M/S Acqueous
Victuals Pvt. Ltd. Vs. State of U.P. & Ors [1998] INSC 290 (8 May 1998)
S.B.
Majmudar, M. Jagannadha Rao S.B. Majmudar, J:
ACT:
HEAD NOTE:
Leave
granted.
All
these three appeals arising from a common judgment rendered by the High Court
of judicature at Allahabad in there writ petitions project a short question
whether the common appellant, original writ petitioner, was liable to pay octroi
duty during the relevant period from 1980 to 1987 to the respondent
Municipalities on the weight of the glass bottles which were brought within the
municipal limits when they were containing soft drinks like Gold Spot, Limca,
Thumps-up, Soda, Rim-Zim etc. For the sake of convenience, we shall refer to
the appellant as the writ petitioner and the respondents as the
respondent-Municipalities in the latter part of the judgment. The contention of
the writ petitioner was that the beverages in liquid form were imported by the
wholesalers to whom the soft drinks were sold. The Municipalities, therefore,
could validly impose octroi on the weight of liquid contents of the bottles and
not on the weight of bottles which were mere containers as these bottles after
taking out the liquid contained therein were being sent back in their empty
state to the writ petitioner by the wholesalers for re-cycling and thus these
bottles were not imported within the local limits of the Municipalities for
consumption, use or sale therein. This contention of the writ petitioner was
rejected by the Division Bench of the High Court relying on its earlier
decision in the case of Prem Nath Monga Bottlers (p) Ltd. vs. Municipal Board, Meerut
& Ors. in Civil Misc. Writ Petition No. 6883 of 1973 decided on 11.02.1980.
We shall refer to the said judgment at the appropriate place in the latter part
of the judgment . In the impugned common judgment, the division bench of the
High Court held that even though the cold drinks were being imported for being
sold within the municipal limits, the bottles in which they were carried and
filled in could be said to have been used within the municipal limits, the
bottles in which they were carried and filled in could be said to have been
used within the municipal limits for the purpose of storing these liquids till
they were ultimately utilised by the consumers concerned. Therefore, even the
weight of bottles containing these liquids could legitimately be taken into
consideration by the Municipalities for imposing the octroi duty thereon.
It is
the aforesaid decision of the High Court which is brought in challenge by the
writ petitioner. We have heard learned counsel for the writ petitioner as well
as learned counsel appearing for the respondent-Municipalities of Rampur and Moradabad and the State of Uttar Pradesh in support of the decision rendered by the High Court. The
Municipalities of Pilibhit and Sahajahanpur, though served, have not thought it
fit to appear and contest these proceedings.
RELEVANT
FACTS:
It
will be necessary to keep in view a few relevant facts leading to these
proceedings. The writ petitioner is a Private Limited Company incorporated
under the Indian Companies Act, 1956. under an agreement with M/s Parle
(Exports) pvt. Ltd., Bombay, the writ petitioner is engaged in
the business of bottling soft drinks like Gold Spot, Limca, Thumps-up, soda,
Rim-Zim etc. Which are manufactured by Parle Exports. After bottling these
beverages at its Plants at Bareilly, the
writ petitioner distributes the same to wholesalers in ten districts of Uttar
Pradesh, which include amongst others, the respondent-Municipalities, namely,
the Municipal Boards of Moradabad, Rampur, Sahajahanpur and Pilibhit. According to the writ petitioner- company
after the beverages are consumed the consumers within the municipal limits the
bottles empty state are returned to it and the title and ownership in the
bottles also remain with it. The Uttar Pradesh State Legislature enacted an Act
in 1916 called the U.P. Municipalities Act, 1916 (hereinafter referred to as
'the Act'). Under Section 128 thereof powers were conferred on the Municipal Board
governed by the State Act to impose an octroi on goods or animals brought
within the municipality for consumption, use or sale therein. Under Section 298
of the Act, the Municipal Boards are empowered to frame bye-lays for various
purposes of the Act. The bye-laws of Municipal Boards of Moradabad, Rampur, Pilibhit and Sahajahanpur were
enforced during the period from 12.05.1977 to 01.09.1982. According to the writ
petitioner, these bye laws provided for levying octroi on soft drinks like Cococola,
Fanta, Vimgo, Soda Water, Lemon etc. but they did not permit levying octroi on
the weight of bottles which contained these soft drinks. As the respondent-
Municipalities were seeking to levy octroi on the basis of gross weight not
only of the beverages contained but also of the bottles containing the
beverages which were brought within the municipal limits of the aforesaid
Municipalities, the writ petitioner company filed three writ petitions in the
High Court of judicature at Allahabad in
the year 1983. The grievance made in the writ petition was that from 1980
onwards the respondent- Municipalities were illegally recovering octroi also on
the weight of bottle-containers which they were not entitled to do and hence
the respondent- Municipalities were required to be ordered to refund the
requisite amount of octroi levied on the basis of the gross weight of bottles
from 1980 onwards. During the pendency of the writ petitions in the High Court
from 1983 till 1987, by interim orders, the respondent-Municipalities were
restrained from recovering octroi on the gross weight of bottles meaning
thereby the octroi duty was required to be confined only on the net weight of
the beverages contained in these bottles that were imported by the writ
petitioner within the municipal limits of the aforesaid four Municipalities .
