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PETITIONER: HIRALAL THAKORLAL DALAL

       Vs.

RESPONDENT: BROACH MUNICIPALITY & ORS.

DATE OF JUDGMENT15/04/1976

BENCH: SHINGAL, P.N. BENCH: SHINGAL, P.N. RAY, A.N. (CJ) BEG, M. HAMEEDULLAH SARKARIA, RANJIT SINGH SINGH, JASWANT

CITATION:  1976 AIR 1446            1976 SCR   82  1976 SCC  (3) 398  CITATOR INFO :  RF         1992 SC 645  (4,11)

ACT:      Bombay Municipal  Boroughs Act  1925 S. 73(i)(iv)-Scope of-Octroi duty-If could be levied on "through consignments".

HEADNOTE:      Section 73(i)(iv)  of the Bombay Municipal Boroughs Act 1925 empowers  a  municipal  borough  to  impose  octroi  on animals or  goods or  both brought  within the octroi limits for consumption, use of sale therein. The appellant imported certain consignments  of goods  within the  octroi limits of the municipality  and exported  them, the consignments being termed as  "through consignments"  or "goods  in transit" or "goods for export". Octroi duty was imposed on the goods and the  appellant  filed  a  petition  before  the  High  Court challenging  the   levy.  The   High  Court  held  that  the expression  ’sale’   used  in  the  definition  of  "through consignments" in  the rules  had the  same connotation as in the Sale  of Goods  Act and, therefore, if a consignment was brought within  the  octroi  limits  and  if  the  municipal authorities were  satisfied that  the consignment  had  been brought in for the purpose of sale, then the consignment did not become a through consignment.      Allowing the appeal to this Court, ^      HELD: The law on the subject has been clearly laid down in Burmah Shell Oil Storage and Distributing Company (India) Ltd. v.  The Belgaum  Borough Municipality  and the  present case is  governed by that decision. It was held in that case that the  company was  liable to pay octroi on goods brought into the local area, if the goods are:      (a) to  be consumed by the Company itself or sold by it to consumers direct and (b) for sale to dealers who in their turn sold  the goods  to consumers within the municipal area and irrespective  of whether  such consumer  bought them for use in  the area  or outside  it; but  it was  not liable to octroi in respect of goods which were brought into the local area and were re-exported. [86 C-D]

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    Buimah Shell  Oil Storage  and Distributing  Co.  India Ltd. v.  The Belgaum  Borough Municipality  [1963] Suppl.  2 S.C.R. 216, explained and applied

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1823 of 1969.      Apeal by  Special Leave  from the  Judgment  and  Order dated the  27th/28th/30th January,  1967 of the Gujarat High Court in Special Civil Application No. 163 of 1962.      B. R. Agarwala for the Appellant.      I. N. Shroff for the Respondents.      Dr. L.  M. Singhvi,  Advocate General, Rajasthan, V. S. Dave and  S. M.  Jain  for  Intervener,  Municipal  Council, Jodhpur.      The Judgment of the Court was delivered by      SHINGHAL, J.-This  appeal by  special leave arises from the judgment  of the Gujarat High Court dated January 27, 28 and 30, 83 1967. The  two petitioners  before the High Court were firms trading in  certain commodities  within the  limits  of  the Municipal Borough  of Broach.  The grievance  in one  of the petitions was  that the  Municipality had  collected certain amounts wrongfully,  and the grievance in the other petition was that  the Municipality  had refused  some  amounts  even though they  were refundable  under its  byelaws.  Both  the petitions concerned  goods which  were "imported" within the octroi limits  of the Municipality but came to be "exported" therefrom.  The   first  petition   was  in   respect  of  a consignment which  was designated  as a through consignment, and the second petition concerned goods in transit and goods for export  other than  those which could be called goods in transit. The  amounts in  dispute related  to  the  levy  of octroi under  section 73(i) of the Bombay Municipal Boroughs Act, 1923,  hereinafter called  the Act,  which provides  as follows:           "73 (i)   Subject to any general or special orders                     which the  State Government  may make in                     this behalf  and to  the  provisions  of                     sections 75  and 76,  a Municipality may                     impose for  the purposes of this Act any                     of the following taxes, namely:-                *         *         *         *         *             (iv)    an octroi  on animals  or goods or both,                     brought, within  the octroi  limits  for                     consumption, use or sale therein;." The word "sale" was included within the ambit of octroi when the Act was amended in 1954. The High Court took note of the rules and  the bye-laws and held that it was not possible to take the view that the rules contemplated that no refund was payable in  case the  goods had  undergone a sale during the course of  their stay  in octroi limits. It accordingly came to the  conclusion that  in regard to goods meant for export in the sense defined in the rules, refund was claimable even if a  sale transaction  in the larger sense (i.e. in a sense other than  a sale  to a consumer or with the intention that the goods  must pass  into hands  of the  ultimate consumer) took place  in  regard  thereto,  provided  that  the  other conditions were  satisfied. The High Court then examined the correct interpretation  of the word "sale" in clause (iv) of section 73(i)  of the Act and after considering this Court’s judgment in  Burmah Shell  Oil Storage  and Distributing Co.

