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PETITIONER: TOWN MUNICIPAL COUNCIL

       Vs.

RESPONDENT: URMILLA KOTHARI

DATE OF JUDGMENT20/01/1977

BENCH: SINGH, JASWANT BENCH: SINGH, JASWANT RAY, A.N. (CJ) BEG, M. HAMEEDULLAH

CITATION:  1977 AIR  873            1977 SCR  (2) 660  1977 SCC  (1) 687

ACT:             Karnataka Municipalities Act, 1964--Sec.  124--Karnataka         Municipalities Taxation Rules, 1965--Rule 26--Trucks passing         on  the  highways within  municipal  limits--Whether  octroi         payable--Meaning  of "brought into" and "immediate  exporta-         tion".

HEADNOTE:             The  respondent is a transporter.  The respondent  lifts         the  iron  ore  in his trucks from Hubli  Railway  yard  and         carries  it to Karwar and Belekeri harbours. The  trucks  of         the respondent have to pass in the course of transit through         :he  limits  of various Town Municipalities situate  on  the         highway   of  which  the appellant happens to be  one.   The         respondent  does not unload or re-load the iron ore  at  any         intermediary point or stop.  The appellant passed a  resolu-         tion in purported exercise of s. 124 of the Karnataka Munic-         ipalities  Act,  1964 read with rule 26  of  the.  Karnataka         Municipalities  Taxation Rules, 1965, imposing a fee of  Re.         1/-  per trip of each truck.  The respondent filed  a   writ         petition  challenging  the  levy of the  fee.   The  learned         single Judge of the High  Court dismissed the writ petition.         The Division Bench, however, allowed the appeal.         Dismissing the appeal by certificate,             HELD: The present case is not covered by "any article or         animal brought into the municipal limits for the purpose  of         immediate exportation" mentioned in s. 124.  "Brought  into"         and "immediate exportation" do not  comprehend within  their         sweep the continuous process of transit of goods by vehicles         which  merely  use the State High Way  passing  through  the         areas which lie within the municipal limits.  In the instant         case, the iron ore is carried in the trucks of the  respond-         ent which merely pass through the areas which lie within the         municipal  limits  and is not unloaded and reloaded  at  any         place within the municipal areas.  The continuity or contin-         uous process of the carriage of iron ore is not in any  way,         in fact, broken within the municipal limits. The  respondent         cannot be said either to bring in or export the iron ore  as         contemplated  by s. 124 of the Act read with Rule 26 of  the         Rules  and, as such, is not liable to pay octroi or what  is         styled as supervision fee.  A contrary interpretation  would

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       make  rail borne goods passing through the  Railway  Station         within the limits of the municipality liable to the  imposi-         tion of the fee on their arrival at the Railway Station  and         departure therefrom which could not be the intention of  the         Legislature.  [662 G-H, 664 B, G-H, 665 A-B]             The Central India Spinning and Weaving  and  Manufactur-         ing  Company Limited, the Empire Mills, Nagpur v. The Munic-         ipal Committee, Nagpur [1958] SCR 1102=AIR 1958 SC 352, fol-         lowed.             Brown  v. State of Maryland (1827) 12 Wheat 419, 442;  6         L.  Ed.  678, 686 and Wilson v. Robertson 24  L.J.Q.B.  185,         quoted with approval.

