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PETITIONER: INDIAN ALUMINIUM COMPANY LIMITED

       Vs.

RESPONDENT: THANE MUNICIPAL CORPORATION

DATE OF JUDGMENT25/09/1991

BENCH: REDDY, K. JAYACHANDRA (J) BENCH: REDDY, K. JAYACHANDRA (J) PANDIAN, S.R. (J)

CITATION:  1992 AIR   53            1991 SCR  Supl. (1) 208  1992 SCC  Supl.  (1) 480 JT 1991 (4)    31  1991 SCALE  (2)656

ACT:      Maharashtra Municipalities (Octroi) Rules, 1968--Sched- ule I, Entry No. 77 read with Schedule 11, Part IA, II, Part IA,  Rule  4,  Form  14  ---Octroi---  Payment-Excess   from 1.10.1982 to 14.4.1987--Failure to submit Form 14 --Claim of refund of octroi made on 8.3.1988 ---Legality of.

HEADNOTE:      The  petitioner-Company was engaged in the business  of manufacture of aluminium products and its factory was locat- ed  at Kalwa in Thane District, obtaining aluminium  as  raw materials from its another factory, situated In a  different State.      With  effect  from  1.10.82 the Company  at  Kalwa  was included  in the municipal Jurisdiction of Thane, and  prior to that date, the Company did not have to pay any octroi  on the raw materials brought into its factory at Kalwa.      The respondent - Corporation was levying octroi duty on the imports of aluminium raw materials made by the petition- er-Company at the rate of from 1.10.1982 to 14.4.1987 and from 15.4.87 at the rate  of 2%.      On 18.5.87 the Thane Manufacturer’s Association made  a representation  to  the  respondent-Corporation  about   the increase in octroi rates.      The   respondent-Corporation   in  Its   letter   dated 20.11.1987  pointed out that when raw material specified  In Entry  77  in Schedule I to the  Maharashtra  Municipalities (Octroi)  Rules imported for use in the manufacture of  fin- ished  goods, It would be subject to the levy of octroi  not exceeding 1.25% and not less.      On receipt of this letter, the petitioner-Company  made detailed enquiries and was informed that under Rule 4 of the Rules  the  goods mentioned In Part IA of the  Schedule  I1, which  were  imported,  were liable    to  be  subjected  to octroi at a lower rate. The Company also noticed further 209 that Part IA of the Rules provided that the goods  specified in Entry 77, when imported by an industrial undertaking  for use as a raw material for processing within that undertaking and  if  a  declaration in Form 14 was filed,  the  levy  of

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octroi in such cases would not exceed 12.5% and would not be less than 0.25%.     The petitioner, however, had not filed any-Form 14  duly filled  in and according to it, it acted under a mistake  of law and under the bonafide impression that the octroi levied on  and recovered by the Corporation at the rate of 1.3%  in respect  of  the period from 1.10.82 to 14.4.87 and  at  the rate  of  2% from 15.4.87 onwards, represented  the  correct rate.     On 8.3.1988 the petitioner-Company in its letter to  the respondent-Corporation stated that under a mistake of law it paid excess amount and same should be refunded.     On 16.5.1988, the respondent-Corporation replied that as the  petitioner-Company had not complied with the  procedure specified  in  Part IA of the Schedule 11 to the  Rules  for availing  such concessional rates and therefore  the  refund could not be sanctioned.     On 19.4.1989 the petitioner-Company claimed a refund  of total amount of Rs. 13,54,101.79 p. The respondent  rejected the  claim, against which the Company filed a writ  petition in the High Court, seeking refund.     A  Division Bench of the High Court dismissed  the  writ petition  holding that the concessional rate of octroi  duty was available only if the declaration in Form 14 was  filled with the octroi authorities. Questioning  the  High  Court’s Order,  this  Special  Leave Petition was filed.     The  petitioner-Company  contended  that  a   procedural failure  should not disentitle the petitioner-Company,  pro- vided,  if  otherwise the Company  could  have  legitimately claimed.     The  respondent-Corporation submitted that  the  conces- sional rate would be available only if the raw material  was utilised  by the Company for manufacturing goods within  the industrial undertaking; that if a declaration had been filed in proper Form 14 there could have been a 210 scope for verification and in the absence of such a declara- tion the question of refunding at this distance of time  did not arise; and that the concession should have been  availed at  the  time when it was available, and  having  failed  to avail,  the  question  of claiming the same  later  did  not arise. Dismissing the petition, this Court,     HELD:.  1.  A verification at the relevant time  by  the octroi  authorities  becomes very much  necessary  before  a concession  can  be given. In the absence of filing  such  a declaration in the required Form 14, there is no opportunity for  the authorities to verify.  Therefore  the  petitioner- Company has definitely failed to fulfil an important obliga- tion under the law though procedural. [214 F]     2.  The verification at the time when the  raw  material was still there is entirely different from a verification at a belated stage after it has seized to be there. May be that the  raw-material was used in the industrial undertaking  as claimed  by the petitioner-Company or it may not be. In  any event  the  failure to file the  necessary  declaration  has necessarily  prevented  the  authorities to  have  a  proper verification. [214 H, 215 A]     3.  A concession has to be availed at the time  when  it was available and in the manner prescribed. [216 D]     4. The concession can be granted only if the raw materi- al  is used in the industrial undertaking seeking such  con- cession.  For that a verification was necessary and that  is why  in the rule itself it is mentioned that  a  declaration

