A Municipal Committee cannot charge octroi on the market price of goods imported at concessional rates.

G.S.Singhvi, J.

1. Notice Annexure P5 dated 25.1.1989 issued by the Executive Officer, Municipal Committee, Bhatinda, Under Section 80(2) of the Punjab Municipal Act, 1911 (for short, the Act) and order Annexure P50 dated 26.9.1989 passed by the Special Executive Magistrate, Ferozepur Region, Ferozepur, have been challenged in this writ petition filed by the National Fertilizers Limited, Bhatinda. The prayer of the petitioner is to quash the impugned notice and the order, as well as for restraining the Municipal Committee, Bhatinda (hereinafter referred to as, the Committee) from realising the so-called arrears of octroi.

2. The petitioner is engaged in the manufacture of the fertilizer, popularly known as Kishan Urea. For manufacturing the urea, the petitioner imports/purchases different raw material including furnace oil which is used as feed stock. The furnace oil is purchased and imported from the Indian Oil Corporation, a Government of India Undertaking. The prices of the various commodities sold by the Indian Oil Corporation are fixed by the Government of India on the recommendations of the Oil Coordination Committee. The Oil Coordination Committee has classified the furnace oil under two heads for the purpose of price, namely, furnace oil for general purpose and furnace oil for manufacture of fertilizers. In support of this assertion, the petitioner has produced Annexures P1 to P6. As on 1..1986, the selling price of furnace oil per kilo litre was Rs. 2903.06 ps. (for general use) and Rs. 1320.2 ps. (for manufacture of fertilizer). Similar difference has persisted for many years. According to the petitioner, furnace oil supplied to it was used exclusively for manufacture of fertilizer and for no other purpose.

3. The Committee has been charging octroi on the actual price paid by the petitioner on the purchase of furnace oil and as and when some doubts were expressed by the Committee about the rate of octroi, the petitioner clarified the mode of sale of furnace oil to it by the Indian Oil Corporation on concessional rates. On 25.1.1989, the Executive Officer of the Committee issued a notice to the petitioner Under Section 80(2) of the Act for recovery of the octroi amounting to Rs. 65,85,938.62 ps. To this, a reply came to be filed by the petitioner and after hearing the parties respondent No. 2 passed impugned order Annexure P50 and held that the amount of Rs. 65,85,938.62 ps. was payable as arrears of octroi.

4. The argument of Shri Aggarwal, Senior Advocate, learned counsel appearing for the petitioner, is that the Committee is entitled to charge octroi on the goods imported within its limits for consumption, sale or use and as the petitioner was importing furnace oil for use and consumption within the limits of the Committee, it could charge the octroi on the price paid by the petitioner to the Indian Oil Corporation as per the price fixation devised by the Indian Oil Corporation and respondent-Committee cannot force the petitioner to pay octroi on the basis of fictional price mentioned by the supplier on the invoices with a view to secure immediate user of the goods supplied by it. Shri Aggarwal argued that the Committee has throughout accepted octroi on the basis of the price paid by the petitioner and, therefore, it had no authority to issue notice Under Section 80(2) of the Act and in any case, respondent No. 2 could not have held the petitioner liable to pay a huge amount of over Rs. 65 lacs. Learned counsel contended that the Committee cannot charge octroi on the basis of price of the furnace oil paid by the general users and there is nothing wrong in fixing price - one meant for general use and the other meant for manufacture of fertilizers.

5. The Committee has contested the writ petition on the ground that the concession given by the Indian Oil Corporation in the price of furnace oil supplied to the petitioner cannot be made basis for charging octroi. According to the Committee, octroi is payable on