FERDINO I. REBELLO, J. :- Rule. By consent heard forthwith.

Petitioner carries on banking business, including selling of gold coins as per the provisions of section 6 of Banking Regulation Act, 1949. For that purpose the petitioner has entered into an agreement with a reputed supplier of bullion on consignment sale basis from Volcambi, Switzerland. The IBB Mumbai branch of petitioner has been identified as a Controlling Branch, which is monitoring the overall gold business of petitioner Banle There are various other branches which are receiving the consignment from the overseas supplier of gold coins for further distribution to Point of Sale (POS) branches. These branches are having responsibility for sales Tax/VAT consolidation and payment of the same to the respective State Government Authorities. As per the said procedure all gold coins are imported at Mumbai office of petitioner. Petitioner after paying all duties, taxes and Octroi on the gold at Mumbai, distributes the same to the other branches such as Pune, Nashik etc. The gold in form of coins is to be delivered to the said branches and actual sale is to be done by the Corporate Office of petitioner situated at Mumbai. The sale proceeds is to be deposited by the said branch through e-payment in the Corporate office at Mumbai.

2. The petitioner through its office at Mumbai had already paid the Octroi in Mumbai to Municipal Corporation of Greater Mumbai at 0.10% and then distributed the same to the other branches of the petitioner Bank. Respondent No. 1 by their notice dated 11-9-2009 had asked the petitioner to provide details for the gold imported in the city of Pune during the period 1-4-2006 to 31-8-2009. Petitioner accordingly has provided the details of the gold coins delivered at Pune Branch by Corporate Office at Mumbai of the petitioner by letter dated 23-9-2009.

3. Respondent No. 1 on the basis of inforn1ation provided by the petitioner calculated the Octroi amount and sent a demand notice dated 6-10-2009 to the petitioner thereby demanding the Octroi amount and also penalty charges at ten times of the Octroi amount on gold imported in Pune since year 2005 and demanded to pay an Octroi amount of Rs. 9,42,200/- and ten times penalty of Rs. 94,22,000/- total amounting to Rs. 1,03,64,200/- before 14-10-2009. Petitioner's contention is that Corporation had calculated the Octroi amount as per the current prevailing market rates of gold and not as per the rates of gold in the year 2005 and thereafter.

4. Petitioner immediately on 09-10-2009 had replied to the abovesaid demand notice dated 6-10-2009 and requested for waiver of the penalty charges. Various contentions were raised as to why the petitioner is not responsible. Second demand notice was served on petitioner on 14-10-2009 and petitioner was asked to pay Octroi within three days. Petitioner on 14-10-2009 sent a Pay Order bearing No. 573360 by registered post for Octroi amount of Rs. 9,42,200/demanded by respondent Pune Municipal Corporation. The respondent Corporation through their notice dated 15-10-2009 demanded an amount of Rs. 1,03,64,200/- on account of Octroi and ten times penalty to be paid before 18-10-2009. The respondent Corporation refused to accept the Pay Order and issued notice to that effect on 20-10-2009.

5. It is the case of the petitioner that the rate of the penalty demanded by the respondent Pune Municipal Corporation is arbitrary and exorbitant. Even the rate of Octroi is also on the higher side as compared to Octroi rates of other Municipal Corporations. Petitioner had set out that they are ready to pay the Octroi charges once again, even though they had paid the Octroi in Mumbai.

Petitioner had shown their bona fide intention, by sending a Pay Order to the respondent Pune Municipal Corporation, but respondent Pune Municipal Corporation had returned the said Pay Order and refused to accept the said amount of Octroi.

6. The demand notice is challenged on various grounds. It is principal