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PETITIONER: MUNICIPAL COUNCIL, JODHPUR

       Vs.

RESPONDENT: PAREKH AUTOMOBILES LTD. AND ORS.

DATE OF JUDGMENT07/11/1989

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) KANIA, M.H. RANGNATHAN, S.

CITATION:  1989 SCR  Supl. (2)  49  1990 SCC  (1) 367  JT 1989  Supl.    309    1989 SCALE  (2)1349

ACT:     Rajasthan  Municipalities Act  1959/Rajasthan  Municipal Octroi  Rules,  1962:  Sections 104, 133  Rules,  6,  9  and 13--Octroi--Liability for--When arises.

HEADNOTE:     M/s. Parekh Automobiles Ltd., respondent No. 1, had been allotted retain outlet by Indian Oil Corporation, respondent No.  2,  for sale of its petroleum  products  at  Dangiawas, which  was outside the limits of the  appellant.  Respondent No.  2 had its depot near Raikabag Station at Jodhpur  where it  stored  petroleum products for supply  to  various  pump stations situated within the limits of the appellant as well as  situated outside its limits. Respondent No. 2,  being  a public  sector  undertaking, was  provided  current  account facilities under section 133 of the Rajasthan Municipalities Act, 1959, and so respondent No. 2 had not to pay octroi tax on  such consignments at the time of entry of  goods  within the  limits of the appellant. For this  purpose,  respondent No.  2 was provided with the export facilities and  supplied with  entry passes under Rule 13 of the Rajasthan  Municipal Octroi  Rules  1962. Under rule 13(4), the  amount  of  duty payable, in the case or persons who had the current  account facilities, was determined and collected on the basis of the total  amount  of goods that had come in as reduced  by  the total  amount of goods that had gone out, the balance  being presumed  to  have been consumed, used or  sold  within  the municipal limits.     It was alleged that the appellant suspended the  current account  facility under section 133 of the Act and took  the stand that octroi would be charged from Respondent No. 2  on the goods brought within the municipal limits if these  were sold within the limits of the appellant although such  goods were  mean for use and consumption of the consumers  outside the municipal limits. As a consequence of this action of the appellant, respondent No. 2 charged octroi duty on  supplies made  to respondent No. I at Dangiawas by adding the  amount of octroi tax in the bills.     Respondent No. 1 filed a writ petition in the High Court praying  inter alia for a direction or an order  restraining the Municipal Council from realising any tax on diesel, etc.

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which  were  supplied  to respondent No.1  at  Dangiawas  by respondent No. 2, and for refund of octroi tax already paid. It was contended on behalf of respondent No. 1, in the  High Court,  that  the Municipal Council had no  jurisdiction  to levy octroi on the goods brought within the municipal limits but  not  sold, consumed or used  therein  and  subsequently exported  outside  the said limits; that  actual  sale  took place  only at Dangiawas and since neither the sale nor  the consumption  nor the use of the petroleum products in  ques- tion took place within the limits of the municipa- 50 lity  of Jodhpur, and Municipal Council was not entitled  to levy any octroi thereon; alternatively, even if the sale was held to have taken place at Jodhpur, still, octroi could not be  levied as the goods so sold were meant for use  of  con- sumption  outside  the municipal limits; and that  the  word ’sale’ occuring under s. 104 of the Municipalities Act could not be read without reference to use or consumption, as sale simplicitor  by itself did not attract the levy  of  octroi, unless  the goods were meant for use or consumption  of  the ultimate consumer in the area of the Municipal Council.     The  defence of the Municipal Council was  that  because the sale took place at Jodhpur, octroi was chargeable  irre- spective of the fact where it was consumed or used; that  as soon as the goods entered the octroi limits, it gave rise to taxable  event  unless a declaration as  contemplated  under rule 9 had been made; that respondent No. 2 did not make the declaration  as  required by rule 9 and rule  13(4)  of  the Octroi  Rules;  and that under sub-rule (4) of rule  13  the goods  exported were to be lessened only if such  goods  had not been sold within the municipal limits and were  exported out  within a period of six months from the date  of  entry. The  claim of refund was contested on the ground that  there was no privity of contract between respondent No. 1 and  the Municipal Council as the demand of octroi was not made  from respondent No. 1.     The  case of the Indian Oil Corporation, respondent  No. 2, was that under the terms of the agreement respondent  No. 2  was  obliged to transport petroleum products out  of  its depots  and supply petroleum products to its dealers at  the destination in its own truck-tankers, and till the  supplies were made at the destination, the goods were at the risk  of respondents  No. 2 and therefore the goods were sold at  the retail  outlet  where the deliveries were made  and  not  at Jodhpur.     The learned Single Judge did not permit the  petitioners to raise the question that the sale took place only  outside the  municipal  limits  of Jodhpur since  that  involved  an investigation into facts which could not be undertaken in  a writ petition, and proceeded on the footing that the sale of the  products  in question took place within the  limits  of Jodhpur. He, however. accepted the contention of IOC and the dealer that even if the sale was taken to have been effected within  Jodhpur,  no octroi was leviable as  admittedly  the goods had been sold in Jodhpur only for their onward  trans- mission  for  use and consumption in Dangiawas  outside  the municipal  limits. The prayer for refund of the  octroi  tax was, however, refused.     The Division Bench dismissed the appellant’s appeal  and partly allowed the appeal filed by respondent No. 1. On  the basis  of  the judgments of this Court in Burmah  Shell  Oil Storage & Distribution Co. India Ltd. v. The Belgaum Borough Municipality,  [1963] Supp. 2 SCR 216 and Hiralal  Thakorlal Dalai v. Broach Municipality, [1976] Supp. SCR 82 wherein it was  held that the sine qua non for levy of octroi was  con-

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sumption,  and  that the sale in order to  attract  levy  of octroi shall be for the purpose of use or consumption 51 of the ultimate consumer, the Division Bench held that  sale simplicitor  would ot attract the levy of the  octroi,  that the  word ’sale’ in this context had to be read with  refer- ence  to  the use or consumption and ’use,  consumption  and sale’ had to read in a disjunctive manner.     The  Division  Bench  further held that rule  13  was  a special  provision  in regard to; the persons who  had  been granted  current  account facilities and this rule  was  not subject  to  either rule 6 or rule 9 but was  an  overriding rule independent of rules 6 and 9. The Division Bench was of the opinion that s. 133 of the Municipalities Act, alongwith rule 13 of the octroi Rules left no doubt that no conclusive presumption  of  the goods having been  brought  within  the municipal limits for consumption, use or sale therein  could be  drawn in cases where special current account  facilities had been given to a person.     The Division Bench also held that the claim of refund by respondent  No.  1 was not maintainable. The  Bench  however directed that the Municipal Council would have to refund  to the Indian Oil Corporation, respondent No. 2, the amount  of octroi duty paid on the petroleum products re-exported by it to  Dangiawas  outlet for supply to respondent  No.  1,  who would recover the same from the Indian Oil Corporation.     M/s.  Motilal Padampat Sugar Mills Co. Ltd. v. State  of Uttar  Pradesh & Ors., AIR 1979 SC 621 and State  of  Madhya Pradesh  &  Anr. v. Bhailal Bhai, AIR 1964 SC  1006,  relied upon.     Before this Court, the parties reiterated their  conten- tions  raised  before the High Court. In  addition,  it  was contended on behalf of the appellant that there was  nothing in  the  two judgments of this Court to the effect  that  if goods  were brought into a local area for sale to  a  dealer who  then transported the goods outside the local  area  for sale  to  consumers, no octroi would be chargeable.  It  was further contended that during the period in dispute, as also today, there was no current account facility to the respond- ent No. 2 under rule 13 of the Octroi Rules and as admitted- ly the respondent No. 2 was not complying with the  require- ments of rules 6 and 9 of the said Rules and not filing  any declaration,  the Municipal Council had the right  to  treat the  goods  brought within the Municipal  limits,  as  those brought  for consumption, use or sale under sub-rule (2)  of rule  9 of the said Rules and thereby attracting octroi.  On the  other hand, it was contended on behalf of the  respond- ents  that it was incorrect to say that the current  account facility was suspended or withdrawn. Dismissing the appeal, this Court,     HELD:  (Sabyasachi  Mukharji and  M.H.  Kania,  JJ.--Per Sabyasachi Mukharji, J).     (1)  The  High Court was right in holding  that  it  was difficult  and inappropriate under Article 226 to  determine the question as to where the sale 52 took place, and that even if the sale took place within  the octroi  limits of Jodhpur Municipal Council for the  use  or consumption  of  the ultimate consumer  outside  the  octroi limits  of Jodhpur then the taxable even did not take  place in the octroi limits of Jodhpur. [66F-G]     (2)  In view of the decisions of this Court and in  view of the language of section 104 of the Municipalities Act and the  facts,  the  High Court was right in  holding  that  no octroi  was leviable on petroleum products re-exported  out-

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side  the municipal limits for consumption and  use  outside the municipal limits. [65F]     Burmah Shell Oil Storage & Distributing Co. Ltd. v.  The Belgaum  Borough  Municipality, [1963] Supp. 2 SCR  216  and Hiralal  Thakorelal  Dalai v. Broach  Municipality  &  Ors., [1976] Sup. SCR 82, followed.     (3) In view of the facts of this case, the title  passed to the goods outside the municipal limits even in respect of the petroleum products which were sold within the  municipal limits. If the goods were brought within the municipal limis for the purpose of sale (sale means passing of the title  to the  purchaser),  then different considerations  might  have applied. [73D]     (4)  Analysis  of Section 133 and  the  current  account facility  therein indicates that only on the goods for  use, consumption  or sale, octroi is leviable. Under this  provi- sion, octroi tax is paid at the tune of settlement of  peri- odical  account,  say after every month. Thus,  question  of complying with rule 6 or rule 9 does not arise as they apply when  octroi tax is paid at the time of entry of goods.  The delivery  of  entry passes and transport passes is  only  to facilitate settlement of octroi account on goods which  have been  retained  in Municipal area for use  and  consumption. [73H; 74A]     (5)  A  perusal of section 133 would show  that  current account facility is provided by substantive section, whereas rule 13 is procedure provided with’ the object of  providing facility of settlement of account of payment of octroi  tax. In  other  words,  according to rule 13(4),  octroi  tax  is charged  on  quantity mentioned in entry  passed  minus  the quantity mentioned in transport passes, i.e., on quantity of petroleum  products  used or consumed within  the  Municipal limits of Jodhpur Municipality. [75A-B]     (6)  In  view  of the confused state  of  pleadings  and averments, it was not possible to hold that current  account facilities  were  withdrawn  or cancelled. If  that  is  the position, then there is no question that the High Court  was right  in  the order it passed and the  direction  it  gave. [75E] Per Ranganathan, J.     (1) When goods arrive at an octroi outpost, they may  be coming  in  either for consumption, use or sale  within  the municipal limits or for transportation outside these limits. Rule  9  requires  every person bringing  goods  within  the municipal limits to make a declaration as to what the  goods are intended for. [77E] 53     (2)  Under the normal procedure for the  assessment  and collection  of  octroi duty, the declaration  under  Rule  9 becomes  important and the terms of the  declaration  deter- mines  the incidence of the duty. Rule 13, however,  contem- plates  a  totally different scheme for the  assessment  and collection of octroi for the special type of cases. [78C-D]     (3) A comparison of the two sets of provisions will make it  clear that they are two independent and mutually  exclu- sive  modes of assessment and collection of duty. Under  the cash system of payment, a declaration under rule 9 is  abso- lutely essential. The mode of collection of duty in  respect of a person having current account facilities, however, does not  depend  upon any such declaration or upon the  mode  of utilisation  of the goods as indicated in such  declaration, because in the case of the current account holders, the duty payable  in respect of the entirety of the goods brought  in is straightaway debited to his account on the basis of entry passes. The duty payable in respect of the goods transported

