Case: Municipal Council Of Jodhpur Vs. M/S. Parekh Authmobilies Ltd

of the pleadings, according to Shri Bhandari, would make it clear that these were not suspended or withdrawn. Reference was made to paragraphs 6 and 7 of the reply to the writ petition at p. 116 of the paper book to the effect that it was the case of the appellant that facilities provided to the Indian Oil Corporation were never stopped and this submission has been repeated several times. It was further submitted that when current account facility has been provided, there is no question of payment of octroi at the time of entry of petroleum, products. On the other hand, the octroi tax is paid at the time of settlement of periodical account, say after every month. Thus, question of complying with Rule 6 or Rule 9 of the said Rules does not arise as they apply when octroi tax is paid at the time of entry of goods. In fact, the account of petroleum products imported and exported is kept by delivery of entry passes and transport passes by Indian Oil Corporation at octroi outpost, which passes are given by Municipal Council. In fact, it is obligatory duty, according to counsel, of Municipal Council to provide entry passes and transport passes to Indian Oil Corporation which have been provided current account facilities. The delivery of entry passes and transport passes is only to facilitate settlement of octroi account on goods which have been retained in municipal area for use and consumption. If municipality does not provide transport passes, it cannot take advantage of its own default, according to Shri Bhandari. It is obligatory duty of municipality, it was urged, to provide transport and entry passes to companies and persons who have been provided current account facilities. In any way, even if transport passes are not given by the Municipal Council, the quantity exported can be ascertained by other means also 20. In the present case, there is no dispute regarding diesel exported to Dangiawas from Jodhpur Municipality. The Municipal Council has not refuted in its reply in paragraph 11 at p. 117 of the paper book, the quantity of petroleum products exported to Dangiawas as mentioned in Schedule A (p. 104 of paper book) from July 25, 1975 to date of writ petition. The Municipal Council gave an undertaking to refund the octroi tax charged from the petitioner on the diesel exported to Dangiawas outside the limits of Municipal Council, Jodhpur as will be clear from the order of the learned Single Judge dated February 7, 1976. It was also stated that the Division Bench vide its order dated April 1, 1977 has already ordered that respondent 2 would deposit the octroi tax on diesel exported to Dangiawas. Thus, the octroi tax which became due on diesel exported to Dangiawas from April 1, 1977 up to date is being deposited in the bank account and there is no dispute regarding quantity of diesel exported to Dangiawas. Thus, it appears to us that the controversy raised by Municipal Council referring to cancellation of transport passes is unfounded. The object of the transport passes was to ascertain the quantity of diesel exported to Dangiawas. There appears to be no dispute regarding quantity of diesel exported to Dangiawas from July 25, 1975. The Depot Superintendent of Indian Oil Corporation, Jodhpur had disposed that current account facilities to Indian Oil Corporation is being continued till today. It was stated that the octroi as paid periodically on settlement of account between Municipal Council and Indian Oil Corporation and not at the time of entry of petroleum products. It appears that the contention that cancellation of transport passes is equivalent to cancellation of current account facilities, made on behalf of the appellant, is incorrect. A perusal of Section 133 would show that current account facility is provided by substantive section, whereas Rule 13 of the said Rules is procedure provided with the object of providing facility of settlement account of payment of octroi tax. In other words, according to Rule 13 (4), octroi tax is charged on quantity mentioned in entry passes minus the quantity mentioned in transport passes, i.e., on quantity of pertroleum products used or consumed within the municipal limits of Jodhpur Municipality. It is also unsustainable, according to Shri Bhandari to contend that M/s. Parekh Automobiles has recovered octroi tax from consumers. It has been asserted in the writ petition on oath as well as before this Court on filing affidavit that no octroi was recovered by M/s. Parekh Automobiles from consumers. On the other hand, it is the case of M/s. Parekh automobiles that it had to pay octroi taxes out of commission which it received from Indian Oil Corporation on sale of diesel. This fact, according to Shri Bhandari was never refuted by the Municipal Council or the Indian Oil corporation. Thus there is no question of unjust enrichment, and as such M/s. Parekh Automobiles is entitled to octroi tax which was recovered from it and which is lying deposited in separate bank account by the Indian Oil Corporation as per order of Division Bench dated April 1, 1977 up to date. For period before April 1, 1977, the Municipal Council has already given an undertaking to refund octroi tax. 21. Pleadings in this case and the averment are rather confusing. On the consideration of all the facts and the circumstances of the case, we are of the opinion that the principles of the aforesaid two decisions of this Court have been correctly applied by the High Court in the facts and the circumstances of the case. The octroi duty is, therefore, not chargeable on the transactions mentioned herein. We are further of the opinion that in view of the confused state of the pleadings and averment, it is not possible to hold that current account facilities were withdrawn or cancelled. If that is the position, then there is no question that the High Court was right in the order it passed and the direction it gave. 22.

