Case: Tata Engineering And Locomotivecompany Ltd. And Anr Vs. Municipal Corporation Of The City Of Thane And Ors

a Engineering and Locomotiveer called) is a company registered under the Indian Companies Act,and the second appellant is one of itsy is carrying on business of manufacture and sale of motor vehicles and spare parts of motor vehicles and excavators. Their manufacturing units are at Pune and Jamshedpur outside the Thanen limits. They have a bonded warehouse within the municipal limits in which they bring and stock motor vehicleparts and excavatorparts from their own factories at Pune and Jamshedpur. They also bring in parts manufactured by their ancillaries within India and also parts imported fromThese products or parts are brought in bulk and thereafter taken or sent out from themunicipal limits insmaller packings depending on the requirements of the customers in various parts of the country. It is stated that the parts imported or purchased from others and brought in are relatively very small in quantity and the major portion of the activity related to their own factory producedand from 1st October,with the notification underof the Bombay Provincial Municipal Corporation Act, 1949, the Thane Municipal Council became aer called. Prior to theof the Corporation it was a municipality andgoverned by the Thane Municipal Council constituted under the Maharashtra Municipality Act, 1965. Prior to 1st October,the Thane Municipal Council had granted to thecurrent account facilities in respect of payment of octroi under the Maharashtra Municipalities Act,and the Maharashtra Municipalities (Octroi) Rules,made thereunder. The Municipal Council had also granted permission underany for maintaining a godown or warehouse of their own.There is nodispute that even after the coming into existence of the Thane Municipal Corporation the appellants were permitted to have a warehouse of their own and keep a current account facility without the requirement of immediate payment of octroi at the. In terms of granting those facilities thehad made as security a cash deposit of Rs. 7 lakhs with the Corporation and had also given ae for an equivalent amount as agreed to between theand the Corporation. However, there is some dispute as to what were the formalities that were dispensed with in the matter of claiming refund of the octroi when the goods were exported. But suffice it to say at this stage that the appellants were permitted to carry out their activities of imports and exports under the current account procedure with a facility of unpacking the bulk, repacking androm 1stto 31st March,it is stated that the appellants had made2 claims for refund. All these claims were rejected by the letters of the Corporation dated4 and4. They were rejected on the following two grounds : (1) thehad "sold" the spare parts within the octroi limit (which iswith the Corporation limit) in contravention of) of the Maharashtra Municipalities (Octroi) Rules, 1968the procedure prescribedfor export and the claim of refund had not been strictly followed. The non-compliance withthe procedure prescribedreferred to in the second ground accordingto the Corporationorm 4 of the Octroi Rules and the original invoices were not submitted, or (ii) Forms 11 and 12 filed were incomplete and all the required information were notor (iii) certificate of the OctroiExit Naka Officer hadnot been obtained. The rejection of the claim was either on one or more than one or all the grounds mentioned above.

Court's reasoning:
It appears that during the hearing of the writ petitionel appearing for the Corporation did not counter the contention of thethat the rejection under25(3)(d) was not correct andes have also recorded the same in thetherefore, permitted the point to be argued in thiswe discuss the points in controversy we may state that in the counter-affidavitin the writ petition therespondents have admitted that thewas enjoying the current account facility prior to1st October, 1982and the respondent-Corporation had also given the said facility to the1st October,on their making a cash deposit of Rs. 7and furnishing ae for a like sum as security for grant of that facility. Thehad also admitted that thehad been given permission under10(2) to maintain their own godown from 12th December, 1982. Broadly stated under the current account facility granted, no octroi duty is recoverable in cash from the appellants at the entry octroi naka point. However, thewas required to submit a statement of goods imported in5 before the 10th of the following month. The officers of the respondent after scrutiny of the statement so filed determine the octroi duty payable thereon and debit the amount in the current account kept and send a demand notice to the company. Theis required to pay the amountto the Corporationwithin 15 days of the determination ofratio is thus not a mere sale inside that attracts octroi but a sale intended for consumption of the goods inside the octroi area though ultimately the person to whom it was sold for consumption does not consume the goods inside but does the same outside thethat in computing the octroi duty payable under(4), the goods transported outside the municipal limits shall be lessened only if such goods have not been sold within the municipal limits and if they have been exported out of such limits within a period of six months from the date of their import in suchappeal this Court confirmed this view and held that the IndianCorporation (importer) who had the current account facility and governed by the terms of13 was entitled to go on paying octroi duty "onthe basis ofthe 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 shouldconsumed or used outside the municipalthe present case the sales were towho were carrying on business outside the limitsof the Corporationand