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outside is later on credited to his account on the basis  of the transport passes. [79E-G]     (4)  The High Court was fully justified in holding  that the terms of rules 6 and 9 have no relevance to the  payment of  duty  in cases covered by the current  account  facility envisaged under rule 13, and that the present case cannot be brought  within  the terms of proviso to rule  9(2)  on  the basis of a deemed consumption, use or sale within the munic- ipal  limits.  In  cases where rule 13 applies,  rule  9  is excluded. [80B]     (5) The present case is governed by the terms of rule 13 and  the Indian Oil Corporation is entitled to go on  paying octroi  duty on the basis of the goods brought by it  within the  Municipality  less the goods  transported  outside  the Municipality,  may  be  in pursuance of a  sale  within  the Municipality,  so  long as such sale is in pursuance  of  an intention that the goods should be consumed or used  outside the Municipal limits. [80G]     (6)  The appellant should not be permitted to  raise  at this  stage  a new plea that the  current  account  facility granted to the Indian Oil Corporation had been revoked  when all along, in the earlier proceedings in the High Court, the case had proceeded on the footing that the Indian Oil Corpo- ration had been having and continued to have current account facilities. [81C]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1552 of 1981.     From the Judgment and Order dated 1.2.1980 of the  Jodh- pur High Court in D.B. Civil Appeal No. 9 & 31 of 1977.     Soli J. Sorabji, Tapas Ray, L.C. Agarwal, Mrs.  Pratibha Jain,  Pradeep Aggarwal, Sushil Kumar Jain, Sudhansu  Atreya and S.D. Sharma for the Appellant.     Dalveer  Bhandari, Badridas Sharma, B.Y. Kulkarni,  S.K. Mehta, D. Mehta, S.M. Satin, Aman Vathher, Atul Nanda,  Mrs. P.S. Shroff, 54 R. Sasiprabhu, S.S. Shroff, S.A. Shroff, R.Jagannath  Goulay and D. Goburdhan for the Respondents. The Judgments of the Court were delivered by     SABYASACHI MUKHARJI, J. This appeal by special leave  is directed against the judgment and order of the High Court of Rajasthan  at Jodhpur in D.B. Civil Special Appeals  Nos.  9 and 31 of 1977 and which raised common questions of law  and fact, and were disposed of together.     Writ  Petition  No. 17 of 1976 was filed by  M/s  Parekh Automobiles, respondent No. 1 in C.A. No. 1552/81. The  said appeal  may be taken up and disposal of the same would  lead to the disposal of other appeals. In the said writ petition, the petitioner prayed for a direction or an order  restrain- ing  the respondents therein from realising any tax on  die- sel,  etc.  which are supplied to the respondent  herein  at Dangiawas by the Indian Oil Corporation. being the  respond- ent No. 2 herein. It was further prayed that the respondents therein be ordered to refund the octroi tax as mentioned  in the Schedule to the said petition which, it was alleged, had been illegally realised from the petitioner. It was  further prayed  that  the respondent No. 1 be  directed  to  provide transport passes to the Indian Oil Corporation under rule 13 of  the  Rajasthan Municipal Octroi Rules,  1962  read  with section 133 of Rajasthan Municipalities Act. It was the case of the petitioner in the High Court, respondent No. 1  here-

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in,  that the Municipal Council had no jurisdiction to  levy octroi tax on the goods brought within the municipal  limits but  not  sold, consumed or used  therein  and  subsequently exported outside the said limits. The case of the respondent No.  2  was that H.S.D. (diesel) which was  brought  by  the Indian  Oil Corporation within the local limits  of  Jodhpur Municipality was ultimately exported and sold to  respondent No. 1 at Dangiawas for use, consumption or sale outside  the Municipal  limits and as such the Municipal Council  had  no jurisdiction to levy octroi tax on the same. In reply to the said writ petition, it was stated by the Municipal  Council, being the appellant herein, that the sale of H.S.D. (diesel) by  the respondent No. 2 to respondent No. 1 took  place  at Jodhpur, and only the delivery was effected at Dangiawas  as respondent  No. 1 did not have its own tankers but for  this the  respondent No. 2 was charging mileage for  transmission of goods from its depot to Dangiawas. It was stated that the appellant was charging octroi from the respondent No. 2  and not  from respondent No. 1. It was stated that the  question whether  the contract of sale between the respondent  No.  2 and  respondent No. 1 took place at Jodhpur or at  Dangiawas was  a disputed question of fact to be decided by  reference to  the  original  agreement qua each  transaction.  It  was further stated that the disputed question of fact could  not be  adjudicated  under Article 226 of the  Constitution.  In reply  to  para 6, it was stated that  the  current  account facility  was still provided and had not been stopped,  that respondent No. 2 did not make the declaration as required by rule  9  and rule 13(4) of the  Rajasthan  Municipal  Octroi Rules, 1962 and that the goods exported were to be 55 lessened  only  if such goods had not been sold  within  the Municipal  limits and were exported out within a  period  of six months’ from the date of entry. The relevant  provisions of s. 104 of the Rajasthan Municipalities Act, 1959 (herein- after referred to as ’the Act’) are as follows:               "Sec. 104: Obligatory Taxes--Every board shall               levy,  at such rate and from such date as  the               State  Government may in each case  direct  by               notification  in the official gazette  and  in               such manner as is laid down in this Act and as               may be provided in the rules made by the State               Government  in  this  behalf,  the   following               taxes, namely:               (1) ...                         ...               (2)  an  octroi on goods and  animals  brought               within  the  limits of  the  municipality  for               consumption, use or sale therein; and               (3) ...                         ... Section 133 of the Act provides as follows: "133. POWER TO KEEP ACCOUNT CURRENT WITH FIRM OR PUBLIC BODY IN LIEU OF LEVYING OCTROI ON INTRODUCTION OF GOODS: The  Board if it thinks fit instead of requiting payment  of octroi  due  from any mercantile firm or public body  to  be made at the time when the articles in respect of which it is leviable  are  introduced within the octroi  limits  of  the municipality,  at  any time direct that an  account  current shall  be kept on behalf of the board of the octroi  so  due from  any such firm or body as the board specifies  in  this behalf. (2)  Every  such account shall be settled at  intervals  not exceeding one month and such firm or public body shall  make such  deposit or furnish such security as the board  or  any committee  or officer authorised by it in this behalf  shall consider  sufficient  to cover the amount which may  at  any

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time be due from such firm or body in respect of such  dues. Every  amount  so  due at the expiry of  any  such  interval shall, for the purposes of Chapter VIII be deemed to be  and shall be recoverable in the same manner as amount claimed on account of any tax recoverable under the same Chapter."     The Rules, being Rajasthan Municipal Octroi Rules, 1962, framed thereunder are relevant and rule 13 of the said Rules provided as follows:               "13.  FACILITIES FOR CURRENT ACCOUNTS:  (1)The               Board shall maintain a list, in Form 6, of all               persons  whether firms Or individuals  allowed               special facilities under s. 133 of the Act for               the payment of octroi. The list shall be  kept               corrected               56               upto date and a copy of the list signed by the               Executive Officer shall be kept at each octroi               out-post.               (2)  The  person to whom such  facilities  are               given, printed books of entry passes in dupli-               cate  shall be supplied in Form No. 7 on  pay-               ment  of  such price as may be  fixed  by  the               Board. When such a person wishes to bring  his               goods into the Municipality, he shall fill  up               the entry pass, the goods shall be dealt  with               under  the ordinary rules. On receipt  of  the               entry  pass, the Incharge of the  octroi  out-               post shall see that the person who has  signed               it is named on his list, and if so, he  shall,               after satisfying himself that the goods  agree               with  the details entered in the  entry  pass,               fill up the certificate the at foot thereof as               well as the coupon. He shall then tear off the               coupon, deliver it to the person who  presents               the  entry pass, and admit the goods named  in               the  pass. He shall send the entry  passes  to               the Octroi Superintendent, where they shall be               examined  that  the  certificate  covers   the               details  of the entry pass and the  amount  of               octroi due shall be debited to the account  of               the person concerned.               (3)  The  persons to whom  special  facilities               have  been given, a printed book of  transport               passes  shall  be supplied in Form  No.  5  on               payment of such a price as may be fixed by the               Board. When such a person wishes to  transport               h*is  goods  from the Municipality,  he  shall               fill up a transport pass and send it with  his               good  to the octroi gut-post of exit.  On  re-               ceipt  of the Transport pass, the Incharge  of               octroi out-post shall see that the person  who               has signed it is named on the list; and if so,               he  shall  after satisfying himself  that  the               goods to be transported agree with the details               entered  in  the Transport pass, fill  up  the               certificate at the foot thereof as well as the               coupon. He shall then tear off the coupon  and               deliver  it  to the person  who  presents  the               Transport  pass. He shall send  the  transport               passes  to  the Octroi  Superintendent,  where               they shall be examined to see that the certif-               icate covers the details of the transport pass               and  shall be filed separately under the  name               of each such person.               (4)  In  cases provided for  in  sub-rule  (3)