During the pendency of these writ petitions, the State of Uttar Pradesh issued a Government Order on
06.04.1987 directing all the Municipalities functioning under the Act in the
State not to charge octroi on the basis of gross weight but only on the weight
of beverages contained in the bottles. Thus, from 06.04.1987 onwards, the
weight of bottles and crates containing the bottles got exempted from the octroi
duty.
Consequently,
it must be held that dispute got confined only from 1980 till 06.04.1987. We
may also note a further development, namely, that after 1991 the provision of
Section 128 (i) (viii) got deleted, therefore, from that date in the State of Uttar Pradesh no octroi duty is levied by any of
the Municipalities on any goods or animals imported within the municipal limits
of the Municipalities .
In the
light of this factual backdrop, the main grievance putforth by learned counsel
for the writ petitioner has to be examined.
RIVAL
CONTENTIONS:
Learned
counsel for the writ petitioner submitted that under Section 135 of the Act,
the State Government or the prescribed Authority has to notify in the official
Gazette the imposition of the tax from the appointed date as laid down by
Section 135(2) of the Act. The Governor of Uttar Pradesh had issued a
Notification dated 26.5.1979 in exercise of powers conferred under Section
135(2) of the Act read with Section 21 of the U.P. General Clauses Act
notifying that the concerned Municipality had in exercise of the powers under
clause (viii) of Sub-section (1) of Section 128 of the Act imposed the
following tax in the Municipality of Moradabad with effect from the date of the
said Notification. The description of the taxes was to the following effect:-
" Octroi on goods and animals brought within the limits of the
Municipality of Moradabad for consumption, use of sale therein be levied
according to the rates given in Schedule I below subject to the exemptions in
Schedule II thereunder:
SCHEDULE
1 Class 1.- Articles of food and drink for human and animal's consumption
---------------------------------------------------------- SI. No. Description
of goods Rate of Octroi
------------------------------------------------------------ Rs. P.1 to 16
....................... ... - - Aerated water like Cococola, Fanta, 2.25 per
quintal Vimto, sodawater lemon
etc.------------------------------------------------------------ It is of
course true that the notification regarding Municipality of moradabad was
brought on record of this case at page no. 47 of the main paper-book but we may
mention that similar notifications were issued by the Governor of uttar Pradesh
concerning the other three Municipalities also. Learned counsel for the writ
petitioner submitted that aforesaid entry at SI. No. 17 includes aerated water
like cococola, fanta, vimto, sodawater, lemon etc. for which the rate of octroi
prescribed is 2.25 per quintal. That this would show that no separate rate of octroi
was sought to be levied on the bottles containing these beverages. Therefore,
there could be no octroi imposed under the Act so far as the bottles or
containers of these beverages were concerned. It was also submitted that the
High Court in the impugned judgment had erroneously held that these bottles
containing the beverages were being used within the municipal limits and were
imported for that purpose. That they were brought within the municipal limits
only as containers, as only beverages were sold and not the bottles within the
municipal limits. In fact, two Municipalities out of four contesting
Municipalities, namely, Moradabad and Sahajahanpur had not disputed that the
title of bottles remained with the writ petitioner and only the liquid contents
thereof were being sold to the consumers through the wholesalers within the
municipal limits of the Municipalities and the empty bottles were being sent
back to the writ petitioner for the purpose of recyling at its plant at Bareilly
for further circulation. It was further submitted that the bottles containing
the beverages, though physically entered the municipal limits of the respondent
Municipalities, they i.e. the bottles were neither consumed nor used nor sold
within the municipal limits. Therefore, no octroi could be levied on the weight
of bottles brought within the municipal limits. As at the entry point weigh of
these bottles was also subjected to the charge of octroi duty, the action of
the respondent-Municipalities must be held to the ultra vires the Act, rules
and the notification issued under the Act. Consequently,
respondent-Municipalities were required to refund the illegally collected octroi
duty on the gross weight of bottles. The writ petitions were, therefore,
required to be allowed. They were erroneously rejected by the High Court. In
support of this contention, strong reliance was placed on some of the decisions
to which we shall make a reference hereafter.
Learned
counsel for the State of Uttar Pradesh as well as learned counsel appearing for
the two Municipalities, as aforesaid, on the other hand, contended that
beverages of different types of cold drinks cannot enter the municipal limits
in loose or liquid from unless they are contained in bottles and other
receptacles or containers and these containers are, therefore, in the nature of
primary packing.
