Case: Hindustan Coca-Cola Beverage Pvt. Ltd Vs. Sangli Miraj &amp; Kupwad Municipal Corporation &amp; Others

According to the appellant, their products are distributed and sold in returnable and reusable glass bottles. Glass bottles are stored in plastic crates. Glass bottles and crates are owned by the appellant. They are never sold to any distributor or retailer. Once the product in the glass bottles kept in crates is consumed, glass bottles along with crates are returned to the appellant for filling after cleaning and washing them. The appellant pays octroi levied on the aerated beverages when they enter octroi limits of Municipal Corporations. The impugned bill has the effect of levying octroi separately on the glass bottles and plastic crates utilized by the appellant to pack and transport the aerated beverages manufactured by them. The aerated beverages cannot be separated from bottles and crates. The bottles and crates are neither consumed nor sold but are returned. The glass bottles and plastic crates are both reusable and durable and are repeatedly used by the appellant. Moreover, it is alleged that the cost of the glass bottles and crates is amortized and included in the retail sale price of the aerated beverages. Hence, it was suggested that Octroi cannot be levied on the value of the glass bottles and crates and the impugned bills are, therefore, illegal and arbitrary.6. The said challenge did not find favour with the High Court and the High Court after placing reliance on the judgment of this Court in the case of Acqueous Victuals Private Limited v. State of Uttar Pradesh & Ors. reported at (1998) 5 SCC 474 dismissed the Writ Petition. However, liberty was granted to the appellant company to claim refund by filling appropriate application, in case, the bottles and crates are not sold, used, or consumed in the Municipal limits of the respondent-corporation, that is to say, if they have not finally rested in the Municipal limits of the respondent-corporation; and a further direction was issued that if such an application is filed, the same will be considered in its proper perspective by the concerned authority and if a case is made out the refund shall be granted.

Court's reasoning:
If empty bottles are taken out of Municipal limits, they cannot be said to have been consumed or destroyed within the Municipal limits. The question which needs investigation is whether out of the total consignment of bottled beverages imported within the Municipal limits, the entire consignments of the very bottles after getting emptied got re-exported or whether some of the said bottles forming part of the original consignments got destroyed by way of breakage, etc. or were never returned by the consumers concerned and only rest of the imported bottles were re- exported by enabling the consumers and retailers or wholesalers to get refund of the price of the bottles paid by way of advance security from the petitioner-Company on return of these empty bottles for recycling. It is axiomatic that if the bottles in which beverages were brought within the Municipal limits for sale to consumers had themselves got destroyed by breakage, etc. or were not returned by consumers, they could be said to be consumed within the Municipal limits and, hence, there would be no occasion for their export at any time thereafter. In the said circumstance the intention with respect to the fact that whether or not, the said goods were brought for consumption and usage will become clear only at the subsequent stage i.e. when the bottles are re-exported.In the view that it had taken, this Court held that if the petitioner-Company satisfied the authorities concerned that the bottles containing the original consignments after getting emptied within the Municipal limits were actually taken out of the Municipal limits for recycling, then it would be entitled to claim proportionate refund of the octroi duty assessed on the weight of such empty bottles only subject to the burden of such amount of duty not being shown to have been passed on to consumers of beverages or to anyone else, i.e. there is no unjust enrichment.17. Setting aside the High Courts order to the above extent, this Court permitted the petitioner-Company to lodge its claim for refund by producing evidence on the followingNature of the consignments concerned with their dates and the number of bottles packed with beverages brought within the municipal limits with their weight;(b) Proof regarding the fact that these bottles were not sold within the municipal limits to wholesalers, retailers or to any other person;(c) Number of bottles covered by the consignments concerned which were subsequently taken out as empty bottles beyond the municipal limits for recycling and weight of such empty bottles;(d) Whether the bottles which are actually found to have been taken out of the municipal limits were the very same bottles containing beverages brought within the municipal limits by way of relevant consignments;(e) Whether the value of such bottles and amount of octroi duty on their weight was passed on to the consumers orIn our considered opinion the present case is squarely covered by the above said decision of this Court in the case of Acqueous Victuals (supra), and the said decision was passed on the similar facts as of the present case, the only difference being that in the case of Acqueous Victuals (supra) octroi was computed and levied on the basis of the weight of the bottles and crates, whereas in the present case, the impugned bill seeks to levy octroi on the basis of value of the bottles and value of the crates. It was suggested by the learned senior counsel appearing for the appellant that due to the said difference the judgment in the case of Acqueous Victuals (supra) will not be applicable to the present case. In our opinion the said difference of the mode of computation of the octroi will not affect the applicability of the ratio of the said decision to the present case and the same applies to the present case on all fours.19. It was also suggested by the learned senior counsel appearing for the appellant that the decision in the case of Acqueous Victuals (supra) cannot be said to be the correct law as the said decision did not correctly appreciate the law laid down by the Constitution Bench of this Court in the case of Burmah Shell Oil (supra). In order to appreciate the said submission it would be appropriate to extract the relevant portion of the judgment in the case of Acqueous Victuals (supra) wherein this Court has elaborately considered the law laid down by the Constitution Bench in the case of Burmah Shell OilIn view of the aforesaid decision, it becomes