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             amount  of octroi duty payable shall be  based               on the total amount of the octroi as shown  by               the  entry  passes less the  total  amount  of               goods transported outside the Municipal limits               as shown by the transport passes:                         Provided   that  in  computing   the               octroi  duty payable under sub-rule  (4),  the               goods transported outside the Municipal Limits               shall be lessened only if such goods have  not               been  sold within the Municipal limits and  if               they  have  been exported out of  such  limits               within a period of (six months) from the  date               of their import in such limits.               57               (5)  Payments  by such person  shall  be  made               strictly in advance, and at the expiry of  his               period  for which facilities have been  given,               the  name of the person shall  immediately  be               struck off."  Rule 6 deals with the payment of octroi duty and provide as  follows:               "6. PAYMENT OF OCTROI DUTY: No goods liable to               payment  of octroi shall, except as  otherwise               provided in these rules, be brought within the               Municipal  limits until the octroi duty  levi-               able in respect of such goods has been paid at               the  octroi out-post situated on the route  of               entry  as notified by the Board from  time  to               time for the purpose."     Rule 9 deals with the declaration of goods brought  into the Municipal limits and provides as follows:               "9.  DECLARATION  OF GOODS  BROUGHT  INTO  THE               MUNICIPAL  LIMITS: (1) Every  person  bringing               within  the Municipal limits goods  liable  to               payment of octroi shall produce such goods  at               the octroi oUt-post and shall declare  whether               goods are intended:-               (i)  for consumption, use or sale  within  the               municipality; or               (ii) for immediate transportation outside  the               Municipality; or               (iii) for temporary detention within Municipal               limits  and  eventual  transportation  outside               Municipal limits.               (2)  Declaration under clause (i) of  sub-rule               (1)  may  be oral, declaration  under  clauses               (ii)  and (iii) shall be, in writing  in  Form               No. 1 and shall be tendered to the incharge of               the octroi outpost at the time of bringing the               goods shall be treated as having been  brought               within  the Municipal limits for  consumption,               use or sale therein."     It was urged by the appellant that the respondent No.  2 had not made the declaration as required by rule 9 and  that under rule 13(4) of the rules, the goods exported were only. to  be lessened only if such goods had not bee  sold  within the  municipal limits and were exported out within a  period of six months’ from the date of entry. The Municipal Council also  raised the plea that there was no privity of  contract between  respondent No. 1 and the Municipal Council  as  the demand of octroi tax was not made from respondent No. 1. The Writ  petition  of the respondent No. 1 along  with  another writ  petition being No. 82 of 1976 filed by one  Shri  Sukh Sampat  Raj  was heard by the learned Single Judge  of  High Court of Rajasthan. The learned Single Judge by his judgment

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dated  28th  January,  1977 allowed the  writ  petition  and restrained  the appellant from charging or realising  octroi on  the  goods brought within the municipal  limits  by  the Indian  Oil  Corporation but re-exported  outside  the  said municipal limits to its retail outlets for the use 58 and consumption of the ultimate consumers outside the limits of  the  Municipal  Counsel. The prayer for  refund  of  the octroi tax was, however, refused. Appeals were filed  there- from  against the judgment and order of the  learned  Single Judge.  The appellant herein filed the appeal No. 9  arising out  of  the Writ Petition No. 17 of 1976 and  also  Special Appeal  No. 13 arising out of Writ Petition No. 82 of  1976. M/s  Parekh  Automobiles also filed a Special  Appeal  being Special  Appeal  No. 31 of 1977. Thus,  three  appeals  were filed.  All  the three appeals were heard  by  the  Division Bench of the High Court and by its judgment and order  dated 1st February, 1980, the Division Bench dismissed the Special Appeal  Nos.  9 and 13 filed by the  appellant  herein.  The special  appeal filed by M/s Parekh Automobiles  was  partly allowed.  It was directed that the Municipal  Council  would have  to refund to the Indian Oil Corporation the amount  of octroi duty paid on the petroleum products re-exported by it to  Dangiawas outlet for supply to the writ  petitioner  who would recover the same from the Indian Oil Corporation.     It  is not necessary for the purpose of this  appeal  to deal with the facts agitated and found by the High Court. We will, however, refer to the same in brief. Respondent No.  1 had  been allotted retail outlet allotted by the  respondent No.  2,  Indian  Oil  Corporation,  for  sale  of  petroleum products such as diesel oil, mobile, iii, etc. at Dangiawas, which  was outside the limits of Jodhpur Municipal  Council, appellant  herein.  The respondent No. 2 had its  depot  ear Raikabag  Station  at  Jodhpur  where  it  stored  petroleum products.  The  respondent No. 2 from its depot  at  Jodhpur supplied  the  petroleum products to various  pump  stations situated within the limits of appellant as well as  situated outside the limits of appellant in several districts such as Districts  of  Jodhpur, Pali, Barmet, Jalore,  Nagaur,  etc. including  the retail outlet of the appellant at  Dangiawas. The respondent No. 2, being a public sector undertaking, was provided current account facilities under s. 133 of the Act, and  so  the respondent No. 2 had not to pay octroi  tax  on such  consignment at the time of entry of goods  within  the limits of appellant. It was alleged by respondent No. 1 that under  rule 13 of the said Rules, respondent No. 2 was  sup- plied  printed books for entry passes in duplicate  in  Form No. 7 appended to the said Rules. Rule 13 provides, as noted before,  that  if the goods which are  imported  within  the Municipal  limits are not used, consumed or sold within  the Municipal  limits and are exported out of  Municipal  limits for supply at various other retail outlets no octroi duty is charged on those goods for the reason that under rule  13(4) octroi  tax  payable shall be based on the total  amount  of octroi tax as shown by the entry passes less the octroi  tax on the total amount of goods transported outside the Munici- pal  limits.  It was contended that the appellant  had  been following the aforesaid procedure till 24th July, 1975,  but a11  of  a sudden on 25th July, 1975, it  was  alleged,  the appellant  had  suspended the transport  facilities  to  the respondent  No.  2 and took the stand that octroi  would  be charged  from respondent No. 2 on the goods  brought  within the municipal 59 limits  even  though these were exported by it  outside  the

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municipal  limits, if these were sold within the  limits  of appellant  although such goods were meant for use  and  con- sumption of the consumers outside the Municipal limits.  The appellant,  it  is alleged, cancelled the  transport  passes supplied to the respondent No. 2 from 25th July, 1975. As  a consequence of this action of the appellant, the  respondent No.  1 was charged octroi duty on supplies made to  the  re- spondent  No. 1 at Dangiawas by the respondent No.  2  since 25the  July, 1975 by adding the amount of octroi tax in  the bills for the supplies made to the respondent No. 1’s retail outlet  at  Dangiawas. The respondent No. 2  challenged  the right  of the appellant to charge the octroi on  such  goods and  approached the State Government. Upon that,  the  State Govt.  by its letter wrote to the appellant that  it  having granted  current account facilities under s. 133 of the  Act to the respondent No. 2 should charge octroi on the basis of petroleum  products imported by respondent No. 2  minus  the goods  exported by it to its other distributing  centres  in Rajasthan. The respondent No. 1 also made representation  to the appellant challenging its right to realise octroi on the petroleum  products which were received at the depot of  the respondent  No. 2 at Jodhpur but were transported by  it  to its retail outlets but of no avail. The case of the respond- ent  No. 1 was that the goods were not sold at  Jodhpur  but actually the sale took place at Dangiawas, the retail outlet of the respondent No. 1 Secondly, even if the sale was  held to have taken place at Jodhpur merely on that account octroi could not be levied unless the goods so sold Were meant  for the  use or consumption of the consumers within  the  octroi limits. Respondent No. 2, Indian Oil Corporation,  supported the  case of respondent No. l. Respondent No. 2 is a  public sector  undertaking and has got vast network of retail  out- lets, i.e., distribution centres for distribution of  petro- leum products throughout Indian including Rajasthan. For the purpose  of distribution, it had got its depots  at  various important places where it stored its petroleum products  for supply  to  its various retail outlets,  i.e.,  distributing centres.  Likewise  the respondent No. 2 had got  its  depot situated near Raikabag Station, Jodhpur where it stored  its petroleum  products  for sale and supply  of  its  petroleum products to its numerous retail outlets situated within  the districts  of  Jodhpur,  Pali,  Barmet,  Jalore,  Jaisalmer, Nagaur,  Sirohi, etc. It was further alleged  by  respondent No.  2  that it stored petroleum products in  its  depot  at Jodhpur for purposes which might be classified into  differ- ent classes, namely.                     (1) for sale by respondent No. 2 to  its               consumers  such as Railways, Police, etc.  and               to  its  dealers of  retail  outlets  situated               within  Municipal limits of Jodhpur  city  who               distributed  or  sold the  petroleum  products               within the area covered by municipal limits of               Jodhpur city,                     (2)  for re-export by itself for  supply               to  its  dealers in charge of  various  retail               outlets situated outside the municipal  limits               of  Jodhpur city within the various  districts               specified above. Such retail outlets  distrib-               uted  or sold the petroleum products to  ulti-               mate consumers 60 outside the limits of Jodhpur Municipal Council.     According  to the respondent No. 2, it had allotted  the retail  outlets to various dealers under dealers  agreement. Under the terms of the said agreement, the respondent No.  2

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was  obliged  to  transport petroleum products  out  of  its depots and supplied petroleum products to its dealers at the destination  in its own truck-tankers or the tankers of  its contractors  and obtained the signatures of the  dealers  of the retail outlet in token of the delivery of the goods  and till  the  supplies were made at the destination  the  goods were  at  the risk of the respondent No. 2. It  was  further alleged  by  respondent No. 2 that the pump tank  and  other outfits which were fitted at the retail outlets belonged  to it  and these were its property. It was, therefore,  alleged that  the goods supplied at retail outlets situated  outside the  limits of Municipal Council, Jodhpur were sold  at  the retail  outlets  where the deliveries were made and  not  at Jodhpur  although the dealers were required to  deposit  the price  of the petroleum products in the respondent  No.  2’s account in the bank unless they were allowed credit  facili- ties but the sale took place only when the respondent No.  2 delivered  its products at the dealers’ retail outlets  out- side  the municipal limits as per the terms of the  dealers’ agreement.  The appellant, Municipal Council, had,  however, disputed the aforesaid position. It contended that  whenever the  sale was made at the Jodhpur depot at  Jodhpur,  Octroi was  chargeable irrespective of the fact where it  was  con- sumed  or  used.  It was further contended  that  whether  a contract of sale had taken place at Jodhpur or retail outlet is a question of fact and unless the contracts  (agreements) were placed on the record by the respondent No. 1, the Court should  not decide whether the sale by the respondent No.  2 had  taken place at Jodhpur or at Dangiawas. Rule  13(4)  of the said Rules would be operative only in those cases  where the  goods had not been sold within the Municipal limits  or if they had been exported out of such limits within a period of  six  months from the date of its import.  The  Municipal Council’s  further case was that the respondent No.  2  sold the  goods at Jodhpur. The respondent No. 2 never  submitted its declaration as required by rule 9 of the said Rules and, therefore, the goods brought within the limits of  Municipal Council were, according to the appellant, liable to  octroi. It was contended on behalf of the respondent No. 1 that  the appellant was not entitled to levy the octroi on the  petro- leum products which were re-exported by the respondent No. 2 to the retail outlet of the respondent No. 1 at Dangiawas as the goods were neither brought for consumption or use in the limits of the Municipal Council of Jodhpur, nor sold in  the Municipal area. It was further contended that even if it was assumed that the petroleum products which had been  exported to the respondent No. 1’s outlet at Dangiawas have been sold at Jodhpur then to the appellant had no jurisdiction to levy the  octroi  and realise the same as good so sold  were  not meant  for  the use of ultimate consumer  in  the  municipal area.  The taxable event for the purpose of levy  of  octroi duty takes place, according to respondent No. 1, only if the entry of the goods in the limits of appellant was 61 meant  for  the  use of ultimate consumer or  user.  It  was contended that the petroleum products which had been export- ed to the respondent No. 1’s retail outlet at Dangiawas were meant  for the use of ultimate consumer for use outside  the limits of the Municipal Council so these were not chargeable to  octroi. It is not necessary in view of the  findings  of the  High Court to deal with the preliminary  objections  of the  appellant, namely, respondent No. 1 was a firm and  not competent  to bring the writ petition, that  the  respondent No. 1 had no locus standi to file the writ petition, or that there  was an alternative remedy under rule 40 of  the  said

