CWP No.13599 of 2004 1 In the High Court of Punjab and Haryana, Chandigarh. CWP No. 13599 of 2004 (O&M) Date of Decision: 03.02.2010 Dabur India Ltd. ....Peitioner. Versus State of Punjab and others ....Respondents. Coram:- Hon'ble Mr. Justice Adarsh Kumar Goel Hon'ble Mr. Justice Alok Singh Present: Mr. S.D. Sharma, Sr. Advocate with Mr. R.D. Sehgal, Advocate for the petitioner. Mr. Jagjit Singh, Advocate for Mr. C.M. Sharma, Advocate. ... Alok Singh, J. 1. Present writ petition has been filed challenging order dated 10.10.2002 (Annexure P-7) as well as order dated 23.4.2004 (Annexure P- 11) passed by respondent No.3 and 1, respectively. A further direction was also sought commanding respondent No.2 to refund the sum of Rs.95,77,627/- to the petitioner, which was charged by respondent No.2 as octroi at Zirakpur. 2. Brief facts of the case are that the petitioner – company is CWP No.13599 of 2004 2 having head office at Delhi while regional offices at various places in India and other countries. The petitioner is having its regional office at Chandigarh to control the areas of Punjab, Haryana, Chandigarh and Jammu and Kashmir. One of the Warehouses of the petitioner – company is at Zirakpur since 1989. According to the petitioner – company, goods are produced in its factory at Sahibabad District Ghaziabad, near Delhi and in Baddi in Himachal Pradesh. Further case of the petitioner – company is that goods/products are supplied to various dealers on the basis of their demand/order received at different branch offices including the branch office at Sector 9, in Chandigarh. For the purpose of making supply to the dealers, goods/products are stored for transit/temporary period at company's godowns at Zirakpur. The Incharge of the godown at Zirakpur sends the products to different places as per demand. The invoices of the goods are prepared at Zirakpur. The goods are transported through various transport agencies. It is further stated that respondent No.3 wrongly treated this transaction as sale and illegally charged octroi duty from the company at Zirakpur. The petitioner- company challenged the action of the Nagar Panchayat, Zirakpur before the Executive Officer and finally before respondent No.1 who passed the order dated 23.4.2004 by upholding the order passed by the Executive Officer – respondent No.3 by ignoring all the factual position and law. 3. Main contention of the petitioner is that no products/goods are being sold for consumption, use or sale within the municipal limit of Zirakpur. Hence, octroi thereon cannot be charged by respondents No.2 and 3 and in view of this, the impugned orders are without jurisdiction and CWP No.13599 of 2004 3 illegal. 4. Written statement was filed on behalf of respondent No.3. It has been specifically pleaded that since sale takes place within the municipal limit of Zirakpur, the petitioner – company is liable to pay octroi thereon. It is further submitted that sale bills are issued from the municipal limit of Nagar Panchayat, Zirakpur and the sales tax is also charged within the municipal limit of Nagar Panchayat, Zirakpur. Hence, the petitioner – company cannot escape liability to pay octroi saying orders are being taken in different branch offices, which are outside the jurisdiction of Nagar Panchayat, Zirakpur. 5. We have heard learned counsel for the parties and perused to the record. 6. The main argument of the learned counsel for the petitioner – company is that to impose octroi, not only sale is required to be completed within the municipal limit of Zirakpur, it should also be proved that the goods/products are being sold within the municipal limit for the purposes of consumption or use by such person in the octroi area. 7. Learned counsel for the respondents vehemently argued that for the purpose of imposition of octroi duty, only thing which is required to be seen is that goods are sold to the consumer within the municipal area irrespective of the fact that consumer bought the same from there or outside it. 8. Learned counsel for the petitioner – company has placed reliance on two judgements of the Apex Court rendered in Tata Engineering and Locomotive Co. Ltd. and another Vs. Municipal Corporation of the CWP No.13599 of 2004 4 City of Thane and others, AIR 1992 SC 645 and Indian Oil Corporation Vs. Municipal Corporation, Jullundhar and others, AIR 1993 SC 844. 9. In Tata Engineering’s case (supra), the Hon’ble Supreme Court has observed as under: - “29.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 definition 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 collected. 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 occasions 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 CWP No.13599 of 2004 5 export of the goods imported and are not meant to be exhaustive 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 considered 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 unidentifiable 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.” 10. In Indian Oil Corporation's case (supra), it was observed by the Apex Court as under: - CWP No.13599 of 2004 6 “Entry of goods within the local for area for consumption, use or sale therein is made taxable by the state Legislature on the authority of Entry 52 of List legislature and it obviously cannot have any authority more extensive than the authority of the state Legislature. Since the state Legislature in view of Entry of goods for 'consumption use or sale' into a local area, the municipality cannot under a legislation, enacted in exercise of the powers conferred by Entry 52 of List II, have the power to levy tax in respect of good brought into the local area for purposes other than consumption, use or sale. section 113 of the Act has, therefore, reasonably to be read subject to the same limitation as are contained in Entry 52 of to be read subject to the same limitation as are contained in Entry 52 of List II of schedule VII. The expression " imported into the city" used in section 113 of the Act, as meaning "imported into the city for any purpose and without any limitation", would amount to attributing to the legislature an intention to give a go-by to the restrictions contained in Entry 52 of List II. That is not permissible. The expression "imported into the city" in section 113, therefore, has to be interpreted as meaning " imported into the municipal limits for purpose of consumption, use or sale" only. thus, construed in the limited sense, section 113 of the Municipal Act is not ultra vires Entry 52 of List II of Schedule VII. In fairness to the learned counsel for the appellant, it must be recorded, that CWP No.13599 of 2004 7 the finding the High court regarding vires of section 113 of the Municipal Act was not seriously questioned before us.” 11. Octroi means a cess without a refund on the entry into a city or municipality of goods for consumption use or sale. 12. From the judgement of the Apex Court, it is just clear that only sale within the municipal limit does not authorize the municipality to charge octroi on goods. Octroi can only be levied and charged when sale of octroiable is made in the octroi area for the purpose of consumption and use within that octroi area. If a person purchases goods to be consumed beyond the octroi area then ofcourse no octroi can be levied. 13. Learned counsel for the petitioner has drawn our attention to the order passed by the Appellate Authority dated 23.4.2004 (Annexure P- 11) and argued that octroi was levied and charged on the ground that goods are sold from its godowns which situate within the municipal limit of Zirakpur. Sales tax is also paid within the municipal limit of Zirakpur. Since sale takes place within the municipal limit of Zirakpur, hence octroi is justified. Learned counsel for the petitioner further argued that the Appellate Authority has not appreciated the fact and has not recorded any finding as to whether sale took place within the municipal limit of Zirakpur for consumption and use of the goods within the octroi limit. If goods/products are to be consumed or used beyond the octroi limit then octroi cannot be levied and charged, simply because sale takes place within the municipal limit. 14. We are of the view that in the impugned orders, no finding has been recorded on the question as to whether goods/products sold were to be CWP No.13599 of 2004 8 consumed or used within the municipal limit of Zirakpur. Hence, we have no other option except to quash the impugned orders. 15. In view of the above, writ petition is allowed. Impugned orders dated 10.10.2002 (Annexure P-7) and 23.4.2004 (Annexure P-11) are quashed and the matter is remanded to the Appellate Authority for fresh decision in view of the observations made by the Apex Court in Tata Engineering’s case (Supra) and Indian Oil Corporation's case (supra). ( Alok Singh ) Judge ( Adarsh Kumar Goel ) Judge 03.02.2010 sk.