Appeal No 4702 of 1991
From the Judgment and Order dated 26888 of the Bombay High Court in WP No 2264 of 1984
T Andharujina FH Talyarkha RF Nariman R Narain Ashok Sagar and Ms Amrita Mitra for the Appellants
KK Singhvi BN Singhvi and Anil K Gupta for the Re spondents
The Judgment of the Court was delivered by 451 V RAMASWAMI J
Leave granted
The First appellant Tara Engineering and Locomotive Company Limited hereinafter called the Company  is a company registered under the Indian Companies Act 1913 and the second appellant is one of its Directors
The Company is carrying on business of manufacture and sale of motor vehi cles and spare parts of motor vehicles and excavators
Their manufacturing units are at Pune and Jamshedpur outside the Thane Municipal Corporation limits
They have a bonded warehouse within the municipal limits in which they bring and stock motor vehicles parts and excavators parts from their own factories at Pune and Jamshedpur
They also bring in parts manufactured by their ancillaries within India and also parts imported from aboard
These products or parts are brought in bulk and thereafter taken or sent out from the Municipal limits in smaller packings depending on the re quirements of the customers in various parts of the country
It is stated that the parts imported or purchased from others and brought in are relatively very small in quantity and the major portion of the activity related to their own factory produced parts
On and from 1 st October 1982 with the notification under Section 3 of the Bombay Provincial Municipal Corpora tion Act 1949 the Thane Municipal Council became a Munici pal Corporation hereinafter called the Corporation
Prior to the constitution of the Corporation it was a municipality and were governed by the Thane Municipal Council constituted under the Maharashtra Municipality Act 1965
Prior to 1 st October 1982 the Thane Municipal Council had granted to the Company current account facilities in respect of payment of octroi under the Maharashtra Municipalities Act 1965 and the Maharashtra Municipalities Octroi Rules 1968 made thereunder
The Municipal Council had also granted permis sion under Rule 10 2 to the Company for maintaining a godown or warehouse of their own
Their is no dispute that even after the coming into existence of the Thane Municipal Corporation the appellants were permitted to have a ware house of their own and keep a current account facility without the requirement of immediate payment of octroi at the Octroi Naka
In terms of granting those facilities the Company had made as security a cash deposit of Rs 7 lakhs with the Corporation and had also given a Bank Guarantee for an equivalent amount as agreed to between the Company and the Corporation
However there is some dispute as to what were the formalities that were dispensed with in the matter of claiming refund of the octroi when the goods were export ed
But suffice it to say at this stage that the appellants were permitted to carry out their activities of imports and exports under the current account procedure with a facility of unpacking the bulk repacking and exporting
452 During the period 1st January 1983 to 31st March 1964 it is stated that the appellants had made 1182 claims for refund
All these claims were rejected by the letters of the Corporation dated 3181983 121
1984 541984 and 641984
They were rejected on the following two grounds 1 the Company had sold the spare parts within the octroi limit which is co terminus with the Corporation limit in contravention of Rule 25 3 d of the Maharashtra Munici palities Octroi Rules 1968 hereinafter called the Rules 2 the procedure prescribed for export and the claim of refund had not been strictly followed
The non compliance withthe procedure prescribed referred to in the second ground according the Corporation were i Form 4 of the Octroi Rules and the original invoices were not submit ted or ii Forms 11 and 12 filed were incomplete and all the required information were not given or iii certificate of the Octroi exit Naka Officer had not been obtained
The rejection of the claim was either on one or more than one or all the grounds mentioned above
The appellants filed a writ petition under Article 226 in the High Court of Judicature at Bombay contending that the action of the Municipal Corpo ration in refusing refund is unconstitutional and illegal and for certain other reliefs
The Division Bench of the High Court which heard the same dismissed the writ petition on the 26th August 1988
It is against this judgment that the present appeal has been filed
It appears that during the hearing of the writ petition the learned counsel appearing for the Corporation did not counter the contention of the Company that the rejection under Rule 25 3 d was not correct and the learned Judges have also recorded the same in the judgment
But the learned counsel for the respondent before us stated that it is not correct to say that he had conceded any point and that since he could not argue that point in view of the decision of another Division Bench of the same High Court in Khandelwal Trader Akola vs The Akola Municipal Council AIR 1985 Bombay 218 which was binding on the Bench which heard the writ petition and also in view of certain observations of this Court in Burmah Shell Company vs Belgaum Municipal 1963 Suppl
2 SCR 216 and Hiralal Thakorlal Dalai vs Brash Broch Municipality he did not press the point
We have therefore permitted the point to be argued in this appeal
Before we discuss the points in controversy we may state that in the counter affidavit filed in the writ petition the respondents have admitted that the Company was enjoying the current account facility prior to 110
1982 and the re spondent Corporation had also given the said facility to the Company even after 1st October 1982 on their making a cash deposit of Rs 7 Lakhs and furnishing a Bank Guarantee for a like sum as security 453 for grant of that facility
The respondent had also admitted that the Company had been given permission under Rule 10 2 to maintain their own godown from 12th December 1982
Broadly stated under the current account facility granted no octroi duty is recoverable in cash from the appellants at the entry octroi naka point
However the Company was re quired to submit a statement of goods imported in Form 5 before the 10th of the following month
The officers of the respondent after scrutiny of the statement so filed deter mine the octroi duty payable thereon and debit the amount in the current account kept and send a demand notice to the company
The Company is required to pay the amount to the Corporation within 15 days of the determination of duty
The first submission of Mr Andharujina learned counsel for the appellants was that the sales were not for consump tion or use within the octroi limits and that the parts were sold to parties outside the octroi limits and also for consumption or use outside such limits and therefore the rejection of the claims on the ground that the spare parts were sold within the municipal limits and that it amounted to a contravention of Rule 25 3 d of the Rules is ille gal
Mr KK Singhvi the learned counsel for the Corpora tion on the other hand contended that the meaning of words sales therein in the definition of octroi in the Acts and in Entry 52 of List II could not be limited to sales of the goods for purposes of consumption or use within the munici pal limits
When an importer wants to export dutiable goods tempo rarily detained by him in his own godown he shall present an intimation cumapplication for written permission in Form 11 to the Superintendent of Octroi to export such goods
Rule 25 3 d states that no such intimation shall be accepted unless LM15 the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership LM0
