IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1467 OF 2007 WRIT PETITION NO.1467 OF 2007 WRIT PETITION NO.1467 OF 2007 Axis Bank Ltd., A Banking Company ) registered under the Banking ) Regulation Act, 1949 and having its ) its Central Officer at Maker Tower, ) "F", 13th Floor, Cuffe Parade, ) Colaba, Mumbai - 400 005. ) ..Petitioner. V/s. Brihan Mumbai Mahanagarpalika, ) having its office at Mahapalika ) Marg, Mumbai - 400 001. )..Respondent. Mr.Virag Tulzapurkar, senior Advocate with Mr.Vinay Sonpal for petitioner. Mr.K.K.Singhvi, senior Advocate with Ms.Aruna Savla for respondent. CORAM : SWATANTER KUMAR, C.J. AND CORAM : SWATANTER KUMAR, C.J. AND CORAM : SWATANTER KUMAR, C.J. AND J.P.DEVADHAR, J. J.P.DEVADHAR, J. J.P.DEVADHAR, J. JUDGMENT RESERVED ON : 18TH DECEMBER, 2007. JUDGMENT RESERVED ON : 18TH DECEMBER, 2007. JUDGMENT RESERVED ON : 18TH DECEMBER, 2007. JUDGMENT PRONOUNCED ON : 31ST JANUARY, 2008. JUDGMENT PRONOUNCED ON : 31ST JANUARY, 2008. JUDGMENT PRONOUNCED ON : 31ST JANUARY, 2008. JUDGMENT (PER J.P.DEVADHAR, J.) JUDGMENT (PER J.P.DEVADHAR, J.) JUDGMENT (PER J.P.DEVADHAR, J.) 1. Heard. Rule. Rule made returnable forthwith. By consent of parties, the Writ Petition is taken up for final hearing. 2. This petition is filed to challenge the order dated 18th June, 2007 passed by the Deputy Assessor and Collector (Octroi), Municipal Corporation, Mumbai -= : 2 : =- (‘Adjudicating Authority’ for short) wherein the demand for payment of octroi duty amounting to Rs.94,90,250/- from the petitioner has been confirmed. 3. The petitioner is engaged in the business of banking duly registered under the Companies Act, 1956 and holds a licence under the Banking Regulation Act, 1949 from the Reserve Bank of India. 4. On 29th December, 1999 the petitioner entered into an agreement with M/s. Infosys Techno Ltd. (‘Infosys’ for short) for developing certain computer programme on the Master Computer of the petitioner for efficient and effective functioning of the banking operations amongst its departments and also between the petitioner and its customers. As per the contract, Infosys was to develop software and provide requisite programme on the computer of the petitioner as per the needs and specifications of the petitioner. The software programme was to include the third party software of Oracle Corporation and Integra Microsystem Pvt. Ltd. to be used in conjunction with the software to be developed and installed by Infosys. According to the petitioner, the entire software was developed by Infosys at Mumbai and that no software on any Compact Disc (CD) or any other medium had entered the area of Mumbai from outside. -= : 3 : =- 5. As per clause 3 of the contract, Infosys was to retain at all times the title, copy right and other proprietary rights in the software programme and the number of users of the said software were also specified. As per clause 4.1 of the contract, if the petitioner wished to use the software so developed beyond the scope of the licence, the petitioner was required to take licence for such additional use on the terms to be mutually agreed with Infosys. The consideration for the package consisting of development, installation, provision, commission and technical support of the software on the computer of the petitioner duly customized including licence fees for the limited number of users was Rs.2,60,00,000/-. As per the contract, after the first year, the use of the software as provided, developed and customized by the Infosys, the petitioner was to pay Rs.39,00,000/- per year to the Infosys for annual technical support. Accordingly, Infosys developed and installed software programme in situ on the petitioner’s main / master computer system in Mumbai. According to the petitioner, no content of the software programme was brought in or given to the petitioner on any CD or other medium and nothing was brought to Mumbai from outside. According to the petitioner, everything was developed and installed in Mumbai itself. -= : 4 : =- 6. By a notice dated 18th July, 2006 the respondent called upon the petitioner to furnish particulars of payments made by the petitioner to Infosys for installation of the software as per the contract dated 29th December, 1999. The petitioner furnished the requisite particulars. Thereupon, by a letter dated 18th September, 2006 the respondent claimed a sum of Rs.94,90,250/- as octroi duty on the total value of software purchased by the petitioner from Infosys. The petitioner filed its detailed reply and objected to the levy of octroi duty. The petitioner was heard in the matter on 28/11/2006. By the impugned order dated 18/6/2007 the Deputy Assessor and Collector (Octroi) confirmed the demand raised on 18th July, 2006. Challenging the said order, the present petition is filed. 7. Mr.Virag Tulzapurkar, learned senior Advocate appearing on behalf of the petitioner submitted that the demand of octroi duty from the petitioner is ex-facie illegal and arbitrary inasmuch as no taxable goods have entered into the local area for the purpose of sale, use or consumption as contemplated under Entry 52 of list II of the seventh schedule to the Constitution of India and section 192 of the B.M.C. Act, 1888. He submitted that as per Rule 25 of the -= : 5 : =- Municipal Corporation Greater Bombay Octroi Rules, 1965, the liability for payment of octroi arises only where the octroi duty is not paid (presuming while not admitting that the octroi is payable) at the time of import and demand notice is issued within a period of 3 months from the date of import. He submitted that the last but one payment made to Infosys was on 15th April, 2006 and the period of limitation expired on 14th July, 2006. Thus, even assuming that octroi duty was payable in respect of the transaction, in the present case the claim for octroi duty is hopelessly time barred. He submitted that the Deputy Assessor and Collector (Octroi) has presumed that the CD or some other medium with software in it has entered the city of Mumbai from outside and has levied octroi duty without there being any material on record. He submitted that the software programme has been developed in situ at Mumbai on licence fees and not by way of sale of goods. He submitted that the goods manufactured or sold or technic developed in the city of Mumbai ipso facto cannot be said to have entered the city from outside. 