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rules  and as such writ petition would not be  maintainable. The  learned Single Judge of the High Court  rejected  these contentions of the appellant. Two main contentions  involved before the High Court and us were and are, namely, where the taxable even took place and whether respondent No. 1, in the facts and the circumstances of this case, was liable to  pay octroi duty and secondly, whether in view of the maintenance of  the current account facilities, as  mentioned  hereinbe- fore,  the  Municipal  Council was entitled  to  charge  the octroi  duty in the manner it has purported to do  from  the 25th July, 1975 and whether that the appellant was liable to refund the said duty.     Section 104 of the Act by sub-section (2) provides  that an octroi on goods and animals brought within the limits  of the  municipality for consumption, use or sale  therein,  is liable  to be charged by the State Government. It  was  con- tended  on behalf of the respondent No. 1 that  the  taxable event in respect of the goods supplied at its real outlet at Dangiawas  had  not  taken place within the  limits  of  the appellant.  It was submitted that the goods brought  by  the respondent  No.  2 and exported to the  respondent  No.  1’s retail outlet at Dangiawas were in the first place not  sold at  all within the Municipal limits; secondly, even  if  the sale  of the goods so exported was held to have taken  place within  the Municipal limits than too the taxable event  had not taken place as such goods were not meant for sale or use or consumption of the ultimate consumer residing within  the local  limits of the appellant but were meant for  the  con- sumption of the ultimate consumer residing outside the local limits  of  the appellant. It was contended  that  the  word ’sale’  occurring  under s. 104 of the Act  cannot  be  read without reference to use or consumption. Sale simplicitor by itself did not attract the levy of octroi, it was submitted, unless  the goods were meant for use or consumption  of  the ultimate  consumer in the area of the  appellant.  Reference was made before the High CoUrt as before us to the  decision of this Court in Burmah Shell Oil Storage & Distributing Co. India  Ltd. v. The Belgaum Borough Municipality, [1963]  SCR Supp. 2 216 as well as the decision of this Court in Hiralal Thakorlal Dalai v. Broach Municipality & Ors., [1976]  Supp. SCR  82. In Burmah Shell’s case (supra), the company  was  a dealer  in petrol and petroleum products which  it  manufac- tured in its refinery situated outside the octroi limits  of Belgaum Municipality. It brought those products inside  that area  either  for use or consumption by itself or  for  sale generally to its dealers and the licensees who in their turn 62 sold  these to others. According to the Company,  the  goods brought by it within the octroi limits could be divided into four separate categories, namely:                      (i)  goods  consumed  by  the   company               within the octroi limits,                      (ii) goods sold by the company  through               its  dealers or by itself and consumed  within               the  octroi limits by persons other  than  the               company,                      (iii) goods sold by the company through               its  dealers  or by itself inside  the  octroi               limits to other persons to be consumed by them               outside the octroi limits.                      (iv) goods sent by the company from its               depot inside the octroi limits to extra munic-               ipal  points  where  these  were  brought  and               consumed by persons other than the company.     In  that case, the company had objected to the  levy  of

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octroi on the goods which were sent by it out of the  octroi limits for the outside ultimate consumers and claimed refund of  the amount so charged as octroi. Clause (4) of  sub-sec- tion (1) of section 73 of the Bombay Municipal Boroughs Act, 1925  which was under consideration in that case was  analo- gous to subsection (2) of section 104 of the present Act  in question.  The words ’use or sale’ were substituted for  the words ’for use’ by the Bombay Act of 35 of 1954. This  Court examined  the scheme of the taxation under the  Bombay  Bor- oughs Act and the Rules and bye-laws made by the Municipali- ty  for the levy of octroi. After examining the  history  of octroi, this Court in that decision held octrois were tax 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.’ This Court specifically clarified that  the word ’sale’ was included only in 1954 in order to bring  the description  of the octroi in the Act in line with the  Con- stitution  of India. While doing so this Court  further  ob- served that the expression ’consumption’ and ’use’  together ’connote’ the bringing in of the 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  con- sumption  in manner which destroys, wastes or uses them  up. This  Court  further observed in that case that  octroi  and terminal tax resemble each other in the sense that they  are both leviable in respect of goods brought into a local area. Otherwise, these are quite different from each other.  While terminal taxes are leviable on goods ’imported or  exported’ from  municipal limits denoting thereby that they  are  con- nected  with the traffic of goods, octrois are  leviable  in respect  of  the  goods brought into a  municipal  area  for consumption  or use or sale. The history of these two  taxes showed that while terminal taxes were a kind of octroi which were concerned only with the entry of goods in a local  area irrespective  of  whether they would be used there  or  not, octrois  were taxes on goods brought into the area for  con- sumption, use or sale. These 63 Were leviable in respect of the goods put to some use or the other  in  the area but only if these were  meant  for  such user. Another difference between the two is that there is no system  of  refund  under terminal tax but that  is  so  for octroi.  This  Court held that the sale by  it  directly  to consumer  or  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 acts of consumption  must take place in the area of the municipality. Hidayatullah, J. (as  the learned Chief Justice then was) speaking  for  this Court observed at p. 233 of the report 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  former-               ly, was implicit, provided the goods were  not               re-exported  out of the area but  were  bought               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 ’octroi’  was  deliberately

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             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  termi-               nal  taxes are also a kind of octroi  and  the               two were to be allocated to different legisla-               tures.                        In our opinion, even without the word               ’sale’  in the Boroughs Act the  position  was               the  same provided the 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  and in this case the municipality  has               agreed  to refund the amount of tax  on  goods               re-exported without being used or consumed  in               the  municipal area. In this view of the  mat-               ter, it was not necessary for the municipality               to  follow  the procedure for  imposing  taxes               when  the section was amended. The  tax  still               remained  the same. Its nature.  incidence  or               rate were not altered."     The  aforesaid observations were approved by this  Court in  Hiralal Thakorlal Dalal v. Broach Municipality  &  Ors., (supra).  On  the basis of the aforesaid decisions  of  this Court,  the Division Bench of the High Court in the  instant case  in  appeal filed from the aforesaid  judgment  of  the learned  Single Judge held that sale simplicitor  would  not attract the levy of the 64 octroi. The word ’sale’, in this context, has to be read  in reference to the use or consumption, according to the  Divi- sion  Bench and ’sue, consumption and sale’ have to be  read in  disjunctive manner. Reference, in this  connection,  was made  to  rule 6 of the said Rules, which provides  that  no goods liable to payment of octroi shall except as  otherwise provided  in  these Rules be brought  within  the  Municipal limits  ’until the octroi duty leviable in respect  of  such goods  have been paid at the octroi outpost situated on  the route  of  the entry as notified by the Board from  time  to time.  Rule 9 of the said Rules further provides that  every person bringing within the Municipal limits goods liable  to payment  of octroi shall produce such goods at  the  octroi. outpost and shall declare whether the goods are intended (i) for  consumption,  use or sale within the  Municipality,  or (ii)  for  immediate transport outside the  Municipality  or (iii)  for temporary detention within Municipal  limits  and eventual  transportation  outside the Municipal  limits.  It further  provides  that if no such declaration is  made  the goods  shall  be treated as having been brought  within  the Municipal  limits for consumption, use or sale  therein.  On the basis of these rules, it was contended before the  Divi- sion Bench that as soon as the goods enter within the octroi limits  it gives rise to taxable event unless a  declaration as contemplated rule 9 has been made by the person  bringing such  goods. It was submitted that no such  declaration  had been made in this case, and therefore, a conclusive presump- tion  arose that the goods should be treated as having  been brought within the Municipal limits for consumption, use  or sale  therein. The division bench was unable to accept  this

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submission.  The  division bench was of the view  that  this argument  ignored the import of rule 13. Rule  13  dispensed with the requirements of rules 6 and 9 and it was a  special rule applicable to the persons, firms and individuals  under section 133 of the Act. Section 133 of the Act provides that the  Board if it thinks fit instead of requiting payment  of octroi due from any mercantile firm or public body it may at the  time when the articles in respect of which it is  levi- able are introduced within the octroi limits of the  munici- pality,  direct  that an account current shall  be  kept  on behalf of the Board of the octroi so due from any such  firm or  body as the Board specifies in this behalf.  It  further provides  that  every such account shall be settled  at  the intervals  not exceeding one month and such firm  of  public body shall make such deposit or furnish such security as the Board  of any committee or officer authorised by it in  this behalf  shall  consider it sufficient to  cover  the  amount which may at any time be due to such firm or body in respect of  such  dues. Rule 13, therefore, dispenses with  the  re- quirement of rule 6. It further dispenses with the  require- ments of rule 9 in regard to declaration. The division bench of the High Court also referred to sub-rule (3) of rule  13, which has been set out before. The High Court held that rule 13  is a special provision in regard to the persons who  had been granted current account facilities and this rule is not subject to either rule 6 or rule 9 but is a over-riding rule independent  of  rules 6 and 9. The High  Court  found  that respondent No. 2 had been granted current account 65 facilities and, therefore, the octroi duty shall be  charged from  it under sub-rule (4) of rule 13 on the goods  brought by  it in the Municipal area minus the goods transported  by it  outside the Municipal limits. Therefore, the  contention of  the appellant herein on rules 6 and 9 was  rejected.  It is,  therefore, necessary for these appeals to consider  the validity or otherwise of the said findings of the High Court in these appeals.     The High Court dealt with the contentions based on  sub- rule (4) of rule 13 and considered if the sale of the  goods had  taken place within the Municipal limits to see  if  the octroi  shall be leviable or not. The High Court  felt  that the  rule had to be construed in consonance with s.  104  of the  Act As mentioned hereinbefore, section 104 of  the  Act was anologous to s. 73 of the Bombay Boroughs Act which  had been  interpreted by this Court in the aforesaid  two  deci- sions, wherein it was held that the sale in order to attract levy of octroi should be for the purpose o fuse or  consump- tion  of the ultimate consumer in the area.  (Emphasis  sup- plied). The High Court further observed that the meaning  of the  word  ’sale’, therefore, has to be given  as  per  this Court’s  view and any other meaning to ’sale’  contained  in the rules shall not be justified as it will be repugnant  to s. 104 of the Act. The High Court found that the goods  were re-exported by the Indian Oil Corporation from its depot  to its retail outlet for the use or consumption of the ultimate consumer outside the municipal limits. (Emphasis  supplied). The  Municipal  Council was not entitled to levy  octroi  on goods  so exported by respondent No. 2 to its retail  outlet for use and consumption by the ultimate consumer outside the local  limits  of the Municipal Council. Therefore,  it  was held that the Municipal Council had no jurisdiction to  levy octroi on the goods re-exported by the respondent No. 2, the Indian Oil Corporation to the retail outlets of its  dealers located  outside  the Municipal limits for the  use  of  the ultimate consumers outside the Municipal limits. Though  the

