits for consumption,
use or sale therein;." The word "sale" was included within the
ambit of octroi when the Act was amended in 1954. The High Court took note of
the rules and the bye-laws and held that it was not possible to take the view
that the rules contemplated that no refund was payable in case the goods had
undergone a sale during the course of their stay in octroi limits. It
accordingly came to the conclusion that in regard to goods meant for export in
the sense defined in the rules, refund was claimable even if a sale transaction
in the larger sense (i.e. in a sense other than a sale to a consumer or with
the intention that the goods must pass into hands of the ultimate consumer)
took place in regard thereto, provided that the other conditions were
satisfied. The High Court then examined the correct interpretation of the word
"sale" in clause (iv) of section 73(i) of the Act and after
considering this Court's judgment in Burmah Shell Oil Storage and Distributing
Co.
India Ld. v. The Belgaum Borough
Municipality,(1) it held that the word "sale" could not be given the
narrow meaning of a sale for consumption to the ultimate consumer because, in
that sense, the Legislature would be guilty of having introduced a word which
it was not necessary for it to introduce. The High Court made a reference to
the definition of "sale" in section 4 of the Sale of 84 Goods Act and
held that the expression "sale" as used in the definition of 'through
consignments" in the rules had the same connotation as in the Sale of
Goods Act and therefore "if a consignment is brought within the octroi
limits and if the municipal authorities are satisfied that the consignment has
been brought in for the purpose of effecting a sale in the aforesaid sense,
then the consignment does not become a through consignment." According to
the High Court, it was not enough merely to prove that the consignment left the
octroi limits within six hours after the goods were imported and that it was
necessary to show that the goods were intended only to pass through in the
sense that they were not meant for consumption, use or sale, and that in regard
to such goods there was no intention of changing hands by way of sale or that
there was no intention of breaking their bulk or detaining them beyond six hours
or unloading them.
In the view it took, the High Court issued
some directions for compliance by the authorities concerned. The writ
petitioners felt dissatisfied with the view taken by the High Court and applied
for a certificate under articles 132(1) and 133(1) (c) of the Constitution. The
High Court held that no question arose under article 132, and no certificate
could be granted under article 133 as there was no final order. The petitioners
however applied to this Court for special leave on the ground, inter alia, that
the High Court put a wrong interpretation on the expression "sale" in
section 73(i)(iv) of the Act inspite of the decision of this Court in Burmah
Shell's case (supra). As has been stated, they succeeded in obtaining special
leave from this Court. When the case came up for hearing before a Division
Bench, it noticed the decision in Burmah Shell's case (supra) and felt that
there were "burred areas" of sale within the territory which may
attract a tax under entry 52 (List II of Seventh Schedule) left uncertain by
the aforesaid decision of this Court so that the matter deserved consideration
by a larger Bench. This is how the case has come up before us for hearing. We
have allowed Municipal Council, Jodhpur, to intervene in the hearing at its
request.
The short question before us is whether this
Court's decision in the Burmah Shell's case (supra) squarely covers the present
controversy or whether that decision requires reconsideration. The learned
counsel have in fact confined their arguments to this narrow field.
In order to appreciate the controversy, it
will be desirable to refer to the basic facts of the Burmah Shell's case
(supra). The Burmah Shell Oil Storage and Distribution Co. India Ltd.,
hereinafter referred to as the Company, was a dealer in petrol and other
petroleum products which it manufactured in its refineries situated out-side
the octroi limits of Belgaum Municipality. It brought these products inside
that area either for use or consumption by itself or for sale generally to its
dealers and licensees who in their turn sold them to others. According to the
Company the goods brought by 85 it within the octroi limits could be divided
into four 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 octroi limits to other persons but consumed by
them outside the octroi limits; and
4. Goods sent by the Company from its Depot
inside the octroi limits to extra-municipal points where they are bought and
consumed by persons other than the company.
This Court examined the scheme of taxation
under the Act and the rules and the bye-laws made by the Municipality for the
levy of octroi. It also took note of the fact that the words "use or
sale" were substituted for the words "or use" by Bombay Act 35
of 1954, which are the subject matter of a fresh controversy before us, and made
a reference to the Legislative Lists in the Government of India Act, 1935 and
the Constitution. After examining the history of octrois and terminal taxes,
this Court held that "octrois were taxes on goods brought into the local
area for consumption, use or sale", and that "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." It was specifically clarified that the word
"sale" was included only in 1954 in order to bring the description of
octroi in the Act in line with the Constitution, and that the expression
"consumption" and "use" together "connote the bringing
in of 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 consumption
in a manner which destroys, wastes or uses them up." Looking to the trade
of the Company, this Court held that sale by it directly to consumers or to
dealers was "merely the means for putting the goods in the way of use or
consumption" and that the word "therein" does not mean that all
the act of consumption must take place in the area of the municipality. The
Court therefore went to hold as follows.- "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, provided the goods were not
re-exported out of the area but were brought inside for use or consumption by
buyers inside the area. In this sense the amplification of the description both
in the Government of India Act, 1935 and the Constitution did not make any
addition to the true concept of 'octroi' as explained above. That concept
included the bringing in of goods in a local area so that the goods come to a
repose there. When the Government of India Act, 1935 was enacted, the word 86
'octroi' was deliberately avoided and a description added to forestall any
dispute of the nature which has been raised in this case. In other words, even
without the description the tax was on goods brought for 'consumption, use or
sale'. The word 'octroi' was also avoided because terminal taxes are also a
kind of octroi and the two were to be allocated to different legislatures.
In our opinion, even without the word 'sale'
in the Boroughs Act the position was the same provided the goods were sold in
the local area to a consumer who bought them for the purpose of use or
consumption or even for resale to others for the purpose of use or consumption
by them in the area. It was only when the goods were re-exported out of the
area that the tax could not legitimately be levied......" This Court
categorically held that the Company was liable to pay octroi on goods brought
into the local area (a) to be consumed by itself or sold by it to consumers
direct, and (b) for sale to dealers who in their turn sold the goods to
consumers within the municipal area irrespective of whether such consumers
bought them for use in the area or outside it, but it was "not liable to
octroi in respect of goods which it brought into the local area and which were
re- exported." The law on the subject matter of the present controversy
has thus been laid down quite clearly in the Burmah Shell's case (supra) and
the present case squarely falls to be governed by it. We are also in agreement with
that interpretation of the law. It may be mentioned that the learned counsel
have not been able to advance any new argument justifying a reconsideration of
the decision.
The appeal is allowed, the impugned judgment
of the High Court is set aside and the respondents are directed to examine and
determine the claims of the appellant in accordance with the above decision.
The appellant will be entitled to costs from the respondents.
P.B.R. Appeal allowed.
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