8. Mr.Tulzapurkar further submitted that the Deputy Assessor and Collector (Octroi) had erroneously construed the decision of the Apex Court in the case of Tata Consultancy V/s. M.C.G.M. Tata Consultancy V/s. M.C.G.M. Tata Consultancy V/s. M.C.G.M. reported in A.I.R. A.I.R. A.I.R. 2005 S.C. 371 2005 S.C. 371 2005 S.C. 371. He submitted that the Apex Court in -= : 6 : =- the above case has clearly observed that uncanned and unbranded software does not amount to goods and in the present case, there was no material on record to show that any goods in the form of CD or otherwise had entered the city of Mumbai. Accordingly, learned counsel submitted that the impugned decision based on the erroneous construction of the decision of the Apex Court is liable to be quashed and set aside. Relying on the decision of the Apex Court in the case of Bharat Bharat Bharat Sanchar Nigam V/s. Union of India Sanchar Nigam V/s. Union of India Sanchar Nigam V/s. Union of India reported in (2006) 3 (2006) 3 (2006) 3 S.C.C. 1, S.C.C. 1, S.C.C. 1, Mr.Tulzapurkar submitted that the provision for service cannot be termed as provision of goods and thus licence fees for the extended use cannot be termed as goods and consequently, octroi duty is not leviable. Similarly, the charges in respect of the annual maintenance contract is by its very nature a contract for service and there is no entry in the city area of any article as contemplated under section 192 of the B.M.C. Act and, therefore, in such a case no octroi duty is payable. 9. Relying on the decision of the Apex Court in the case of Harbanslal Sahnia & Anr. V/s. Indian Oil Harbanslal Sahnia & Anr. V/s. Indian Oil Harbanslal Sahnia & Anr. V/s. Indian Oil Corpn. Ltd. & Ors. Corpn. Ltd. & Ors. Corpn. Ltd. & Ors. reported in (2003) 2 S.C.C. 107 (2003) 2 S.C.C. 107 (2003) 2 S.C.C. 107, Mr.Tulzapurkar submitted that even where there is an alternate remedy of filing an appeal against the impugned order, the remedy of writ is not totally -= : 7 : =- barred and in the facts of the present case, it is just and proper to exercise the writ jurisdiction and quash and set aside the impugned order. 10. Mr.Singhvi, learned senior counsel appearing on behalf of the respondents on the other hand while supporting the order passed by the Deputy Assessor and Collector (Octroi) submitted that in view of the alternate remedy of appeal, the petitioner is not entitled to any relief in the present petition. 11. Mr.Singhvi further submitted that the petitioner is situated within the limits of Mumbai and the software programme is developed by Infosys by importing CD into the city of Mumbai and the same has been used in Mumbai and since import of software in the form of CD for use in Mumbai attracts octroi duty, there is no infirmity in the order passed by the Deputy Assessor and Collector (Octroi). 12. We have considered the rival submissions. The specific plea raised by the petitioner before the Deputy Assessor and Collector (Octroi) was firstly, the contract dated 22/12/1999 was for development, customization, installation of software programme for providing service and not for supply of goods and, therefore, octroi duty was not leviable. Secondly, as -= : 8 : =- per the contract, Infosys developed and installed software programme in situ on the petitioner’s main / master computer system at Mumbai and hence there being no import of software in the form of CD or otherwise, the question of levying octroi duty did not arise at all. Thirdly, it was contended that assuming for the sake of argument that octroi duty was leviable, the same was barred by limitation under Rule 25 of the Octroi Rules, 1965. 13. The Deputy Assessor and Collector (Octroi) relying upon the decision of the Apex Court in the case of Tata Consultancy Services (supra) held that even if the software is transferred and installed at Mumbai through CD, there would be transfer of goods and hence octroi duty was leviable. In view of the specific plea raised by the petitioner that the software in the form of CD was not brought to Mumbai from outside and that the software was developed by Infosys in situ at Mumbai, it was obligatory on the part of the Deputy Assessor and Collector (Octroi) to give a specific finding to that effect. However, in the impugned order, no such finding is recorded and on the basis of the Judgment of the Apex Court in the case of Tata Consultancy Services (supra), it is inferred that the petitioner must have imported the software through CD into Mumbai. Although, the counsel for the Corporation -= : 9 : =- has contended that there is material to show that the software in the form of CD has been imported into the City of Mumbai, the same is disputed by the petitioner and there is no finding recorded in the impugned order as to why the contention of the petitioner is not acceptable. 14. Similarly, the specific plea raised by the petitioner before the adjudicating authority was that assuming that the octroi duty was leviable, the same was barred by limitation. This plea of the petitioner has not been considered in the impugned order. In these circumstances, in our opinion, this is a fit case for exercise of writ jurisdiction and the impugned order which suffers from serious infirmities is liable to be quashed and set aside. 15. Accordingly, the impugned order dated 18th June, 2007 is quashed and set aside and the Deputy Assessor & Collector (Octroi) is directed to decide the matter afresh and in accordance with law after giving opportunity of hearing to the petitioner. 16. Rule is made absolute in the above terms with no order as to costs. -= : 10 : =- CHIEF JUSTICE CHIEF JUSTICE CHIEF JUSTICE J.P.DEVADHAR, J J.P.DEVADHAR, J J.P.DEVADHAR, J.