The case of the Corporation was that there was a change in the ownership of the goods since a sale in law had taken place inside the octroi limits though the purchaser was residing and carrying on business outside the octroi limits and under the sale the goods were intended to be and in fact exported for the purpose of consumption and use outside the octroi limits
Section 127 of the Bombay Provincial Municipal Corporation Act1949 and the corresponding section 105 of the Maharashtra Municipalities Act1965 authorises the Muncipality to levy Octroi
Both these Acts define 454 octroi as meaning a tax on the entry of goods into the municipal area for consumption use or sale therein
The Maharashtra Municipalities Octroi Rules 1968 made under the Maharashtra Municipalities Act 1965 provides for the levy collection and refunds of octroi duty on the goods specified in the schedule thereunder and the procedure for the same
These Rules were in force in Thane Municipality before Thane was declared as City under the Bombay Munici pal Corporations Act LIX of 1949
However these Rules are continued in the Thane Municipal Corporation by virtue of paragraph 5 of Appendix IV to the Act LIX of 1949
The legislative entry relating to the constitutional power to levy this tax is found in List II Entry 52 of the 7th Schedule to the Constitution which reads 52
Taxes on the entry of goods into a local area for consumption use or sale therein
The Bombay Municipal Boroughs Act 1925 which was in force prior to the enactment of the Maharashtra Municipali ties Act 1965 also contained a similar provision in section 73 enabling the Municipalities covered by that Act to levy Octroi on animals or goods or both brought within the octroi limits for consumption or use therein
This provi sion was amended by Amending Act 35 of 1954 by substituting the words use or sale for the words or use with effect from May 5 1954
In other words before 1954 the word sale was not included in the provision of octroi on goods which the Municipality was authorised to impose
After the amend ment the Municipality could levy octroi on goods brought within the octroi limits for consumption use or sale therein
This provision came up for consideration in Burmah Shell case supra
Two of the categories of transactions which were considered in this case related to transactions under which 1 goods were sold by the Company through its dealers or by itself and consumed within the octroi limits by persons other than the Company and 2 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
The Company contended that the tax could not be collected on goods which were merely sold but not con sumed inside the octroi limits
In connection with this con tention this Court considered the meaning of words consump tion use or sale therein and observed It is not the immediate person who brings the goods into a local area who must consume them him self the act of consumption may be post poned or may be performed by someone else but so long as the goods have been brought into the local 455 area for consumption in that sense no matter by whom they satisfy the requirements of the Boroughs Act and octroi is payable   
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
And concluded holding In our opinion the Company 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 was re exported
The ratio is thus not a mere sale inside that attracts octroi but a sale intended for consumption of the goods inside the octroi area though ultimately the person to whom it was sold for consumption does not consume the goods inside but does the same outside the limit
After consideration of the judgment in Burmah Shell Company s case supra the Gujarat High Court in one of the cases arising for refund of octroi duty paid took the view that octroi leviable on goods brought within the octroi limits for consumption use or sale therein  and that the word sale  could not be given the narrow meaning of a sale for consumption to the ultimate consumer within the octroi limits
Accordingly if the goods were sold within the octroi limits by the importer even if it resulted in export and consumption was also outside the octroi limit octroi duty paid is not refundable
This decision came up in appeal before this Court and the decision of this Court is reported in Hiralal Thakorlal Dalai vs Brash Broach Municipality On facts that case related to a con signment sale and the goods were despatched to destination outside octroi limits for consumption there
A plea for review of the decision in Burmah Shell Company s case supra was also made in this case
However a Constitution Bench rejected the request for reconsideration and held that the word sale in the colloquium of the words consumption use or sale therein means sale for consumption within the octroi limits
The ratio of these two decisions was consid ered by the Bombay High Court in Khandelwal Traders Akola s case supra which was referred to in the Judgment under appeal
It was held in this case also 456 that where a dealer imports goods within the octroi limits not for ultimate consumption or sale for consumption within the limits but for the purpose of export and obtain permis sion for export he is not liable to pay octroi on such goods notwithstanding that in the larger sense for purposes of export he sells the goods within the octroi limits that is to say even where the situs of the sale could be fixed within the octroi limit
The matter is now put beyond any pale of doubt by the latest decision of this Court in Munic ipal Council Jodhpur vs Ms Parekh Automobiles Ltd  Ors  Rule 13 4 of the Rajasthan Munici pal Octroi Rules 1962 which was one of the provisions considered in this case provided that In cases provided for in sub rule 3 that is who is given the account current facilityamount of octroi duty payable shall be based on the total amount of the octroi as shown by the entry passes less the total amount of goods transported outside the munic ipal limits as shown by the transport passes Provided that in computing the octroi duty payable under subsection 4 the goods trans ported outside the municipal limits shall be lessened only if such goods have not been sold within the municipal limits and if they have been exported out of such limits within a period of six months from the date of their import in such limits
Relying on this provision the municipality in that case contended that if the sale had taken place within the octroi limits though the sale was not for consumption or use within the octroi limits duty was payable and no refund could be claimed
The learned Single Judge who heard the matter in the High Court did not permit the importer to raise the question that the sale took place only outside the octroi limits of Jodhpur and proceeded on the footing that the sale of product in question took place within the octroi limits of Jodhpur
He however accepted the contention of the Indian Oil Corporation importer that the sale to the dealer was for the purpose of export and the dealer did export the goods outside the octroi limits and that therefore even if the sale was said to have been effected within the octroi limits no octroi was leviable
Since admittedly the goods had been sold in Jodhpur octroi limits only for their on wards transmission for use and consumption in Dangia was outside the octroi limits he held that no octroi duty was payable
This view of the learned Single Judge was confirmed on appeal by the Division Bench of the High Court
On appeal this Court confirmed this view and held that the Indian Oil Corporation importer who had the current account facility and gov 457 erned by the terms of rule 13 was entitled to go on paying octroi duty on to basis of the goods brought by it within the municipality less the goods transported outside the municipality even where the transport outside the municipal ity may be in pursuance of a sale within the municipality so long as such sale is in pursuance of an intention that the goods should be consumed or used outside the municipal limits