Consequently,,
the gross weight of bottles containing beverages as well as weigh of beverages
contained therein as to be taken into consideration for imposing the octroi
duty, that the bottles can be said to have been brought within the municipal
limits for the purpose of use or consumption till the bottles get emptied at
the end of the consumers within the municipal limits and that the bottles
remained in use for storing the cold drinks. A lot of time is taken for
consumption of cold drinks. A lot of time is taken for consumption of cold
drinks. Bottles may also get destroyed in the meanwhile or may not be returned
by the consumers to the retailers or wholesalers for being re-sent to the writ
petitioner for recycling. Therefore, for an indefinite period the bottles can
also be said to have entered the municipal limits fro the purpose of use.
Learned counsel for the respondent-Municipalities accordingly submitted that
the view taken by the Division Bench of the High Court in the impugned judgment
and also the view taken by the earlier Division Bench of the High Court in
Civil Misc. Writ petition No. 6883 of 1973 cannot be said to be erroneous in
any manner. They also invited our attention to some of the judgments of this
Court and also one judgment of the Orissa High Court to which we shall make a
reference hereafter.
Learned
counsel for the respondent-Municipalities further submitted that the writ
petitioner never filed relevant statement of objections as required by the Act
and that no details were furnished to the effect that the empty bottles were
being re-exported after the contents thereof were taken out by the consumers.
It was also contended that in substance the bottles could also be said to have
been sold within the municipal limits as the full value of bottles was
recovered in advance by the writ petitioner company by way of security deposits
and under these circumstances if the bottles were not returned they remained
sold through the wholesalers. Some bottles may also get destroyed any may never
get out of the municipal limits for recycling and that all these disputed
questions of fact could not have been decided by the High Court under Article
226 of the Constitution nor can they be decided by us in the present
proceedings. it was, therefore, contended that the writ petitioner was not
entitled to any refund in these proceedings and in any case no refund can be
ordered to the writ petitioner without satisfying the concerned authorities
that they had not passed on the burden of disputed octroi duty to their
consumers. It was accordingly submitted that the writ petitions were rightly
dismissed by the High Court.
In the
light of these rival contentions, the following points arise for our consideration
:-
POINT
NO. 1:- Whether the
weight of bottles containing beverages imported within the municipal limits of
the respondent Municipalities during the period from 1980 to 1987 could be
legally subjected to octroi duty by the respondent- Municipalities under the Act
?
POINT
NO. 2: - In the
light of the decision on Point No. 1 what further directions, if any, can be
issued in the present proceedings.? We shall proceed to deal with the aforesaid
two points which arise for out consideration.
POINT
NO. 1: - It is not
in dispute between the parties that the writ petitioner which is bottling
beverages in its plant at Bareilly in
the State of Uttar
Pradesh is selling
beverages through wholesalers functioning without the municipal limits of the
aforesaid four Municipalities for making them available to the consumers within
the municipal limits. The writ petitioner has, therefore, to sell these
beverages to the wholesalers with in the municipal limits. consequently, the
cold drinks and beverages contained in bottles can be said to have been brought
within the Municipalities for the purpose of sale. Accordingly, on the weight
of beverages contained in the bottles, octroi duty could be legally levied by
the respondent-Municipalities. There is no dispute on this point.
The
dispute centres round the weight of bottles containing beverages. In order to
resolve this controversy between the parties, it is necessary to have a look at
the relevant provisions of the Act which held the field during the period from
1980 to 1987. Section 128 of the Act provides for taxes which may be imposed.
Sub-section (1) clause (viii) thereof lays down that subject to any general
rules or special orders of the State Government in this behalf, the taxes which
a Board may impose in the whole or par of a Municipality can consist of octroi
on goods or animals brought within the Municipality for consumption, use or
sale therein. It is, therefore, obvious that before any octroi is levied on any
commodity by the Municipality, it must be shown that the said commodity was
brought within the municipal limits for consumption, use or sale therein.
Section
134 of the Act deals with resolution of Board directing imposition of tax.
Sub-section (1) thereof lays down that when the proposals have been sanctioned
by the State Government, the State Government after taking into consideration
the draft rules submitted by the Board, shall proceed forthwith to make under
Section 296 such rules in respect of the tax as for the time being it considers
necessary. Sub-section (2) of Section 134 provides that when the rules have been
made, the order of sanction and a copy of the rules shall be sent to the board,
and thereupon the Board shall be special resolution direct the imposition of
the tax with effect from a date to be specified in the resolution. Then follows
section 135 regarding imposition of tax to which we have made a reference
earlier. A conjoint reading of Section 128(1)(viii) and Section 134 and 135
leaves no room for doubt that tax by way of octroi on goods brought within the
municipal limits for consumption, use or sale could legitimately be imposed by
the authorities concerned functioning under the Act. It is true, as pointed out
by learned counsel for the writ petitioner, that under Section 135(2),
notifications were issued by the Governor of Uttar Pradesh permitting
imposition of octroi duty on goods and animals brought within the limits of the
Municipalities according to the rates given in Schedule I to the Notification
and subject to the exemptions in Schedule II thereof. It is also true that in
Schedule I at entry 17 for aerated water like cococola, fanta, vimto, sodawater
lemon etc. the rate of octroi was specified. However, learned counsel for the
writ petitioner could not effectively contend that merely because the rate of octroi
as laid down in the Notification, Schedule I refers to the aerated water etc.