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aforesaid finding of the High Court has been assailed before us  in  this appeal, in view of the decision of  this  Court referred to hereinbefore and in view of the principles  laid down  therein and the language of s. 104 of the Act and  the facts,  we are unable to accept the challenge on  behalf  of the  appellant  herein. It was, however,  contended  by  the respondent No. 1 before the High Court that the taxable even had taken place at Dangiawas and not at the octroi limits of Jodhpur as the sale had not taken place in the octroi limits but  had taken place at Dangiawas. It was contended  by  the respondent No. 1 that goods were supplied by the  respondent No.  2 in its tankers at Dangiawas and till the  goods  were supplied at the respondent no. 1’s outlet at Dangiawas,  the risk in respect of the goods was with the respondent no.  2, the  Indian Oil Corporation. This fact, it was  stated,  had been  admitted by the Corporation in its return  wherein  it had  been clearly admitted that till the goods are  supplied to the respondent No. 1’s outlet stations the goods were  at the  risk of respondent no. 2. It was, therefore,  contended that  till the goods were delivered at Dangiawas, there  was no contract for sale. The contract for sale, it was contend- ed, had taken place at Dangiawas where the 66 goods  were delivered at the respondent no. 1’s  outlet  and receipt  was  obtained from the respondent  no.  1’s  outlet acknowledging  the delivery of the goods at that  place.  In this connection, reference was made to para 25 of the  model agreement  Ex. B. 1. According to para 25, the  quantity  of petroleum  and other allied products shall be  delivered  by the  Corporation as measured by the Corporation’s  measuring device and a receipt signed by or on behalf of the dealer at the time of delivery by the Corporation would be  conclusive evidence that the petroleum products mentioned therein  were in  fact delivered to the dealer. It was submitted that  the delivery  was  made  by the respondent No.  2’s  tankers  at Dangiawas and the receipt obtained there. On the other  hand before  the  High Court. as mentioned hereinbefore,  it  was contended  on  behalf of the appellant  that  this  question involved  disputed questions of facts. which was beyond  the pale of jurisdiction under Article 226 of the  Constitution. It  was  submitted  that neither indents in  regard  to  the transactions  of  sale had been produced nor there  was  any evidence  as to the quantities for which the sale had  taken place  and in the absence of material documents it  was  not possible to determine the question as to where the sale  had taken  place. It further appeared that the respondent No.  1 used  to deposit the amount in advance against the  supplies to be made to its retail outlet at Jodhpur. According to the appellant,  as  the material and relevant evidence  had  not been produced on the record, it would be hazardous to  reach a  definite conclusion as to where the contract of sale  had taken  place. The High Court held that it was difficult  and inappropriate to go into under Article 226 of the  Constitu- tion. The High Court referred to certain decisions. The High Court.  however.  rested on the view that even if  the  sale took  place  within the octroi limits of  Jodhpur  Municipal Council for the use or consumption of the ultimate  consumer outside the octroi limits of Jodhpur then the taxable  event did not take place in the octroi limits of Jodhpur. In those circumstances. the High Court held that the Municipal  Coun- cil  had  no  jurisdiction to levy octroi on  the  goods  so exported.  We have considered the submissions of the  appel- lant  on this point. We are, however, in view of  the  facts and circumstances of the case, of the opinion that the  High Court  was  right.  The High Court issued an  order  of  re-

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straint.  It  directed  that the Municipal  Council  be  re- strained by way of Mandamus not to levy octroi on the  goods exported by the respondent No. 2 for the use of the ultimate user outside the octroi limits of Municipal Council even  if the  sale took place within the octroi limits  of  Municipal Council, Jodhpur.     The next aspect of the matter, is, whether the  respond- ent No. 1 was entitled to refund of the octroi realised from respondent  No. 2. It had been contended by  the  respondent No.1  that  although the octroi had been  realised  directly from the respondent No. 2 but in fact and in reality it  was the respondent No. 1 who had been made to pay the octroi  as the same had been realised by the respondent No. 2 by adding the  octroi realised by the Municipal Council in  its  bills for the supply of the goods made to respondent No. 1. It was contended  on  behalf  of the appellant that  there  was  no privity 67 of obligation between respondent No. 1 and the appellant and therefore, respondent No. 1 had no right to ask for a refund of  the octroi. Secondly, it was urged that  the  respondent No.1  had  realised the amount of octroi while  selling  the petroleum  products  to the retail consumers by  adding  the same in the retail price charged from the consumers. So  far as  the  first contention is concerned, the  division  bench found  that there was no privity of obligation  between  re- spondent  No.  1 and the appellant. The same  had  not  been realised from the respondent No. 1. It was, therefore,  held that there being no privity of obligation between respondent No. 1 and the appellant, the respondent No. 1 could not  ask for  a  refund  of the money which it has not  paid  to  the appellant.  There was no provision for refund in the Act  or in  the  Rules which enabled the respondent No. 1  to  claim refund  from the appellant even though it had been  paid  by the  respondent  No. 1 indirectly. There  was,  however,  an undertaking given to the High Court by the appellant on  3rd February,  1976 in the High Court. On that date, the  appel- lant  had  given  an undertaking that  the  appellant  would refund  the octroi charged from the respondent No. 1 on  the diesel  re-exported outside the Municipal limits of  Jodhpur in case the writ petitions were allowed. The undertaking  is however,  confined to the refund of the amount charged  from the respondent No. 1 by the appellant and not from  respond- ent  No. 2. The basis for refund of the  amount  undertaking from  respondent  No. 2 has not been  established.  To  that extent, the writ petition was bound to fail, the High  Court held.  If that was the position, there cannot be  any  basis for refund of the same on the basis of the undertaking.  The Division Bench of the High Court held that as the  challenge in this case was that the words ’use or sale’ could not make any  difference so far as the event of taxability  was  con- cerned, as according to this Court, ’sale’ simplicitor would not  attract  the levy of the octroi. The sine qua  non  for levy  of  octroi is consumption, according  to  this  Court. Therefore,  no  octroi could be levied in respect  of  goods which  were re-exported for consumption or use  outside  the Municipal  limits, the Division Bench held. In that view  of the  matter, the Division Bench of the High Court held  that in view of the decisions of this Court, no octroi was  levi- able  on petroleum prod acts re-exported to the retail  out- lets  situated outside the municipal limits for  consumption and  use  outside the limits. In our opinion,  the  division bench is right insofar as it held as aforesaid.     It  was, however, submitted that the ratio of the  deci- sions  of this Court had no application because of  rules  6

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and 9 of the said Rules. We have referred to the said rules. The  contention of the appellant on the basis of the  afore- said  rule was that since the goods were brought within  the octroi limits, these became liable to octroi unless a decla- ration as contemplated by rule 9 had been made by the person bringing such goods. It was submitted by the appellant  that no  such  declaration  had been made in  the  present  case. According to the High Court rule 13 contemplates, as we have noticed, special facilities for current account under  which in  case  of  a person to whom such  facilities  are  given, amount of octroi duty payable is determined by 68 deducting the total amount of goods transported outside  the municipal  limits as shown by the transport passes from  the total  amount  of octroi as shown by the entry  passes.  The High Court noted that s. 133 of the Act confers power on the Board to direct that current accounts may be kept on  behalf of the Board with the firm or public body in lieu of  octroi on  introduction  of goods. The Division Bench  was  of  the opinion  that  s. 133 of the Act along with rule 13  of  the said  Rules left no doubt that no conclusive presumption  of the  goods having been brought within the  municipal  limits for  consumption,  use or sale therein, could  be  drawn  in cases where special current account facilities were given to a  person. In the instant case, special facilities for  cur- rent accounts had been given to the respondent No. 2. There- fore,  rule 9 had no application according to  the  Division Bench. Learned counsel for the respondent No. 1 had contend- ed  before the Division Bench that at the time of  entry  of petrol  or  diesel, it was not possible for the  Indian  Oil Corporation  to give a declaration as to how much  would  be re-exported to retail outlets situated outside the Municipal limits. The Division Bench found that the argument on behalf of  the  Municipal Council regarding necessity of  giving  a declaration  was  vital. The appeal filed by  the  Municipal Council was, therefore, dismissed. Coming to the appeal  for refund, it was urged before the Division Bench that  Munici- pal  Council had given an undertaking that it  would  refund the octroi charged from the respondent No. 1 on the petrole- um  products  re-exported outside the  Municipal  limits  of Jodhpur.  The Division Bench noted that the  learned  Single Judge  had  disallowed this firstly on the ground  that  the octroi  had been charged from the respondent No. 2  and  not from the respondent No. 1 and, secondly, the respondent  No. 1  had  not succeeded in establishing his claim  for  refund against  the respondent No. 2. The Division Bench held  that the  refund was not possible. In this  connection,  reliance was  placed  on the decisions of this Court in  M/s  Motilal Padarnpat  Sugar Mills Co. Ltd. v. State of Uttar Pradesh  & Ors., AIR 1979 SC 621 and State of Madhya Pradesh & Anr.  v. Bhailal  Bhai etc., AIR 1964 SC 1006. The Division Bench  of the High Court, therefore, held that the claim for refund is not sustainable but the High Court found that the octroi had been  paid  by  the Indian Oil Corporation and  not  by  the respondent No. 1 and therefore, directed that the  Municipal Council  would have to refund to the Indian Oil  Corporation the  amount  of octroi paid on the  petroleum  products  re- exported  by  it to Dangiawas outlet for supply to  the  re- spondent No. 1 and the respondent No. 1 may recover the same from the Indian Oil Corporation. The appeals were allowed to the  extent indicated above. Otherwise, the decision of  the learned  Single Judge was confirmed. As mentioned  hereinbe- fore,  being aggrieved, the appellant came up for appeal  by special leave to this Court.     On behalf of the appellant, Shri Soli Sorabjee and  Shri

