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PETITIONER: INDIAN OIL CORPORATION

       Vs.

RESPONDENT: MUNICIPAL CORPORATION, JULLUNDHAR AND ORS.

DATE OF JUDGMENT20/10/1992

BENCH: [J.S. VERMA AND DR. A.S. ANAND, JJ.]

ACT: Punjab Municipal Corporation Act, 1976: S.113-Levy  of   octroi-Indian   Oil   Corporation-Petroleum Products-Transportation to depot within municipal limits for export therefrom to dealers outside municipal limits at risk of  IOC-Held   transaction  of   re-export-Octroi   duty-not chargeable on such transaction. Constitution of India, 1950: Article 246,  Seventh Schedule,  List Ii,  Entry  52-Tax  on entry of  goods into  local area for consumption use or sale therein-State legislature-Power  to legislate-held Municipal Corporation cannot  have authority  more extensive than that of State legislature. Words and Phrases: "Imported  into   the  city"-s.113   of   Punjab   Municipal Corporation Act-Meaning of.

HEADNOTE: The appellant,  Indian Oil  Corporation  (IOC),  had  a depot, comprising  a  pipeline  terminal  and  LPG  bottling plant,  within   the  limits   of   Municipal   Corporation, Jullundhar. The  IOC transported  various petroleum products to the depot through underground pipelines. The respondent Municipal Corporation raised a demand on the IOC  for octroi.  The IOC  deposited the octroi duty but filed appeals before the appellate authority challenging the demand notice so far as it related to the petroleum products imported to the depot for export by the IOC therefrom to its dealers for  the sale,  use and consumption by persons other than IOC,  outside  the  octroi  limits.  The  appeals  were dismissed. In the  writ petition  before the  High Court  the IOC, besides impugning  the judgment  of the appellate authority, challenged the validity of s. 113  of   the  Punjab   Municipal  Corporation   Act,   1976 authorising levy  of octroi on articles and animals imported within the  municipal limits  of the  respondent Corporation without any reference to the use, consumption or sale of the said  goods,   as  being  beyond  the  power  of  the  state Legislature in  view of  entry 52 of List II of Schedule VII to the  Constitution of  India. It  was contended  that  the Municipal Corporation  could not  impose and  demand  octroi duty on  the petroleum  products imported  by the IOC to its depot for  being exported  at the  risk of  the IOC  to  its dealers at  their sale  points situated  outside the area of the Municipal  Corporation  in  as  much  as  the  petroleum products in  such transactions  only entered the area of the

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Municipal Corporation  for the  purpose of  re-export to the place of  business of  its dealers  and the property in such petroleum products  passes to  the  dealers  only  at  their premises outside  the Municipal  limits and not at the depot of the  IOC and  as such  it could it could not be said that any transaction  takes place  within the municipal limits of the respondents for use, consumption or sale of the imported petroleum products and thus attract any octroi duty. The respondent  contended that  the transactions by the IOC were  sale simplicitor at the depot within the municipal limits of the Corporation and the export of the goods to the premises of  the dealers outside the octroi limits was of no consequence since the IOC received payment in advance as the sale proceeds  from its  various dealers  and collected  the local taxes  etc. like the sale tax and MST from the dealers at its  depot; that  the IOC  could not  either in law or in equity retain the octroi duty so collected. The High  Court held  S. 113  of the  Punjab  Municipal Corporation Act,  1976 as  intra vires,  and upheld the levy and demands  of octroi duty by the Municipal Corporation. It dismissed the writ petition holding that the property in the goods passed  on to  that dealers as and when the goods were laden in the turck/lorries and that the sale was complete at the depot  of the  IOC. The  IOC filed the appeal by special leave. Allowing the appeal, this Court HELD: 1.1  Entry of  goods within  the local  area  for consumption use or sale therein is made taxable by the State Legislature on  the authority  of Entry  52 of  List  II  of Schedule VII  to the Constitution. The municipality deriving its power  to tax from the state Legislature cannot have any authority more extensive than that of the state Legislature. Since the  State Legislature  under a legislation enacted in exercise of  the powers conferred by Entry 52 of list II, is competent to  levy a  taxes only on the entry of goods for " consumption,  use   or  sale"   into  a   local  area,   the municipality cannot nuder such a legislation, have the power to levy  tax in respect of goods brought into the local area for purposed other than consumption use or sale. Section 113 of the  Act has  therefore reasonably  to be read subject to the same  limitation as are contained in Entry 52 List II of Schedule VII.[69-E-G] 1.2 The  expression "imported into the city" in section 113, has  to be  interpreted as  meaning "imported  into the municipal limits  for purposes  of consumption, use or sale" only. Thus  construed in  the limited  sense, section 113 of the Municipal  Act is not ultra vires Entry 52 of List II of Schedule  VII   Interpreting  the   expression  as   meaning "imported into  the city  for any  purpose and  without  any limitation, would  amount to  attributing to the legislature an intention   to give a go-by to the restrictions contained in Entry 52 of List II. That is not permissible. [69-G-H; A- B] 1.3 The  High court  was  right  in  holding  that  the provisions of  section 113  of the   Municipal  Act are  not beyond the  competence of the state Legislature and the same are to  be read  along with  Entry 52 of List II of Schedule VII of the constitution. [70-D-E] 2.1. The  transaction whereunder the petroleum products trans-ported to  the depot  of the  IOC are meant for export from its  depot inside  the octroi  limits  to  outside  the municipal     limits  to   its  dealers  for  sale  use  and consumption by  persons other  than   the  IOC  outside  the octroi  limits   is  a  transaction  of  re-export  and  the appropriation of  the goods does not take place at the depot