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has to be filed in Form 14 facilitating verification.  Fail- ure  to  file the same would  automatically  disentitle  the Company from claiming any such concession. [218 C-D]     5.  In  the  instant case the octroi duty  paid  by  the petitioner-Company  would naturally have been passed  on  to the consumers. Therefore, there is no justification to claim the  same  at  this distance of time and the  court  in  its discretion can reject the same. [218 G]     kirpal  Singh  Duggal v. Municipal  Board  Ghaziabad,  [ 1968]  3 SCR 551; HMM Limited and another v.  Administrator, Bangalore  City  Corporation and another, [1989]4  SCC  640, distinguished. Kedarnath Jute Manufacturing Co. v. Commercial Tax  Officer, Calcutta 211 and Ors., [1965] 3 SCR 626, followed.     Orissa  Cement Ltd. v. State of Orissa & Ors., AIR  1991 SC 1676, referred to.     Dictionary  of  English Law by Earl  Jowitt;  Halsbury’s Laws of England, 4th Edn. Para 198, referred to.

JUDGMENT:     CIVIL  APPELLATE  JURISDICTION: Special  Leave  Petition (Civil) No. 6497 of 1991.     From  the  Judgment  and Order dated  18.4.1990  of  the Bombay High Court in W.P. No. 419 of 1990.     S.  Ganesh,  Ravinder Narain, P.K. Ram  and  Ms.  Amrita Mitra for the Petitioner. K.K Singhvi and A.K Gupta for the Respondent. The Order of the Court was delivered by:     K.  JAYACHANDRA  REDDY, J.  The  petitioner  Company  is engaged in the business of manufacture of aluminium products and  its  factory  is located at  Kalwa  in  Thane  District (Maharashtra). The Company obtains aluminium as raw  materi- als for consumption from another factory of theirs  situated in  a different State. With effect from 1.10.82 the  Company at  Kalwa  was  included in the  municipal  jurisdiction  of Thane.  Prior  to that date the factory was not  within  the jurisdiction of Thane  Municipality and did not have to  pay any octroi on the raw materials brought into its factory  at Kalwa.   By a notification dated 23.8.82, the Government  of Maharashtra  constituted  the Municipal Corporation  of  the City of Thane and Kalwa was brought within the  jurisdiction of  the Thane Municipal Corporation, the  respondent  herein and all goods imported into the area of the Thane  Municipal Corporation were subjected to octroi at the rates  mentioned in  Schedule  I to the Maharashtra  Municipalities  (Octroi) Rules,  1968  (’Rules’ for short). Schedule I  to  the  said Rules  contains  description of various goods  and  articles which  were liable to octroi and minimum and  maximum  rates are  prescribed.  Item No.77 in the said Schedule I  to  the said  Rules covered non-ferrous metals, including  aluminium and  Entry provided for the levy of octroi duty on the  alu- minium and_other goods mentioned therein at the minimum rate of 0.5% and at the maximum of 4%. The respondent Corporation was  levying  octroi duty on the imports  of  aluminium  raw materials made by the 212 petitioner  Company  into  Kalwa at the rate  of  1.3%  from 1.10.1982  to 14.4.1987. Then with effect from  15.4.87  the respondent Corporation was levying octroi at the rate of 2%. On  18.5.87  the  Thane Manufacturer’s  Association  made  a representation  to  the  respondent  Corporation  about  the

