IMPORTANT POINT
Burden of proof to show that a product falls within a particular tariff is always on the revenue.

Headnote:TAXATION - Octroi duty - Quantity of Heavy Commercial Chemicals being brought to factory of appellant in bulk was subjected to octroi duty under clause (a) of Entry 40 - Octroi duty was being paid @ 1/2% - Respondent started claiming that appellant was liable to pay octroi duty under Clause (e) of Entry 40 - Suit for injunction - Trial Court dismissed suit - Distt. Court and High Court upheld decree in 1st and 2nd appeal - Appeal - High Court did not discuss many important issues raised by appellant - Burden of proof to show that a product falls within a particular tariff was on revenue - Respondent Municipal Council failed to establish and justify burden of proof - High Court disposed of second appeal at admission stage, interest of justice required that matter be heard afresh by High Court with opportunity to both parties.
       Held : We have perused the judgment of the High Court and considered the rival claims. The High Court has not discussed many important issues raised by the appellant-plaintiff and also by the respondent-defendant. The High Court has not decided as to whether the onus or burden of proof to show that a product falls within a particular item is on the department or the assessee. The High Court has also not properly interpreted the Entries which is contrary to the settled principles of interpretation. It is settled by catena of decisions of this Court that the burden of proof to show that a product falls within a particular tarrif item is always on the revenue. In our view, the respondent, Municipal Council has failed to establish and justify the burden of proof, the taxability ingredient of the appellants goods under Entry 40, sub-clause (e). As rightly pointed out by the learned counsel for the appellant, the High Court has failed to appreciate that it is the respondent- Revenue Authority which is cast with the duty of assessing octroi to be imposed on the appellant and that the said respondent, Municipal Council has for 13 continuous years assessed the goods in question under Entry 40(a) of the Schedule as heavy commercial chemicals.(Para 9)
       Since the High Court disposed of the Second Appeal at the admission stage and without notice to the respondent, we feel that the interest of justice would require that another opportunity should be given to both the parties to argue the appeal afresh and on merits.(Para 10)

JUDGMENT

Dr. AR. Lakshmanan, J. - Leave granted.

2. The above appeal is directed against the final judgment/order dated 18.2.2005 passed by the High Court of Punjab & Haryana at Chandigarh in R.S.A. no.704 of 2005. The unsuccessful plaintiff is the appellant in this appeal. The respondent is the Municipal Council, SAS Nagar, Mohali.

3. We have perused pleadings and the judgments of all the three courts and heard the arguments of Mr. Arun Jaitley, learned Senior Counsel for the appellant and Mr. A.P. Bhandari, learned counsel for the respondent.

4. The issue which arises for consideration in the present appeal is whether an entry in a tariff schedule which after specifying the subject matter of the entry and illustrating it with examples by using the word like can be construed as being limited to only the items listed by way of illustration or includes all such products as answer the classification of the entry and further whether the revenue can change the classification of the product from the specific enumerated entry, which was accepted for 13 years to the residuary clause without any change of circumstance and without discharging the burden of proof cast on the revenue to show that the particular product falls in the residuary tariff item and not in the specific enumerated entry.

5. In the plaint, in paragraph 4, it has been mentioned that the description of Annexure-A itself shows that the quantity of the Heavy Commercial Chemicals is brought to the factory premises in bulk, for example, in a period of nine months from April to December 29, 1995 the receipts of Commercial Heavy Chemicals like Ascetic Acid Glacial - 3,06,415 kg, Caustic Lye - 6,82,205 kg, Ethyl Acetate - 3,65,270 kg., Hemane - 3,45,094 kg., Hydrochloric Acid - 39,22,195 kg., Methylene Chloride - 7,82,203 kg. Penicillin G-4,32,812 Bous, Pen V Acid-1,75,027 kg. The quantities as highlighted above would show that the Heavy Commercial Chemicals are being brought to the factory premises by the appellant/Plaintiff is bulk.

6. The case of the appellant, according to the learned Senior Counsel, is covered for the purposes of payment of octroi duty only under clause (a) of Entry 40 as mentioned in the heading of the plaint which reads as under and the appellant is liable to pay octroi duty @ ½ % only on Heavy Commercial Chemicals.

"Heavy commercial chemicals like Sulphur, refined soda, caustic soda, acids, bleaching power, carbonates excluding sodium carbonate, bicarbonates of ammonia, calcium, zinc and sodium, etc. magnesium chloride and soda silicate."

7. It is the further case of the appellant that the appellant has been paying octroi duty on Commercial Heavy Chemicals brought by it to its factory under clause 40(a) right from the beginning when octroi duty was imposed, without any difficulty. Some of the receipts of last five years wherein octroi duty has been charged under clause 40(a) were attached with the plaint. Thus, it is submitted that keeping in view the nature of the Commercial Heavy Chemicals brought by the appellant to the factory premises which is situated within the municipal limits of the respondents Committee, the appellant is liable to pay octori duty only at =% and not more than that. It is the further case of the appellant that there has been no trouble in payment of octroi duty as per the schedule during the last six years as it was being charged rightly so much so that the appellant was extended O-4A facility for making the payment. But of late the respondent had started claiming that the appellant is liable to pay octroi duty not under clause 40(a) but under clause 40(e) which is altogether illegal and has even threatened to withdraw O-4A facility. It is further submitted that the respondent is bound to charge and levy only octroi duty as per the schedule mentioned above and is under obligation not to make any illegal false claim thus the appellant cannot be made liable to pay something for which the appellant is not liable at all. Thu

Click Here to Read the rest of this document

Judicial Analysis

SupremeToday

2006 Supreme(SC) 1050

IMPORTANT POINT Burden of proof to show that a product falls within a particular tariff is always on the revenue.

Judicial Analysis

IMPORTANT POINT
Burden of proof to show that a product falls within a particular tariff is always on the revenue.