In the present case the sales were to person who were carrying on business outside the limits of the Corporation and the goods were also intended to be consumed or used outside such limits and in fact the goods were also export ed
The ratio of the decisions above referred clearly therefore governs this case even if it were to be assumed that the sale in the general sense took place inside the municipal limits
However we may state that it was the contention of the learned counsel for the appellant that the sale in fact took place outside the municipal limits and in support of this contention he relied on the following facts among others
The spare parts were consigned by the Company to out station purchasers
The goods were transported by the Company them selves across the octroi limits
The consignment or lorry receipt mentioned the consignee as self
The bills for collection were sent through Bank and the goods were not to be delivered to the consignee until the payment was made by the consignee through the Bunk
Right of disposal expressly reserved with the vendor
On the other hand on behalf of the Corporation it was contended that orders were both received and accepted in Thane goods were despatched from Thane and challans were also made in the name of the buyers and the property in the goods passed within Thane
The sale had in fact taken place within municipal area
In fact he further contended that being a question of fact we are not entitled to go into the same in view of the finding of the High Court
It is not necessary for us however to consider this aspect and we would for the purpose of this case proceed on the assumption that technically the sale in law had taken place inside the municipal limits
Since the goods were sold by the Company to outside purchasers and the goods under the transactions of sale were intended to be exported and were in fact exported for consumption or use outside the municipal limits no octroi duty was leviable and the octroi duty paid on entry into the municipal limits was therefore liable to be refunded
Accordingly the rejection of the refund claims on the ground that Rule 25 3 d had not been strictly complied with is illegal and could not be sustained
Such of those claims which were rejected only on the grounds of contravetion of 458 Rule 25 3 d shall now be taken up by the respondent and passed for payment
In the case of impost of octroi the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area
Mere physical entry into the octroi limits would not attract levy of octroi
When the goods are brought in not for consumption within the area but for temporary detention and eventual export octroi is not leviable
But in order to ensure in such circumstances that the goods are exported and to prevent evasion of octroi on goods consumed inside the octroi limit Rules provide for deposit of a certain sum of money or the actual octroi duty payable subject to a right to get a refund of the same when the goods are exported
When the goods in respect of which octroi was paid are exported the octroi became refundable and that is the very scheme of the  levy of octroi
The octroiable event in such a case shall be deemed not have happened
Right to refund arises because the goods are not consumed inside the area but exported and the tax becomes not leviable
The rules merely regulate the system on which refunds shall be allowed
The procedure prescribed and the need to adhere to the procedure shall have to be considered in the light of these legal incidence and nature of octroi duty
Before we deal with the question whether the Company had not followed any of the procedure prescribed and the right of the Corporation to deny refund of octroi on non compli ance with any of those provisions in the Rules it is neces sary to broadly set out the different types of procedures prescribed depending on different purposes of imports and exports contemplated under the Rules
This may be broadly classified into five categories i goods imported for Consumption use or sale in the municipal area ii goods imported not for consumption use or sale within the munici pality but for immediate export iii goods intended to be temporarily detained within the municipality in the bonded warehouse maintained by the Corporation and eventual export iv goods intended for temporary detention in the private licensed bonded wharehouse of the importer and eventual export and v goods imported by any person mercantile firm or body which has been permitted by the municipal Corporation to keep an current account
In the first case since octroi is attracted on arrival of the dutiable goods at the Octroi Naka the importer pays the amount of octroi assessed by the octroi officer and takes the goods inside the municipal limits
In the second case the importer gives a declaration cum application that the goods are not being imported in the municipal limits for consumption use or sale but are intended for immediate export outside the octroi limits
He is required to deposit an amount in 459 accordance with the scale fixed under clause b of sub rule 1 of Rule 5
On such deposit being made a receipt is given in the form prescribed by the Entrance Naka Inspector and a written permission cum transit pass issued by the Octroi Officer
On arrival of the goods at the exit Naka and on surrender of the written permission cum transit pass the deposit amount is refunded
In the third category of cases the importer makes an application to the Octroi officer at the Entrance Naka for a written permission to deposit such goods at the bonded warehouse maintained by the Corporation
The Octroi Officer then makes an entry on the application that the importer is allowed to proceed with the goods to the bonded warehouse
The Officer in charge of the bonded warehouse will receive the goods and keep them in the bonded warehouse until exported
When the importer wants to export the goods he is required to apply for a written permission cum export pass in the prescribed form and also deposit an amount equal to the octroi leviable therein
On such deposit made a written permissioncum export pass is issued
When the goods are taken out of the municipal limits the Officer Incharge of the Exit Naka endorses the export pass certify ing the export and the refund of the deposit is claimed thereafter producing the certificate issued by the Exit Naka Officer
In the fourth category the importer gives a decla ration in Form 4 that the goods are meant for temporary detention with him at his own warehouse for eventual export
After verification of the particulars furnished in that form with the invoices and other documents produced he is re quired to deposit at the Entry Octroi Naka point itself an amount equal to the amount of full octroi duty thereon as deposit
A receipt is given by the Octroi Inspector stating that the said amount on account of deposit has been recov ered
When he wants to export the dutiable goods detained with him he presents an intimation cum application in Form 11 for written permission to export the goods
He is also required to produce the goods at the Central Octroi officer along with the application
On satisfaction that all the conditions prescribed have been fulfilled and after verifi cation of the goods a written permission cum refund export pass in Form No 12 is given to the importer
On presenta tion of these documents the Octroi officer at the Exit Naka gives a certificate that the goods mentioned therein have passed octroi limits and with that the refund application is made and refund obtained
The instant case falls under the fifth category