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but  at the outlets of the dealers or the agents outside the municipal  limits.   The  octroi  duty  is,  therefore,  not chargeable on such a transaction. The levy and collection of the octroi  duty on  such goods by the Municipal Corporation is, therefore, not justified. [76-G-H;77-A] Burmah-shell oil storage and Distributing Co. of  India Ltd. Belgaum  v. Belgaum  Borough Municipality  Belgaum, Air 1963 SC  906 and   Municipal  council, Jodhpur v. M/s Parekh Automobiles Ltd. and ors. [1990]1 SCC 367, relied on. 2.2.   The High  court erred in not considering various clauses of  the agreement or the affidavits filed by the IOC before the  appellate authority or the categorical statement in the  writ petition and rejoinder affidavit , showing that the risk  till delivery of products to the dealers continues to remain  with the IOC and the goods are re-exported at the risk of the IOC and not at the risk of the dealers; and that the property  in the  goods passed on to the dealers only on delivery of  the products  at their place of business and at no point of time prior thereto. This evidence had a material bearing on the case and deserved proper consideration and in the absence  of any rebuttal should have been considered i n its correct  perspective. The  Municipal Corporation took no steps to  produce any  material to show that the delivery of the goods  outside the  municipal limits was not at the risk and responsibility of the IOC.[72-C-D, G;74-G-H; 75-A] 3.1. Since  the IOC  has collected the octroi duty from its dealers and agents who have in turn passed on the burden to the  consumer, there is no equity in favour of the IOC to claim a refund of the same. [77-B-C] 3.2 The  appellant shall  not be entitled to any refund of the          octroi duty already deposited by it with the Municipal Corporation.  The IOC  shall not  be liable to pay the octroi  duty ,  in respect of such transaction in future only on  the condition  that it  does not collect any octroi duty from  its dealers  or agents  in  respect  of  the  re- exported goods  at the  time of  their appropriation outside the municipal limits. Should the IOC collect any such octroi duty from  its dealers  or agents, it shall remain liable to deposit the  same with  the Municipal  Corporation and shall not retain  any such octroi duty for its own benefit. [77-C- E]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 46 of 1990. Form the  judgment and  order dated 2.6.89 of the Punjab and Haryana High Court in C.W.P. No. 3361 of 1984. A.N Haksar,  Ms. Ritu  Bhalla and  S.S Shroff  for       the Appellant. G.L Sanghi,  V.C. Mahajan, S.K Metha, Aman Vachhar, Tajinder Singh  Dobia   and  Ms.   Kamini  Jaiswal   (N.P)  for   the Respondents. The Judgment of the Court was delivered by      DR. A.S.  ANAND, J.  The controversy in this appeal, by special leave, directed against the judgment of the Division bench of  the Punjab  and Haryana  High Court,  dated 2nd of June 1989  in Writ  petition No.  3361 of  1984,  is  rather limited.      The appellant  (hereinafter IOC)  set  up  a  pipe-line terminal and  LPG bottling  plant at  Suchi Pind in District Jullundhar. In 1983, the limits of the respondent, Municipal Corporation   Jullundhar,    (hereinafter   the    Municipal Corporation) were  extended and  depot of the appellant came to be  included within  the municipal  limits. The appellant

