Appeal No 545 of 1965
167 Appeal by special leave from the judgment and order dated December 18 1961 of the Madhya Pradesh High Court in Misc
Petition No 247 of 1961
M section Gupta and Yashpal Singh for the appellant
section K Mehta and K L Mehta for the respondents
The Judgment of the Court was delivered by Shelat J
The appellant Municipal Committee is for the vil lage Khurari a notified area under the Central Provinces and Berar Municipalities Act 1922
The Committee is entitled to levy and collect under the said Act and under the Rules made thereunder octroi duty inter alia on foodgrains brought into the municipal limits for sale
On March 8 1954 respondents 1 and 2 applied for refund of octroi duty on the ground that they had exported from the municipal area foodgrains of which particulars were given in the schedule attached thereto
The appellant Committee replied that they would not be entitled to the refund unless they filed with their application the receipts of duty is sued by the Committee at the time when it was paid on the importation of the said foodgrains
It may be mentioned that it was not the case of the Committee in the said reply that the said goods were not exported by respondents 1 and 2 by rail or that they were not the same goods which were imported into the area and which were purchased by respondents 1 and 2 and on which duty would be payable by the cultivators from whom respondents 1 and 2 had purchased the said foodgrains
The Committee simply refused to pay the refund as the respondents failed to produce the said receipts
In the appeal filed by respondents 1 and 2 before the Additional Deputy Commissioner that officer held on a construction of rr 27 and 34 that it would be the
person who had paid the duty when the goods were brought into the municipal area who alone could claim the refund if the goods exported by him were the same on which the duty was paid
The Board of Revenue before whom respondents 1 and 2 filed a revision application against the Deputy Commissioner s said order held that the word refund  in r 27 meant that the person who had paid the duty could alone be entitled to claim the refund and that respondents 1 and 2 not being such persons could not apply for it
On that ground alone the Board rejected the revision application
Respondents 1 and 2 thereupon filed a writ petition in the High Court of Madhya Pradesh for quashing the said orders of the Deputy Commissioner and the Board of Revenue
The admitted facts before the High Court were 1 that res pondents 1 and 2 had purchased the said foodgrains from certain cultivators and 2 that those cultivators had in fact paid octroi 168 duty when they brought the said foodgrains for sale within the municipal area
The contention of respondents 1 and 2 before the High Court was that as persons who had exported the said goods they were entitled to the refund of the duty paid by their vendors the said cultivators  and that the Board misconstrued the rules and was in error in refusing the refund to them
A learned Single Judge of the High Court held that under r 9c a declaration had to be made if the goods were intended for consumption or use within the municipal area or if they were intended for immediate export
He observed that r 9 however did not provide for any such declaration if the goods brought into the municipal area were intended for sale
He then observed that section 27 dealt with refund of octroi on the exportation of dutiable goods outside the municipal limits and the exporter thereunder was entitled to a refund of 78th of the duty paid on such goods
He held that the duty having admittedly been paid on such goods by the said cultivators and respondents 1 and 2 having purchased and exported those very goods they were entitled to the refund
On this basis he quashed the orders of the Deputy Commissioner and the Board and allowed the writ petition
In the Letters Patent appeal filed by the appellant Committee a division bench of that High Court agreed with the Single Judge on his construction of r 27 but as the Board had considered only one question namely whether respondents 1 and 2 not having themselves paid the duty were not entitled to claim the refund remanded the case for dealing with the rest of the questions
On remand to the Board the Committee contended 1 that respondents 1 and 2 had to establish that duty was paid on the said goods when they were imported into the municipal area and 2 that they had also to produce the receipts of payment of such duty and that without doing so they were not entitled to the refund
The Board rejected the contention and held on the strength of rr
42 and 43 of the said Rules that except in the case of cloth or goods produced or manufactured within the municipal area no proof by the person claiming refund of duty paid on importation was required and that such payment would be presumed in the case of goods other than the two aforesaid kinds of goods
The Board further held that r 27 also did not lay down that the person who has exported the goods had to prove payment of octroi on those goods when they entered the area
The Board on this interpretation allowed the revision application of respondents 1 and 2 and set aside the orders of the Committee and the Deputy Commissioner and directed payment of the refund
The Municipal Committee thereupon filed a writ petition in the High Court for quashing the Board s order contending once again that no octroi duty had been paid on the said foodgrains