The Company has been permitted by the Municipal Corporation to keep the dutiable goods in a bonded warehouse of their own with a current account facility
The rules which were relied on by the Respondent and some of which are said to have not been complied with by the Company may be set out 10
Maintenance of Bonded Warehouses
460 1 x x x 2 A Council may permit any importer to maintain a private Bonded Warehouse for keep ing goods which are imported by such importer for temporary detention and eventual export and grant a licence to such importer for that purpose subject to the conditions and restric tions laid down in such licence
A fee shall be charged for such licence at the rates specified in the bye laws relating to the grant of such licence 14
Declarations to be made by importer etc 1 On arrival of any dutiable goods at the Octroi Naka the Octroi Officer shall call upon the importer or the driver of the Vehicle or conveyance or the person incharge of the pack animal or other persons bringing the goods a X X X X b X X X X C X X X X d to make a declaration in Form 4 in respect of the goods intended for temporary detention with himself and eventual export e to make a declaration in Form 5 in respect of the goods imported by or on behalf of any person mercantile firm or body which has been permitted by the Council to keep an account current under Section 142 15
Procedure for assessment and recovery of octroi
4 On receipt of a declaration in Form 5 under the last preceding rule the Octroi Officer shall ascertain whether the name of the person mercantile firm or body on whose behalf the goods are being imported is on the list of persons firms or bodies allowed to keep an account current and if so check the goods with the details entered in the declara tion and fill up the certificate below the declaration and issue a pass in Form 6
The Octroi Officer shall forward all such declara tions together with a list in duplicate there of to the Central Octroi Officer for further action in accordance with the provisions of Section 142
24Procedure for temporary detention of dutiable goods meant for eventual export with importer himself
1 Where dutiable goods intended for temporary detention within the octroi 461 limits and eventual export are to be detained by the importer at his residence or a Bonded Warehouse licensed under sub role 2 of rule 10 within the octroi limits he may do so on giving a declaration to the Octroi officer in Form 4 and on payment of an amount equal to the amount of full octroi due thereon as deposit either in cash or in the form of Bank Guarantee at the Entrance Naka
2 In case the importer cannot export the goods without breaking bulk or without assem ble and testing in the case of machinery he shall do the same only with the sanction of the Superintendent of Octroi in the presence of an officer deputed for this purpose by the said Superintendent
Such goods if necessary shall be formed into packages which may be sealed and marked by the Officer so deputed
25Procedure for export of dutiable goods temporarily detained with importer 1 When the importer wants to export dutiable goods detained with him he shall present an intima tion cum application for written permission in Form 11 to the Superintendent of Octroi to export such goods giving necessary details and produce such goods for verification on any working day during the hours fixed by the Chief Officer at the Central Octroi Office or at any other Branch Office as may be estab lished by the Council for the purpose
2 A separate intimation cum application shall be given by each importer or his own goods
One such intimation cumapplication shall be sufficient for a single consignment
When such consignment contains goods of dif ferent descriptions full details shall be given separately in the intimation cum appli cation
Not more than one intimation cum application for export can be given by an importer for goods passing through an Exit Naka in a day
3 No such intimation cum application shall be accepted unless a it is complete in all respects and signed by the importer himself or by a person authorised by him in writing in this behalf b it is supported by the receipt for the deposit paid at the time of import and is accompanied by the original invoice if any filed at the time of import 462 c the goods produced for inspection and intended to be exported are subject to the provisions of sub rule 2 of the last preced ing rule identical with what they were at the time of import
d the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership
The requirement of clause c shall not be applicable in the case of dutiable goods to which sub rule 3 or 4 of the last preceding rule applies
4 On receipt of such intimation cum applica tion and on arrival of the goods intended for export at the Central Octroi Office or Branch Office the Superintendent of Octroi or any officer authorised by him shall a satisfy himself that all the condi tions prescribed above are fulfilled b verify that the goods actually pro duced for inspection are as described in the intimation cum application and in the relevant import invoice if any or in the import declaration in Form 4 and seal and mark such goods whenever deemed necessary and c issue a written permission cum refund export pass in Form 12 after obtaining a specimen signature of the importer or his authorised agent on such pass
5 The importer accompanied by an escort if provided by the Council shall then take the goods beyond the octroi limits through the Exit Naka within the time limit and by the route specified in the pass
Before crossing the Exit Naka the impoter shall present the goods to the Octroi Officer at the Exit Naka for inspection with the pass
The time limit shall be fixed with due regard to the distance of the Exit Naka from the Central Octroi Office or the Branch office but in no case it shall exceed 12 hours from the time of issue of the permission cumrefund export pass
6 The Octroi Officer at the Exit Naka on presentation of such goods as well as the pass shall satisfy himself that a the pass as well as the goods are presented within the specified time limit 463 bthe seals or marks if any are inact and c the goods actually tally with those men tioned in the pass
On being so satisfied he shall make relevant entries in the register maintained for the purpose obtain signature of the importer thereon sign a certificate as given on the pass deliver the same to the importer and allow the goods to pass beyond the octroi limits
Provision for refund of deposit 1 When any goods for which a deposit has been paid under rule 24 at the time of their import are exported the amount of deposit recovered shall subject to the provision of sub rule 2 be refunded
2 The refund shall be admissible if all the conditions below are satisfied a The refund is applied for within one month from the date of e x port
b The goods are exported out of the octroi limits within a period of six months of their import
c The application for refund is supported by a duly certified written permission cum refund export pass
d All the conditions in sub rule 3 of rule 25 are fulfilled
e The amount claimed as refund is with drawn within three months from the date of intimation to the importer to receive the amount
f The goods exported were declared to be intended for temporary detention with the importer and eventual export at the time of import Provided that the said period of six months shall not apply to goods imported by the Food Corporation of India established under section 3 of the Food Corporation Act 1964
Procedure for refund
1 The Applica tion for refund of deposit shall be made in Form 13 by the importer himself or by his duly authorised agent in this behalf in writing on any working day during the hours fixed for money transactions by the Council at the Central Octroi Office within one month from the date of the actual export