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transports through  underground pipelines  various petroleum products to  its depot  situated within the municipal limits of the  Municipal Corporation.  These petroleum products are meant:      (i) either  for use  or consumption      by the IOC within the limits of the      Municipal Corporation; or      (ii) for  sale by  IOC  though  its      dealers   or    by    itself    for      consumption   within   the   octroi      limits, by  persons other  than the      IOC; or      (iii) for  sale by  the IOC through      its dealers or by itself inside the      octroi limits and the vendee, after      completion  of   sale,  take  those      production  outside     the  octroi      limits  to   outside    the  octroi      limits    for    sale,    use    or      consumption; and      (iv) for export by the IOC from its      depot inside  the octroi  limits to      outside the  municipal  limits,  to      its  dealers   for  sale,  use  and      consumption by  persons other  than      the  IOC,  out  side    the  octroi      limits.      The Municipal  Corporation raised  a demand  on the IOC for octroi for the period September 7,1983 to May, 1984. The demand  was  to  the  tune  of  Rs.  40,26,230.17.  The  IOC challenged the  demand notice  by filing  a writ petition in the High  Court of  Punjab and  Haryana. Since  the IOC  had approached  the   High  Court   with  first  exhausting  the statutory remedies  under the Punjab Municipal Act, The High court allowed the appellant to file a statutory appeal under the Act  against the  demand  notice  before  the  Appellate Authority, Commissioner  of Jullundhar Division and kept the writ petition pending. The High Court, however, directed the IOC to  deposit arrears  of octroi duty in order to avail of the remedy  of statutory appeals and commanded the Appellate Authority to  hear the  appeals in accordance with law after condoning     the  delay  in  the  filing  of  the  appeals. Accordingly, after  the deposit  of the  arrears  of  octroi duty, the appeals were filed before the Appellate Authority, Commissioner Jullundhar  Division, Jullundhar.  The appeals, after a  contest on  merits, were dismissed by the Appellate Authority. The  IOC thereafter amended the writ petition and also challenged  the order of the Appellate Authority before the High Court.      In the writ petition, the IOC inter alia challenged the validity of section  113 of the Punjab Municipal Corporation Act, 1976  on the  ground that it had authorised the levy of octroi on articles and animals imported within the municipal limits of  the corporation  without any reference to the use consumption or  sale of  the said  goods as being beyond the power of the state Legislature. Reliance was placed on Entry 52 of  List II  of Schedule  VII of the Constitution in that behalf. The  IOC did not dispute its liability to pay octroi duty in relation to the first three categories noticed above but  it   only  disputed  the  authority  of  the  Municipal Corporation to  impose and demand octroi duty in relation to the  first  three  categories  noticed  above  but  it  only disputed the  authority  of  the  Municipal  Corporation  to impose and  demand octroi  duty on  the  petroleum  products imported by  the IOC  within the  limits of  the Corporation

