Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1957 Supreme(SC) 148

SUPREME COURT OF INDIA
18th December 1957.
N.H. BHAGWATI, B.P. SINHA, SYED JAFER IMAM, J.L. KAPUR AND P.B. GAJENDRAGADKAR JJ.
Mills, Nagpur, Appellants
Versus
The Municipal; Committee, Wardha, Respondent.
Civil Appeal No. 119 of 1953.
Advocates appeared
Mr. C. K. Daphtary, Solicitor-General of India (Mr. S. K. Sastri, Advocate, with him), for Appellants; Mr. A. V. Vishwanatha Sastri, Sr. Advocate (M/s. G. J. Ghate and Naunit Lal, Advocates, with him), for Respondent.

Advocates:
A.V.VISHWANATHA SASTRI, C.K.DAFTARY, G.J.GUPTA, M.S.K.Shastri, NAUNIT LAL

The terminal tax under S. 66(1)(o) of the C. P. & Berar Municipalities Act (Act II of 1922) is not leviable on goods which are in transit and are only carried across the limits of the Municipality.

Headnote:
TERMINAL TAX - IMPORTED INTO OR EXPORTED FROM - GOODS IN TRANSIT - NOT LIABLE TO TAX - C. P. & BERAR MUNICIPALITIES ACT (II OF 1922), S. 66(1)(O).
Fact of the Case:

The appellant, a company with spinning and weaving mills at Yeotmal, transported its bales of cotton from Yeotmal to Nagpur by road. The vehicles carrying the bales passed through the limits of Wardha Municipality, a P. W. D. road. The goods were neither unloaded nor reloaded at Wardha but were merely carried across the municipal area. The Municipal Committee, purporting to act under S. 66(1)(o) of the C. P. & Berar Municipalities Act (Act II of 1922) and R. 1 of the rules made thereunder, collected Rs. 240 as terminal tax on these goods on the ground that they were exported by the appellant from the limits of the Municipality of Wardha. The appellant claimed a refund of this sum. On refusal by the Municipality, the appellant took an appeal to the Deputy Commissioner, Wardha, which was sent for disposal to the Sub-Divisional Officer, who referred the following two questions under S. 83(2) of the Act to the High Court for its opinion: (1) Whether goods passing through the limits of Wardha Municipality by road despatched from Yeotmal to their destination at Nagpur without being unloaded or reloaded at Wardha are liable for an export terminal tax? (2) Whether the respondent Municipal Committee is not liable to refund the export terminal tax collected on such goods?
Finding of the Court:

The High Court held that the tax had been validly imposed and the appellant was therefore not entitled to a refund.
Issues: Whether goods in transit are liable to terminal tax under S. 66(1)(o) of the C. P. & Berar Municipalities Act (Act II of 1922)?
Ratio Decidendi: The words “imported into or exported from” do not merely mean “to bring into” or “to carry out of or away from” but also have reference to and imply the termination or the commencement of the journey of the goods sought to be taxed. Therefore, goods in transit which are transported across the limits of a Municipal Committee are neither imported into the municipal limits nor exported therefrom.
Final Decision: Appeal allowed.

Judgment

J. L. KAPUR, J: This is an appeal by Special Leave against a Judgment and order of the High Court of Judicature at Nagpur dated February 14, 1950 and the question for decision turns upon the construction of S. 66 (1) (o) of the C. P. & Berar Municipalities Act (Act II of 1922) which in this judgment will be termed the Act.

2. A short recital of the facts of the case will suffice for its decision. The appellant is a company which has its spinning and weaving mills at Yeotmal. The appellants bales of cotton are transported from Yeotmal to Nagpur by road and vehicles carrying them past through the limits of Wardha Municipality. The goods being in transit, the vehicles carrying them do no more than use the road which traverses the municipal limits of Wardha and is a P. W. D. road. The goods are neither unloaded nor reloaded at Wardha but are merely carried across through the municipal area. The Municipal Committee purporting to act under S. 66 (1) (o) of the Act and R. 1 of the rules made thereunder collected Rs. 240 as terminal tax on these goods on the ground that they were exported by the appellant from the limits of the Municipality of Wardha. The appellant thereupon claimed a refund of this sum. On refusal by the Municipality the appellant took an appeal to the Deputy Commissioner, Wardha which was sent for disposal to the Sub-Divisional Officer, who, on March 11, 1946, referred the following two questions under S. 83(2) of the Act to the High Court for its opinion :

"(1) Whether goods passing through the limits of Wardha Municipality by road despatched from Yeotmal to their destination at Nagpur without being unloaded or reloaded at Wardha are liable for an export terminal tax?

(2) Whether the respondent Municipal Committee is not liable to refund the export terminal tax collected on such goods?

3. The reference in the first instance came up for hearing before Sheode, J., who referred the matter to a Division Bench and the Division Bench in turn referred it to a Full Bench. The High Court after referring to a number of decided cases was of the opinion that the tax had been validly imposed and the appellant was therefore not entitled to a refund.

4. The powers of the Municipality to impose, assess and collect taxes are set out in chapter 9 of the Act and S. 66(1) enumerates the taxes which may be imposed. Clause (d) of sub-S. (1) deals with tolls : Cl. (e) with octroi and Cl. (o) with terminal tax. The sub-section provides :

"66(1) A committee may, from time to time, and subject to the provisions of this Chapter, impose in the whole or in any part of the municipality any of the following taxes for the purposes of this Act, namely :-

(a) a tax payable by the owners of buildings or lands situate within the limits of the municipality, with reference to the gross annual letting value of the buildings or lands;

(b) a tax on persons exercising any profession or art, or carrying on any trade or calling, within the limits of the municipality;

(c) a tax, payable by the owner, on all or any vehicles or animals used for riding, driving draught or burden or on dogs, where such vehicles, animals or dogs are kept within the limits of the municipality.

(d) a toll on vehicles and animals used as aforesaid entering the limits of the municipality, and on boats moored within those limits :

Provided that a toll under this clause shall not be payable on any vehicle or animal on which a tax under Cl. (c) has been imposed.

(e) an octroi on animals or goods brought within the limits of the municipality for sale, consumption or use within those limits;

(f) market dues on persons exposing goods for sale in market or in any place belonging to or under the control of the Government or of the committee :

(g) fees on the registration of cattle sold within the limits of the municipality;

(h) a latrine or conservancy tax payable by the occupier (or owner) upon private latrines, privies or cesspools, or upon premises or compounds cleansed by municipal agency;

(j) a

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