and because the rate does not contain any reference to the aerated water
bottles, no octroi duty can be imposed on such bottles. The imposition of octroi
duty is in general terms on goods or animals brought within the municipal
limits for consumption, use or sale therein. If it is so, the bottles
containing beverages - aerated water like cococola etc. When brought within the
municipal limits for the purpose of consumption, use or sale would also become
liable to bear the burden of octroi tax. Our attention was invited to specimen
rules framed under the Nagarpalika Moradabad Octroi Rules, 1978 which are at
page 35 of the main paperbook. Rule 2(vi) thereof defines 'octroi' to mean a
tax on goods or animals brought within the Municipality for consumption, use or
sale therein.
According
to Rule 2(vii) 'Schedule' means the schedule of rates at which octroi shall be
levied. Rule 4 thereof lays down that if the octroi is levied according to
weight it shall be calculated on the gross weight of the consignments including
bardana and packing etc. Therefore, as per this rule it can be said that if the
packing or bardana by utilisation of which the consignments of goods liable to octroi
entered the municipal limits the former would also as packing materials become
liable to bear the burden of octroi duty and gross weight thereof would remain
chargeable for octroi. However, despite the said Rule 4, it has to be
considered whether the said the falls within the for corners of the charging
provision of Section 128(1)(viii) . In the light of this main charging
provision, it must be held that weight of bardana or packing which contains the
consignments of octroiable beverages would remain liable to be included in the
taxable gross weight of the consignment provided such baradana or packing
which, even may be primary packing or secondary packing, is shown to be brought
within the municipal limits for the purpose of its sale, consumption or use
within the municipal limits. If such primary or secondary packing is not
brought within the municipal limit for the purpose of consumption or sale or
use thereof and is found to have been taken out of the municipal limits after
its contents were discharged within the municipal limits, then the weight of
such outgoing bardana or packing, on the express language of the charging
provision, cannot be brought to octroi tax or if such a tax is levied at the
entry point, it would become liable to be refunded. But this question in its
turn will raise further questions of fact whether such consignments including packings
contemplated by Rule 4 were actually sold with their contents to the local
consumers or wholesalers, as the case may be, or whether they were consumed or
used up within the local limits or whether they were used for an indefinite
period and had ultimately rested within the municipal limits and had not been
taken out. These are all disputed questions of fact which are required to be
examined and adjudicated upon when claims for refund on the allegation that octroi
was wrongly realised on the gross weight of such bardana or packing of bottles
which were allegedly taken out of the municipal limits are placed for
consideration of the appropriate authorities.
We
have, therefore, to see whether on the facts of the present case the writ
petitioner was justified in invoking the writ jurisdiction of the High Court
straightaway without going to the competent authorities for lodging its claim
for refund of octroi levied on the weight of bottles in which beverages were
packed and brought within the municipal limits of the
respondent-Municipalities. Learned counsel for the writ petitioner submitted
that the High Court had patently erred in taking the view that these bottles
containing beverages were brought within the municipal limits for use and that
the Division Bench had also equally erred in taking the further view that
liability to pay the octroi duty on the weight of bottles also got fastened on
the relevant consignments. In this connection, our attention was invited to two
decisions of this Court. The first decision is Burmah Shell Oil Storage &
distributing Company India Ltd. The Belgium Borough Municipality [1963 Supp.
(2) S.C.R. 216]. In that case, a Constitution Bench of this Court speaking
through Hidayatullah, j. examined the question whether octroi duty was leviable
from Burmah Shell Oil Storage & Distributing Company, Which was the
appellant before this Court, when it brought within the municipal limits of
Belgium the goods (a) for consumption by itself;
(b) for
re-export either by itself or through dealers outside the area - which as was
admitted by the municipality, entitled the company to a refund of tax and (c)
for sale by it directly to consumers or to dealers who distributed the goods
within the area to ultimate consumers.
Considering
the case of the appellant before this Court, Hidayatullah, J. made the
pertinent observations in connection with the legal position concerning the
imposition of octroi duty by the Municipality. Interpreting the word found in
Entry 52 of the State List in the Constitution dealing with taxes on the entry
of goods into a local area for consumption use or sale therein it was held as
under:- " It is not the immediate person who brings the goods into a local
area who must consume them himself, the act of consumption may be postponed or
may the performed by someone in else but so long as the goods have been brought
into the local area for consumption in that sense, no matter by whom, they
satisfy the requirements of the boroughs Act and octroi is payable.