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increase in octroi rates pointing out that the increase  was having a disastrous effect on their industrial units located within  the limits Of the Corporation. In reply to the  said representation,  the  respondent  Corporation  addressed   a letter  dated  20.11.1987 in which it was  pointed  out  and clarified  inter  alia that goods specified in Entry  77  in Schedule I to the said Rules, when raw material is  imported for  use  in the manufacture of finished goods it  would  be subject  to the levy of octroi not exceeding 1.25%  and  not less.  On receipt of this letter the petitioner Company made detailed enquiries and was informed that under Rule 4 of the said  Rules the goods mentioned in Part IA of that  Schedule which  were imported by certain industrial undertakings  are liable to be subjected to octroi at a lower rate. The Compa- ny  also noticed further that Part IA of the Rules  provided that  the  goods specified in Entry 77 when imported  by  an industrial  undertaking for use as a raw material for  proc- essing within that undertaking and if a declaration in  Form 14 is filed, the levy. octroi in such cases would not exceed 1.25%  and  would not be less than  0.25%.  The  petitioner, however,  did not file any such Form 14 duly filled  in  and according  to  them they acted under a mistake  of  law  and under the bonafide impression that the octroi levied on  and recovered  by  the Corporation at     the rate  of  1.3%  in respect  of  the period from 1.10.82 to 14.4.87 and  at  the rate  of  2% from 15.4.87 onwards, represented  the  correct rate.  The petitioner however having later realised by going through  the  records and the financial accounts  and  other documents  which  are  duly audited claimed  refund  of  the excess of octroi duty which has been paid by them. On 8.3.88 the petitioner Company addressed a letter to the  respondent Corporation  pointing out that under a mistake of  law  they paid  excess amount and therefore the excess amount so  paid should  be  refunded. The respondent  Corporation  in  their reply  dated 16.5.88 stated that the petitioner company  had not complied with the procedure specified in Part IA of  the Schedule II to the said Rules for availing such concessional rates  therefore the refund cannot be  sanctioned.  However, the petitioner Company by their letter dated 19.4.89 claimed a refund of total amount of Rs. 13,54,101.79 p. The respond- ent again rejected the claim reiterating that the  procedure specified  in  Part IA of Schedule II to the Rules  was  not complied  with. Being aggrieved the Company filed a writ  of mandamus seeking’ refund. A Division Bench of the High Court dismissed  the. same holding that the concessional  rate  of octroi duty was available only if the declaration in Form 14 was filed with the octroi authorities. Questioning the said 213 Order, this special Leave Petition has been filed and it  is being  disposed of at the admission stage itself  after  no- tice.     Most  of  the  facts in this case are  not  in  dispute. Admittedly  the aluminium raw material was imported  by  the petitioner  Company and octroi duty at the normal  rate  was paid  and  no declaration in Form 14 was filed. It  is  only after the lapse of long time that the petitioner Company has made  a claim for refund. The learned counsel for the  peti- tioner  Company submitted that a procedural  failure  should not disentitle the petitioner Company provided if  otherwise the  Company  could have legitimately claimed.  The  learned counsel  appearing for the respondent Municipal  Corporation submitted that the concessional rate would be available only if the raw material was utilised by the Company for manufac- turing goods within the industrial undertaking. If a  decla- ration  had  been filed in proper Form 14 there  could  have