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

Explanation:
0[ds]We are, however, unable to accept these contents. If the goods were brought within the municipal limits for the purpose of sale (sale means pausing of the title to the purchaser), then different considerations might have appliedBut in view of the facts of this case, the title passed to the goods outside the municipal limits even in respect of the petroleum products which were sold within the municipal limits. It was contended by Shri Sorabjee that Rule 13 had no application. Shri Sorabjee drew our attention to certain paragraphs of the writ petition, in particular to paragraph 18(b) where it was stated that it is obligatory for respondent 1 to grant respondent 2 transport passes and it had no jurisdiction to withdraw that facility. It was submitted with reference to that and other paragraphs that it was the case of respondent 1 that facility was withdrawn and suspended and prayer was made for restoration of that facility. It was, therefore, submitted on behalf of the appellant that in the absence of facilities being granted under Rule 13, it was incumbent on the parties to make a declaration under Rule 9 of the said Rules. As no such declarations had admittedly been made, Rule 9(2) of the said Rules was attracted. Accordingly, the goods in the present case were to be treated as having been brought within the municipal limits for consumption, use or sale therein and as such liable for octroi duty, according to the appellant. Therefore, Shri Sorabjee submitted that this appeal should only be confined to the applicability of Rule 9(2) of the said RulesIn the present case, there is no dispute regarding diesel exported to Dangiawas from Jodhpur Municipality. The Municipal Council has not refuted in its reply in paragraph 11 at p. 117 of the paper book, the quantity of petroleum products exported to Dangiawas as mentioned in Schedule A (p. 104 of paper book) from July 25, 1975 to date of writ petition. The Municipal Council gave an undertaking to refund the octroi tax charged from the petitioner on the diesel exported to Dangiawas outside the limits of Municipal Council, Jodhpur as will be clear from the order of the learned Single Judge dated February 7,1976.It wasalso stated that the Division Bench vide its order dated April 1, 1977 has already ordered that respondent 2 would deposit the octroi tax on diesel exported to Dangiawas. Thus, the octroi tax which became due on diesel exported to Dangiawas from April 1, 1977 up to date is being deposited in the bank account and there is no dispute regarding quantity of diesel exported to Dangiawas. Thus, it appears to us that the controversy raised by Municipal Council referring to cancellation of transport passes is unfounded. The object of the transport passes was to ascertain the quantity of diesel exported to Dangiawas. There appears to be no dispute regarding quantity of diesel exported to Dangiawas from July 25, 1975. The Depot Superintendent of Indian Oil Corporation, Jodhpur had disposed that current account facilities to Indian Oil Corporation is being continued till today.It wasstated that the octroi as paid periodically on settlement of account between Municipal Council and Indian Oil Corporation and not at the time of entry of petroleum products. It appears that the contention that cancellation of transport passes is equivalent to cancellation of current account facilities, made on behalf of the appellant, is incorrect. A perusal of Section 133 would show that current account facility is provided by substantive section, whereas Rule 13 of the said Rules is procedure provided with the object of providing facility of settlement account of payment of octroi tax. In other words, according to Rule 13 (4), octroi tax is charged on quantity mentioned in entry passes minus the quantity mentioned in transport passes, i.e., on quantity of pertroleum products used or consumed within the municipal limits of Jodhpur Municipality. It is also unsustainable, according to Shri Bhandari to contend that M/s. Parekh Automobiles has recovered octroi tax from consumers. It has been asserted in the writ petition on oath as well as before this Court on filing affidavit that no octroi was recovered by M/s. Parekh Automobiles from consumers. On the other hand, it is the case of M/s. Parekh automobiles that it had to pay octroi taxes out of commission which it received from Indian Oil Corporation on sale of diesel. This fact, according to Shri Bhandari was never refuted by the Municipal Council or the Indian Oil corporation. Thus there is no question of unjust enrichment, and as such M/s. Parekh Automobiles is entitled to octroi tax which was recovered from it and which is lying deposited in separate bank account by the Indian Oil Corporation as per order of Division Bench dated April 1, 1977 up to date. For period before April 1, 1977, the Municipal Council has already given an undertaking to refund octroi taxPleadings in this case and the averment are rather confusing. On the consideration of all the facts and the circumstances of the case, we are of the opinion that the principles of the aforesaid two decisions of this Court have been correctly applied by the High Court in the facts and the circumstances of the case. The octroi duty is, therefore, not chargeable on the transactions mentioned herein. We are further of the opinion that in view of the confused state of the pleadings and averment, it is not possible to hold that current account facilities were withdrawn or cancelled. If that is the position, then there is no question that the High Court was right in the order it passed and the direction it gaveChapter II of the Rules provide for the manner of assessment and collection of octroi duty. Rules 3 to 5 provide for the establishment of octroi outposts with powers to the inspecting staff to stop the vehicles at the outposts. Rule 6 lay down that no goods liable payment of octroi shall, except as otherwise provided in these rules, be brought within the municipal limits until