JUDGMENT:             CIVIL  APPELLATE JURISDICTION: Civil Appeal   No.   1386         of 1976.             From the Judgment and Order dated 21-9-76 of the  Karna-         taka High Court in W.A. No. 150 of 1976.         H.B.  Datar, Sanjeev Aggarwal and R.B. Datar for the  Appel-         lant.             S.T. Desat, S.K. Mehta, K.R. Nagara]a and P.N. Puri  for         Respondent.         661         The Judgment of the Court was delivered by            JASWANT  SINGH, J.  This appeal by certificate  which  is         directed against the judgment and order dated September  21,         1976, of the High Court of Karnataka at Bangalore  reversing         the judgment and order dated March 3, 1976 of a Single Judge         of that Court dismissing writ petition No.6945 of 1975 filed         by the respondent involves a substantial question of law  of         general  public importance relating to the validity  of  the         levy  of what is styled as ’supervision fee’  under  section         124  of the Karnataka Municipalities Act, 1964  (hereinafter         referred to as ’the Act’) read with rule 26 of the Karnataka         Municipalities Taxation Rules, 1965 (herinafter referred  to         as ’the Rules’).            The  facts of the case lie in a short compass and may  be         stated as follows:-            Iron ore which is extracted from its mine heads in Hospet         Taluka is brought over and stocked in Hubli Railyard by  the         Mysore  Minerals Limited which is a Government  undertaking.         Having taken up the contract of transhipment of the iron ore         from  Hubli  Railyard to Karwar and Belekeri  harbours,  the         Mysore Minerals Limited has sublet the same to the West  End         Minerals  and  Exports Private Limited.  The latter  has  in         turn  entrusted  the execution of the contract to.  the  re-         spondent  which is engaged in transport business.  The  iron         ore  is accordingly lifted by the respondent in  its  trucks         from  Hubli  Railyard  and carried to  Karwar  and  Belekeri         harbours.   The trucks of the respondent carrying  the  iron         ore  ’have  (en route) to pass. in the  course   of  transit         through the limits of various town municipalities situate on         the  highway of which the appellant happens to be  one,  but         they do not unload and reload the iron ore at any intermedi-         ary point or stop.             The appellant, on the basis of a resolution passed by it         on  January 25, 1975, and approved by the  State  Government         levies the aforesaid fee of Re. 1/- per truck under  section         124  of the Act read with rule 26 of the Rules.  The  trucks         of the respondent using the State highway within the munici-         pal  limits of Kalghatgi, District Dharwar  are  accordingly         made to pay the fee for each of their trips.             Feeling  that  the  fee realised by  the  appellant  was

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       invalid,  the respondent filed a writ petition,  being  writ         petition  No.. 6945 of 1975 in the High Court  of  Karnataka         challenging the levy of the fee and seeking the issuance  of         a writ of mandamus restraining the appellant from  realising         the said fee.             A  Single  Judge  of the High Court upheld  the  fee  in         question  and dismissed the writ petition holding  that  the         expression   ’importer’,  ’place of import’  and  ’place  of         export’  as used in section 124 (1 ) of the Act are  compre-         hensive  enough to describe a person who merely  brings  the         goods within the municipal limits for immediate  exportation         and  the respondent who answered that description was  bound         to  pay the fee.  Aggrieved by this judgment and order,  the         respondent took the matter in appeal to a Division Bench  of         the High Court which allowed the appeal and issued the  writ         prayed for by the respondent  by its         662         judgment and order dated September 21, 1976.  It is  against         this; judgment and order that the present appeal is  direct-         ed.             At  the hearing of the appeal, counsel  have  reiterated         the  contentions urged on behalf of the parties in the  High         Court.             The  sole  question that arises  for  determination   in         this  appeal relates to the validity of the aforesaid  levy.         For a proper detemination of this question, it is  necessary         to  advert  to  section 124 of the Act and rule  26  of  the         Rules.                           "Section 124: Non-liability for octroi and                       refund of  octroi  ongoods in transit.--                           (1) Any article or animal brought into the                       municipal limits for the purpose of  immediate                       exportation may at the option of the  importer                       not to be subjected to levy of octroi if  such                       article or animal be conveyed direct from  the                       place of import to the place of export by such                       routes,  within  such  time,  and  under  such                       supervision  as the municipal council  may  by                       resolution determine..  For purposes of   this                       subsection  the  municipal  council  shall  on                       payment of the prescribed fees issue  promptly                       the necessary transport permits.                           (2)  When any article in respect of  which                       octroi  has  been paid is  exported  from  the                       municipal  limitS,  in the same  condition  in                       which  it  was brought into or  received  from                       beyond  the  municipal limits, the  amount  of                       octroi  paid Shall, subject to such  rules  as                       may be prescribed, be refunded."                           "Rule 26: ... In case the person  bringing                       the   goods wishes to transport the  goods  at                       once beyond the limits of the municipality  he                       shall  do so only after obtaining a  transport                       permit  in  Form IV, on payment of  a  fee  of                       rupees  two  for each lorry and rupee  one  in                       other  cases in the case of a  city  municipal                       council and rupee one for each      lorry  and                       fifty  paise in other cases in the case  of  a                       town  municipal council."             The  opening words of section 124 of the Act  viz.  "any         article or animal brought into the municipal limits for  the         purpose  of  immediate exportation" on the  construction  of         which the up-shot of  the  case, depends are very important.         They  imply  processes of ’importing  into’  and  ’exporting         from’  the  municipal  limits of goods or  animals  and  are

