2007 Supreme(SC) 1174

2007(6) Supreme 217
Supreme Court of india
(From Bombay High Court)
C.K. Thakker & Tarun Chatterjee, JJ.
Municipal Corporation of City of Thane — Petitioner
versus
M/s Vidyut Metallics Ltd. & Anr. — Respondents
Appeal (crl.) 647-650 of 2002
Decided on : 14-09-2007

important point
In taxation-matters, the strict rule of res judicata has no application. However if a taxing statue is held to be valid on a basic and material issue, it may not be easy to hold that the decision on this issue would not operate as res judicata against the assessee in a subsequent year.

Headnote:(a)Code of Civil Procedure, 1908 – Section 11 – In taxation-matters, the strict rule of res judicata has no application – As a general rule, each year’s assessment is final only for that year and does not govern later years, because it determines the tax for a particular period – A decision taken by the authorities in the previous year would not estop or operate as res judicata for subsequent year – However if the validity of a taxing statute is impeached by an assessee who is called upon to pay a tax for a particular year and it is held that the taxing statute is valid, it may not be easy to hold that the decision on this basic and material issue would not operate as res judicata against the assessee in a subsequent year. (Paras 14 and 18)

       1959 Supp (2) SCR 547: AIR 1959 SC 881; (1961) 3 SCR 287; (1962) 2 SCR 644; (1964) 2 SCR 971; 1963 Supp (1) SCR 172; (1965) 1 SCR 686; (1967) 1 SCR 913; (1968) 1 SCR 65; (1969) 1 SCR 691; AIR 1971 SC 2439; (1992) 1 SCC 659: AIR 1992 SC 377; 1960 AC 55; 1925 All ER 675: 1926 AC 94: 95 LJPC 33 – Relied upon.

       (b)Code of Civil Procedure, 1908 – Section 11 – In earlier litigation, the Court held that the goods imported by the Company was ferrous in nature and the Company was right in paying octroi under Item No. 71 – It was thus a ‘fundamental factor’ and the nature of goods imported by the Company was directly and substantially in issue – In absence of any changed circumstances it would be very difficult to hold that such decision would not continue to operate in subsequent years – The Revisional Court as well as the High Court were right in giving benefit of the decision in earlier litigation to the respondent-Company. (Para 22)

       Facts of the case :

       The respondent No.1 is a Company registered under the Indian Companies Act, 1913 having its registered office and factory at Bombay-Agra Road, Wagle Estate, Thane. The Company is engaged in the process of manufacturing safety razor blades of various qualities and types. For the said purpose, the Company was importing stainless steel strips and bringing them to its factory within the octroi limits of the Corporation. According to the Corporation, since 1968, the Company had been importing stainless steel strips to its factory and it was paying octroi at the rate of 1% under Item No. 77 of the Schedule to the Maharashtra Municipalities (Octroi) Rules, 1974 (‘the Rules’). The Company was also maintaining a current account with the Corporation under Section 142 of the Maharashtra Municipalities Act, 1965 (‘the Act’).

       It is the case of the Corporation that in the year 1974, a sudden turn was taken by the Company. It obtained a copy of the Rules and found that it was paying octroi at an enhanced rate of 1% though it was liable to pay such octroi at the rate of 0.5% only. It, therefore, stopped paying octroi at the rate of 1% as provided in Item 77 of the Schedule and started to pay at the rate of 0.5% as provided under Item 71 of the Schedule. According to the Corporation, the said action was totally illegal, unlawful and inconsistent with the provisions of the Rules. From October 1, 1974 to March 31, 1979, the Company paid octroi at the rate of 0.5% instead of 1%. The Corporation, hence, wrote a letter on May 10, 1978 to the respondent-Company stating therein that the Company was liable to pay octroi at the rate of 1% under Item 77 and not at the rate of 0.5% under Item 71 of the Schedule. The respondent-Company replied to the said letter contending that the Company was liable to pay only at the rate of 0.5% under Item 71 and had been correctly paying octroi and no action could be taken against it.

       Being aggrieved by the claim of the Corporation, the Company preferred appeals in the Court of IIIrd Joint Civil Judge, Senior Division, Thane. The learned Judge, by an order dated January 29, 1988 dismissed the appeals filed by the Company holding that Item No. 77 expressly referred to ‘stainless steel’ which was applicable and Item No. 71 could not be attracted to the goods brought by the appellant-Company within the Municipal limits and the Company was liable to pay octroi at the rate of 1%.

       The Company challenged the order passed by the learned IIIrd Joint Civil Judge, Senior Division by filing revision petitions. The VIth Addl. District & Sessions Judge, Thane allowed those revisions. It was held that the point was finally concluded and the Company had paid proper octroi and it was not liable to pay octroi under Item No. 77. The revision petitions were, therefore, allowed and the order passed by the learned Judge was set aside. The High Court also dismissed writ petitions.

       Findings of the Court:

       The impugned judgment requires no interference.

       Result : Appeals dismissed.