Case: Swastik Rubber Products Limited Etc Vs. Municipal Corporation of The City of Poona and Another

2. The Bombay Provincial Municipal Corporation Act, 1949 (for short the A ct) came into operation in the City of Poona on 15th of February, 1950. Section 127 (2) thereof authorises the Corporation to impose octroi and other taxes. Section 149 prescribes the procedure to be followed in levying taxes. Insofar as it is material, it reads:"149 (1) In event of the Corporation deciding to levy any of the taxes specified inn (2) of section 127, it shall make detailed provision, in so far as such provision is not made by this Act, in the from of rules, amplifying or adding to the rules at the time in force(2) The rules shall be submitted by the Corporation Government and the provincial Government may either refuse to sanction the m or refer them back to the Corporation for further consideration or sanction them either as they stand or with such modification as it thinks fit, not, however, involving an increase in the rate or rates of the levy or the extent thereof."3. It appears that sometime in the year 1957 the Corporation in order to boost industrial development and to encourage the industrialists to establish industries in the city, had decided to give certain concession in the nature of exemption from octroi duty on certain products under certain conditions. Pursuant to this objective the Corporation made rule62Bin Chapter VIII to the Schedule of the Raid Act in 1957. It. Industrial Estate or Area" means the area which Corporation may from time to time demarcate for the purposes of the rule as the area in which industries canbe suitably located in the interest of industrialisation of the city of PoonaIn respect of any raw materials or machinery imported by any industrial manufacturing concern established or to be established in the industrial estate solely for the purpose of manufacturing finished articles in the said industrial estate, the Commissioner shall not, for a period of twelve years only, from the date on which this rule comes into force, levy octroi..."Under this rule no levy of octroi was to be made for a period of twelve years from the date on which the rule came into forceLater on the Corporation framed extensive new octroi Rules under their resolution dated 7th of August, 1962, which received the sanction of the Government of Maharashtra on 28th of January, 1963. As the entire argument on behalf of the appellants is based on rule 5 (8) of the said rules, it will be appropriate to quote the rule:"5(8). In respect of any raw materials or machinery belonging to and imported by the industrial, manufacturing, processing or assembling concern established or to be established in the industrial estate or area for the purpose of manufacturing, processing, or assembling finished articles in the said industrial estate or area, the Commissioner shall not levy octroi for a period of 10 years from the date of demarcation of such areas as an industrial estate or area. Provided that this exemption not be given in respect of any raw materials imported for the purpose of refilling, packing or repacking onlyProvided that no exemption from octroi shall be given or claimable unless the importer produces at the time of 1) import but not afterwards a certificate in the form prescribed in Schedule P signed by the proprietor or the manager of the said industrial concern certifying that the raw materials or machinery that are being imported are the property of the ownership of the said industrial concern and that the said materials or machinery are to be used or are intended to be used by the said industrial concern for the purpose of manufacturing, processing or assembling finished articles in the said industrial estate or area.For the purpose of this exemption Industrial Estate or Area shall mean the area which the Corporation may from time to time demarcate for the purposes of this rule as the area in which industries can be suitably located in the interest of industrialisation of the City of Poona."5. The Corporation had been levying octroi on the materials received by the appellants. They, however, sought to get exemption under rule 5 (8) from octroi. As the pattern of facts in each of the appeals is similar, we shall deal with the application made by the appellant in appeal No. 1568 of 1970. The appellant in this case applied on 17th of November, 1964 for exemption from payment of octroi duty under rule 5 (8) of the octroi Rules. The Superintendent of octroi, Poona Municipal Corporation wrote back on 5th of December, 1964 as follows:"...exemption from payment of octroi duty can only be granted if the area within which the concern is situated is declared as industrial area and is demarcated for the purpose under the Resolution of the Corporation. As the area in question has not been demarcated as an industrial area, under the resolution of the Municipal Corporation, the question of granting exemption from the payment of octroi duty does not arise. It is, therefore, regretted that the exemption asked for cannot be granted."6. Similar was the position of the appellants in the other two appeals7. In the circumstances the appellants filed petitions under Article 226 of the Constitution for a mandamus requiring the Municipal Corporation to define and demarcate the area where their factories were situate as industrial area within the meaning ofe (8) of rule S and to exempt them from payment of octroi8. It appears that during the pendency of the writ petitions rule 5 (8) of the octroi Rules was repealed by a notification with effect from 1st of September, 1968. The appellants, therefore, applied for amendment of the petitions. By these amendments, the appellants sought to take up two more pleas: (I) that the repeal ofe (8) of rule 5 was illegal and/or ultra vires and, therefore, rule 5 (8) still continues to be effective, and (2) that in any event the appellants can get the benefit of rule62Bwhich has not beene High Court repelled both the contentions and held that old rule62Band the new rule 5 (8) were repealed and there was no legal flaw. It, however. took the view that despite the repeal of rule S (8) the appellants could still get the relief under rule S (8) if other conditions were satisfied, because of the proviso attached to the repealing rule. On merits, however, the High Court did not accept the case of the appellant s. In its opinion the area in ques was not demarcated as industrial estate or area for the purpose of rule 5 (8). The High Court further held that in view of rule 5 (8) of the octroi Rules it was solely in the discretion of the Corporation t o demarcate an area as industrial estate. The appellants have now come to challenge the order of the High Court by these A appeals.