the octroi duty leviable in respect of such goods has been paid at the octroi outposts. Where goods arrive at an octroi outpost, they may be coming in either for consumption, use or sale within the municipal limits or for transpiration outside those limits, whether immediately or after a period of time. If they have come in merely for the purpose of transportation, they are not liable to pay octroi duty. If, therefore, became necessary to make a detailed provision as to the manner of assessment and collection of duty having regard to this consideration. That is why Rule 9 requires every person bringing goods with the municipal limits to make a declaration as to what the goods are intended for. If however, the goods are intended for immediate or eventual transportation outside the municipality, a written declaration should be filed by the importer. In respect of goods declared intended for immediate transportation, thee of the octroi outpost receives by way of deposit such amount as may be equivalent to the duty payable thereon and issues a transit pass to the importer. The importer should transport the goods outside the municipal limits within a period not exceeding eight hours (which can be extended to 24 hours at the most). On such transportation being effected, the amount of octroi deposited in respect of the goods so transported is returned to the importer and the transit pass taken back. This is the procedure envisaged in Rule 11. (Certain refinements in procedure in the case of travelling agents is provided for in RulesA andB with which we are not concerned). Where, however, the goods are not immediately to be transported outside the municipal limits but are to be temporarily detained within the municipal limit and eventually transported outside the municipal limits, Rule 12 is attracted. In the case of such goods they have to be sent to a bonded warehouse. The goods may be withdrawn from time to time either on payment of octroi in the event of their being consumed, used or sold within the municipal limits or without any payment of octroi duty in case of their being transported outside the municipal limits. This procedure is outlined in Rules 12 and 16 to 22. But one important condition is that the maximum period for which the goods can be placed in the bonded warehouse is six months. If the goods are not removed within the said time limit, they are liable to be sold by public auction and the warehouse charges and octroi recovered from the sale proceeds. This is the normal procedure for the assessment and collection of octroi duty. It is in respect of this procedure that the declaration in Rule 9 becomes important. The terms of the declaration determine the incidence of the duty. Regarding the first category goods, mentioned in Rule 9(1) the collection of duty is immediate; regarding the second category, a deposit is demanded which can be refunded on transportation within a few hours; and in respect of the third, duty has to be paid unless the goods are transported outside the municipal limits within six monthsRule 13 however, contemplates a totally different scheme for the assessment and collection of octroi for the special type of cases envisaged therein. From the terms of Section 133, it would appear to be intended to cover mercantile firms or bodies which may be bringing goods into, or taking goods out of, the municipal limits frequently and, perhaps, also firms or bodies about whose capacity to pay the duty in due course the Municipal Board has confidence. These persons are given the facility of having a current account with the municipality and the amount of duty payable by such a person is determined and collected from time to time. Such an account is opened on the firm or body making such deposit or furnishing such security as the municipality may require, for the due discharge of its liabilities under the Act and the Rules. When this facilities provided, the procedure to be followed is set out in Rule 13, Here what is done is that the firm or body is given a books of entry passes and a book of transport passes from time to time. As and when the firm or body brings goods into the municipality, it is required to fills in one of the entry passes setting out the details of the goods which are being brought in under any particular consignment and present the same at octroi outpost of entry. After verifying that the details of the goods brought in tally with the details of the goods entered in the entry pass, the details are passed on the octroi Superintendent who debits is the account of the person concerned with the amount of octroi payable in respect of the goods listed in the pass. As and when the firm or body wishes to transport the goods out of the municipality, it fills up a transport pass containing the details of the goods proposed to be transported outside and presents it to the octroi outpost of exit. The officer at the outpost verifies that the goods mentioned in the pass and the goods sought to be transported tally with each other. Then the transport as duly certified by him is passed on to the Octroi Superintendent. The Octroi Superintendent, after verification, files the certificates of export separately in respect of each such body or firm. The amount of octroi payable in these cases is based on the total amount of octroi on the good shown by the entry passes less the goods transported out under the transport passes. In other worlds, in the case of persons who have the current account facilities, the duty is calculated on the basis of the total amount of goods that have come in as reduced by the total amount of the goods that have gone out, the balance being presumed to have been consumed, used or sold within the municipal limits. In order to ensure that there is a correspondence between the good that have come in and those that have gone out, the proviso toe (4) of Rule 13 provides that, in computing the octroi duty payable, the goods transported outside the municipal limits shall be lessened only if (a) such goods have not been sold within the municipal