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Tapash Ray made their submissions. On the main point as held by  the division bench of the High Court there was not  much substantial challenge. We agree with the High Court. It was, however, contended that during the period in respect of 69 which  the claim had been made by the respondent, there  was no continuation of the current account facilities in  favour of the respondent No. 2, Indian Oil Corporation as  provided under s. 133 of the Act read with rule 13 of the said Rules, and  the question was whether the goods brought  within  the Municipal limit by the Indian Oil Corporation were liable to payment of octroi because of non-compliance with the  proce- dure in rules 6 and 9 of the said Rules. The other  question which  required consideration is that assuming that  current account  facilities in favour of respondent No.  2  existed, whether  by  reason of such, respondent No. 2  was  exempted from  complying  with the rules 6 and 9 of the  said  Rules. Council  submitted that it was strange that  the  respondent No.  1  was purporting to make out a case that  the  current account  facility to the respondent No. 2 by  the  appellant was  not  withdrawn and the same was  still  continuing.  An affidavit  in  support of this contention was filed  by  one Shri R.C. Parekh after the conclusion of the hearing in this case  on  the 30th September, 1988. The  case  was  reargued again in Feb. 1989. It was contended that the Writ  Petition in M/s Parekh Automobiles’ case showed beyond doubt that the writ  petition  was made on a positive case that  all  of  a sudden  on 25th July, 1975, the appellant had suspended  the current  account  facilities in respect of  also  the  goods which  were exported out of Jodhpur Municipal limit  by  the respondent No. 2 and supplied to respondent No. 1 at Dangia- was. It was further the case of M/s Parekh Automobiles  that upon suspending such current account facility the municipal- ity was charging octroi on all petroleum products brought by respondent No. 2 within the Municipal limits without  making a distinction amongst goods which were exported outside  the Municipal limits. In this connection, reference was made  to paragraph  9 of the writ petition. On behalf of  the  appel- lant,  it  was contended that the term  ’export  facilities’ used in that paragraph was to mean ’current account  facili- ty’ as it appeared from the pleadings of the respondent  No. 1  in paragraph 16 of the said writ petition. Reference  was also made to other paragraphs of the writ petition,  namely, paragraph 10, paragraph 11 and paragraph 12 which  proceeded on the basis that current account facilities had been  with- drawn and a complaint was made on that basis. Reference  was also made to the paragraph 17 at p. 107 of the appeal  paper book.  The Municipal Council, Jodhpur filed a reply  to  the writ  petition where also statements were made. It was  sub- mitted that reading of the said pleadings make it clear that the  respondent No. 2 was not making any  declaration  under rule 9 of the said Rules. A declaration under rule 9 of  the said  Rules  was to be made in Form 1, a  specimen  copy  of which  was enclosed to the written argument. it was  further stated that in the affidavit of the Indian Oil  Corporation, nowhere it was stated that the said current account facility had not been suspended and was still continuing. It was  the case  of the appellant that current account facilities  were not  provided to the respondent No. 2 as contemplated  under s. 133 of the Act. It was the case of the municipality  that even  now  the facilities are provided to  a  public  sector undertaking provided they act in compliance with the  provi- sions  of s. 104 of the Act read with rules 6 and 9  of  the said Rules. But so far as the facts of this 70

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case are concerned, it was submitted that during the  period in  dispute  as also today there is no facility to  the  re- spondent No. 2 under rule 13 of the said Rules and as admit- tedly,  the  respondent  No. 2 was not  complying  with  the requirements of rules 6 and 9 of the said Rules and was  not filing  any declaration, the Municipality had the  right  to treat  the  goods, brought within the Municipal  limits,  as those  brought for consumption, use or sale  under  sub-rule (2)  of  rule  9 of the said Rules  and  thereby  attracting octroi.  The Division Bench of the High Court, it  was  con- tended  by the appellant, failed to appreciate the  implica- tion of the aforesaid provisions of law and the fact that in respect  of the period in question, admittedly, the  current account  facility  was  not available with  the  Indian  Oil Corporation  and as admittedly, the Indian  Oil  Corporation did not file any declaration under rule 9 of the said Rules, the  petroleum products brought within the Municipal  limits by the Indian Oil Corporation were to be presumed to be  for consumption, use or sale and as such liable to octroi  duty. The  High  Court, according to Shri Ray for  the  appellant, should have appreciated that the questions raised, gone into but the questions decided by the High Court were not germane to  the issue and as such were not required to be gone  into the  decided.  On  this aspect, it was  submitted  that  the appeals  should be allowed so far as refund  was  concerned, and  the impugned decisions of the High Court should be  set aside.  It  was further submitted that an  analysis  of  law while dealing with this point would indicate that a declara- tion  under s. 133 of the Act read with rule 13 of the  said Rules  cannot  be  interpreted as one  dispensing  with  the requirement of the declaration under rule 9 of the Rules and if that be so then the presumption of non-declaration  would be available to the Municipality. It would, therefore, be  a case of deemed use or consumption. It was submitted that the aspect whether sale alone would be sufficient to levy octroi or along with sale there should be consumption or use within the  municipal limits, would require consideration.  It  was submitted  that conceivably goods can be brought within  the municipal  limits of a municipality for the purposes of  (i) use, consumption or sale; or (ii) for immediate  transporta- tion outside the Municipality; or (iii) for temporary deten- tion within the Municipal limits and eventual transportation outside  the Municipal limits; or (iv) goods brought   by  a travelling  agent for sale or exhibiting them for  the  pur- poses of securing orders for sale thereafter. Octroi, it was submitted,  can  only be levied on goods which  are  brought within the municipal limits for the purpose of  consumption, use  or sale therein. No octroi can be charged on any  goods which  are  brought within the municipal limits  either  for immediate  transportation  outside the municipality  or  for temporary detention within the municipal limits or for  sale or  exhibition by a travelling agent, it was submitted.  The provisions  of the Act and the Rules have been made for  the different categories in different ways. it was submitted. S. 104 of the Act is the charging section and authorises munic- ipality to impose octroi on goods and animals brought within the limits of the municipality for consumption. use or sale. The said section, it was submitted, is to be read with  rule 6 providing for payment of octroi duty on goods liable to 71 payment of octroi. Rule 6 of the said Rules, would  indicate that octroi is to be paid only on goods liable to payment of octroi and not other goods. Rule 7 indicates that import  of the goods should be through prescribed routes. This has been made for preventing clandestine importation of goods. Rule 8

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provides  that  the importers are to furnish  documents  and information in respect of the dutiable goods to be  brought. Rule 9 enjoins that the person bringing within the municipal limits good liable to payment of octroi, shall produce  such goods  at the octroi outpost and shall declare  whether  the goods  are intended for consumption, use or sale within  the municipality  or  for immediate transportation  outside  the municipality or for temporary detention within the municipal limits. Referring to the scheme of the Act and the rules, it was submitted on behalf of the appellant that an analysis of s.  133  and the current account facility  therein  indicate that only on the goods for use consumption or sale octroi is leviable.  Grant of current account facility does  not  mean providing  facility to bring within Municipal  limits  which are  liable to payment of octroi without complying with  the other  rules  specifically  applicable in  respect  of  Such goods. It was submitted that respondent No. 1 knew well that current  account  is  in respect of those  goods  which  are brought within the Municipal limits for use, consumption and sale.  In  this connection, reference was  made  to  certain paragraphs  in the pleadings. There was no  current  account facility, according to the appellant. It was submitted  that when the writ petition was moved at the particular point  of time  the  current account facility stood  suspended.  Xerox copy of the Order Sheet of the Trial Court was relied  upon. It would appear from that the trial court did not grant  any stay  because there was nothing to be stayed as by the  time the  writ  petition was moved the current  account  facility stood  suspended, it was submitted. If the Court desired,  a mandatory  order reviving the current account  facility  was required to be made. That was not done. Therefore, the court of  first instance heard the writ petition and  disposed  of the  same.  The Court of first instance did  not  grant  any relief to the writ petitioner and as such the writ petition- er filed the appeal before the Division Bench. In the appeal the  appellate  Court refused to stay the operation  of  the writ  issued  by  the learned Single  Judge.  Therefore.  by reason  of  that  order also, there was no  revival  of  the current account facility to the respondent No. 2,  according to  the appellant. The Division Bench, as appears  from  the said order dated 1st April, 1977, restrained the payment  of the octroi duty by the respondent No. 2 to the  Municipality pending the said appeal and directed the Indian Oil Corpora- tion  to maintain a separate account in respect of the  same and  to  keep the same in a separate bank account  with  the State  Bank  of  India, Jodhpur. The said  order  speaks  of deposit  of the octroi tax payable in respect of  such  des- patches.  As  the  Division Bench partly  allowed  the  writ petition,  the Municipality moved this Court and this  Court stayed  the  operation of that order.  Therefore,  when  the petitioner  moved this Court, the Current  Account  facility stood suspended, according to the appellant, and at no stage thereafter  till now the same stood revived by any order  or otherwise. 72     But it may be noted, as mentioned hereinbefore, that  an affidavit  was filed by one Shri R.C. Parekh. It was  stated that current account facility as mentioned in s. 133 of  the Act  was  provided  to the respondent No. 2,  but  the  said facility  was never discontinued even after 25th July,  1975 and is still being provided till the date of the hearing  of the  matter before this Court. The current account  facility under section 133 of the Act is not to recover octroi tax on goods  at the time of entry but to keep current account  and recover  it periodically. Reference was made to paragraph  6

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of  the  writ petition and in reply, the  Municipal  Council admitted para No. 6 of the writ petition and stated that the facilities  are  still provided and has  not  been  stopped. Therefore,  it  is  clear, according to  the  deponent,  and according to the respondent, that according to the Municipal Council, Jodhpur itself current facilities as provided under s.  133 of the Act were never withdrawn and  therefore,  any submissions  made by the Municipal Council to  the  contrary are  totally  unfounded. It could not  have  been  withdrawn unilaterally  without notice to the Indian Oil  Corporation. According to the deponent, the petitioner never stated  that the  current  account facility provided to  the  Indian  Oil Corporation had been withdrawn by the Municipal Council.  It only stated in paragraph 9 of the writ petition that sudden- ly  on 25th July, 1975, the Municipal Council, Jodhpur  sus- pended the export facilities provided to the respondent  No. 2  and informed the respondent No. 2 that henceforth  octroi tax would be charged from the respondent even on those goods which  were exported outside the Municipal limits and  which were  not used or consumed within the municipal limits.  The export  facility, i.e., facility on the issue  of  transport passes  under  rule 13 of the said Rules was only  with  the object to ascertain that quantity of petroleum products that have  been exported out of Jodhpur Municipal limits  and  it did not amount to withdrawal of current account  facilities. The  object of current account facilities is not to  realise octroi  tax on each consignment of goods at the time of  its entry  in Municipal limits of Jodhpur, but to  keep  current account and realise octroi tax after specified time periodi- cally.  It  is  the case of the respondent No.  1  that  the current  account facility was never discontinued and  it  is still  continuing. In fact it is the duty of  the  Municipal Council  to provide passes under rule 13 to person who  have been  provided current account facility. In reply to para  9 of the writ petition, it was stated by the Municipal Council that it never suspended the export facilities of Indian  Oil Corporation.  It  was  further stated that  it  was  decided between  the  officers  of the Indian  Oil  Corporation  and Administrator  that  export facility shall remain  in  force only  for  goods exported to such  distribution  centres  in respect of goods of which no sale is done at Jodhpur. There- fore,  the  affidavit stated that there was  no  suspension. Reference was made to the order of the High Court dated  9th February, 1976 and other orders.     Shri Soli Sorabjee referred to the scheme of the Act and submitted  that the two decisions of this Court referred  to by  the  High Court were not applicable.  Neither  of  these cases, it was submitted, was concerned with the 73 situation where the goods were sold within the octroi limits and  thereafter  exported for consumption outside  the  said limits.  In  the Burmah Shell’s case (supra), there  was  no sales by the company to its dealers. The company sold  goods through its dealers to the customers both within and outside the  local area. He submitted that the observations of  this Court  to  the  effect that octroi is  chargeable  on  goods brought  into the area for sale to consumers must be  under- stood  in  that  context. It was submitted  that  there  was nothing  in the said judgments of this Court to  the  effect that  if goods are brought into a local area for sale  to  a dealer who then transports the goods outside the local  area for sale to consumers, no octroi would be chargeable. It was submitted that as the goods were brought into the local area for sale within that area, octroi would be chargeable. It is significant  to  note,  it was submitted,  that  the  Burmah

