Case: Man Mohan Tuli Vs. Municipal Corporation Of Delhi &amp; Ors

to be intended for immediate export. In view of the interpretation we have placed on Section 178 it is obvious that the word ‘immediately? appearing in Rules 26 has to be libe-rally construed so as to imply a reasonable period and if the export is delayed the rules may apply if a reasonable explanation has been given. So far as rules regarding taking of passes, etc., at the barrier are concerned they would, of course, apply but subject to the conditions under which terminal tax can be imposed under Section 178 of the Act which is the main charging section. 23. The High Court appears to have placed some reliance on Amrit Banaspati Co. Ltd.v.The Union of India ILR 1973 (1) Delhi 237 in coming to the conclusion that in the instant case the Corporation was legally entitled to levy terminal tax. With due respect to the Judges of the High Court who decided the appeals, we would like to point out that the case just above referred to is clearly distinguishable from the present appeals. The most crucial fact in the Delhi decision was that the goods were being carried into the Union Territory of Delhi for the purpose of sale at Delhi. Thus, the case proceeded on the admitted position that the goods were carried from Ghaziabad into the Delhi territory for sale at Delhi. The final destination of the goods being Delhi, there can be no doubt that the Corporation was fully entitled to levy terminal tax on such goods. In this connection, the High Court observed as follows:?The petitioner-company was incorporated under the Companies Act, 1956, and it had its registered office at G.T. Road, Ghaziabad in the State of Uttar Pradesh....It has a factory, inter alia, at Ghaziabad for manufacturing the said Vanaspati products. In the course of its business, the company carried and still carries its products by railway and/or road into the Union Territory of Delhi from Ghaziabad for the purpose of sale at Delhi. The words ?shall be levied on all goods carried by railway or road? in Sub-section (1) shows clearly that the section imposes terminal tax on the carriage or movement of goods from outside the Union Territory of Delhi into the said Territory. In other words, the tax-able event is the carriage or movement of goods into the Union Terri-tory of Delhi.? 24. The observations last extracted must be understood in the light of the admitted facts in Amrit Banaspati Company?s case (supra). We are unable to accept that case as an authority for the proposition that even if the final destination of the goods was not Delhi but as the goods were carried through the territory of Delhi, they would still be eligible to terminal tax. In the impugned judgment the High Court, however, seems to have laid undue emphasis and special stress on the fact that the goods were carried into the Union territory of Delhi, the moment they passed through it even though the destination of the goods may be some other area. This appeared, accor-ding to the High Court, the real purport and intention of Section 178. We are, however, unable to agree with this view which is patently wrong and does not at all flow from the plain and unambiguous language of Section 178 of the Act nor does Section 178 warrant such and interpretation. Thus, our conclusions are as follows: (1) The High Court was wrong in interpreting Section 178 of the Act so as to justify imposition of terminal tax even on goods which merely passed through the territory of Delhi, although their destination is not Delhi but places beyond Delhi. (2) The High Court was wrong in holding that merely because the goods after having been unloaded in the godown of appel-lant Tuli are sorted, reloaded in different trucks and there-after pass through the territory of Delhi, they become exigible to terminal tax. (3) The High Court was wrong in interpretating Rule 26 literally and holding that exemption could be granted only if the goods are exported immediately which means within a very short time irrespective of any other consideration. In view of our interpretation of Section 178. Rule 26 must be interpreted in the light of the object of Section 178 and terminal tax can be leviable only if it is proved that the goods remained at the godown for an indefinite and unexplained period which could not be said to be reasonable as discussed by us in the circum-stances. (4) Where the goods are carried by trucks into the territory of Delhi and unloaded there and are also meant for Delhi and soon thereafter may be rebooked by the receiver of the goods to some other place, terminal tax would be levi-able because in this case there are two separate transactions. (1) by which the goods are meant for Delhi, and (2) by which after having reached and having been unloaded at Delhi they are rebooked and reloaded for some other place and which, therefore, is a fresh and different transaction. In such a case, terminal tax would be leviable at the entry point in the territory of Delhi 25. We might mention that the High Court while holding that termi-nal tax is exigible has construed the word ‘immediately? in Rule 26 literally and directed the Terminal Tax Officer to fix a reasonable time for unloading, sorting and reloading the goods which are meant for different destinations taking into consideration the quantity of the goods, the time for unloading, etc., and has further directed that reloading or transhipment should be done within a time to be fixed by the Terminal Tax Officer. Though the direc-tions given are correct but they will have to be construed in the light of the various factors which we have referred to. Rule 26 will have to be interpre-ted on the footing that Section 178 of the Act does not contemplate levy of termi-nal tax for goods meant for destinations other than Delhi. 26.