the goods were also intended toconsumed or used outside such limits and in fact the goods were also exported. The ratio of the decisions above referred clearly, therefore, governs this case, even if it were to be assumed that the sale in the general sense took place inside the municipalis not necessary for us, however, to consider this aspect and we would for the purpose of this case proceed on the assumption that technically the sale in law had taken place inside the municipalthe goods were sold by theto outside purchasers and the goods under the transactions of sale, were intended toexported and were in fact exported, for consumption or use outside the municipal limits no octroi duty was leviable and the octroi duty paid on entry into the municipal limits was, therefore, liable to be refunded. Accordingly the rejection of the refund claims on the ground that25(3)(d) had not been strictly complied with is illegal and could not be sustained. Such of those claims which were rejected only on the grounds of contravention of25(3)(d) shall now be taken up by the respondent and passed forthe case of impost of octroi the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area. Mere physical entry into the octroi limits would not attract levy of octroi. When the goods are brought in not for consumption within the area but for temporary detention and eventual export, octroi is not leviable. But in order to ensurein such circumstances, that the goods are exported and to prevent evasion of octroi on goods consumed inside the octroi limit,provide for deposit of a certain sum of money or the actual octroi duty payable subject to a right to get a refund of the same when the goods are exported. When the goods in respect of which octroi was paid are exported, the octroirefundable and that is the very scheme of the levy of octroi. The octroiable event in such a case shall be deemed nothave happened. Right to refund arises because the goods are not consumed inside the area buttax becomes not leviable. The rules merely regulate the system on which refunds shall be allowed. The procedureeed to adhere to the procedure shall have to beght oflegal incidence and nature of octroiinstant case falls under the fifth category. Thehas been permitted by the Municipal Corporation to keep the dutiable goods in a bonded warehouse of their own with a current accounta reading of these rules it appears to be that24, 25 and 28 in terms would apply only to cases falling under category four, stated above. The declaration in4 referred to init ofamount equivalent to octroi duty payable at the entry point, production of the goods for verification at the Centrale are all consistent with its being applicable to a case where dutiable goods are imported for temporary detention and eventual export by a person having a bonded warehouse of his own contemplated in14(1)(d) and notes 29 and 30 are general in terms and may be invoked in both the cases falling under14(1)(d) and (e). Sub-rule (3) of29 refers to the compliance of the conditions in28 and that is how it may be said that the provisions of28 are attracted to the cases of a person having a bonded warehouse and the facility of account current. However, thehave to be read and applied in such way that they do not conflict with but are consistent with the facility of current account given to theForm 5 which is applicable to a casee 14(1)(e) does not require the(importer) to give a declaration at the time of arrival of the goods at the entrypoint that the "goods are meant for temporary detention with" theat its warehouse "for eventual export outside the octroi limits". Theneed not also make any deposit with the Naka Inspector at the point of entry. An amount equivalent to the octroi duty payable inof the goods isn the account currentafter the goods have reached the warehouse and verified by the. Form 4 is not applicable to the case of thewhich has got a current account facility. Theis, therefore, bound to give a declaration only in5, and need not give a declaration as in4 nor is there any obligation to deposit an amount equivalent to the full octroi duty with the Octroi Inspector at thet. Further reference to original invoices in5 is only for the purpose of checking the particulars entered into in the forms. The production of an invoice is not, having regard tothe purpose of such production, to be insisted blindly. If the particularsin the formincluding weight/quantity or value could be established satisfactorily by other documents, we have no doubt that will be sufficient compliance with theColumn 5 of11 also refers to invoice and the date of invoice. This is again to correlate the goods exported with the goods imported. If the identity of the goods could be established by evidence other than the production of invoices that should satisfy theThe invoice as such has no bearing on the liability of the goods for octroi or theSo far as the production of the original invoices are concerned,el for thepointed out that the goods are brought from their own manufacturing units at Pune and Jamshedpur and it will only be a stock transfer and this requirement of producing original invoice could not be complied with and is not applicable. Under the current account procedure the invoices, if any and all the other documents are verified when the goods reach the warehouse with reference to the description of the goods, weight/quantity, value and other particulars and it is only after verification the octroi duty leviable is determined and amount isn the account currentand the demand also isthese columns could be filled only to the extent possible by a person having an account current facility and there is no dispute about theof the goodsmentioned therein the refusal to give the export pass certificate by the Exit Naka Officer could not be