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India Ld.  v. The  Belgaum Borough  Municipality,(1) it held that the  word "sale"  could not be given the narrow meaning of a  sale for consumption to the ultimate consumer because, in that  sense, the  Legislature would  be guilty  of having introduced a  word which  it was  not necessary  for  it  to introduce. The High Court made a reference to the definition of "sale" in section 4 of the Sale of 84 Goods Act and held that the expression "sale" as used in the definition of  ’through consignments"  in the  rules had the same connotation  as in  the Sale of Goods Act and therefore "if a consignment is brought within the octroi limits and if the municipal authorities are satisfied that the consignment has been  brought in  for the purpose of effecting a sale in the aforesaid  sense, then the consignment does not become a through consignment."  According to  the High  Court, it was not enough  merely to  prove that  the consignment  left the octroi limits within six hours after the goods were imported and that  it was  necessary to  show  that  the  goods  were intended only  to pass  through in  the sense that they were not meant  for consumption,  use or sale, and that in regard to such  goods there  was no  intention of changing hands by way of sale or that there was no intention of breaking their bulk or  detaining them  beyond six hours or unloading them. In the  view it  took, the High Court issued some directions for  compliance  by  the  authorities  concerned.  The  writ petitioners felt  dissatisfied with  the view  taken by  the High Court  and applied  for a  certificate  under  articles 132(1) and  133(1) (c)  of the  Constitution. The High Court held that  no question  arose  under  article  132,  and  no certificate could  be granted under article 133 as there was no final  order. The  petitioners however  applied  to  this Court for  special leave on the ground, inter alia, that the High Court  put a  wrong interpretation  on  the  expression "sale" in  section 73(i)(iv)  of  the  Act  inspite  of  the decision of  this Court  in Burmah  Shell’s case (supra). As has been  stated, they  succeeded in obtaining special leave from this  Court. When the case came up for hearing before a Division Bench,  it noticed  the decision  in Burmah Shell’s case (supra) and felt that there were "burred areas" of sale within the  territory which may attract a tax under entry 52 (List  II   of  Seventh  Schedule)  left  uncertain  by  the aforesaid decision of this Court so that the matter deserved consideration by  a larger  Bench. This  is how the case has come up  before us  for hearing.  We have  allowed Municipal Council,  Jodhpur,  to  intervene  in  the  hearing  at  its request.      The short  question before  us is  whether this Court’s decision in  the Burmah Shell’s case (supra) squarely covers the present  controversy or  whether that  decision requires reconsideration. The  learned counsel  have in fact confined their arguments to this narrow field.      In order  to appreciate  the controversy,  it  will  be desirable to  refer to the basic facts of the Burmah Shell’s case (supra).  The Burmah Shell Oil Storage and Distribution Co. India  Ltd., hereinafter referred to as the Company, was a dealer  in petrol  and other  petroleum products  which it manufactured in  its refineries situated out-side the octroi limits of  Belgaum Municipality.  It brought  these products inside that  area either for use or consumption by itself or for sale generally to its dealers and licensees who in their turn sold them to others. According to the Company the goods brought by 85 it within  the octroi  limits could  be  divided  into  four