The High Court rejected this contention in view of the admission made by 169 the Committee before the Deputy Commissioner the Board and the High Court in earlier proceedings that the goods exported by respondents 1 and 2 were duty paid
The High Court held that in view of those admissions the Committee could not require respondents 1 and 2 to produce the receipts to prove payment of the duty apart from the fact that the rules did not require a claimant who had exported dutiable goods to produce receipts of payment of duty
The High Court further held that it was clear from rr 28 and 29 that the amount of refund is to be determined from the quantity of foodgrains exported or from their value and therefore even for determining the amount of refund production of receipts by such a claimant was not necessary nor was such production required by rr
42 and 43 except as aforesaid in the case of two categories of goods viz cloth and articles produced or manufactured within the municipal area
The High Court held that that being the position and there being no dispute as to the fact that the goods in question were duty paid and those very goods had been exported there was nothing in the rules which barred respondents 1 and 2 from recovering 78th of the duty paid on those goods
The High Court dismissed the writ petition
The Committee then filed a review petition before the High Court on the ground that it had not considered in its judgment its contention based on rr
35 to 38 urged before it The contention was that compliance of those rules by respondents 1 and 2 was a condition precedent to their being entitled to the refund
The High Court conceded in its judgment on the review petition that the said point was urged before it but observed that it did not deal with it as during the hearing of the writ petition it was pointed out to the counsel for the Committee that there was no substance in it
According to the High Court rr 35 to 37 did not require any compliance by respondents 1 and 2 as they dealt with matters to be done by the Octroi Superintendent and the Muharrir at the exit post when an application for refund is made by a person exporting the goods out of municipal limits and that the fact that respondents 1 and 2 did not present the challan at such exit post did not debar them under the rules from claiming the refund
The review petition on this ground was therefore rejected
Aggrieved by the dismissal of its writ petition the appellant Committee obtained special leave from this Court and filed this appeal
In view of the aforesaid decision of the Board and the High Court in the earlier stages of this litigation most of the contentions raised by the Committee justifying its refusal to refund have by now been concluded
It cannot now be disputed 1 that respondents 1 and 2 had purchased foodgrains from the cultivators who had imported them into the municipal area for sale 2 that those cultivators had at that time paid the duty on those foodup
C I68 12 170 gains and 3 that respondents 1 and 2 had exported the identical goods by rail
Counsel for the Committee however urged that the view taken by the High Court was erroneous and that if the rules regarding refund were read together it would be clear that a person claiming refund would not be entitled to it unless he has followed the procedure thereunder prescribed
To appreciate this contention it would be necessary to turn to those rules
The rules dealing with refund of octroi are rr
27 to 43
Rule 27 provides that on exportation of dutiable goods outside the municipal limits an exporter shall be entitled to a refund equal to 78th of the duty paid on them at the time of their import
We do not detain ourselves on the proviso to this rule as it is not relevant for the purposes of this appeal
The object of r 27 is clear viz that in case of dutiable goods the Committee has to refund to the person who has exported them 78th of the duty paid thereon at the time when they were brought into the municipal limits
The rule does not require such an exporter to produce receipts of payment of duty levied at the time of their entry
Obviously the Committee was wrong in insisting upon respondents 1 and 2 to produce receipts before they could be granted the refund nor could it justify its demand that respondents 1 and 2 should prove that duty had been paid on the said goods at the time of their entry as the rule does not lay down any such obligation on the exporter
Rules 28 to 33 are not relevant and need not therefore be set out
Rule 34 provides that an application for refund is to be made in the prescribed form and thatthe exporter after filling in the particulars has to present his application at the office appointed for that purpose
Rules 35 to 39 provide an elaborate procedure to be followed at the time of exportation
Rule 35 provides that on receipt of an application for refund the Octroi Officer must satisfy himself that the goods brought for export agree with those mentioned in the application and if satisfied he must prepare a challan showing the amount of refund and hand it over to the exporter who then shall take the goods beyond the municipal limits
Under r 36 the exporter has to present the challan in which the refund amount is calculated at the exit post within the time prescribed which shall not exceed twelve hours from the examination of the goods under r 35 to their exportation