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]6. The crucial words which have to be interpreted are: ‘goods carried by railway or road into the Union Territory of Delhi from any place outside Delhi?. The contention of the appellant is that the words ‘goods carried into the Union Territory clearly indicate that the final destination of the goods must be Delhi and by virtue of this fact, the natural consequence would be that the goods should be carried from other places either by rail or by road into the territory of Delhi. This argument was reinforced by the words ‘terminal tax? used in Section 178 which imply that the terminus of the journey of the goods must be Delhi and only in that event the Corporation would be competent to levy a terminal tax. This argument was sought to be rebutted by the respon-dents on the ground that the words ‘carried into the Union Territory of Delhi? should be interpreted independently and literally so as to indicate that even if the goods passed through Delhi, the moment they entered into the territory of Delhi terminal tax became eligible. So far as this aspect of the argument is concerned, we are unable to accept the same because it is well settled that taxing statutes must be strictly interpreted giving every benefit of doubt to the tax payerThus, from a consideration of the cases cited above, the following propositions emerge:(1) Terminal tax and octroi are similar kinds of levies which are closely interlinked with (1) destination of the goods, (2) the user in the local area on arrival of the goods. Where the goods merely pass through a local area without being consumed therein the mere fact that the transport carrying the goods halt within the local area for transhipment or allied purposes would not justify the levy of either the terminal tax or octroi duty. This is because the halting of the goods is only for an incidental purpose to effectuate the journey of the goods to the final destination by unloading, sorting and reloading them at a particular place(2) There is a very thin margin of difference between a terminal tax and octroi. In the case of the former (terminal tax) the goods reach their final destination and their entry into the area of destination immediately attracts payment of terminal tax irres-pective of their user. In the case of octroi, however, the tax is levied on goods for their use and consumption(3) But at the same time, the goods while halting at a local area should leave for their destination within a reasonable time which may depend on circumstances of each case and if the goods are kept within the area for such a long and indefinite period that the purpose of reaching the final destination lying in a different area is frustrated or defeated, they may be exigible to terminal tax(4) Where the goods enter into a local area which is also the destination of the goods either temporarily or otherwise, the terminal tax would be leviable. For instance, if A consigns goods from Patna in Bihar to Delhi in the name of X and X after having received the goods at Delhi rebooks or reloads the same on a transport for Chandigarh in the name of Y, terminal tax would be leviable by the Corporation at Delhi because the destination of the goods in the first instance was Delhi and that by itself would attract the imposition of terminal tax. The fact that X rebooks them to Chandigarh would not make any difference because the act of rebooking by X at Delhi would constitute a fresh transaction by which the goods after having been carried into Delhi are further exported to Chandigarh. On the other hand, when there is one continuous journey of the goods from Patna to Chandigarh without any break, the final destination would be Chandigarh even though the goods may have to be halted in Delhi for the purpose of unloading, sorting and reloading and may have to be kept in Delhi for a reasonable time. In such a case terminal tax would not be exigibleWe have laid special stress on the circumstances under which the terminal tax becomes leviable if the halt or interruption of the goods at an intermediate point is for an indefinite and unexplained period. The answer to the question as to what would be a reasonable time for interruption of the goods or halting in the instant case at the godown of Tuli, will naturally depend on the special features or circumstances of each case, viz., the nature of the goods, the time taken in loading, sorting and unloading, the obstacles or difficulties which may be faced by the transporters and similar other factors. Normally, a time of two to three days or even a week should be sufficient to clear the goods for its journey to the ultimate destination. It may sometimes happen that goods may have to be kept in the godowns in the territory of Delhi for circumstances beyond the control of the consignee of the consignor,e.g., while the goods are lying in a godown at Delhi a dispute occurs between the concerned parties as a result of which an injunction is issued by a Court restraining the transporters from moving the goods. In considering what is reasonable time these circumstances would have to be taken into considerationIt was, however, argued before us that according to the Terminal Tax Rules framed under the Act, Rule 26 exempts goods from terminal tax if the same are exported immediately and are declared to be intended for immediate export. In view of the interpretation we have placed on Section 178 it is obvious that the word ‘immediately? appearing in Rules 26 has to be libe-rally construed so as to imply a reasonable period and if the export is delayed the rules may apply if a reasonable explanation has been given. So far as rules regarding taking of passes, etc., at the barrier are concerned they would, of course, apply but subject to the conditions under which terminal tax can be imposed under Section 178 of the Act which is the main charging sectionThe High Court appears to have placed some reliance on Amrit Banaspati Co. Ltd.v.The Union of India ILR 1973 (1) Delhi 237 in coming to the conclusion that in the instant case the Corporation was legally entitled to levy terminal tax. With due respect to the Judges of the High Court who decided the appeals, we would like to point out that the case just above referred to is clearly distinguishable from the present appeals. The most crucial fact in the Delhi decision was that the goods were being carried into the Union Territory of Delhi for the purpose of sale at Delhi. Thus, the case proceeded on the admitted position that the goods were carried from Ghaziabad into the Delhi territory for sale at DelhiWe might mention that the High Court while holding that termi-nal tax is exigible has construed the word ‘immediately? in Rule 26 literally and directed the Terminal Tax Officer to fix a reasonable time for unloading, sorting and reloading the goods which are meant for different destinations taking into consideration the quantity of the goods, the time for unloading, etc., and has further directed that reloading or transhipment should be done within a time to be fixed by the Terminal Tax Officer. Though the direc-tions given are correct but they will have to be construed in the light of the various factors which we have referred to. Rule 26 will have to be interpre-ted on the footing that Section 178 of the Act does not contemplate levy of termi-nal tax for goods meant for destinations other than Delhi.