Case: Poona City Municipal Corporation Vs. Dattatraya Nagesh Deodher

The Poona Municipality was formerly a Municipality under the Bombay District Municipal Act of 1901 (Act 3 of 1901). In 1925 it became a Municipal Borough under the Bombay Municipal Boroughs Act of 1925 (Act XVIII of 1925). Later, underthe Bombay Provincial Municipal Corporation Act, 1949, the Municipal Authority for the City of Poona became a Corporation known by the name of Municipal Corporation for the City of Poona.2. It appears that from the time when the City was a Municipality under Act 3 of 1901, an octroi duty was being levied on goods imported within the Municipal limits of the City. When such goods were exported out of the City Municipal limits within specified periods, refund used to be given in respect of the duty so recovered.3. The respondent has for many years been carrying on business of securing refund of octroi duty on behalf of persons who had paid the duty and were entitled to refund. In respect of the period from the 15th February 1950 to the 14th September 1950, the respondent made a claim on behalf of his principals, for the refund of Rs. 73,650/- to which, according to him, they were entitled. The Municipality however paid to him only 90% of this amount. The remaining 10% was deducted in accordance with R. 18(3) of the Octroi Rules which had been framed by the Municipal Authorities.4. The respondent then represented to the Corporation that with effect from the 15th February 1950, the date from which the Corporation came into existence under the Provincial Municipal Corporation Act, 1949, this deduction of 10% had become invalid in law and claimed that this amount should be paid to him. The Corporation however refused to concede this claim. The respondent then brought this suit for recovery of Rs. 7,364/ 15/ - (being 10% of Rs. 73,650/ - the amount alleged to have been illegally withheld) with interest.5. The main defence raised by the Corporation to the plaintiffs claim was that the deduction of 10% was legally valid. It was further urged that, in any case, the plaintiff who was not the person who paid the amount, was not entitled to bring the suit. Lastly, it was contended that the suit was barred by limitation.6. The Trial Court held that the plaintiff was entitled to bring the suit and also that it was not barred by limitation. It held however that the deduction of 10 per cent from what was paid as tax was valid. Accordingly, it dismissed the suit.7. On appeal by the plaintiff, the District Court, Poona held, disagreeing with the Trial Court, that the deduction of 10% of what had been realised was not valid in law. It was however of opinion that the plaintiff was not entitled to bring such a suit. It was also of opinion that the suit was barred by limitation. In this view, it dismissed the appeal.8. The plaintiff then appealed to the High Court of Judicature at Bombay. The High Court has found in favour of the plaintiff on all the three points raised. It held that the deduction of 10% was invalid in law, that the plaintiff was entitled to sue, and that the suit was not barred by limitation. Accordingly, the High Court allowed the appeal, and made a decree in favour of the plaintiff for Rs. 7,364/15/- with interest thereon at 4% from the date of the suit and interest at the same rate from the date of the judgment, with costs throughout.

Court's reasoning:
We are clearly of opinion therefore that Cl. 5 (a) of Appendix IV furnishes no justification for the levy of the ten per cent deduction, after the 15th February 1950 when the Act LIX of 1949 with its categorical prohibition in S. 127 (4) against the imposition by the Corporation of a tax which the State Legislature had no power to impose under the Constitution became applicable. The defence that the deduction of 10% of the amount collected as octroi was legally valid has thus been rightly rejected by the High Court.We also agree with the High Courts conclusion that the, plaintiff was entitled to bring the present suit. The Poona City Municipalitys Octroi Rules and Bye-laws under which the claim for refund can be made define "a claimant "as a person" who produces the duly receipted import bill and the corresponding export certificates." (Rule 2, cl. (g)). It is not disputed that for the several cases in respect of which this deduction of ten per cent had been made by the Corporation the plaintiff was the person who produced "the duly receipted import bill and the corresponding export certificate. " Indeed, it is on that basis that 90 per cent of the amount paid by different exporters was refunded by the Corporation to the claimant. It is difficult to understand how if the plaintiff was entitled to claim and obtain refund in respect of 90% of the amount paid, he was not entitled to make the claim with respect to the remaining 10 per cent.It may be pointed out that as the receipted import bill and the corresponding export certificates in respect of the goods in question have already been made over by the plaintiff to the defendant Corporation, it will not be possible for the merchants who actually imported the goods and then exported them, to make any fresh claim. For, no claim would be accepted without the receipted import bill and the corresponding export certificates. Mr.Patwardhan faintly argued that the definition of a claimant in the Rules is in respect of 90 per cent of the octroi refund.There is obviously no substance in this argument. Rule 11 deals with the procedure of claims to refund and requires that claimant should produce a duly receipted import bill and an expert certificate relating to such goods. (Rule 11 (2) (iv)). These provisions are entirely independent of Rule 18 (3) which lays down that a deduction of ten per cent shall in all cases be made before refunding the amount of octroi duty in certain circumstances. It is, in our opinion clear that the plaintiff having made the claim in accordance with the rules was the person entitled to receive what amount was legally refundable. As we have found that the deduction often per cent could not legally be made, in other words, the entire amount paid was refundable, it follows that the plaintiff was the person entitled to obtain the refund and so he was also entitled to bring thebenefit of this section would be available to the Corporation only if it was held that this deduction of ten per cent was "an act done or purported to be done in pursuance or execution or intended execution of this Act". We have already held that this levy was not in pursuance or execution of the Act. It is equally clear that in view of the provisions of S. 127 (4) (to which we have already referred) the levy could not be said to be "purported to be done in pursuance or execution or intended execution of the Act." For, what is plainly prohibited by the Act cannot be claimed to be purported to be done in pursuance or intended execution of the Act. Our conclusions is that the High Court has rightly held that the suit was not barred by limitation.