Under r 37 the Muharrir has to check the goods at the exit post and ascertain that the goods agreed with those mentioned in the chalIan and then issue a certificate to the exporter on which the refund would be paid to him
Rule 38 provides that where the goods are not presented at the out post as provided by r 35 the exporter may get them verified by the officer who would then make an endorsement on the application and on such endorsement made the exporter would get the refund 
Under r 39 when goods are 171 exported by rail the exporter has to produce the railway receipt as well as the refund challan bearing the certificate of the Muharrir at the exit post
It is clear from rr
35 to 39 that they lay down the procedure for claiming refund
Counsel for the Committee therefore appears to be right in his contention that an exporter desiring to claim refund has to make his application at the time of exportation of the goods and in the manner prescribed in these rules
It appears also that there is considerable force in his contention that rr
42 and 43 deal with only two categories of goods viz cloth and articles locally produced or manufactured and that r 43 is confined to those two kinds of goods only and therefore when it provides that no further proof of duty having been paid on them is required it means that no proof of such payment other than the one mentioned in r 42 would be needed in respect of the said two categories of goods
In our view r 43 has to be read in the context of r 42 and must therefore be read to mean that no further proof of payment other than the one mentioned in r 42 would be required to respect of those two classes of goods and therefore r 43 does not apply to other kinds of goods
The reason is that if r 43 is read in the manner in which the High Court has read it it would render rr
35 to 39 totally nugatory a construction which a court having to construe these rules would be loath to adopt
It would seem therefore that these rules do provide a procedure which an exporter wishing to claim refund has to follow
But the question is whether in a case where an exporter has not done so is he disentitled from claiming the refund  The real difficulty in the way of the appellant Committee is that though the rules lay down a procedure which such an applicant has to follow they do not provide at the same time that an applicant for refund who has failed to follow the procedure laid down in rr
35 to 39 would be disentitled to claim the refund
In the
absence of such a provision coupled with the categorical language of r 27 giving a right to an exporter of dutiable goods to claim 78th of the duty paid on such goods on their import it becomes difficult to uphold the denial by the appellant Committee of the right of respondents 1 and 2 to such a refund
We are therefore of the opinion that in the present state of the rules the appeal must fail though for reasons different from those given by the Board of Revenue and the High Court
The appeal is dismissed with costs


Summary:
The first and the second respondents purchased a quantity of foodgrains from certain cultivators who had imported them into the municipal area of the appellant Committee and at the time of importation had paid octroi duty on those foodgrains
The first and the second respondents exported the identical goods out of the municipal areas and there upon applied for refund of octroi duty paid on the foodgrains
The appellant Committee refused to pay the refund mainly on the ground that the respondents had failed to produce the receipts of duty paid on the importation of the foodgrains
An appeal to the Additional Deputy Commissioner as well as the revision application to the Board of Revenue were both dismissed but a writ petition against these orders was allowed by the High Court which held that an exporter was entitled under r 27 to the refund of 78th of the duty paid on the goods exported
Subsequently a Division Bench in appeal remanded  the case to the Board for dealing with certain other contentions raised by the appellant and after considering these the Board get aside the orders of the Committee and the Deputy Commissioner and directed payment of the refund
The appellant Committee then filed a writ petition challenging the order of the Board but this was dismissed the High Court holding inter alia that the Rules did not require a claimant who had exported dutiable goods to produce receipts of payment of duty and that the amount of refund is to be determined from the quantity of foodgrains exported or from their value
The Committee appealed by special leave to this Court
It was urged on its behalf that a person claiming refund would not be entitled to it unless he had followed the procedure prescribed by rr 27 to 43 and that this had not been done in the present case
HELD  Dismissing the appeal Though the rules lay down a procedure which an appellant seeking refund has to follow they do not provide at the game time that an applicant for refund who has failed do follow the procedure laid down in rr
35 to 39 would be disentitled to claim the refund
In the absence of such a provision coupled with the categorical language of r 27 giving a right to an exporter of dutiable goods to claim 78th of the duty paid on such goods on their import it becomes difficult to uphold the denial by the appellant Committee of the right of the first  and the second respondents to such a refund
171 E G