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been  a scope for verification and in the absence of such  a declaration  the question of refunding at this  distance  of time does not arise. It is also his further submission  that the concession should have been availed at the time when  it was available. Having failed to avail the question of claim- ing the same later does not arise and consequently no refund can be claimed.     The  amended  Rules came into force in 1970.  Rule  4(2) provides  for  payment  octroi at a lower  rate  by  certain industrial undertakings in respect of the goods mentioned in Part  IA of Schedule II to the Rules. Aluminium is at  Entry No.77. Part I-A reads thus:               "PART I - A               List of goods on which octroi shah be  payable               at  a lower rate by Certain industrial  under-               takings.                (1) All goods  specified in entries 6(c), 35,               40,  64, 65, 71, 77 and 86 in Schedule I,  and               khobra  mentioned in entry 25, raw rubber  and               latex mentioned in entry 70 in that  Schedule,               when imported by an industrial undertaking for               use as raw material for processing within that               undertaking  and when declaration  in  respect               thereof  is issued by the undertaking in  Form               14, shall be subject to octroi by any  Council               at a rate not exceeding 1.25 per cent and  not               less than 0.25 per cent.               XX                                          XX               XX     It  can  be seen from the above rule that to  avail  the concession,  a  declaration  in Form 14 has to  be  made  in respect of the raw material 214 imported. Form 14 is as under:               "FORM 14               (Part I-A and I1 of Schedule II )               Declaration to be made by an importer  import-               ing  dutiable ’goods as raw material  for  his               industrial undertaking               I   .............  do hereby declare that  the               goods  in respect of which I  have  separately               given  a declaration under rule 14  have  been               imported  by me as raw material to be used  in               the  manufacture  of   .............   in   my               industrial undertaking, viz.  (here give  full               name   and   address   of   the    undertaking               )  .................  and I shall not use them               for  any other purpose for sale  or  otherwise               dispose  them  of to any other party  for  any               other  purpose, except having previously  paid               the difference between the octroi due on  such               goods at ordinary rates and the octroi paid on               concessional  rates under Schedule I1  to  the               Maharashtra  Municipalities  (Octroi)   Rules,               1968.                     Date .................  Signature of the               Importer"     The declaration contemplated in Form 14 is to the effect that  the  goods imported shall not be used  for  any  other purpose for sale or otherwise etc. It can thus be seen  that an incentive is sought to be given to such entrepreneurs  by such  concession  if the raw material which is  imported  is also utilised in the industrial undertaking without  selling or disposing of otherwise. That being the object a verifica- tion at the relevant time by the octroi authorities  becomes

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very much necessary before a concession can be given. In the absence  of filing such a declaration in the  required  Form 14,  there is no opportunity for the authorities to  verify. Therefore  the petitioner Company has definitely  failed  to fulfil  an important obligation under the law though  proce- dural. The learned counsel, however, submitted that even now the  authorities can verify the necessary records which  are audited and submitted to the authorities and find out wheth- er  the material was used in its own undertaking or not.  We do not think we can accede to this contention. Having failed to file the necessary declaration he cannot now  turn-around and  ask  the  authorities to make a  verification  of  some records. The verification at the time when the raw  material was still there is entirely different from a verification at a belated stage after it has ceased to be there. May be that the  raw-material was used in the industrial undertaking  as claimed  by the petitioner Company or it may not be. In  any event  the  failure to file the  necessary  declaration  has necessarily prevented the 215 authorities to have a proper verification.     Shri Ganesh, learned counsel for the petitioner  Company relied on the judgment of this Court in Kirpal Singh  Duggal v. Municipal Board Ghaziabad [1968] 3 SCR 551 in support  of his  submission  that the non-fulfilment of  procedural  re- quirement does not bar the claimant from persuing his remedy in  a  court  of law. That was a case  where  the  appellant entered  into a contract and supplied the goods to the  Gov- ernment. The Municipal Board collected toll when the  trucks were  passing  through the toll barrier. The  appellant  ob- tained  a certificate that the transported goods were  meant for Government work. The appellant claimed exemption on  the basis  of  the certificate but not within  time.  The  Court observed thus:               "But counsel for the respondent contended that               the  rules framed by the Government  regarding               the  procedure constituted a condition  prece-               dent  to  the exercise of the right  to  claim               refund  and recourse to the civil court  being               conditionally   strict  compliance  with   the               procedure  prescribed  the  civil  court   was               incompetent  to  decree the  suit  unless  the               condition  was  fulfilled. We  are  unable  to               agree  with that contention. The rules  framed               by the Government merely set up the  procedure               to be followed in preferring an application to               the  Municipality for obtaining refund of  the               tax paid. The Municipality is under a statuto-               ry  obligation once the procedure followed  is               fulfilled,  to grant refund of the  toll.  The               application  for  refund of the toll  must  be               made  within  fifteen days from  the  date  of               payment           of  the toll. It has  to  be               accompanied by the original receipts. If these               procedural requirements are not fulfilled, the               Municipality  may decline to refund  the  toll               and relegate the claimant to a suit. It  would               then be open to the party claiming a refund to               seek the assistance of the court, and to prove               by  evidence which is in law  admissible  that               the  goods transported by him fell within  the               order  issued under s. 157(3) of the Act.  The               rules framed by the Government relating to the               procedure  to be followed in giving effect  to               the  exemptions  on  April 15,  1939,  do  not