Added
to the word "consumption" is the word "use" also. There may
be certain commodities which though put to use are not 'used up' in the
process. A motor-car brought into an area for use is not used up in the same
sense as food-stuffs. The two expressions use and consumption together
therefore, 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 used
them up....." At page 233 of the Report, the following further
observations were made in connection with the entry regarding octroi on goods
brought within the municipal limits for consumption, use or sale therein. Emphasising
the word "therein" at the end of the entry, it was stated:- "
... The Word 'therein' does not mean that all the act of consumption must take
place in the 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 even ties the entry of goods which are meant to reach an
ultimate user or consumer in the area. Indeed, the consumer may never consumer
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,
provided the goods were not re- exported out of the area but were bought inside
for used or consumption by buyers inside for use or consumption by buyers
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....." In view of the aforesaid,
decision, it becomes obvious that the word 'retention' is held to be synonym
with the word 'repose', meaning thereby the article concerned must finally rest
within the municipal limits. In the light of the aforesaid judgement of the
Constitution Bench of this Court, therefore, it is obvious that before a
Municipality can impose octroi duty on any commodity, it has to be shown that
the commodity concerned was brought within the municipal limits for consumption
that is for being totally used up so that it ceases to exist within the
municipal limits themselves or it was to be used for an indefinite period
within the municipal limits so that it ultimately rests within the municipal
limits and does not go out subsequently, or the commodity concerned must be
shown to have been brought within the municipal limits for the purpose of sale
within the said limits. Having laid down the aforesaid legal position concerning
the imposition of octroi in the penultimate paragraph of the Report at page
234, the Court observed that the Burmah Shell was liable to pay octroi tax on
goods brought into 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. The company was, however, not
liable to Octroi in respect of goods which it brought into the local area and
which were re-exported. But to enable the company to save itself from tax in
that case it had to follow the procedure laid down by rules for refund of
taxes.
The
aforesaid authoritative pronouncement of the constitution Bench of this Court,
therefore, sets at rest the controversy in the present case. If it is the case
of the writ petitioner that during the relevant period from 1980 to 1987 it
brought within the municipal limits of the four respondent- Municipalities
beverages packed in bottles and the bottles were not sold within the municipal
limits and after the beverages were taken out of these bottles, these very
bottles were returned to the petitioner and were taken back to Bareilly, then
for claiming the refund of the octroi paid on the weight of these bottles
during the relevant period when the consignments entered the municipal limits
from time to time, the writ petitioner had to follow the procedure laid down by
the Municipality concerned under its rules for refund of taxes and had to
comply with the statutory gamut of these rules. It had also to show that the
burden of disputed octroi duty was borne by it and was not passed on to
consumers of beverages contained in these bottles. In other words, it would not
be guilty of unjust enrichment if refund was granted. If the refund claim on
furnishing the relevant proofs was not ultimately granted, the remedy of appeal
provided under the rules had to be followed.
In
this connection, we may also refer to a decision of a three-judge Bench of this
Court in the case of S.M. Ram Lal & Co. vs. Secretary to Government of
Punjabi, being an unreported judgment of this Court, reported in [1969 (1) U.J.
(S.C.) 373]. J.C. Shah, J. speaking for the three-Judge Bench considered the
question whether the wool imported within the municipal limits of Faridabad in
raw from for dyeing within the municipal limits could be said to have been used
in the municipal limits or consumed therein so as to attract octroi duty
thereon. In this connection, the following pertinent observations were made in
paragraph 3 of the Report:- " It is common ground that the goods brought
within the Notified Area Committee of Faridabad were not brought for
consumption or sale. It was argued, however, that the goods were brought into
the Notified Area Committee for use, and on that account octroi was leviable.
The expression "use" is not defined in the Act. In its ordinary
meaning the word "use" as a noun, is the act of employing a thing;
putting into action or service; employing for or applying to a given purpose.
But the word "use" occurs in Entry 52 List II of the Seventh Schedule
to the Constitution sandwiched between "consumption " and
"sale" and it must take colour from the context in which it occurs.