Court's reasoning:
11. The expression obviously includes not only a concern to be established but also one already established. But even then the appellant cannot get exemption unless he proves that there has been demarcation within the meaning ofe (8) of rule 5 of the octroi Rules. While demarcating an area for the purpose of rule 5(8) the Corporation may have to take into consideration various factors and circumstances different from those which might weigh with it for making out an area as industrial under the Town Planning Act. The purpose of that Act is to plan the town and thus to keep industrial areas away from the residential or commercial areas and no industries could be set up in an area other than the industrial area declared in pursuance of that Act, while the purpose of demarcation as industrial estate or area under rule 5(8) is the giving of incentive and impetus to industries in a particular area In so doing the Corporation has got to see whether a particular area is or is not suitably located in the interest of industrialisation irrespective of any consideration as to how the t own is to be plannedThere is no foundation for this ground. It has not been alleged, much less proved, that any other unit has been granted exemption even without a demarcation by the Corporation under rule 5(8). There is absolutely no force in this contention13. It is true that seven rules covering the subject of octroi and contained in chapter VIII of the Schedule to the Bombay Provincial Municipal Corporation Act 1949 have been specifically mentioned in the preamble as being rescinded and rule62Bis conspicuous by its absence therefrom, which fact apparently supports Dr. Singhvis contention. A closer analysis of the preamble under which new rules were framed, however, makes it clear that rule62Brelating to octroi was repealed by implication. It is noteworthy that chapter VIII above mentioned does not contain any rule relating to octroi, except rule, which did not find a place in the preamble. All rules relating to octroi and enacted under the 1901 and the 1925 Acts were also repealed without exception. Another pointer (which is perhaps the most important in this connection) is available in the fact that octroi was made ther of a new and comprehensive set of rules which not only deal with the matters covered by the rules contained in chapter VIII and specifically mentioned in the preamble but also the one covered b y rule, namely, the matter of exemption of goods from octroi in areas considered suitable for industralisation. It does not stand to reason that theg authority framed new rules, of which rule 5(8) covers the entire field of the earlier rule, and yet left the latter intact. It could possibly not have been the intention of that authority to have two rules on the same subject and thus create confusion. The promulgation of rule 5(8) as a part of an exhaustive set of new rules, in our opinion, has the effect of a repeal of rule62Bby necessary implication, although not in express terms.Dr. Singhvi, however, as a second string to the bow banks upon the proviso to the resolution of the Corporation seeking to repeal rule 5(8) which is in these words:"Octroi Rule 5(8) is herebyrepealed.Provided that notwithstanding such repeal the exemption already granted shall continue until the expiry of the respective periods of their grants."14. The resolution so passed was sent to the Government and, as held in Municipal Corporation for the City of Poona etc. v. Bijlee Product (India) Ltd. etc., (1) the Government accepted it in full and sanctioned the repeal of rule S(8), as also the proposed proviso. But then the appellants would not be entitled to any benefit by reason of the proviso because they were never granted any exemption under rule 5(8)In our opinion the considerations which have weighed with the Corporation can not be said to be either irrelevant or extraneous. These considerations are within the ambit of rule 5(8) of the octroi RulesWe do not think it is necessary to decide this point as in our opinion the appellants have not been able to make out a case for any relief17. In Civil Appeal No. 1600 of 1970 Shri R.B. Datar adopted the arguments advanced by Dr. Singhvi. In the third appeal, No. 1416 of 1970 also the same questions of fact and law are involved and, therefore, this judgment will govern the other two appeals.