If the last day for claiming refund falls on a public holiday such application shall be accepted on the next working day
464 2 Such application shall be accompanied by the duly certified relevant written permis sion cure refund export pass and shall contain reference to the connected export intimation cum application already given by the importer
There shall be a separate application for each written permission cure refund export pass
3 If the refund application is in order and satisfies all the conditions specified in the last preceding rule the amount of the refund shall be correctly determined subject to the limitation prescribed in the next succeeding rule
Value weight etc
of goods for purposes of refund
When the refund is claimed in respect of goods on which duty is leviable ad valorem the value for the purposes of refund shall be the value as per invoice on the strength of which the duty was originally paid together with such cost of carriage and other incidental charges that were then deter mined
Where the value was determined in the absence of invoice on the basis of market rate prevalent on the day of import that value only should be considered and not the market price prevalent in the local market on the day of export
FORM 4 Rules 14 24 and 25 Declaration in respect of the dutiable goods imported into the Municipal octroi limits which are intended for temporary detention with the importer and eventual export
To The Octroi Officer Octroi Naka No    
Municipal Council
I     insert full name and address of the importer hereby declare that the below mentioned goods are meant for temporary detention with me at   specify address at which to be kept for eventual export outside the octroi limits
I am willing to pay an amount equal to the amount of full octroi due thereon as deposit either in cash or in the form of Bank Guarantee and may claim refund according to the rules if these goods are exported outside limits within six months from the date of their import
The below mentioned details are true and according to the original invoice true copy of which is filed herewith
The said invoice covers all the goods im ported by me as per Bill of EntryRailway ReceiptGoods Transport MemoAir consignment Note No  dated   465 Sr
No Noand Description Weight Value Senders Rem No date descri of the or plus all name arks of ption of goods goods incidental address import packages charges in full document which are to given seper ately 1 2 3 4 5 6 7 8 Full residentialbusiness address of the importer
Date  
Signature of the Importer I have checked the above particulars with the invoice and verified the goods which are found to be correct
True copy of the invoice appended is verified and found to be correct
The weight or quantity or value together with the incidental charges declared is correct
The taxable weightquantityvalue of the goods is   and the rate of octroi   Date 
InspectorClerk
The amount of Rs  on account of deposit has been recovered under receipt No   dated    Date  
InspectorClerk FORM5 Rules 14 and 15 Declaration in respect of the dutiable goods imported on behalf of person firm or body allowed to keep an account current
To The Cetroi Officer Octroi Naka No  Municipal Council
I    insert the full name and address of the importer hereby declare that the below mentioned goods are being imported into the Municipal Octroi limits on behalf of    insert the name of persons firm or body allowed to keep an account current and that the below mentioned value and weightquantity of the goods is true and correct and is according to the original invoice true copy of which is filed herewith
The said invoice fully covers all the goods imported by me today as per Bill of EntryRailway ReceiptGoods Transport MemoAir Consignment Note No  dated    I further undertake to produce the said invoice for your inspection whenever demanded by you within one year from today
466 To be filled in by the importer To be filled in at the Central Octroi Office 1Sr
No 2
Bill of Entry Railway Receipt  Goods Transport Memo Air Consignment Note
Number description of packages
Goods
Value plus incidental charges which are to be given seperately
7Rate of Ovctroi
Amount of Octroi recoverable
Date Signature of the importer Dues entered in I have checked the above particulars Account Current with the invoice and verified the goods Date   which are found to be correct
True Octroi copy of the invoice appended is Superintendent verified and found to be correct
The weight or quantity or value together with the incidental charges declared is correct
Issued pass No  dated  Date   
InspectorClerk FORM6 Rule 15 Pass for goods imported on behalf of person firm or body allowed to keep an account current 
Municipal Council Municipal Council Book No Entrance Naka No  Book No En trance Naka No Counterfoil of pass Pass for goods imported by in account current  Name of Person firm or body Description No and Description Weight Description of the quantity of packages goods or value 1 2 3 Dated   Dated  
Entrance Naka InspectorClerk Entrance Naka InspectorClerk 467 Form 11 Rules 25 and 26 Intimation cum application for written permission for Export of Goods Temporarily detained with the Importer To The Superintendent of Octroi  
Municipal Council
Sir I     insert the full name and address of the importer hereby declare my intention to export the goods to  through
Naka No  as detailed below
The certified copy of original invoiceinvoices under which these goods were imported are appended herewith
I have produced the goods for actual verification
Kindly grant me the permission to carry the goods to the said Naka
Description Quantity Date of Import Deposit Gross No of the Number of Import invoice receipt weight goods bags or  No of No and number  cases entrance date date Naka 1 2 3 4 5 6 7 Value Amount to be Number of Name and How Remarks refunded Refund Export address of exported pass granted the consignee 8 9 10 11 12 13 Date   
Signature of Importer Verified the contents and the weight as above and found correct
Countersigned
Octroi Officer
Signature of the Refund InspectorClerk
Receipt No  468 FORM Rule 25 Written Permission cum Refund Export Pass Receipt No   Date    19 Sl
Month Name and Name and Description Quantity Gross No and address of address of of the number of weight date the impoter the consignee goods bags or cases 1 2 3 4 5 6 7 Value Deposit How Exist Date  time by Whether Remarks to be exported Naka which the goods goods refunded No should reach the sealed or Export Naka escort given 8 9 10 11 12 13 14 Fee for Written Permission Cum Refund Pass Rs  
Miscellaneous Receipt No   dated   Signature of the importer Signature of Octroi Officer I hereby certify that the goods mentioned above have passed outside the octroi limits this day the  of the month  19 Time   ampm
in my presence Railway receipt  Vehicle No 
The seals if any thereon were intact when the goods were presented to me for verification
Date   
Signature of the Exist Naka Officer Naka No  This fee should be levied in accordance with the bye laws framed under section 338 for granting permission to take the goods from the Central Octroi Office or Branch Office to the Exist Naka
FORM13 Rule 29 Application for Refund of Deposit To The Superintendent of Octroi  
Municipal Council
469 Sir I    the resident of  hereby apply for refund of deposit as per enclosed Written Permis sion cum Refund Export Pass No  dated   as the goods mentioned in the pass were exported on under my intimation cum application dated   I therefore request you to grant the refund of Rs  and oblige
Enclosure Date 
Signature of Importer On a reading of these rules it appears to be that Rules 24 25 and 28 in terms would apply only to cases failing under category four stated above