It is a settled rule of interpretation that when two or more words which are
susceptible of analogous meaning are coupled together they are understood to be
used in their cognate sense. They take, as it were, their colour from each
other, that is, the more general is restricted to a sense analogous to the less
general: Maxwell on Interpretation of Statutes, 11th Edition, p.321. The
coupling of three words "consumption", "use" and
"sale" connotes that the underlying common idea was that either the
title of the owner is transferred to another, or the thing or commodity ceases
to exist in its original form. Unless it is proved that the wool brought within
the limits of the Notified Area Committee, Faridabad, by the appellant was
intended to be so employed that it was to become a new commodity or a component
of a new commodity, no octroi would be levied by the Notified Area Committee on
the entry of wool. " It is, therefore, obvious that the underlying common
idea behind all the three relevant words 'sale', 'consumption' or 'use' within
the municipal limits of the imported commodity so as to attract the levy of octroi
thereon would require proof of the fact that the concerned commodity got
consumed completely within the municipal limits or was used for an indefinite
period in such a way that it came to rest finally and permanently within the
municipal limits or was sold within the municipal limits. It is no doubt true,
as submitted by counsel for the writ petitioner, that out of the four
Municipalities, Moradabad and Sahajahanpur Municipalities did not contest on
the case of the writ petitioner that the empty bottles in which the imported
beverages were packed by the writ petitioner belonged to the writ petitioner
company and were not sold to anyone within the municipal limits but even if it
is so the moot question which would remain is to the effect whether containers,
namely, these bottles which were filled in with beverages imported for sale
within the municipal limits could be said to have been consumed or used within
the municipal limits. It is, however, to be noted that other two
Municipalities, namely, pilibhit and Rampur Municipalities have not admitted
the title of these bottles inhering with the writ petitioner and according to
them the full market value of the bottles was also recovered by the writ
petitioner from the wholesalers before despatching these bottles filled in with
beverages. Therefore, the question whether the bottles were really sold by the
writ petitioner to the wholesalers or retailers within the municipal limits of
these four Municipalities will require resolution on consideration of relevant
facts. But that apart, even assuming that the title of the writ petition in
these bottles might not have been transferred to anyone else within the
municipal limits, then the moot question will remain whether these bottles on
which the disputed octroi duty was levied by the respondent-Municipalities were
brought within the municipal limits for consumption or use.
So far
as the question of consumption is concerned, it does not present any difficulty
as it is no one's case that the empty bottles, if in fact found to be taken out
of the municipal limits can be said to be consumed or destroyed within the
municipal limits. However, a further questions still would remain for investigation,
namely, whether out of the total consignments of bottled beverages imported
within the municipal limits, the entire consignments of the very bottles after
getting emptied got re-exported or whether some of the said bottles forming
part of the original consignments got destroyed by way of breakage etc. or were
never returned by the consumers concerned and only rest of the imported bottles
were re-exported by enabling the consumers and the retailers or wholesalers to
get refund of the price of the bottles paid by way of advance security from the
writ petitioner on return of these empty bottles for recycling. it is axiomatic
that if the bottles in which beverages were brought within the municipal limits
for sale to consumers had themselves got destroyed by breakage etc. or were not
returned by consumers, they could be said to be consumed within the municipal
limits and hence there would be not occasions for that exported at any time
thereafter.
But
apart from these vexed disputed questions of fact, a further question would
remain whether these bottles can be said to have been used even temporarily
within the municipal limits even on the assumption that they were not consumed
or sold within the municipal limits. So far as this question is concerned, the
High Court in the impugned judgment had taken the view that beverages in liquid
from could not have entered the municipal limits nor could they have been
brought within the municipal limits without being packed in receptacles or
bottles. These bottles till they were emptied of their contents at the ultimate
end of the consumers would remain filled with liquid beverages contained
therein.
Therefore,
to that extent according to the High Court, the bottles could be said to have
been brought within the municipal limits as containers for storing beverages
and hence these bottles could be said to have been brought within the municipal
limits for the purpose of use for storage even leaving aside the question
whether they were brought within the municipal limits for the purpose of sale
or consumption thereof. In support of this conclusion of the High Court, our
attention was invited to the decision of a Division bench of the Allahabad High
Court in Prem Nath Monga Bottlers (p) Ltd.'s case (supra) referred to earlier.
Now a
mere look at the said decision shows that relying on a decision of this Court
in a sales tax case, the Division Bench of the High Court came to the
conclusion that the bottles and shells were being used for the purpose for
which they were intended to be used, namely, as containers and this use was not
merely for bringing in the contents but was linked with the consumption of the
contents and continued to be used till the final consumption of the contents by
the actual consumers and that it was impossible to deny that a bottle which
contained the beverage till the beverage was drunk by the actual consumer
within the municipal limits was not used by the consumer or whoever had the
custody of beverage till the consumption stage. Therefore, the bottles and
creates containing beverage could be said to have been brought within the
municipal limits for use till the beverages contained therein were sold to the
dealers and retailers for ultimate consumption by the consumers. The aforesaid
reasoning of the Division Bench of the High Court cannot bear scrutiny for the
simple reason that this Court in the Constitution Bench decision in Burmah
Shell's case (supra) has clearly ruled that even though the use of the
commodity brought within the municipal limits may not amount to its destruction
or total using up, the commodity concerned while being brought in the municipal
limits must have reposed within the municipal limits and was not taken out
later on. If the writ petitioner's case on facts is found true, namely, that
the bottles which contained beverages did not repose within the municipal
limits in empty form after their contents were consumed by the consumers and
were actually taken out of the municipal limits, it could not be said, as
assumed by the High Court that the goods were used within the municipal limits.
