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High Court Of Orissa
J. K. Mohanty And P. C. Misra, JJ.
MUNICIPAL COUNCIL - Appellant
Versus
R.UDAYAGIRI REGIONAL MARKETING CO-OPERATIVE SOCIETY - Respondent
First Appeal 76 Of 1971
Decided On : 07/26/1983
OCTROI TAX - REFUND - LIMITATION - ARTICLE 62 OF THE LIMITATION ACT, 1908 - ARTICLE 24 OF THE LIMITATION ACT, 1963 - APPLICABILITY.
Fact of the Case:
The plaintiff, a registered co-operative society, filed a suit for recovery of octroi tax illegally collected by the defendant municipality. The plaintiff claimed that it was merely a distributor of chemical fertilizers and had never brought any fertilizers for its own use, consumption, or sale within the municipal limits. The municipality, however, collected octroi tax on the fertilizers brought by the plaintiff for storage and distribution. The plaintiff contended that the levy and collection of octroi tax were illegal as it was not a consumer, user, or seller of the fertilizers.
Finding of the Court:
The court held that the plaintiff was not liable to pay octroi tax as the transactions carried on by it did not come within the ambit of Clause (kk) of Sub-section (1) of Section 131 of the Orissa Municipal Act, 1950. The court further held that the collection of octroi tax by the municipality was illegal and the plaintiff was entitled to refund of the same. However, the court held that the claim for refund of octroi tax collected prior to three years from the date of institution of the suit was barred by limitation.
Issues: 1. Whether the plaintiff was liable to pay octroi tax on the fertilizers brought by it for storage and distribution? 2. Whether the collection of octroi tax by the municipality was illegal? 3. Whether the plaintiff was entitled to refund of the octroi tax collected by the municipality? 4. Whether the claim for refund of octroi tax was barred by limitation?
Ratio Decidendi: 1. The court held that the plaintiff was not liable to pay octroi tax as the transactions carried on by it did not come within the ambit of Clause (kk) of Sub-section (1) of Section 131 of the Orissa Municipal Act, 1950. The court relied on the fact that the plaintiff was merely a distributor of fertilizers and had never brought any fertilizers for its own use, consumption, or sale within the municipal limits. 2. The court held that the collection of octroi tax by the municipality was illegal as it was not authorized by law. The court relied on the fact that the municipality had not complied with the provisions of Section 388 (3) and 392 of the Orissa Municipal Act for collecting octroi tax. 3. The court held that the plaintiff was entitled to refund of the octroi tax collected by the municipality as the collection was illegal. 4. The court held that the claim for refund of octroi tax collected prior to three years from the date of institution of the suit was barred by limitation. The court applied Article 62 of the Limitation Act, 1908, and Article 24 of the Limitation Act, 1963, to the case and held that the period of limitation for such claims was three years.
Final Decision: The court decreed the suit in part and directed the municipality to refund the octroi tax collected from the plaintiff within the period from 7-5-1966 to 6-5-1969. The court dismissed the plaintiff's claim for refund of octroi tax collected prior to 7-5-1966 as barred by limitation.
P. C. MISRA, J.
( 1 ) THIS appeal arises out of suit for recovery of a sum of Rs. 27,718,73 paise with costs and interest. Defendant No. 1 is the appellant in this appeal,
( 2 ) THE plaintiff's case in brief is that it is a registered co-operative society sponsored by the Government of Orissa. Its business headquarters is at Parlakhemundi. It carries on business in varieties of goods and also undertakes the distribution work of Government goods. The Government of Orissa sponsored a scheme to supply chsmical fertilisers to the farmers through the Orissa State Cooperative Marketing Society Limited, known as "the Apex Society, Regional Marketing Societies and Primary Societies constituted in the rural areas to cater to the needs of the farmer Rules were framed by Government for easy and, smooth distribution of the goods under the control and direction of the Director of Agriculture who has been impleaded in the suit as the second defendant. Government used to release their stork of chemical fertilisers in favour of the Apex Society and the latter used of distribute the stock among the Regional Marketing Societies for the purpose of stocking the same temporarily in their respective godowns and for distribution of the same among the various Primary Societies within their respective areas of operation for sale among the farmers. The plaintiff joined the scheme as a distributor for Parlakhemundi Sub-division under the Apex Society. As already stated, the plaintiff-Society is merely a distributor having no right to sell or deal wih the fertilisers other than distributing the same among the various Primary Societies in the manner prescribed by rules. During the suit period, the plaintiff had never brought any chemical fertiliser for its own use, consumption or sale within the limits of defendant No. 1 Municipality. The Municipality, however, collected octroi tax for the chemical fertilisers brought by the plaintiff for storage and distribution under coercion. The plaintiff further alleges that defendant No. 1 Municipality had never published or gave any intimation either to the individuals interested or to the public in general of the fact of imposition of octroi tax on fertilisers till December, 1967, but it continued to collect a total sum of Rs. 27,718. 73 Paise as octroi tax on chemical fertilisers brought by the plaintiff into the local limits of the first defendant for storage during the period between 5-4-1963 and 23-10-1967. The plaintiff thereafter made several representations against the collection of octroi tax but the Municipality paid no heed
thereto. The Plaintiff also brought the matter to the notice of the State Government and the State Government through the Urban Development Department vide letter dated 21-9-1966 exempted levy of octroi tax on fertilisers. The plaintiff moved the State Government through the Registrar of Co-operative Societies for refund of the octroi tax illegally collected by the first defendant and the State Government allowed refund in their letter dated 22-111967. The first defendant in obedience to Government's letter dated 21-9-1966 stopped collection of octroi tax but did not pay any heed to the claim for refund of the octroi tax already collected. The plaintiff thereafter issued a notice under Section 349 of the Orissa Municipal Act on 22-1-1968 which was replied by the Municipality through its Advocate on 7-3-1968 denying the liability to refund the octroi tax collected from the plaintiff and further asserted that the executive orders of Government were invalid and did not bind the Municipality. According to the plaintiff, the levy of ctori tax and collection thereof being contrary to law, it is entitled to refund of the same for recovery of which the aforesaid suit has been filed.
( 3 ) THE Director of Agriculture and the Orissa State Co-operative Marketing Society Limited have been impleaded in the suit as defendants 2 and 3 respectively, but no relief has been claimed against them. The
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