The declaration in Form 4 referred to in Rule 24 and deposit of the amount equivalent to octroi duty payable at the entry point production of the goods for verification at the Central Octroi Office are all consistent with its being applicable to a case where dutia ble goods are imported for temporary detention and eventual export by a person having a bonded warehouse of his own contemplated in Rule 14 1 d and not Rule 14 1 e
However Rules 29 and 30 are general in terms and may be invoked in both the cases falling under Rule 14 1 d and e
Sub rule 3 of Rule 29 refers to the compliance of the conditions in Rule 28 and that is how it may be said that the provisions of Rule 28 are attracted to the cases of a person having a bonded warehouse and the facility of account current
However the Rules have to be read and applied in such way that they do not conflict with but are consistent with the facility of current account given to the Company
Form 5 which is applicable to a case falling under Rule 14 1 e does not require the Company importer to give a declaration at the time of arrival of the goods at the entry Naka point that the goods are meant for temporary detention with the Company at its warehouse for eventual export outside the octroi limits
The Company need not also make any deposit with the Naka Inspector at the point of entry
An amount equivalent to the octroi duty payable in respect of the goods is only entered in the account current after the goods have reached the warehouse and verified by the Octroi Officer
Form 4is not applicable to the case of the Company which has got a current account facility
The Compa ny is therefore bound to give a declaration only in Form 5 and need not give a declaration as in Form 4 nor is there any obligation to deposit an amount equivalent to the full octroi duty with the Octroi Inspector at the Entry Naka Point
Further reference to original invoicesin Forms 4 and 5 is only for the purpose of checking the particulars en tered into in the forms
The production of an invoice is not having regard to the 470 purpose of such production to be insisted blindly
If the particulars furnished in the form including weightquantity or value could be established satisfactorily by other docu ments we have no doubt that will be sufficient compliance with the Rules
Column 5 of Form 11 also refers to invoice and the date of invoice
This is again to correlate the goods exported with the goods imported
If the identity of the goods could be established by evidence other than the production of invoices that should satisfy the Rules
The invoice as such has no bearing on the liability of the goods for octroi or the right of the Company for refund
So far as the production of the original invoices are concerned the learned counsel for the Company pointed out that the goods are brought from their own manufacturing units at Pune and Jamshedpur and it will only be a stock transfer and this requirement of producing original invoice could not be complied with and is not applicable
Under the current account procedure the invoices if any and all the other documents are verified when the goods reach the ware house with reference to the description of the goods weightquantity value and other particulars and it is only after verification the octroi duty leviable is determined and amount is debited in the account current and the demand also is issued
The learned counsel for the appellant also referred to certain documents to show that for every category of arti cle the Company has given a distinctive number and the goods are easily identifiable and the number of items or quantity imported are all record in the register and com puterised for easy verification
It is these identifying numbers of the articles that are mentioned in the intima tion cure application for written permission for export
He also relied on the fact that the Company has no manufactur ing unit within the Thane Municipality
Similarly Column 6 of Form II also could not be complied with as it is not applicable to a person who is having current account facili ty
So far as the value is concerned the learned counsel for the appellants have fairly stated that the respondent was taking 72 of the list price of the articles for determining octroi payable for which he has no objection
In fact he has suggested that since the Company publishes the price list periodically and that which shows the current price at any point of time may be taken as the basis for such valua tion
The Octroi Exit Naka Officer had refused to give the certificate of export pass on the ground that the particu lars in Columns 5 and 6 of Form 11 could not be verified as the original invoices and the deposit receipts were not produced
Since these columns could be filled only to the extent possible by a person having an account current facil ity and there is no dispute about the export of the goods mentioned therein the refusal to give the export pass cer tificate
by the Exit Naka Officer could not be sustained
471 The next point to be considered is the procedure to be followed when the importer wants to breaking the hulk and repack the goods in smaller quantities and also the proce dure relating to filling up Forms 11 and 12 and the refund applications in such circumstances
Rules 24 2 states that for breaking the bulk and repacking in smaller pack ages sanction of the Superintendent of Octroi is necessary and the breaking bulk shall also be done in the presence of an officer deputed for this purpose
Rule 62 of Chapter VIII of the Schedule to the Bombay Provincial Municipal Corporation Act 1949 provides that subject to the standing orders not less than 90 of the octroi paid on any goods shall be refunded if such goods are exported beyond the limits of the city within six months of payment provided that C in the case of goods which have been broken bulk prior intimation has been given to the officers specified in this behalf in the standing orders and the place or places of storage have been reported to him from time to time
Paragraph 5 of Appendix IV to this Act which we have noticed earlier states that the rules flamed under the Municipal Act shall in so far as it is not inconsistent with the provisions of this Act continue in force
Rule 62 of Chapter VIII forms part of the Act
The learned counsel for the appellant therefore contended that Rule 62 shall prevail and prior intimation of the intention to breaking bulk  shall be enough and there was no necessity for the Company to get the sanction of the Superintendent of Octroi or break the bulk in the presence of an officer deputed for the purpose as required under sub rule 2 of Rule 24
In other words according to the learned counsel Rule 24 2 of the Octroi Rules is inconsistent with Rule 62 of Chapter VIII of the Schedule to the Act and to the extent _ of inconsistency it shall be deemed to be not applicable
On the other hand the learned counsel for the respondent con tended that Rule 62 c deals with prior intimation and Rule 24 2 deals with the sanction and breaking of the bulk in the presence of an officer deputed for that purpose and both the rules can stay together and operate and there is no inconsistency
We are not impressed with the argument that there is an inconsistency between Rule 62 and Rule 24 2
The intimation contemplated in Rule 62 imply that the break ing the bulk shall be done with the knowledge of the octroi authorities
But it Cannot be said that the rules further provide that after intimation the breaking of the bulk shall be done in the presence of the officers and after sanction that would in any case be inconsistent
Both the rules thus can stand together
In HMM Limited vs Administrator  this Court had occasion to consider the effect of non com pliance with this require 472 ment of a similar provision on the right to get refund