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       indicative  of  an element of repose and rest of  the  goods         within  the municipal limits.  As rightly held by the  Divi-         sion Bench of the High Court, the expressions ’brought into’         and  ’immediate exportation’ do not comprehend within  their         sweep the continuous process of  transit of goods, by  vehi-         cles  which merely use the State  highways  passing  through         the  areas which lie within the municipal limits.   In  the.         instant  case, the iron ore is carried in the trucks of  the         respondent   which merely pass through the areas  which  lie         within the municipal  limits and is not unloaded and reload-         ed at any place within the  municipal         663         area.   As  such, the important element of repose  and  rest         which  the words ’brought into the municipal limits for  the         purpose  of  immediate exportation’ imply is absent  in  the         instant case.             In The Central India Spinning and Weaving  and  Manufac-         turing  Company  Limited, The Empire Mills,  Nagpur  v.  The         Municipal Committee, Nagpur(1), this Court while  discussing         the meaning  of  the expression ’a terminal tax on goods  or         animals  imported  into  or exported from the limits of  the         municipality’   occurring  in  section 66(1)(0) of the  C.P.         and  Berar  Municipalities Act, 1922, held  that  the  goods         which  were  in transit and were merely carried  across  the         limits of the municipality were not liable to terminal  tax.         The following observations made therein which have an impor-         tant  bearing  on the decision. of the  present  appeal  are         worth quoting :--                           "The efficacy of the relative  contentions                       of  the parties requires the determination  of                       the  construction to be placed on  the  really                       important  words of which are "terminal  tax",                       "imported  into  or exported  from"  and  "the                       limits  of the Municipality".   In  construing                       these  words of the statute if there  are  two                       possible interpretations then effect is to  be                       given to the one that favours the citizen  and                       not   the  one  that  imposes  a   burden   on                       him.  .....Lexico-logically  they  (the  words                       ’import’ and "export;) do not have any  refer-                       ence to goods in ’transit’ a word derived from                       transit  bearing a meaning similar  to  trans-                       port,  i.e.  to. go  across.   The  dictionary                       meaning of the words ’import’ and ’export’  is                       not restricted to their derivative meaning but                       bear other connotations also  .....  The  word                       "transit", in the Oxford Dictionary means  the                       action   or  fact  of  passing    across    or                       through; passage or journey from one place  or                       point  to another; the passage or carriage  of                       persons or goods from one place to another; it                       also  means to pass across or  through  (some-                       thing) to traverse, to cross.  Even  according                       to the ordinary meaning of the words which  is                       relied  upon by the  respondent,  goods  which                       are in transit or are being  transported   can                       hardly  be  called  goods  "imported  into  or                       exported  from" because they are neither being                       exported  nor imported  but are  merely  goods                       carried across a particular stretch of  terri-                       tory  or  across a particular  area  with  the                       object   of  being transported to their  ulti-                       mate’  destination which in the  instant  case                       was  Nagpur  .....  By giving to   the   words                       "imported into or exported from" their deriva-