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Shell’s case (supra) makes it clear that to attract liabili- ty  to  pay octroi duty it is not necessary that  the  goods should be consumed within the octroi limits.     We are, however, unable to accept these contentions.  If the  goods were brought within the municipal limits for  the purpose  of  sale (sale means passing of the  title  to  the purchaser),  then  different considerations might  have  ap- plied.     But in view of the facts of this case, the title  passed to the goods outside the municipal limits even in respect of the petroleum products which were sold within the  municipal limits.  It was contended by Shri Sorabjee that rule 13  had no application. Shri Sorabjee drew our attention to  certain paragraphs of the writ petition, in particular to  paragraph 18(b)  where  it was stated that it is  obligatory  for  the respondent No. 1 to grant respondent No. 2 transport  passes and it had no jurisdiction to withdraw that facility. It was submitted  with reference to that and other paragraphs  that it  was the case of the respondent No. 1 that  facility  was withdrawn and suspended and prayer was made for  restoration of that facility. It was, therefore, submitted on behalf  of the appellant that in the absence of facilities being grant- ed under rule 13, it was incumbent on the parties to make  a declaration  under  rule  9 of the said Rules.  As  no  such declarations had admittedly been made, rule 9(2) of the said Rules  was attracted. Accordingly, the goods in the  present case  were to be treated as having been brought  within  the municipal limits for consumption use or sale therein and  as such  liable  for octroi duty, according to  the  appellant. Therefore,  Shri Sorabjee submitted that this appeal  should only  be confined to the applicability of rule 9(2)  of  the said Rules.     On  the  other  hand, it was disputed  by  Shri  Dalveer Bhandari  and  others that it is incorrect to say  that  the facility  was suspended or withdrawn. Reading of the  plead- ings,  according to Shri Bhandari, would make it clear  that these were not suspended or withdrawn. Reference was made to paragraphs  6 and 7 of the reply to the writ petition at  p. 116 of the paper book to the effect that it was the case  of the  appellant  that facilities provided to the  Indian  Oil Corporation were never stopped and this submission has been 74 repeated  several times. It was further submitted that  when current  account  facility has been provided,  there  is  no question of payment of octroi at the time of entry of petro- leum products. On the other hand, the octroi tax is paid  at the  time  of settlement of periodical  account,  say  after every month. Thus. question of complying with rule 6 or rule 9 of the said Rules does not arise as they apply when octroi tax  is  paid at the time of entry of goods.  In  fact.  the account of petroleum products imported and exported is  kept by  delivery of entry passes and transport passes by  Indian Oil Corporation at Octroi outpose, which passes are given by Municipal Council. In fact, it is obligatory duty, according to counsel, of Municipal Council to provide entry passes and transport  passes to Indian Oil Corporation which have  been provided  current account facilities. The delivery of  entry passes and transport passes is only to facilitate settlement of  octroi  account  on goods which have  been  retained  in Municipal area for use and consumption. If municipality does not  provide transport passes, it cannot take  advantage  of its own default, according to Shri Bhandari. It is obligato- ry duty of Municipality, it was urged, to provide  transport and  entry  passes to Companies and persons  who  have  been provided  current  account facilities. In any way,  even  it

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transport passes are not given by the Municipal Council, the quantity exported can be ascertain by other means also.     In  the  present  case, there is  no  dispute  regarding diesel exported to Dangiawas from Jodhpur Municipality.  The Municipal Council has not refuted in its reply in para 11 at p. 117 of the paper book, the quantity of petroleum products exported  to Dangiawas as mentioned in Schedule ’A’ (p.  104 of  paper book) from 25th July, 1975 to date of  writ  peti- tion.  The Municipal Council gave an undertaking  to  refund the  octroi  tax charged from the petitioner on  the  diesel exported to Dangiawas outside the limits of Municipal  Coun- cil, Jodhpur as will be clear from the order of the  learned Single  Judge dated 7th February, 1976. It was  also  stated that the Division Bench vide its order dated 1st April, 1977 has already ordered that respondent No. 2 would deposit  the octroi tax on diesel exported to Dangiawas. Thus, the octroi tax  which became due on diesel exported to  Dangiawas  from 1st  April,  1977 upto date is being deposited in  the  Bank account and there is no dispute regarding quantity of diesel exported  to  Dangiawas.  Thus, it appears to  us  that  the controversy raised by Municipal Council referring to cancel- lation  of transport passes is unfounded. The object of  the transport  passes  was to ascertain the quantity  of  diesel exported  to Dangiawas. There appears to be no  dispute  re- garding  quantity of diesel exported to Dangiawas from  25th July, 1975. The Depot Superintendent of Indian Oil  Corpora- tion, Jodhpur had deposed that current account facilities to Indian Oil Corporation is being continued till today. It was stated that the octroi is paid periodically on settlement of account between Municipal Council and Indian Oil Corporation and  not  at  the time of entry of  petroleum  products.  It appears  that the contention that cancellation of  transport passes  is  equivalent to cancellation  of  current  account facilities, 75 made on behalf of the appellant, is incorrect. A perusal  ot s. 133 would show that current account facility is  provided by substantive section, whereas rule 13 of the said Rules is procedure provided with the object of providing facility  of settlement account of payment of octroi tax. In other words, according  to rule 13(4), octroi tax is charged on  quantity mentioned  in entry passes minus the quantity  mentioned  in transport  passes, i.e., on quantity of  petroleum  products used  or  consumed within the Municipal  limits  of  Jodhpur Municipality.  It is also unsustainable, according  to  Shri Bhandari  to contend that M/s Parekh Automobiles has  recov- ered octroi tax from consumers. It has been asserted in  the writ petition on oath as well as before this Court on filing affidavit that no octroi was recovered by M/s Parekh Automo- biles  from consumers. On the other hand, it is the case  of M/s Parekh Automobiles that it had to pay octroi tax out  of commission which it received from Indian Oil Corporation  on sale  of diesel. This fact, according to Shri  Bhandari  was never  refuted  by the Municipal Council or the  Indian  Oil Corporation. Thus there is no question of unjust enrichment, and as such M/s Parekh Automobiles is entitled to octroi tax which was recovered from it and which is lying deposited  in separate  Bank Account by the Indian Oil Corporation as  per order of Division Bench dated 1st April, 1977 upto date. For period  before  1st April, 1977, the Municipal  Council  has already given an undertaking to refund octroi tax.     Pleadings  in  this case and the  averments  are  rather confusing.  On  the consideration of all the facts  and  the circumstances  of the case, we are of the opinion  that  the principles of the aforesaid two decisions of this Court have

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been  correctly applied by the High Court in the  facts  and the  circumstances of the case. The octroi duty  is,  there- fore,  not chargeable on the transactions mentioned  herein. We  are further of the opinion that in view of the  confused state of the pleadings and averments, it is not possible  to hold  that  current  account facilities  were  withdrawn  or cancelled.  If that is the position, then there is no  ques- tion  that the High Court was right in the order  it  passed and the direction it gave.     In  view  of the aforesaid, appeals must  fail  and  are accordingly dismissed. In the facts and the circumstances of the case, however, we make no orders as to costs.      RANGANATHAN.  J. I have gone through the judgment  pro- posed  to  be  delivered in the above cases  by  my  learned brother Sabyasachi Mukharji, J. I agree but I  would like to add a few words on one of the questions raised. The  controversy before us--I shall refer only to the  facts in CA. 1552/1981 for purposes of the discussion--relates  to the  claim of the Municipal Council, Jodhpur (appellant)  to octroi on the petroleum products sent from the depot of  the Indian  Oil Corporation (IOC) at Jodhpur, to retail  outlets at Dangiawas where they are sold by Parekh 76 Automobiles  Co. (hereinafter referred to as  ’the  dealer’) for  sale  at Dangiawas. Dangiawas  is  admittedly  situated outside the limits of Jodhpur Municipal Council. The case of IOC  and  the dealer is that the goods in question  are  not sold  at  Jodhpur. According to them, the actual  sale  took place only at Dangiawas and, since neither the sale nor  the consumption  nor the use of the petroleum products in  ques- tion  took  place within the limits of the  municipality  of Jodhpur, the appellant council was not entitled to levy  any octroi  thereon. Alternatively, it was contended that,  even if  the sale is held to have taken place at Jodhpur,  still, octroi cannot be levied as the goods so sold were meant  for use or consumption outside the municipal limits, in view  of the  decision  of this Court in Burmah Shell Oil  Storage  & Distributing  Co. India Ltd. v. The Belgaum Borough  Munici- pality,  [1963]  Supp. (2) SCR 216 as  followed  in  Hiralal Thakorlal Dalal v. Broach Municipality & Ors., [1976]  Supp. SCR  82. The learned Single Judge in the High Court did  not permit  the petitioners to raise the question that the  sale took  place  only outside the municipal  limits  of  Jodhpur since that involved an investigation into facts which  could not  be undertaken in a writ petition and proceeded  on  the footing that the sale of the products in question took place within  the  limits of Jodhpur. He,  however,  accepted  the contention  of IOC and the dealer that even if the  sale  is taken  to have been effected within Jodhpur, no  octroi  was leviable  as admittedly the goods had been sold  in  Jodhpur only  for their onward transmission for use and  consumption in  Dangiawas  outside the Municipal  limits.  The  Division Bench of the High Court has also approved of this conclusion and,  in our opinion, rightly. As pointed out by my  learned brother  in  his detailed discussion on  this  aspect,  this issue  is covered by the two decisions of the Supreme  Court which have already been referred to. I have nothing to  add, so far as this part of the case is concerned.     It  was  urged before the High Court. on behalf  of  the Municipal  Council, that the levy of octroi could be  justi- fied on the terms of rule 9 of the Rajasthan  Municipalities (Octroi)  Rules,  1962,  (hereinafter referred  to  as  ’the rules’).  It  is unnecessary to set out again the  terms  of this rule which have already been extracted in the  judgment of  my  learned brother. Under sub-rule (1)  of  this  rule,

