JUDGMENT

Phukan, J.-This appeal by special leave is against the judgment of the Gujarat High Court holding that the appellant is liable to pay octroi duty under Section 99 of Gujarat Municipal Act, 1963 (for short the Act).

2. The appellant, a textile manufacturing company, brought cloth pieces of 100 meters length within the octroi limits of Nadiad town. To meet the requirement of relevant excise rules and also demands in the market, cloth pieces were cut into smaller pieces of different sizes and thereafter sent outside the octroi limits of the said town.

3. On the above facts, the High Court held that in the process of cutting, the cloth pieces are used as well as consumed, therefore, the cloth pieces brought into the octroi limits for this purpose, would attract octroi duty.

4. The Act is relatable to entry 52 of List -II (State List) of the 7th Schedule to the Constitution and the said entry runs as follows :-

"taxes on the entry of goods into a local area for consumption, use or sale therein."

5. Clause (16) of Section 2 of the Act defines octroi and it is stated as follows :

" Octroi means a tax on the entry of goods into the limits of a municipal borough for consumption, use or