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1993 Supreme(P&H) 121
PUNJAB & HARYANA HIGH COURT
A.L.Bahri, Naresh Jain and N.K.Sodhi JJ.
Birla Cement Works
Versus
State Of Punjab
Civil Writ Petition No. 4582 of 1980,
Decided On : FEBRUARY 2, 1993
Octroi is not leviable on goods intended for export outside the Municipal limits.
Headnote:
OCTROI - LEVY - TRANSIT PASSES - INTERPRETATION OF RULES - JUDICIAL PRECEDENTS - REFUND OF OCTROI DUTY - ENRICHMENT. 1. Octroi is leviable only on goods brought into the Municipal limits for consumption, use or sale therein. 2. Goods meant to be exported out of the Municipal limits, either immediately or after a short interval, are not liable to octroi duty. 3. Transit passes are required to be obtained for such goods, and if they are not exported within the prescribed time, a presumption arises that they were meant for consumption, use or sale within the Municipal limits. 4. Judicial precedents support the view that octroi is not leviable on goods intended for export outside the Municipal limits. 5. Refund of octroi duty is permissible under certain conditions, and the petitioner is entitled to such refund in the present case. 6. The petitioner cannot be accused of unlawful enrichment as there is no evidence that it collected octroi duty from its purchasers.
Fact of the Case:
The petitioner, Birla Cement Works, brought cement to Kotkapura by railway. Some of the cement was meant for consumption within the Municipal limits of Kotkapura, while the rest was to be exported to other towns. The Municipal Committee initially issued transit passes for the cement to be exported, but later refused to do so and demanded octroi duty on all the cement. The petitioner challenged this demand in court.
Finding of the Court:
The court held that the Municipal Committee was not entitled to levy octroi duty on the cement that was meant to be exported outside the Municipal limits. The court relied on the provisions of the Punjab Municipal Account Code (Octroi) Rules, which provide that octroi is only leviable on goods that are brought into the Municipal limits for consumption, use or sale therein. The court also referred to judicial precedents, which support the view that octroi is not leviable on goods intended for export outside the Municipal limits.
Issues: 1. Whether the Municipal Committee was entitled to levy octroi duty on the cement that was meant to be exported outside the Municipal limits? 2. Whether the petitioner was entitled to a refund of the octroi duty that it had paid?
Ratio Decidendi: The court held that the Municipal Committee was not entitled to levy octroi duty on the cement that was meant to be exported outside the Municipal limits because: * The provisions of the Punjab Municipal Account Code (Octroi) Rules provide that octroi is only leviable on goods that are brought into the Municipal limits for consumption, use or sale therein. * Judicial precedents support the view that octroi is not leviable on goods intended for export outside the Municipal limits.
Final Decision: The court quashed the Municipal Committee's order demanding octroi duty on the cement that was meant to be exported outside the Municipal limits. The court also directed the Municipal Committee to refund the octroi duty that the petitioner had paid.
A.L. BAHRI, J.
1. Correctness of the Division Bench judgement in Indian Oil Corporation V/s. Municipal Corporation, Jullundur, AIR 1990 Punj and Har 99, having been doubted, the matter has been referred to the Full Bench.
2. The Division Bench held that the Municipal Committee was entitled to levy octroi on all the goods brought within the Municipal limits which were to be sold to consumers outside the Municipal limits. This was so held as the title in the goods passed within the jurisdiction of the Municipal Committee. It is not necessary to refer to the aforesaid decision in detail as the aforesaid judgement was set aside by the Supreme Court subsequently. Since the entire matter stands referred to the Full Bench, brief narration of the facts of the claim made by the petitioner is necessary.
3. Birla Cement Works is a Proprietary Concern of M/s. Birla Jute Manufacturing Company Ltd., Calcutta. This Company has a manufacturing unit known as Birla Cement Works located in Chittorgarh in Rajasthan State. Its office is located in Punjab at Kotkapura and that office is also registered as a dealer under the Punjab General Sales Tax Act and also under the Central Sales Tax Act. Its godown is also situated within the Municipal limits of Kotkapura. The unit of manufacturing cement started functioning in August, 1972. From Chittorgarh the cement used to be brought in railway racks up to Kotkapura. The distributor of the petitioners firm at Amritsar used to receive orders from the dealers in the State of Punjab. Thus Amritsar office used to inform Kotkapura office about the demand of the dealers in different towns in the State of Punjab. On arrival of the cement at the railway station, Kotkapura, the information used to be supplied to the Municipal Committee, Kotkapura, about its arrival and the number of cement bags which were to be brought within the Municipal limits of Kotkapura for consumption, use or sale and on such bags octroi duty used to be paid whereas transit pass used to be obtained from the Municipal Committee with respect to the cement bags which were to be sent straight to other towns in the State of Punjab. For about 8 years this system continued to work. On 10/07/1973 the Municipal Committee, Kotkapura, passed resolution No. 733 to charge octroi on all consignments of goods where destination station was Kotkapura. It was also decided not to issue transit passes in respect of such consignments. The Executive Officer of the Municipal Committee also passed an order in pursuance of the resolution aforesaid The matter was taken before the Deputy Commissioner, Faridkot, challenging the aforesaid order of the Executive Officer dated 10/07/1973, as well as the resolution. The Deputy Commissioner vide his order dated 20/08/1973 suspended the execution of the resolution as well as the order aforesaid. The State of Punjab vide order dated 2/08/1974, decided that the Municipal Committee, Kotkapura, could charge octroi if there was change in the consignee at Kotkapura, otherwise the cement brought by the petitioner company was to be cleared from Kotkapura by transit pass system. Copy of the order is Annexure P-11. The Sub-Divisional Officer (Civil), Faridkot, exercising powers of the Deputy Commissioner under Sec. 232 of the Punjab Municipal Act, passed the order dated 8/08/1974, that the decision was to be taken in accordance with the direction of the Secretary to Government, Punjab. On 14/08/1975, the Municipal Committee all of a sudden refused to issue transit passes and insisted on payment of octroi duty on cement which was to be exported to other towns from Railway Station, Kotkapura. A representation was made to the Deputy Commissioner and a direction was issued thereon to the Municipal Committee to issue transit passes. Copy of the order of the Deputy Commissioner is Annexure P-12. The State also directed issuance of transit passes. Copy of the order is Annexure P-13. On 23/08/1976, the State again passed an order tha