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every person bringing his goods within the municipal  limits should  make a declaration in terms thereof. In the  present case, it is common ground that no such declaration had  been made. It is, therefore, urged that by virtue of the  closing words of rule 9(2), the goods in question should be  treated "as  having  been brought within the  Municipal  limits  for consumption,  use  or  sale therein" and  thus  attract  the charge  of tax under clause 2 of sub-section (1) of  section 104  of the Rajasthan Municipalities Act, 1959  (hereinafter referred to as ’the Act’). The respondents have 77 attempted  to  counter  this argument by  urging  that  this provision  regarding  declaration does not  apply  in  their case.  Their argument is that their case is covered by  sec- tion  133  of the Act read with rule 13 of  the  rules.  The argument  is that rule 13 is a special provision  applicable to a class of persons which has been allowed current account facilities under section 133 of the Act and that the  proce- dure  under  rule 13 overrides the requirements of  rule  9. This  argument  has  been accepted by the  High  Court.  The question  is  whether the High Court’s  conclusion  on  this issue  is correct. I think that the High Court  rightly  ac- cepted this argument and I should like to elaborate a little my reasons for this conclusion.     Chapter II of rules provide for the manner of assessment and collection of octroi duty. Rules 3 to 5 provide for  the establishment of octroi outposts with powers to the inspect- ing staff to stop the vehicles at the outposts. Rule 6  lays down that no goods liable to payment of octroi shall, except as otherwise provided in these rules, be brought within  the Municipal  limits until the octroi duty leviable in  respect of  such goods has been paid at the octroi  outposts.  Where goods  arrive  at an octroi outpost they may  be  coming  in either  for  consumption, use or sale within  the  Municipal Limits  or for transportation outside those limits,  whether immediately or after a period of time. If they have come  in merely  for  the  purpose of transportation,  they  are  not liable  to pay octroi duty. It, therefore, became  necessary to make a detailed provision as to the manner of  assessment and collection of duty having regard to this  consideration. That  is  why rule 9 requires every  person  bringing  goods within the municipal limits to make a declaration as to what the goods are intended for. If any of the goods are intended for  consumption,  use or sale within  the  Municipality,  a declaration  could be made orally to this effect;  thereupon the  octroi would be collected then and there in respect  of those goods. If, however, the goods are intended for immedi- ate  or eventual transportation outside the Municipality,  a written  declaration  should be filed by  the  importer.  In respect of goods declared intended for immediate transporta- tion,  the officer-in-charge of the octroi outpost  receives by  way of deposit such amount as may be equivalent  to  the duty  payable thereon and issues a transit pass to  the  im- porter. The importer should transport the goods outside  the Municipal  limits within a period not exceeding eight  hours (which  can  be extended to 24 hours at the most).  On  such transportation being effected, the amount of octroi deposit- ed in respect of the goods so transported is returned to.the importer and the transit pass taken back. This is the proce- dure envisaged in rule 11. (Certain refinements in procedure in  the case of travelling agents is provided for  in  rules 11A & 11B, with which we are not concerned). Where, however, the goods are not immediately to be transported outside  the Municipal limits but are to be temporarily detained within 78

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the Municipal limits and eventually transported outside  the Municipal limits, rule 12 is attracted. In the case of  such goods they have to be sent to a bonded warehouse. The  goods may  be  withdrawn from time to time either  on  payment  of octroi  in the event of their being consumed, used  or  sold within the Municipal limits or without any payment of octroi duty in case of their being transported outside the  Munici- pal limits. This procedure is outlined in rules 12 and 16 to 22.  But one important condition is that the maximum  period for which the goods can be placed in the bonded warehouse is 6 months. If the goods are not removed within the said  time limit, they are liable to be sold by public auction and  the warehouse  charges and octroi recovered from the  sale  pro- ceeds.  This is the normal procedure for the assessment  and collection  of octroi duty. It is in respect of this  proce- dure  that the declaration in rule 9 becomes important.  The terms  of  the declaration determine the  incidents  of  the duty.  Regarding  the first category of goods  mentioned  in rule  9(1), the collection of duty is  immediate;  regarding the  second  category, a deposit is demanded  which  can  be refunded  on transportation within a few hours; and  in  re- spect of the third, duty has to be paid unless the goods are transported outside the municipal limits within 6 months.     Rule  13,  however,  contemplates  a  totally  different scheme  for the assessment and collection of octroi for  the special  type of cases envisaged therein. From the terms  of S.  133. it would appear to be intended to cover  mercantile firms or bodies which may be bringing goods into, or  taking goods out of, the municipal limits frequently and,  perhaps, also firms or bodies about whose capacity to pay the duty in due course the Municipal Board has confidence. These persons are given the facility of having a current account with  the Municipality and the amount of duty payable by such a person is  determined  and  collected from time to  time.  Such  an account is opened on the firm or body making such deposit or furnishing  such security as the Municipality  may  require, for  the due discharge of its liabilities under the Act  and the Rules. When this facility is provided, the procedure  to be followed is set out in rule 13. Here what is done is that the firm or body is given a book of entry passes and a  book of transport passes from time to time. As and when the  firm or  body brings goods into the Municipality, it is  required to  fill in one of the entry passes setting out the  details of the goods which are being brought in under any particular consignment  and present the same at the octroi  outpost  of entry. After verifying that the details of the goods brought in tally with the details of the goods entered in the  entry pass, the details are passed on to the octroi Superintendent who  debits  the account of the person  concerned  with  the amount of octroi payable in respect of the goods 79 listed  in the pass. As and when the firm or body wishes  to transport  the goods out of the MUnicipality, it fills up  a transport pass containing the details of the goods  proposed to  be  transported outside and presents it  to  the  octroi outpost  of exit. The officer at the outpost  verifies  that the  goods mentioned in the pass and the goods sought to  be transported  tally with each other. Then the transport  pass duly  certified by him is passed on to the  octroi  Superin- tendent.  The  octroi  Superintendent,  after  verification, files  the certificates of export separately in  respect  of each  such  body or firm. The amount of  octroi  payable  in these  cases is based on the total amount of octroi  on  the goods  shown by the entry passes less the goods  transported out under the transport passes. In other words, in the  case

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of persons who have the current account facilities, the duty is calculated on the basis of the total amount of goods that have.  come in as reduced by the total amount of  the  goods that have gone out, the balance being presumed to have  been consumed, used or sold within the Municipal limits. In order to  ensure that there is a correspondence between the  goods that have come in and those that have gone out, the  proviso to  sub-rule (4) of rule 13 provides that, in computing  the octroi  duty  payable,  the goods  transported  outside  the Municipal  limits shall be lessened only if (a)  such  goods have not been sold within the Municipal limits and (b)  they have been transported out of such limits within a period  of 6 months from the date of their import.     A  comparison of the above two sets of  provisions  will make  it  clear that they are two independent  and  mutually exclusive modes of assessment and collection of duty.  Under the  cash system of payment, a declaration under rule  9  is absolutely  essential because the officials at  the  outpost will have to determine the mode of dealing with the goods on the  basis  of such declaration. The octroi duty has  to  be collected  then and there in respect of the goods which  are to be consumed, used or sold within the Municipal limits;  a deposit has to be taken in respect of those goods which  are intended to be immediately transported outside; and the rest of  the goods on which the transportation is to be  effected on a future time, have to be directed to a bonded warehouse. The mode of collection of duty in respect of a person having current  account facilities, however, does not  depend  upon any such declaration or upon the mode of utilisation of  the goods as indicated in such declaration, because, in the case of the current account holders, the duty payable in  respect of  the  entirety of the goods brought  in  is  straightaway debited  to  his account on the basis of entry  passes.  The duty payable in respect of the goods transported outside  is later on credited to his account on the basis of the  trans- port  passes. The difference is the amount of the duty  pay- able by him and this is recovered 80 from  the person concerned from time to time either  by  ad- justment out of the deposits earlier obtained from him or by other  processes of recovery. The procedure as to  issue  of transit passes or storage in a warehouse are also irrelevant for the purposes of dealing with the goods under rule 13.     It,  therefore, appears to me that High Court was  fully justified in holding that the terms of rules 6 and 9 have no relevance  to  the payment of duty in cases covered  by  the current  account facility envisaged under rule 13. The  High Court was, therefore, right in holding that the present case cannot  be brought within the terms of proviso to rule  9(2) on the basis of a deemed consumption, use or sale within the Municipal limits.     It is true that the proviso to sub-rue 4 of rule 13 also envisaged the exclusion from levy of octroi duty only  where the  goods are not sold within the Municipal limits. It  may be contended that, in the present case, as the IOC has  sold the  goods within the Municipal limits, and  the  subsequent transport  to  Dangiawas, though effected by  the  IOC,  was really on behalf of the dealer the goods so transported  and entered in the transport passes of the IOC should be exclud- ed  from deduction under sub-rule (4) of rule 13.  But  this construction,  in my view, cannot be accepted.  The  expres- sions  used in the proviso to sub-rule (4) cannot be  inter- preted  differently from the words used in section  104,  on the  basis of which chargeability to duty arises. If, as  we have held, there can be no octroi duty at all levied by  the

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Jodhpur Municipality in respect of the goods solo by the IOC within,  but clearly intended to be transported for  use  or consumption outside, the Municipal limits, then this  statu- tory  limitation  cannot  be defeated  by  interpreting  the proviso  in such a way as to make all goods sold within  the Municipality liable to duty even if the sale is in pursuance of  a  clear intention that the goods are to  be  despatched outside. The terms of the proviso and the main section  have to be read harmoniously.     The  result of the above discussion is that the  present case  is  governed by the terms of rule 13 and  the  IOC  is entitled  to  go on paying octroi duty on the basis  of  the goods  brought by it within the Municipality less the  goods transported  outside the Municipality even where the  trans- port outside the Municipality may be in pursuance of a  sale within the Municipality so long as such sale is in pursuance of  an intention that the goods should be consumed  or  used outside  the Municipal limits. As we have already  said,  in cases where rule 13 applies, rule 9 is excluded and,  there- fore, the High Court rightly held that the octroi charged on the IOC in respect of the impugned sales was not justified. 81     Before concluding I wish to refer to three aspects.  The first  is  as to whether even assuming that rule 9  was  ap- plicable  to a case where the current account  facility  has been provided, the terms of that rule can be read in such  a manner  as  to militate against the very concept  of  octroi duty  as explained in the Burmah Shell case. A question  may arise whether the terms of rule 9(2) so interpreted would be intra  vires  the rule making power of  the  legislature.  I express no opinion on this issue as I have already expressed my view that rule 9 has no application to the present  case. The  second aspect, which I wish to touch upon, is  a  point sought to be raised on behalf of the appellant in the course of,the  present  hearing that the current  account  facility granted to the IOC had been revoked. My learned brother  has referred  to  the pleadings in this regard at  great  length and,  as pointed out by him, the factual position is  by  no means  clear.  I do not think that the appellant  should  be permitted to raise at this stage a new plea when all  along, in  the earlier proceedings in the High Court, the case  has proceeded  on the footing that the IOC had been  having  and continues  to  have current account  facilities.  The  third aspect to which I would like to make a reference is that  we have  principally  based out decision only on the  facts  in regard  to the sales to Parekh Automobiles Ltd. We are  told that there are a number of suits, other than those before us today, which are pending at various stages in which  various pleas  have been raised, I would only like to make it  clear that we express no opinion regarding the factual position in those cases and those cases will have to be disposed off  in the  light  of the legal position set out in  our  judgment. Except for the above clarifications I have nothing to add to what my learned brother Mukharji, J. has said and I respect- fully  agree with his conclusion that the appeals must  fail and are dismissed. R.S.S.                                Appeals dismissed. 82