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                     tive  meaning  without any -reference  to  the                       ordinary connotation of these. words  as .used                       in the commercial sense, the decided cases  in                       India  have ascribed too general a meaning  to                       these   words   which  it  -appears  from  the                       setting, context and history of the clause was                       not intended.  The effect of the  construction                       of  "import" . or "export" in the  manner  in-                       sisted  upon  by  the  respondent  would  make                       rail-borne  goods  passing through  a  railway                       station  within the limits of  a  Municipality                       liable to the imposition of the tax .on  their                       arrival at the  railway  station  or                       [1958] S.C.R. 1102=A.I.R. 1958 S.C. 352:                       664                       departure  therefrom or both which  would  not                       only result in                       inordinate  delays  and unbearable  burden  on                       trade  both inter State and intra State. It is                       hardly likely that that was, the intention  of                       the  Legislature.   Such   an   interpretation                       would  lead to absurdity which has   according                       to   the  rules  of  interpretation,   to   be                       avoided."             The  enunciation of law in the above case  fully  covers         the  present case.  In the present case also, the  iron  ore         which  is  in transit from Railyard at Hubli to  Karwar  and         Belekeri  harbours  can  hardly  be characterised  as  goods         brought  into  or  exported from the   municipal  limits  of         Kalghatgi because they are neither imported into nor  export         ed from any point within the municipal limits but are merely         carried across a particular stretch of territory or across a         particular area with the object of being transported to  its         ultimate  destination.   In Brown v. State  of  Maryland(1),         Chief Justice Marshall dealing with the word!  ’importation’         said as follows :--                           "The  practice of most commercial  nations                       conforms  to this idea.  Duties, according  to                       that  practice, are charged on those  articles                       only  which are intended for sale or  consump-                       tion  in the country.  Thus sea-stores,  goods                       imported  and re-exported in the same  vessel,                       goods  landed  and carried over land  for  the                       purpose of being re-exported from  some  other                       port,  goods forced in by stress  of  weather,                       and landed, but not for sale are exempted from                       the  payment  of duties. The whole  course  of                       legislation  on the subject shows that in  the                       opinion of the legislature the right to.  sell                       is connected with the payment of the duties."             In  Wilson  v. Robertson(2) where section 33 of  The  48         Geo.  3, c. civ. imposed a duty on all goods "imported  into         or  exported  from Berwick Harbour", and the harbour extend-         ed  from Berwick Bridge down the Tweed to the sea,  but  not         above  the bridge and goods were brought up the river  in  a         seagoing vessel which, having first used the Harbour Commis-         sioners’  rings and posts in order to moor the vessel  while         lowering  the masts, passed through Berwick Bridge  and  un-         loaded her cargo about 200 yards above the bridge and beyond         the limits of the harbour; it was held that these goods were         not "imported into"’ the harbour and as such liable to duty.             Bearing  in mind the above authoritative enunciation  of         law, we are’ of opinion that as the continuity or continuous         process  of  the carriage of iron ore is not in any  way  in         fact  broken within the municipal limits of  Kalghatgi,  the

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       respondent  cannot be said either to bring in or export  the         iron ore as contemplated by section 124 of the Act read with         rule  26 of the Rules and as such is not liable to  pay  the         octroi  or what is styled as ’supervision fee’.  A  contrary         interpretation would  make rail borne goods passing  through         the Railway Stations within the         (1) 1827 12 Wheat 419=442=6 L. Ed. 678, 686.         (2) 24 L.J.QB. 185.         665         limits  of the municipality liable to the imposition of  the         fee  on their arrival at these Railway Stations and   depar-         ture   therefrom   which could not be the intention  of  the         Legislature.   The  High  Court  was,  therefore,  perfectly         justified in allowing the appeal and issuing the writ sought         for.             In the result, the appeal fails and is hereby  dismissed         but in the circumstances of the case without any order as to         costs.         P.H.P.                                                 Appeal dismissed.         666