limits, and (b) they have been transported out of such limits within a period of six months from the data of their importA comparison of the above two sets of provision will make it clear that they are two independent and mutually exclusive modes of assessment and collection of duty. Under the cash system of payment, a declaration under Rule 9 is absolutely essential because of the official at the outpost will have to determine the mode of dealing with the goods on the basis of such declaration. The octroi duty has to be collected then and there in respect of the goods which are to be consumed, used or sold within the municipal limits; a depots has to be taken in respect of those goods which are intended to be immediately transported outside; and the rest of the goods on which the transportation is to be effected on a future time, have to be directed to a bonded warehouse. The mode of collection of duty in respect of a person having current account facilities, however, does not depend upon any such declaration or upon the mode of utilisation of the goods as indicated in such declaration, because, in the case of the current account holders, the duty payable in respect of the entirety of the goods brought in is straightway debited to his account on the basis of entry passes. The duty payable in respect of the goods transported outside is later on credited to his account on the basis of the transport passes. The difference is the amount of the duty payable by him and this is recovered from the person concerned from time to time either by adjustment out of the deposits earlier obtained from him or by other processes of recovery. The procedure as to issue of transit passes or storage in a warehouse are also irrelevant for the purpose of dealing with the goods under Rule 13It, therefore, appears, appears to me that High Court was fully justified in holding that the terms of Rules 6 and 9 have no reliance to the payment of duty in cases covered by the current account facility envisaged under Rule 13. The High Court was, therefore, right in holding that the present case cannot be brought within the terms of proviso to Rule 9(2) on the basis of a deemed consumption. Use or sale within the municipal limitsIt is true that the proviso toe (4) of Rule 13 also envisages the exclusion from levy of octroi duty only where the goods are not sold within the municipal limits. It may be contended that, in the present case, as the IOC had sold the goods within the municipal limits and the subsequent transport to Dangiawas, though effected by the IOC was really on behalf of the dealer the goods so transported and entered in the transport passes of the IOC should be excluded from dedication undere (4) of Rule 13. But this construction;, in my view, cannot be accepted. The expressions used in the proviso toe (4) cannot be interpreted differently from the words used in Section 104, on the basis of which chargeability to duty arises. If as we have held, there can be no octroi duty at all levied by the Jodhpur Municipality in respect of the good sold by the IOC within, but clearly intended to be transported for use or consumption outside, the municipal limits, then this statutory limitation cannot be defeated by interpreting the proviso in such a way as to make all goods sold within the municipality liable to duty even if the sale is in pursuance of a clear intention that the goods are to be dispatched outside. The terms of the proviso and the main section have to be read harmoniouslyThe result of the above discussion is that the present case is governed by the terms of Rules 13 and the IOC is entitled to go on paying octroi duty on the basis of the goods brought by it within the municipality less the goods transported outside the municipality even where the transport outside the municipality 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. As we have already said, in cases where Rule 13 applies, Rule 9 is excluded and, therefore, the High Court rightly held the octroi charged on the IOC in respect of the impugned sales was not justifiedBefore concluding I wish to refer to three aspects. The first is as to whether even assuming that Rule 9 was applicable to a case where the current account facility has been provided, the terms of that rule can be read in such a manner as to militate against the very concept of octroi duty as explained in the Burmah Shell case ((1963) Supp 2 SCR 216 : AIR 1963 SC 906 ). A question may arise whether the terms of Rule 9(2) so interpreted would be intra vires the rule making power of the legislature. I express no opinion on this issue as I have already expressed my view that Rule 9 has no application to the present case. The second aspect, which I wish to touch upon, is a point sought to be raised on behalf of the appellant in the course of the present hearing that the current account facility granted to the IOC had been revoked. My learned brother has referred to the pleadings in this regard at great length and, as pointed out by him. The factual position is by no means clear. I do not think that the appellant should be permitted to raise at this stage a new plea when all along, in the earlier proceedings in the High Court, the case has proceeded on the footing that the IOC had been having and continues to have current account facilities. The third aspect to which I would like to make a reference is that we have principally passed our decision only on the facts in regard to the sales to Parekh Automobiles Ltd. We are told that there are a number of suits, other than those before us today, which are pending at various stages in which various pleas have been raised. I would only like to make it clear that we express no opinion regarding the factual position in those cases and those cases will have to be disposed of in the light of the legal position set out in our judgment. Except for the above clarifications I have nothing to add to what my learned brother Mukharji, J. has said and I respectfully agree with his conclusion that the appeals must fail and are dismissed.