JUDGMENT

V. RAMASWAMI, J.:- Leave granted.

2. The first appellant - Tata Engineering and Locomotive Company Limited (hereinafter called the Company) is a company registered under the Indian Companies Act, 1913 and the second the appellant is one of its Directors. The Company 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 Thane Municipal Corporation Limits. They have a bonded warehouse within the municipal limits in which they bring and stock motor vehicles parts and excavators parts from their awn factories at Pune and Jamshedpur. They also bring in parts manufactured by their ancillaries within India and also parts imported from abroad. These products of parts are brought in bulk and thereafter taken or sent out from the Municipal limits in smaller 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 produced parts.

2A. On and from 1st October, 1982 with the notification under Section 3 of the Bombay Provincial Municipal Corporation Act, 1949, the Thane Municipal Council became a Municipal Corporation (hereinafter called the Corporation). Prior to the constitution of the Corporation it was a municipality and were governed by the Thane Municipal Council constituted under the Maharashtra Municipality Act, 1965. Prior to Ist October, 1982 the Thane Municipal Council had granted to the Company current account facilities in respect of payment of octroi under the Maharashtra Municipalities Act, 1965 and the Maharashtra Municipalities (Octroi) Rules, 1968 made thereunder. The Municipal Council had also granted permission under Rule 10(2) to the Company for maintaining a godown or warehouse of their own. There is no dispute 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 octroi Naka. In terms of granting those facilities the Company had made as security a cash deposit of Rs. 7 lakhs with the Corporation and had also given a Bank Guarantee for an equivalent amount as agreed to between the Company and the Corporation. However, there is some dispute as to what were the formalities that were dispensed with 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 and exporting.

3. During the period 1st January,1983to 31st March, 1984 it is stated that the appellants had made 1182 claims for refund. All these claims were rejected by the letters of the Corporation dated 31-8-1983, 12-1-1984, 5-4-1984 and 6-4-1984. They were rejected on the following two grounds: (1) the Company had "sold" the spare parts within the octroi limit (which is conterminous with the Corporation limit) in contravention of R. 25(3)(d) of the Maharashtra Municipalities (Octroi) Rules, 1968 (hereinafter called the Rules), (2) the procedure prescribed for export and the claim of refund had not been strictly followed. The non-compliance with the procedure prescribed referred to in the second ground according to the Corporation were; (i) Form 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 not given or (iii) certificate of the octroi Exit Naka Officer had not been obtained. The rejection of the claim was either on one or more than one or all the grounds mentioned above. The appellants filed a writ petition under Articl