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             purport  to bar the jurisdiction of the  civil               court if the procedure is not followed."     Relying  on  these observations,  Shri  Ganesh,  learned counsel  for  the petitioner Company contended that  in  the instant  case though the procedural requirement is not  ful- filled by filing a declaration in Form 14, still that is not a  bar to invoke the jurisdiction of the civil court or  the High 216 Court  by way of a writ and seek a refund. We are unable  to agree. In Duggal’s case, the appellant, as a matter of fact, obtained certificate but failed to make the application  for refund  within  time. It is in that context this  Court  ob- served  that the Municipality was under a statutory  obliga- tion  once the procedure followed is fulfilled and if it  is not fulfilled the Municipality may decline. The granting  of a certificate that the appellant used the goods for  Govern- ment work made all the difference. But, in the instant case, the non-fulfillment of the requirement even though procedur- al, has disentitled the petitioner Company because there was no  way to verify whether it was entitled for  such  conces- sion. In HMM Limited and another v. Administrator, Bangalore City Corporation and another, [1989]4 S C C 640 no doubt the view  taken  in Dugal’s case was confirmed but it  does  not make any difference so far as the present case is  concerned for the reasons stated above. In that case the question  was whether  the goods namely Horlicks was consumed  within  the city or not and there was no dispute as to the quantum which was  credited pursuant to the directions of the High  Court. Hence no further verification was necessary. Therefore these two cases are distinguishable.       However,  a concession has to be availed at  the  time when  it  was available and in the  manner  prescribed.  The common  dictionary meaning of the word "concession"  is  the act  of  yielding or conceding as 10 a demand  or  argument, something  conceded;  usually implying a demand.  claim,  or request, "a thing yielded", "a grant".     In  the  Dictionary of English Law by Earl  Jowitt,  the meaning of "concession" is given as under:               "Concession,  a  grant by a central  or  local               public  authority to a private person or  pri-               vate persons for the utilisation or working of               lands,  an  industry,  a  railway  waterworks,               etc."     The expressions "rebate" and "concession" in the commer- cial  parlance have the same concept. In Halsbury’s Laws  of England, 4th edn. Para 198 it is observed as under:               "Application for rebate. When a rating author-               ity  receives an application for a  rebate  it               has  a duty to determine whether the  residen-               tial occupier is entitled to a rebate and,  if               so, the amount to which he is entitled; and it               must  request him in writing to  furnish  such               information and evidence as it may  reasonably               require  as to the persons who reside  in  the               hereditament,  his income, and the  income  of               his spouse. Unless               217               the  rating  authority is satisfied  that  the               residential  occupier  has furnished  all  the               information  and evidence it requires,  it  is               under no duty to grant a rebate. "               (emphasis supplied)     In  Kedarnath Jute Manufacturing Co. v.  Commercial  Tax Officer,  Calcutta and Ors. [1965] 3 SCR 626, the  appellant

