Raymond Woolen Mills Ltd. . & another vs State of Maharashtra & another

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1991 Supreme(Bom) 521

IN THE HIGH COURT OF BOMBAY
M.L. Pendse A.D. Mane, JJ.
Raymond Woolen Mills Ltd. another.... Petitioners
Versus
State of Maharashtra another... Respondents.
Writ Petition No. 2455 of 1983, decided on 30-10-1991.
Advocates appeared :
Kamal Parsuarampuria with Ajay Sethi, for the petitioners.
C.U. Bora, for respondent No. 1.
E.P. Bharucha with Dr. D.Y. Chandrachnd and M.B. Rao, for respondent No. 2.

Headnote:Section 192- See Constitution of India, Schedule VII, list II, Entry 52.
       Sections 192 (1) and 194-A-Levy of octroj duty- Claim that it is not permissible to levy octroj duty in case of imported of articles stored in customs bonded ware- house- Whether not to be accepted. Held,- As soon as the goods enter octorj the limits of the Municipal Corporation, then he liability to pay octroj duty in accordance with the rates set out in Schedule H arises unless the purpose of the import is immediate exportation outside he octroj limit as prescribed under Section 194-A of the Act and the Rules framed by the Commissioner. Hence claim can not be accepted.
       Section 195 (1) and (1-A)-Retention of 6% of octroi duty and refunding balance is cases where goods are exported out of Bombay-- Whether valid Held- Retention of 6 % was on account of fees for collection and refund of octroi duty are-Such retention statutorily permissible and valid.
       The statutory provision under Sub-section (1-A) of Section 195 of the Act clearly enables the Corporation to retain 6% of the duty recovered as a fee for collection and refund. The Corporation has to set up a machinery for collection of octroi duty as the import in Bombay Docks or in Bombay City is on a large scale. The rules provide for filing of several forms and applications at the time of payment of duty and at the time of seeking refund under Sub-section (1) of Section 195 of the Act. As the Corporation has to maintain a large administrative set up. It is obvious that the Corporation is required to spend a substantial amount for rendering service.

       Schedule VII, List II, Entry 52 Bombay Municipal Corporation Act, 1988, Section 192 -Levy of octroi when valid.
       Held-for purpose of valid levy of octroi, it is necessary that not only the goods enter the local area, hut such entry is for the purpose of consumption, use or sale in that local area and not for immediate exportation outside the octroi limit.

JUDGMENT - M.L. PENDSE, J.:---The petitioner No. 1 is a Public Limited Company incorporated under the Companies Act and runs its factory at Jekogram, Thane. The company claims to be one of the largest units manufacturing worsted woollen fabrics, polyester wool fabrics, other blended fabrics, woollen blankets, synthetic yarn and blended yarn. The company imports greasy wool, polyester fibre, acrylic fibre, nylon fibre for the manufacture of its products in the Mills at Thane. The goods are imported from abroad and are received at Bombay Docks. Some of the consignments which are required for immediate consumption are transported to Thane by filing bills of entry for Home Consumption. Some of the consignments are stored in the Customs Bonded Warehouse located within the Municipal limits of Bombay Municipal Corporation. Chapter VIII of Bombay Municipal Corporation Act, 1888 (hereinafter referred to as the 'Act') provides for municipal taxation and section 192 onwards deal with levy of octroi tax. Sub-section (1) of section 192 of the Act provides that the tax shall be levied in respect of articles mentioned in Schedule H on the entry of the said articles into Greater Bombay for consumption, use or sale therein. The tax shall be called an 'octroi'. Schedule H sets out the list of articles liable to payment of octroi and Class VII deals with piece goods cotton, yarn and threads of all sorts and starching and sizing materials, leather and articles of leather and rubber goods. Item 40 under Class VII provides for levy of 2 per cent ad-valorem as octroi duty on import of raw or unspuo wool, hemp, jute, coconut and other fibres and rope and articles made thereof. It is not in dispute that the articles imported by the company squarely fall within Item 40 of Class VII of Schedule H. Section 194-A of the Act, inter alia, provides that any article imported into Greater Bombay for the purpose of immediate exportation shall be exempted from the levy of octroi if such article is conveyed direct from the place of import to the place of export under such supervision and on payment of such fees as shall be determined in the rules to be framed by the Commissioner with the approval of the Standing Committee. It is not is dispute that in respect of consignment imported by the company and which are immediately removed to Thane factory, the Corporation does not levy any duty but recovers only the fees as determined by the rules framed by the Commissioner and approved by the Standing Committee.

Section 195 of the Act deals with refund of octroi duty paid on export of the articles. Sub-section (1) prescribes that when any article upon which octroi has been paid shall be exported from Greater Bombay, then the amount of the tax levied shall be refunded. Sub-section (1A) reads as follows:

"The amount of (tax) to be refunded under sub-section (1) shall be 933/4 per cent of octroi levied upon the articles. The balance of 61/4 per cent shall be credited to the municipal fund as a fee for collection and refund."

Sub-section (2) provides that such refunds shall be paid in accordance with the rules as the Commissioner may frame from time to time with the approval of the Standing Committee. Sub-section (3) then provides that the rules shall require confirmation by the State Government. It also prescribes that any article imported into Greater Bombay and not exported within six months; of such entry of the articles shall be deemed to have been imported for consumption, use or sale in Greater Bombay.

2. In this petition filed under Article 226 of the Constitution of India, the company raises two contentions in regard to levy of octroi duty. The first contention is that it is not permissible for the Municipal Corporation to levy octroi duty when the consignments imported from abroad are merely stored in the Customs Bonded Warehouse. The second contention raised by the company is that in any event, it is not permissible for the Corporation to recover octroi duty a

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