Shortly stated the facts in that case were these The appel lant brought into the municipal limits Horlicks in bulk containers large steel drums for being packed in unit containers glass bottles at the packing station in Banga lore and thereafter exported outside the municipal limits
In respect of the milkfood so exported in glass bottles the appellants sought refund of octroi on the ground that there was no consumption use or sale within the municipal limits and the goods were exported
Rule 24 of the Octroi Rules that were in force in Bangalore city provided 24 0n all articles on which octroi duty has been paid and which are subsequently exported beyond the octroi limits without breaking bulk refunds shall subject to the following rules be granted at the rate originally charged at the time of import provided that no such refunds shall except in the ease of timber imported and re exported in log be granted unless such goods are exported within three months from the date on which octroi was levied
Relying on this provision it was contended by the Munic ipality that breaking the bulk amounted to use within the municipal limits attracting levy of octroi and no refund was permissible
The refund application had also not been made within three months from the date on which octroi was levied
It was admitted that the appellants had not followed that procedure prescribed in Rule 24
This Court held that mere transferring of a bulk product in small containers like packets or bottles for the purpose of sale does not amount to use of the goods in the sense the word is used in rela tion to levy of octroi
It was further held that the words without breaking bulk is not an expression of art and that meant only transferring the product from the drums by break ing the seal of the drums to the bottles for the purpose of exporting or for taking them out of the municipal limits and that would not amount to either use or consumption of the Horlicks powder within the municipal limits attracting the levy of octroi
The ratio of the judgment clearly is that merely on the ground that the goods are not exported in bulk as originally imported the levy does not become valid or that the import er who exported the goods loses his right to a refund of the octroi paid
The goods neither loose their identity nor cease to be identifiable
Once we reach the conclusion that there is no consumption or use octroi is not attracted and if any levy has been made and the amount collected the same becomes legally refundable even when the goods are exported in parts and in smaller packages
This is particu 473 larly so because in the case of goods not consumed or used within the octroi area but exported there is a constitution al bar for the levy of octroi
In this connection we may also refer to another decision reported in Municipal Committee Khurari vs Dhannalal Sethi  Ors 1969 I SCR 166
The rules considered in that case also provided that an application for refund was to be made in the prescribed form and that the exporter after filling in the particulars had to present his application at the office appointed for that purpose
There were other rules which provided an elaborate procedure to be followed at the time of export of the goods
These rules related to the octroi officers satisfying himself that the goods brought for export agree with those mentioned in the application presentation of the claim within the prescribed time iden tifying of the goods exported with those imported and other matters
This Court held that these rules do provide a procedure which an exporter wishing to claim refund has to fol low
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 Commit tee is that though the rules lay down a proce dure 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 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
It may be pertinent to mention that the Maharashtra Municipalities Octroi Rules 1968 also do not contain any specific provision that an applicant for refund who has failed to follow the procedure would be disentitIed to claim the refund
It may be noted that the amount collected which is equivalent to the octroi duty payable on the goods on entry into the octroi limits while in detention in the warehouse is only as a deposit pending export of the goods
The other aspect is that once octroi is not leviable the deposit made by the importer pending export is in the nature of a trust and refundable in the event of the export of the goods
Further in a given set of facts whether the rules have been complied with will have 474 to be tested having regard to the nature of the particular transaction and whether the object of the procedure provided is otherwise fully satisfied
 Rule 28 also merely states that the refund shall be admissible if all the conditions in sub rule 2 of that Rule are satisfied
The object of requiring intimation or sanction and presence of an officer when breaking the bulk in the scheme of octroi levy and refund is to ensure that dutiable goods do not escape the assessment and refunds are made only in respect of goods exported
In other words the whole requirement relates to the identification of the goods
In that sense if the same is otherwise complied with the right to refund cannot be denied
These rules cannot be read as enabling the municipality to levy and collect octroi even in cases where the goods have not been imported for consumption or use
As held by this Court in Kirpal Singh Duggal vs Municipal Board Ghaziabad  the octroi rules are intended to regulate the system on which the refunds shall be allowed and paid
What are merely matters of procedure which the municipality was entitled to require compliance with in granting refund cannot be treated as condition precedent for the entitlement of the refund itself
The Constitution prohibits levy of tax except in accordance with law
When the goods are not imported for consumption or use within the octroi area the municipality ceases to have any constitutional right to levy octroi
If the goods therefore have merely entered into the octroi limits and passed out of the same no octroi duty is attracted
The concept of octroi as held by this Court in Burma Shell s case supra may include the bringing in of goods in a local area so that the goods come to a repose there
It is this concept that is reflected in Rule 28 2 Co when it requires evidence that the goods were exported out of the octroi limits within a period of six months of their im ports
The learned counsel for the appellants Mr Andharuji na had expressed certain difficulties in satisfying the Corporation that the goods imported were exported within the period of six months as provided in the rules in view of certain peculiar circumstances in this case
He pointed out the goods received in bulk are small small items and there are about 16000 distinctive types of articles and when the bulks are broken and each of the categories items are mixed up together it becomes difficult for him to individually identify when the goods were received and when they were exported
However he was sure that the goods were exported before six months
When this difficulty was pointed out during the pendency of the appeal as an interim direction this Court by Order dated 15
1989 directed the parties to proceed on the basis that the goods which came in first had gone out first unless some factors or features indicate otherwise
This is not equitable principle unknown to law
Even as early as in 1816 with reference to money paid on account to a creditor in Clayton s case 1814 475 23 All
ER Rep P 1 it was held that in the absence of an agreement to the contrary in the case of current account containing debit and credit entries there is a presumption that the first item on the credit side of the account is intended to be applied in the payment of the first item on the debit side of the account