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which  was a public limited Company, sought exemption  under the  provisions of the Bengal Finance (Sales Tax) Act,  1941 in  respect of certain sales but did not produce before  the Officer  the  declaration forms from the  purchaser  dealers required to be produced under the proviso to that sub-clause granting exemption. It was contended on behalf of the appel- lant  that proviso to the sub-clause was only directory  and the dealer is not precluded where the proviso is not strict- ly  complied with from producing other relevant evidence  to prove that the sales were for the purposes mentioned in  the said sub-clause. The contention on behalf of the  respondent was that the dealer can claim exemption under the sub-clause but he must comply strictly with the conditions under  which the  exemption  can be granted.  Rejecting  the  appellant’s contention, this Court held thus:               "Section  5(2)(a)  (ii) of the Act  in  effect               exempts a specified turnover of a dealer  from               sales  tax.  The  provision  prescribing   the               exemption  shall, therefore, be strictly  con-               strued.  The  substantive  clause  gives   the               exemption  and the proviso qualifies the  sub-               stantive  clause.  In effect the proviso  says               that  part  of  the turnover  of  the  selling               dealer covered by the terms of sub-clause (ii)               will be exempted provided a declaration in the               form  prescribed  is furnished. To put  it  in               other words, a dealer cannot get the exemption               unless  he  furnishes the declaration  in  the               prescribed form." It was further held as under:               "There  is  an understandable reason  for  the               stringency of the provisions. The object of S.               5(2)  (a) (ii) of the Act and the  rules  made               thereunder  is  self-evident. While  they  are               obviously  intended  to give  exemption  to  a               dealer  in  respect  of  sales  to  registered               dealers’  of  specified classes of  goods,  it               seeks  also to prevent fraud and collusion  in               an  attempt  to evade tax.  In the  nature  of               things,  in view of  innumerable  transactions               that  may be entered into between dealers,  it               will  wellnigh  be impossible for  the  taxing               authorities to ascertain in each case  whether               a  dealer  has  sold the  specified  goods  to               another  for  the purposes  mentioned  in  the               section. Therefore,               218               presumably  to  achieve  the  twofold  object,               namely,  prevention of fraud and  facilitating               administrative efficiency, the exemption given               is made subject to a condition that the person               claiming the exemption shall furnish a  decla-               ration form in the manner prescribed under the               section.  The liberal  construction  suggested               will  facilitate the commission of  fraud  and               introduce administrative inconveniences,  both               of  which  the provisions of the  said  clause               seek to avoid"     It can thus be seen that the submission namely that  the dealer,  even without filing a declaration, can later  prove his case by producing other evidence, is also rejected. This ratio applies on all fours to the case before us. As already mentioned  the  concession can be granted only  if  the  raw material is used in the industrial undertaking seeking  such concession.  For that a verification was necessary and  that

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is why in the rule itself it is mentioned that a declaration has to be filed in Form 14 facilitating verification.  Fail- ure  to  file the same would  automatically  disentitle  the Company from claiming any such concession.     In any event the petitioner Company cannot claim conces- sion at this distance as a matter of right. In Orissa Cement Ltd.  v. State of Orissa & Ors, A I R 1991 SC 1676,  it  was observed thus:               "We  are inclined to accept the view urged  on               behalf  of the State that a finding  regarding               the invalidity of a levy need not automatical-               ly  result in a direction for a refund of  all               collections  thereof made earlier. The  decla-               ration regarding the invalidity of a provision               and  the  determination  of  the  relief  that               should  be granted in consequence thereof  are               two  different  things  and,  in  the   latter               sphere,  the  Court has, and must be  held  to               have,  a certain amount of discretion.  It  is               well-settled  proposition that it is  open  to               the  Court  to grant, mould  or  restrict  the               relief  in  a manner most appropriate  to  the               situation  before it in such a way as  to  ad-               vance the interests of justice."     In  the instant case the octroi duty paid by  the  peti- tioner  Company would naturally have been passed on  to  the consumers. Therefore there is no justification to claim  the same  at this distance of time and the court in its  discre- tion  can reject the same. For the above reasons, this  Spe- cial Leave Petition is dismissed with costs. V.P.R.                                        Petition  dis- missed. 219