Terminal tax is leviable only on goods carried into a local area for consumption, use, or sale therein, and not on goods in transit.

( 1 ) THESE petitions under Article 226 of the Constitution of India raise a number of interesting questions as to the nature and incidents of terminal tax in the context of the rather unusual location of immovable property, consisting of godowns, which are situated at the Delhi-U. P, border in such a manner that while the only entrance to the property and a part of the built area is within the territorial limits of the State of U. P. , and within the local area of the Ghaziabad Nagar Palika, a substantial part of the property falls within the territorial limits of Union territory of Delhi.

( 2 ) THE petitions were filed in the following circumstances. Manmohan Tuli, a resident of Delhi, owns a piece of land situated on the Grand Trunk Road near the 6th mile stone from Delhi to Ghaziabad beyond Delhi-U. P, border. The land is surrounded in the south and west by the territory of U. P. and on the other two sides by the Union territory of Delhi. On the aforesaid land the owner built a number of godowns apparently at the instance of and for the benefit of certain road transport organisations having inter-state operations for the carriage of goods and some industrial houses having national marketing channels as a possible site for transhipment cum sorting out centre with a view to rationalise transport operations, save time, and reduce costs. The godowns are built on the land in such a manner that the only opening to the building is from the G. T. Road, which is within the territory of the State of U. P. and forming part of the local area of the Ghaziabad Nagar Palika. The north of the land is undeveloped, low lying an,d waterlogged and is apparently incapable of being used to provide either any outlet or for facilities or services, either by the owner of the property, its occupants or the Municipal Corporation of Delhi. In course of time some of these godowns were let out to some of the transport organisations, which have inter-state operations, as indeed to some of the industrial houses having inter-state movement of goods. The property tax is levied by the Ghaziabad Nagar Palika, which claims that the entire property would be within the local area of its jurisdiction. The entrance to the building admittedly being in the U. P. territory and, therefore, this side of the terminal tax barrier set up by the Municipal Corporation of Delhi, as indeed the U. P. Delhi border post, the location of the godowns has been beneficial to the transport operators, as indeed the industrial houses, who found it convenient for the purpose of transhipment and sorting out of goods meant for different destinations in, as well as outside Delhi, after transit through the Union territory of Delhi. The need for transhipment an,d sorting out apparently arises because in the course of operations of large transport organisations and industrial houses goods meant for different destinations in and beyond Delhi are transhipped to different vehicles meant for common destinations so as to avoid delay in transportation and in the process reduce the cost of transportation. For reasons, which are not clear, but, may perhaps have some connection with the possible attempt to misuse the godowns to smuggle goods into Delhi, without payment of terminal tax, an attempt was made by the Municipal Corporation of Delhi to set up a sort of a terminal tax post outside the main gate of the building and on the property of the owner on the assumption that the property was within the Union territory of Delhi and an entry of goods into the property was tantamount to entry of goods in the Union territory of Delhi, which would attract terminal tax, either on the basis that the goods were in transit or on the basis that they were meant for consumption within the local area of the Municipal Corporation of Delhi. This was obviously objected to by the owner and it is a common case of the parties that there is at present no terminal tax post outside the building. It is never