We must, therefore, hold that if the writ petitioner satisfies the authorities
concerned that the bottles containing the original consignments after getting
emptied within the municipal limits were actually taken out of the municipal
limits for recycling, then the writ petitioner would be entitled to claim
proportionate refund of the octroi duty assessed on the weight of such empty
bottles only subject to the burden of such amount of duty not being shown to
have been passed on to consumer of beverages or to anyone else.
But
that would require investigation of facts by the authorities concerned, if and
when such claim for refund is lodged.
In
this connection, we may also refer to a decision of the Orissa High Court to
which our attention was invited by learned counsel for the respondent
Municipalities. In M/s Balasore Talkies (Pvt.) Ltd. & etc. etc. vs. Balasore
Municipality & Ors. (AIR 1986 Orissa 230), a Division Bench of the Orissa
High Court had to consider the question whether cinematography films brought
within the municipal limits for exhibition could be validly subjected to octroi
duty. The contention of the importer was that the cinematography films were not
being consumed or used within the municipal limits as after the period for
exhibiting these films by way of picture shows in cinema halls was over, these
very films were taken out of the municipal limits. The High Court on the facts
of the case took the view that it could not be said that the films were not
consumed or used as such within the municipal limits. It is obvious that on the
facts of the case before the Orissa High Court, the said view was quite
justified as the cinematography films imported in original from would naturally
get exhausted by passage of time during which it will have to be subjected to
projection through projector on the cinema screen on as many occasions as the
picture shows were held day in and day out spread over weeks and by the time
the picture shows were over and the films were taken out of the municipal
limits these films would never remain the same as originally imported. Lot of
wear and tear would reduce their efficacy. Therefore, on the facts of that
case, the Division Bench of the High Court was justified in taking the view
that the term 'use' is of wider connotation than consumption. Any article that
is put to such application suffers waste or deterioration to some extent,
though not totally destroyed or used up and, therefore, it could be held to
have been used up to that extent. On the facts and circumstance of the present
cases, the aforesaid decision is of no avail to the respondent-Municipalities
as it is nobody's case that if empty bottles were actually taken out of the
municipal limits after their contents were discharged within the municipal
limits, they would get used up even partially only because they remained for
some time within the municipal limits containing the beverages without having
reposed therein.
Learned
counsel for the State of Uttar Pradesh placed reliance on the Dictionary
meaning of the term 'repose' as found in Shorter Oxford Dictionary, Volume 2,
3rd Edition, p. 1799, wherein one of the meanings of the word 'repose' is
mentioned as 'temporary rest or cessation from activity'.
That
may be the dictionary meaning but the term 'repose' in the context of octroi
duty is treated by the Constitution Bench of this Court in Burmah Shell's case
(supra) as a synonym for final resting of the commodity without being later on
taken out of municipal limits. It must, therefore, be held that the commodity
which is imported within the municipal limits must either be sold or consumed
or used up completely or must be subjected to a continuous the without total
exhaustion but in every case the commodity concerned must not have left the
municipal limits. The word 'repose' as explained by the Constitution Bench in
the aforesaid decision, therefore, has a special meaning and, therefore, the
dictionary meaning of the word 'repose' cannot be of any assistance in the context
of the octroi levy as interpreted by this Court in Burmah Shell's case (supra).
We may
also mention that our attention was invited by learned counsel for the parties
to certain decision of this Court dealing with sales tax in deciding the
question whether the value of the bottles could be subjected to sales tax and
liable to be included in the taxable turn over including the value of the Beer
contained therein. The decisions in Premier Braveries vs. State of Kerala
[(1998) 1 SCC 641] and Tata Engineering & Locomative Company Ltd. & Anr.
vs. Municipal Corporation of the City of Thane & Ors. [(19930 Suppl. 1 SCC
361] cannot be of any avail to the learned counsel for the writ petitioner as
strictly speaking we are not concerned here with such a question in these
proceedings, and especially when we have direct decisions of the Constitution
Bench of this Court in Burmah Shell's case (supra) and S.M. Ram Lal's case
(supra).