This is an equitable princi ple which could be followed in the instant case and it may be presumed that the goods which came in first have gone out first and the six months period could be determined on that basis
In any case in view of the interim direction given by this Court on May 11989 that may be usefully be followed for the future also in this case
To sum up Having regard to the nature and incidence of octroi unless the octroiable goods are consumed or used or are meant to reach an ultimate user or consumer in the octroi area no octroi is leviable
The words sale therein in the words consumption use or sale therein in the defi nition octroi means sale of octroiable goods to a person for the purpose of consumption or use by such person in the octroi area
If sale was intended for consumption or use in the octroi area whether the purchaser actually consumed inside or outside octroi area is irrelevant
Rules 24 to 30 and the forms in the system of levy of octroi are intended to regulate the procedure for collection identification of dutiable goods and correlation of goods exported with the goods imported for the purpose of refunds of octroi collect ed
In view of constitutional bar octroi is not leviable if the goods are not brought into the octroi area for purposes of consumption or use in the area but for export and in fact exported by the importer himself or the sale by him occa sions the export
Compliance with the procedure prescribed in the Rules for filing claims of refunds are not condition precedent for the right or eligibility for refund or the liability to refund but are provisions regarding proof of export of the goods imported and are not meant to be exhaus tive either
They are to be interpreted and understood in that sense
The object of the Rules fixing a period of limitation for export however is different
The export cannot be put in perpetual doubt and the goods may be con sidered to have come to a repose if they were not exported within a particular period provided in the rules
Applying these principles to the instant case on facts the rejection of refund applications on the ground that Rule 25 3 d had not been complied with was illegal
Since the rejection of the claims for refund was merely on the ground that either Form 4 and original invoices were not produced or columns 5 and 6 of Form 11 or the corresponding columns in Form 12 had not been filled with reference to an original invoice or Form 4 or deposit receipt and the refusal to issue export pass certificates on those very grounds which we have stated are untenable the other orders of rejections are also invalid
If the goods are mixed up and unidentifia ble 476 due to breaking bulk and repacking in smaller and assorted packages before export the principle that the first export was of the goods first imported subject to any evidence available to the contrary may be applied and the six months period prescribed for export may be determined accordingly
When these appeals were pending by way of interim ar rangement this Court by order dated 2541990 directed that in order to obviate the difficulty of identifying the goods at the time of export by reason of the breaking of thebulk and in order avoid doubts the respondent Corporation may depute their officer or officers on all working days at the warehouse of the Company to supervise the breaking of the bulk subject to the Company reimbursing the entire monthly payments and other allowances to be paid to the said officer or officers as per bill or pay slips sent by the Corporation to the Company
We think that this procedure could be con tinued and followed in future also so that while the pur poses of the rules are served the free trade and commerce of the Company which is stated to have a large turnover is also not affected
The learned counsel for the respondent then contended that the appellants have recovered the amounts paid by them by way of octroi duty from the dealers or the customers to whom they had sold the goods and therefore they are in any case not entitled to get a refund
The argument was that if refund is ordered it would amount to allowing the appellants to unjustly enrich themselves at the cost of the public to whom the burden had already been passed
This argument is based on the ground that in the selling price the company had merged the octroi duty originally paid as deposit and if a refund is made the company would be getting an additional amount over and above normal price which they would have charged but for the fact that they were initially asked to deposit octroi
There is no evidence that any of the arti cles sold by the Company is subject to any price control by the Government or that the Company had charged any octroi separately in the bills Invoices and the other documents of sale to the outside purchasers produced before us do not also show that any octroi was separately charged and col lected by the Company
It may be mentioned that in the rejoinder filed by the appellant in the writ petition they have specifically denied that they have recovered the amount paid by them by way of octroi duty from the dealers to whom they had sold the goods or that the dealers in turn have recovered the octroi duty from the customers
In view of this the question of unjust enrichment does not arise
477 This appeal is accordingly allowed on the above terms
There will however be no order as to costs
TNA Appeal allowed


Summary:
The appellant a Havildar was charge sheeted on the ground that during an armed action against a group of mili tants when the militants opened fire he ran away in a cow ardly manner and left his post without permission of his superior
The respondent authorities proceeded on the ground that his offence was covered by section 36 of the and accordingly section 120 1 of the Act was applicable
Consequently he was tried by a summary court Martial and was convicted and reduced in rank and imprisoned for one year
He filed an application under Article 226 before the Delhi High Court which was dismissed
In appeal to this Court it was contended on behalf of the appellant that having regard to the nature of the charge against him section 34 of the was attracted and in view of section 1202 of the Act trial by summary Court was not permitted
Allowing the apeal and setting aside the judgment of the High Court this Court HELD 1
Under section 120 2 of the if an offence is covered by section 34 and immediate action for the specified reasons is not warranted the summary court martial shall not have jurisdiction to hold the trial
372 D F 2
Section 36 covers a wide range of offences and the scope of 371 section 34 is limited to a smaller area where the offence is more serious attracting more severe punishments
The opera tion in which the appellant was engaged was directed against the militants who were undisputedly included in the expres sion enemy within section 3 x
If the allegations are assumed to be true than the appellant on the militants  opening fire shamefully abandoned the place comitted to his charge and which he was under a duty to defend
Both clauses a and h of section 34 are clearly attracted
The appel lant was therefore guilty of a more serious offence under clauses a and h of section 34 of the Act than under section 36
1373 D G It is also not suggested on behalf of the respondents that there was in existence any grave reason for immediate action so as to justify trial by an officer holding summary court martial
Consequently the impugned hed trial by Summary Court Martial and the decision thereby must be held to be without jurisdiction and is quashed
The conviction and sentence passed against the appellant is set aside
373 E G 3
The respondents authorities can proceed to hold a fresh trial of the appellant in accordance with law
374 C