obvious that the wordis held to be a synonym with the wordmeaning thereby the article concerned must finally rest within the municipal limits. In the light of the aforesaid judgment of the Constitution Bench of this Court, therefore, it is obvious that before a municipality can impose octroi duty on any commodity, it has to be shown that the commodity concerned was brought within the municipal limits for consumption, that is, for being totally used up so that it ceases to exist within the municipal limits themselves or it was to be used for an indefinite period within the municipal limits so that it ultimately rests within the municipal limits and does not go out subsequently, or the commodity concerned must be shown to have been brought within the municipal limits for the purpose of sale within the said limits. Having thus laid down the aforesaid legal position concerning the imposition of octroi in the penultimate paragraph of the Report at p. 234, the Court observed that the Burmah Shell was liable to pay octroi tax on goods brought into local area (a) to be consumed by itself or sold by it to consumers direct and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumers bought them for use in the area or outside it. The Company was, however, not liable to octroi in respect of goods which it brought into the local area and which were re-exported. But to enable the Company to save itself from tax in that case it had to follow the procedure laid down by rules for refund of taxes.16. The aforesaid authoritative pronouncement of the Constitution Bench of this Court, therefore, sets at rest the controversy in the present case. If it is the case of the writ petitioner that during the relevant period from 1980 to 1987 it brought within the municipal limits of the four respondent-Municipalities beverages packed in bottles and the bottles were not sold within the municipal limits and after the beverages were taken out of these bottles, these very bottles were returned to the petitioner and were taken back to Bareilly, then for claiming the refund of the octroi paid on the weight of these bottles during the relevant period when the consignments entered the municipal limits from time to time, the writ petitioner had to follow the procedure laid down by the Municipality concerned under its rules for refund of taxes and had to comply with the statutory gamut of these rules. It had also to show that the burden of disputed octroi duty was borne by it and was not passed on to consumers of beverages contained in these bottles. In other words, it would not be guilty of unjust enrichment if refund was granted. If the refund claim on furnishing the relevant proofs was not ultimately granted, the remedy of appeal provided under the rules had to be followed.On a minute and detailed perusal of the judgment of the Constitution Bench in the case of Burmah Shell Oil (supra), and the above noted inference drawn in the case of Acqueous Victuals (supra), we do not agree with the said submission of the appellant. We respectfully agree with the above noted inference drawn and are of the considered opinion that this Court in Acqueous Victuals (supra) has correctly appreciated the law laid down by the Constitution Bench in Burmah Shell Oil (supra).21. Though it was vehemently argued that the cost of the bottles and crates is amortized and included in the retail sale price of the aerated beverage but no facts were placed before the High Court in that regard. Moreover, even in case the same were placed, the same being disputed question of fact could not have been gone into by the High Court exercising the jurisdiction under Article 226 of the Constitution of India.22. In the present case, the definition ofis contained in Section 2(42) of the BPMC Act. Relevant entry in respect of aerated water in the octroi schedule under the said Rules is at serial no.11 (D). Relevant entry as regards bottles is at serial no.52. Relevant entry as regards barrel crate and individual crate, is at serial No.53E. The said Rules contain detailed provisions under which an importer can make an application for refund.23. Accordingly, in our opinion, as also laid down by this Court in Acqueous Victuals (supra), in case the appellant- company is sending out the same bottles for recycling and if the bottles and crates are not sold, used, or consumed in the Municipal limits of the respondent-Corporation, that is to say, if they have not finally rested in the Municipal limits of the respondent-Corporation in which they are imported, the appellant-company can always make an application for refund under the said Rules. The appellant-company will have to produce evidence on the points detailed in the Acqueous Victuals (supra) which we have quoted hereinabove. As submitted by the appellant, in case, the cost of the bottles and crates is amortized and included in the retail sale price of the aerated beverage, the evidence can also be placed in that regard, in order to claim refund on any such amount. Besides, it was also pointed out that bottles in which beverages are brought are recycled and used bottles and therefore levy of octroi cannot be at the same rate as that of the new bottles. These are also disputes on the facts, which would require production of evidence. On the appellant- company making an application for refund, the concerned authority will consider it in its proper perspective and if a case is made out shall grant refund.24. Needless to say, in case, the appellant is aggrieved by the valuation of the bottles and crates on the basis of which the impugned bill is issued they are at the liberty to file objections before the appropriate authority, and the appropriate authority will adjudicate the same in accordance with the law, as against which if still aggrieved, further remedy as available could be resorted to.25. At this stage it is pertinent to mention that during the hearing, the appellant has expressed its concern about the mechanism by which the said levy could be computed and collected as according to them the present procedure is very cumbersome and unworkable at both the ends, and moreover, the same would result into incurring of huge managerial time and administrative cost. After the present judgment was reserved for pronouncement, the appellant has also given proposals to the respondent corporation for devising a suitable and convenient mechanism. The said request on the part of the appellant requires consideration. Accordingly, the responded corporation shall consider the said proposal in accordance with law and even otherwise on their part devise a suitable, convenient and workable mechanism for levy and collection of octroi.