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categories as follows:           1.   Goods consumed by the Company;           2.   Goods sold by the Company through its dealers                or by  itself and  consumed within the octroi                limits by persons other than the Company;           3.   Goods sold by the Company through its dealers                or by  itself inside  the  octroi  limits  to                other persons  but consumed  by them  outside                the octroi limits; and           4.   Goods sent  by the  Company  from  its  Depot                inside the  octroi limits  to extra-municipal                points where  they are bought and consumed by                persons other than the company. This Court examined the scheme of taxation under the Act and the rules  and the bye-laws made by the Municipality for the levy of octroi. It also took note of the fact that the words "use or  sale" were  substituted for  the words  "or use" by Bombay Act  35 of  1954, which  are the  subject matter of a fresh controversy  before us,  and made  a reference  to the Legislative Lists  in the  Government of India Act, 1935 and the Constitution. After examining the history of octrois and terminal taxes,  this Court held that "octrois were taxes on goods brought  into the  local area  for consumption, use or sale", and  that "they were leviable in respect of goods put to some use or other in the area but only if they were meant for such  user." It was specifically clarified that the word "sale" was  included only  in 1954  in order  to  bring  the description  of   octroi  in   the  Act  in  line  with  the Constitution, and  that  the  expression  "consumption"  and "use" together "connote the bringing in of goods and animals not with  a view to taking them out again but with a view to their retention  either for use without using them up or for consumption in  a manner which destroys, wastes or uses them up."      Looking to  the trade  of the  Company, this Court held that sale  by it  directly to  consumers or  to dealers  was "merely the means for putting the goods in the way of use or consumption" and  that the word "therein" does not mean that all the  act of  consumption must  take place in the area of the municipality.  The  Court  therefore  went  to  hold  as follows.-           "In other  words, a  sale  of  the  goods  brought      inside, even  though not  expressly  mentioned  in  the      description  of   octroi  as  it  stood  formerly,  was      implicit, provided  the goods  were not re-exported out      of  the  area  but  were  brought  inside  for  use  or      consumption by  buyers inside  the area.  In this sense      the  amplification  of  the  description  both  in  the      Government of  India Act, 1935 and the Constitution did      not make  any addition  to the true concept of ’octroi’      as explained  above. That concept included the bringing      in of goods in a local area so that the goods come to a      repose there.  When the  Government of  India Act, 1935      was enacted, the word 86           ’octroi’   was    deliberately   avoided   and   a      description added  to  forestall  any  dispute  of  the      nature which  has been  raised in  this case.  In other      words, even  without the  description the  tax  was  on      goods brought  for ’consumption, use or sale’. The word      ’octroi’ was  also avoided  because terminal  taxes are      also a  kind of octroi and the two were to be allocated      to different legislatures.           In our  opinion, even  without the  word ’sale’ in      the Boroughs Act the position was the same provided the

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    goods were  sold in  the local  area to  a consumer who      bought them  for the  purpose of  use or consumption or      even for  resale to  others for  the purpose  of use or      consumption by  them in  the area. It was only when the      goods were  re-exported out  of the  area that  the tax      could not legitimately be levied......" This Court categorically held that the Company was liable to pay octroi  on goods  brought into  the local area (a) to be consumed by  itself or  sold by  it to consumers direct, and (b) for  sale to dealers who in their turn sold the goods to consumers within  the municipal area irrespective of whether such consumers  bought them  for use  in the area or outside it, but  it was  "not liable  to octroi  in respect of goods which it  brought into  the local  area and  which were  re- exported."      The  law   on  the   subject  matter   of  the  present controversy has  thus been  laid down  quite clearly  in the Burmah Shell’s  case (supra)  and the  present case squarely falls to  be governed  by it.  We are also in agreement with that interpretation of the law. It may be mentioned that the learned counsel  have not  been  able  to  advance  any  new argument justifying a reconsideration of the decision.      The appeal  is allowed,  the impugned  judgment of  the High Court  is set aside and the respondents are directed to examine  and  determine  the  claims  of  the  appellant  in accordance with  the above  decision. The  appellant will be entitled to costs from the respondents. P.B.R.                                       Appeal allowed. 87