The main legal point established in the judgment is that the levy and realization of octroi by the respondent Municipal Corporation was illegal and ordered its refund with interest at 6% p.a.

( 1 ) UNDER challenge in this writ petition is the notification dated 13-5-1968, validity of which has been questioned by the petitioners to the extent of Note-1 appended to its schedule with the prayer that the same be declared ultra-vires of Section-104 of the rajasthan Municipalities Act and further action of the respondents in a realizing octroi vide order dated 21-11-19. 96 on iron scrap purchased by them in auction sale by indian Railways at Kota be declared illegal and without the authority of law and they be directed to refund the amount of illegally realised octroi together with interest @ 24% p. a. and pay a sum of Rs. 11,000/- as costs of litigation to the petitioners.

( 2 ) FACTUAL matrix of the case is that the petitioner No. 1, who is resident of Ajmer, was engaged in the business of purchase and sale of iron scrap material in the name and style of M/s. Ashish Traders, the petitioner no. 2 herein. The Western Railways at its Kota Junction auctioned certain iron steel scrap on 23-10-1996 and the petitioners bid for a big lot of such scrap being lowest (sic) was accepted and the iron scrap was auctioned to the petitioners for a sum of Rs. 31,66,100/ -. Accordingly, the petitioners paid an amount of Rs. 3,17. 000/- being 10% of the bid amount on the same day i. e. on 23-10-1996. Remaining amount was payable by the petitioners in installments and the petitioners paid first installment of Rs. 10,56,000/- on 13-11-1996. As per condition of the auction sale, the petitioners could lift part of the lot in proportion to the payments made and accordingly the first truck load of about 12 M. T. of scrap of iron was lifted by the petitioners from Railwav-yard, kota on 21-11- 1996 in Truck No. RJR-9187 for being carried to Ajmer. The Railways Sale issue Note dated 21-11-1996 Authorising the petitioners to lift the first lot has been placed on record. The petitioners wanted to carry the said lot outside the municipal limits of Kota to its destination at Ajmer for use, consumption or sale. When the aforesaid goods reached the octroi post of Municipal corporation, Kota for exit on 21-11-1996, the Officer In-charge of the octroi post rangpur Road, Kota, demanded octroi from the petitioners. The petitioners protested because as per Section 104 (2) of the rajasthan Municipalities Act, 1959 (for short "the Act"), no octroi could be levied on the goods going out of the municipal limits. The officer In-charge however insisted upon payment of octroi as per scheduled rate. The petitioners under compulsion had to make payment of amount of octroi under protest. The petitioners then wrote a letter on 21-11-1996 to the Revenue Officer of the rajasthan Municipal Corporation, Kota protesting against the levy of octroi. The Revenue Officer by its letter dated 23-11-1996 informed the petitioner that octroi could be levied on the goods purchased by auction or otherwise from the department of the state or the Central Government or even from the Municipal Corporation as per the government Notification dated 13-5-1968. The petitioners were surprised to learn about such notification. Demand of octroi in such a case was without the authority of law. The stipulation in the notification was unauthorised and ultra-vires Entry 52 in list-II of Schedule VII to the Constitution of india as also sub-section (2) of Section 104 of the Act. The said notification prescribed different rates of octroi for different items. Note No. 1 to the Schedule appended to such notification however provided that the octroi will be levied as per rates given in the schedule on the goods sold or auctioned by the departments of the State Government or Central Government or by any Municipal corporation. According to the petitioners, such note was liable to be declared illegal and unconstitutional. Merely because certain goods were auctioned within the municipal limits and were allowed to be removed outside such limits, the respondents cannot demand octroi. It was against th