As a
result of the aforesaid discussion, therefore, we hold that if beverages in
liquid from contained in bottles are brought within the municipal limits and
after such beverages are taken out of these bottles, those very empty bottles
are found to have been re-exported from the municipal limits without being sold
therein, the octroi duty paid on the weight of such bottles earlier could be
subjected to claim for refund by the exporter of such empty bottles if the
relevant factual data is found to the satisfaction of the authorities before
whom such claim id lodged. The first point is, therefore, answered by holding
that if the writ petitioner proves to the satisfaction of authorities that very
bottles in which beverages were imported in given contingency for sale and
consumption within the municipal limits were actually taken out of municipal
limits as empty bottles for re-cycling without meanwhile, the octroi duty paid
at the time of their entry on the weight of bottles could be subjected to claim
for refund subject to the rider that it is also shown by the writ petitioner
that the octroi duty on such empty bottles had not been passed on to the
consumers or any other person so that the writ petitioner will not be found to
be guilty of unjust enrichment by getting such refund. This question was also
to be examined by the authorities before whom claim of refund is lodged. As
held by the Constitution Bench of this Court in Mafatlal Industries Ltd. &
Ors. vs. Union of India & Ors. [(1997) 5 SCC 536], the question of unjust
enrichment pertaining to such refund claims has to be examined by the authorities
concerned. Before parting with discussion on Point No.1, we may also mention
that one decision of this court in Nagar Mahapalika, Meerut vs. Prem Nath Monga
Bottlers pvt. Ltd. & Anr. [(1996) 8 SCC 1] was pressed in service by
learned counsel for the writ petitioner. In our view that decision is of no
avail to the writ petitioner on the facts of the present case. This Court in
the said decision was concerned with the question whether the exemption of octroi
granted to mineral water bottles would include aerated water bottles also. It
was held that the mineral water bottles would include latter type of bottles
also. Such is not the controversy before us. Point No.1 is answered
accordingly.
In the
light of the decision on Point No.1 Point No.2 will naturally require
consideration of the question as to what type of directions can be issued in
the present case.
It is
obvious that the dispute centres round the levy of octroi on the weight of the
containers, namely, the bottles imported and brought within the municipal
limits of four respondent-Municipalities between 1980 and 1987 and as there was
already stay of recovery of octroi duty from the High Court on the weight of
such bottles from 1983 pending the writ petitions till 1987, the writ
petitioner had no occasion to put forth their claim for refund till then. It is
of course true that for earlier period from 1980 to 1983 when there was no stay
from any court, the writ petitioner could have lodged claims for refund but
presumably because the writ petitioner thereafter raised this contention before
the High Court and the writ petitions remained pending before the High Court
for a number of years such claims were not lodge. Under these circumstances,
the writ petitioner cannot be shut out from asking for refund on relevant
consignments by submitting appropriate data. Consequently, on the peculiar fact
of this case, we hold that it would be unfair and unequitable to prevent the
writ petitioner from lodging any claims for refund of octroi duty paid on the
weight of re-exported empty bottles during the relevant period from 1980 to
1987. If the writ petitioner's claim for refund regarding the exported empty
bottles covered by the concerned consignments is found justified during the
period when there was stay against such recovery, nothing further would survive
and the assessments for the same will close the chapter. However, if the claim
is not justified then the questions would survive for the authorities to
proceed further for recovery of the unpaid octroi duty on the bottles covered
by these consignments as they were till then restrained from claiming such
duty. So far as earlier period of 1980 to 1983 is concerned, if the claim of
the writ petitioner for refund is found to be justified on the facts concerning
the given consignments and on the principle of unjust enrichment, the writ
petitioner is requited to be non-suited, then the question of refund would
survive for consideration and appropriate refunds orders will have to be passed
by the authorities. The writ petitioner shall be permitted to lodge such claims
backed up by relevant material before the authorities concerned within the
period of 12 weeks from today. The writ petitioner will have to support such
claim for refund by producing relevant evidence on the following points:
(a)
Nature of the consignments concerned with their dates and the number of bottles
packed with beverages brought within the municipal limits with their weight.
b)
Proof regarding the fact that these bottles were not sold within the municipal
limits to wholesalers retailers or to any other person.
c)
Number of bottles covered by the concerned consignments which were subsequently
taken out as empty bottles beyond the municipal limits for recycling and weight
of such empty bottles;
d)
Whether the bottles which are actually found to have been taken out of the
municipal limits were the very same bottles containing beverages brought within
the municipal limits by way of relevant consignments;
e)
Whether the value of such bottles and amount of octroi duty on their weight was
passed on to the consumers or not? When the relevant facts and figures are
placed before the authorities supported by relevant documentary evidence and if
the authorities concerned get satisfied about the same then only the question
of refund for the period from 1980 to 1987 or the question of non-recover of octroi
duty on the weight of bottles covered by the consignments for the relevant
period would survive for consideration and if the authorities take any adverse
decision in this connection on the diverse claims of the writ petitioner, it
will be open to the writ petitioner to challenge such assessments by filing
appeals under the rules and relevant provisions of the Act. Point No.2 for
consideration is answered by issuing the aforesaid relevant directions.
We may
also mention, in this connection, that if such claims are lodged by the writ
petitioner within the time aforesaid, then only they will be examined at the
earliest and preferably within a period of further 12 weeks from the lodging of
such claims and after hearing the petitioner or his representative, appropriate
assessment orders and consequential refund orders, if any, may be passed by the
authorities concerned.
The
appeals are allowed accordingly to the aforesaid extent. The judgment and order
of the High Court are set aside. The writ petitions filed by the writ
petitioner before the High court will stand granted in the aforesaid terms with
no order as to costs all throughout.
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