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HIGH COURT OF BOMBAY
BHAGWATI AND DIXIT, J.
Jalgaon Borough Municipality
Versus
Khandesh Spinning and Weaving Mills Co. Ltd.
First Appeal No.502 of 1949
Decided On : 21-07-1952
OCTROI DUTY - LEVY ON FUEL OIL - INTERPRETATION OF OCTROI RULES AND BY-LAWS - NOTICE UNDER S.206, BOMBAY MUNICIPAL BOROUGHS ACT, 1925 - NECESSITY - LIMITATION.
Fact of the Case:
The plaintiffs, a spinning and weaving mill, imported fuel oil for use in their boiler instead of charcoal, which was previously used. The defendants, the municipality, levied octroi duty on the fuel oil under item 73 of class III of sch.A to the Octroi Rules and By-laws, which provided for a levy on "oils used for machinery." The plaintiffs contended that the fuel oil was not covered by this item and that the defendants were not entitled to charge octroi duty on it. They filed a suit for a declaration that the levy of octroi duty on fuel oil was illegal, for a perpetual injunction restraining the defendants from levying and recovering the same, and for recovery of the amount paid by them as octroi duty.
Finding of the Court:
The court held that the defendants were not entitled to levy octroi duty on the fuel oil imported by the plaintiffs. The court found that the fuel oil did not fall within the description of "oils used for machinery" under item 73 of class III of sch.A to the Octroi Rules and By-laws. The court also held that the plaintiffs were required to give notice under S.206, Bombay Municipal Boroughs Act, 1925, before filing the suit for refund of the octroi duty paid by them. The court allowed the plaintiffs' claim for refund of the octroi duty paid by them up to July 31, 1947, but dismissed their claim for refund of the excess amount paid after that date, as they had failed to give the requisite notice under S.206 of the Act.
Issues: 1. Whether the fuel oil imported by the plaintiffs was covered by item 73 of class III of sch.A to the Octroi Rules and By-laws, which provided for a levy on "oils used for machinery." 2. Whether the plaintiffs were required to give notice under S.206, Bombay Municipal Boroughs Act, 1925, before filing the suit for refund of the octroi duty paid by them.
Ratio Decidendi: 1. The court interpreted item 73 of class III of sch.A to the Octroi Rules and By-laws and held that the fuel oil imported by the plaintiffs did not fall within the description of "oils used for machinery." The court found that the fuel oil was used for heating the boiler, which was a different purpose than that of lubricating machinery. 2. The court held that S.206, Bombay Municipal Boroughs Act, 1925, applied to the plaintiffs' claim for refund of the octroi duty paid by them. The court found that the defendants' act of levying octroi duty on fuel oil was not illegal, but was an act which they purported to do in pursuance of the Act. Therefore, the plaintiffs were required to give notice under S.206 of the Act before filing the suit for refund.
Final Decision: The court allowed the plaintiffs' claim for refund of the octroi duty paid by them up to July 31, 1947, but dismissed their claim for refund of the excess amount paid after that date. The court also dismissed the defendants' appeal and the plaintiffs' cross-objections.
FACTS :- The Khandesh Spinning and Weaving Mills Co., Ltd. (plaintiffs) were carrying on business as a Spinning and Weaving Mills at Jalgaon, and for the purpose of that business they used to import charcoal within the jurisdiction of the Jalgaon Borough Municipality (defendants). There were difficulties about obtaining charcoal, with the result that the plaintiffs resorted to the user of fuel oil or furnace oil for the purpose of heating their boiler. The defendants claimed that the fuel oil or the furnace oil which was thus imported by the plaintiffs within their jurisdiction fell under item 73 of class in of sch.A to these rules and by-laws framed by them and which provided for the levy of an octroi duty at the rate of annas -/4/- per maund on "all articles of sizing used in mill industries, oils used for machinery, boiler composition, spindle oil, china clay, grease, lubricating oils of all kinds". The defendants accordingly levied on the fuel oil or the furnace oil which was thus imported by the plaintiffs, from and after 21st May 1946, octroi duty at this rate of annas -/4/- per maund. Disputes thereupon arose between the plaintiffs and the defendants, and correspondence ensued between the parties. The plaintiffs claimed that the fuel oil or the furnace oil was imported by them in lieu of charcoal which they used before, and that the defendants were not entitled to charge anything more than six pies per maund by way of octroi duty, which was the duty payable on charcoal.
The defendants, on the other hand, contended that the fuel oil or the furnace oil which was imported by the plaintiffs fell within the description of "oils used for machinery" and was, therefore, rightly charged by them with octroi duty at the rate of annas -/4/- per maund under item 73 above referred to. The plaintiff, therefore, ultimately gave a notice to the defendants and their Chief Officer on 2nd May 1947, under S.206, Bombay Municipal Boroughs Act, 1925, setting out therein the cause of action which had accrued to them and their intention to file a suit in default of the defendants making duo amends.
The defendants failed and neglected to comply with the requisitions contained in this notice, with the result that on 3lst July 1947, the plaintiffs filed in the High Court of Judicature at Bombay, a suit for a declaration that the defendants act of levying octroi duty on fuel oil was illegal, for a perpetual injunction restraining the defendants from levying and recovering the same from the plaintiffs, and for recovery from the defendants of Rs.18,776-6-0 which was the amount which they had paid up to the date of the filing of that suit, the last of such payments having been made by them to the defendants under protest on 28th June 1947.
The plaintiffs obtained leave under cl.12 Letters Patent, in so far as they claimed a refund of the monies to themselves at their registered office at Cambata Building, 42 Queens Road, Bombay. The defendants took out appropriate proceedings for the revocation of leave under cl.12. Letters Patent, and on September 30, 1947, Coyajee J. revoked that leave and ordered that the plaint be taken off the file of the Court. The plaintiff filed an appeal and the appeal Court confirmed the order which was passed by Coyajee, J.
On July 15, 1948, the plaintiffs filed the present suit in the Court of the Civil Judge (Senior Division) at Jalgaon. When, however, they filed the present suit, they applied for an amendment of the plaint, which- had been originally filed by them in the High Court, by putting forward a claim for Rs.37,422-11-0 being the aggregate of the sums which they had paid to the defendants between May 21, 1946, and June 28, 1948. This sum of Rs.37,422-11-0 was made up of the sum of Rs.18,776-6-0 which had been claimed by the plaintiffs in the High Court suit plus the further payments which the plaintiffs had made to the defendants after July 31, 1947, up to June 28, 1948. The trial Judge granted the applicati
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