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which are only exported to its dealers at their sale point s situated outside  the area of the Municipal Corporation. The IOC with  in the  limits of  the corporation  which  are  on exported to  its  dealers  at  their  sale  points  situated outside the  area of  the Municipal  Corporation. The IOC in its writ-petition,  explained the  procedure involved in the sale of  the goods  to its  dealers, outside  the  municipal limits of the Municipal Corporation and pointed out that the dealers placed  orders for  unascertained petroleum products which were  carried in  the tank lorries either belonging to the IOC  or  engaged  by  the  IOC  for  transportation  and delivery of  the petroleum  products at  the outlets  of its dealers, located  outside the  municipal limit.  The precise case of  the appellant-IOC  was that the property in such of the petroleum  products passes  to the dealers only at their premises and not at      the depot of the IOC and, as such it could not be said that any transaction takes place within the municipal  limits of  the Municipal  corporation for the use, consumption or sale of the imported petroleum products. It was  emphasised  that  the  petroleum  products  in  such transactions  only   entered  the   area  of  the  Municipal Corporation for  the purpose  of being  re-exported  to  the place of business of its dealers/ agents and it was asserted that the   transaction  could not  attract imposition of any octroi duty  for no  ‘sale, use  or consumption’  took place within the octroi limits.      The case  of the  Municipal Corporation  on  the  other hands as  pleaded and  argued before the High Court was that though no  octroi duty  is leviable  or lived  in respect of articles brought  by the  IOC within the municipal limits of the  Municipal   corporation   for   purposes   other   than consumption use or sale therein, transactions in the instant case by  the IOC were sale, simplistor at their depot within the municipal  limited of  the Corporation and the export of the goods  to the premises of the dealers outside the octroi limits was  of no consequence. Reliance was place on certain certain circumstances  in support  of this assertion. It was pointed out  by  the  Municipal  Corporation  that  the  IOC receives payment  in advance  either in  cash or  through  a demand-draft, as the sale proceeds, from its various dealers at its  depot situated  within the  municipal limits  of the Corporation; that the IOC also collects the local taxes etc. like the Sales Tax and MST from the dealers at their depots; that the  IOC  also  collects  delivery  charges  (based  on kilometres covered)  from its  dealers at its dealers at its depot for  transportation of  the products  and  from  these circumstances it  was sought to be argued that the ’sale’ to the dealers  was complete within the municipal limits of the Corporation and  the export  of goods  after  the  sale  was complete could  not effect the levy and collection of octroi duty and  it was argued that the IOC could not either in law or in equity retain the octroi duty so collected.      The  High  court  noticed  that  the  parties  were  at variance  as  to  whether  the  property  in  the  goods  is conditionally appropriated  to the contract and passed on to the buyer  at the  depot of  IOC at  Jullundhar  or  at  the dealers outlets  and after  considering the submissions made and the  pleadings of  the parties held that the property in the goods  passed on  to the  dealers as  and when the goods were laden  in the  tank  lorries  and  that  the  sale  was complete at  the depot  of the  IOC and that it did not take place at  the respective  places of  business of the dealers and as such octroi duty was rightly levied and demanded.      The High  Court  after  extracting  the  provisions  of section 113  of the  Municpal Act and Entry 52 of List II of

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the VII schedule, which read thus:      "113. Levy  of octroi.-  Except  as      hereinafter      provided,      the      Corporation shall  levy  octroi  on      articles and  animals imported into      the city,  at such  rates as may be      specified by the Government".      Entry 52 of List II provides:      "Taxes on  the entry  of goods into      the local area for consumption, use      or sale therein."      opined that  the words  and phrases employed in section 113 of  the Municipal  Act were  of wide content and general connotation and since the power of the state Legislature are circumscribed  by   List  II   of  schedule  VII  the  state Ligislature could  not empower  the municipal  committees to levy tax  only on  the entry  of goods within the local area when those goods were not meant for consumption, use or sale within that  area. It  rightly held that the    authority of the state  Legislature in  those matters  is subject  to the restrictions imposed  by Entry  52 and since source of power of section  113 of  the Municipal  Act is traceable to Entry 52, the  wide  language  employed  in  section  113  of  the Municipal Act  had to  be  read  down  to  mean  that    the Municipal corporation  could levy  octroi  on  articles  and animals imported  into a  local area for consumption, use or sale therein and construing the provisions of section 113 in that  manner held the same to be intra-vires.      We are  in agreement  with  the  High  Court  that  the provisions of  section 113  of the  Municipal  Act  are  not beyond the  competence of the state Legislature and the same are to be read alongwith Entry 52 of List II of schedule VII of the Constitution.      Entry  of   goods  within   the  local   for  area  for consumption, use  or sale  therein is  made taxable  by  the state Legislature  on the  authority of  Entry  52  of  List legislature and  it obviously cannot have any authority more extensive than the authority of the state Legislature. since the state  Legislature  in  view  of  Entry  of  goods  for" consumption use or sale’ into a local area, the municipality cannot under  a legislation,  enacted  in  exercise  of  the powers conferred  by Entry  52 of List II, have the power to levy tax  in respect of good brought into the local area for purposes other than consumption, use or sale. section 113 of the Act has, therefore, reasonably to be read subject to the same limitation  as are  contained in Entry 52 of to be read subject to  the same limitation as are contained in Entry 52 of List  II of  schedule VII. The expression " imported into the city"  used in  section  113  of  the  Act,  as  meaning "imported into  the city  for any  purpose and  without  any limitation", would  amount to attributing to the legislature an intention  to give  a go-by to the restrictions contained in   Entry 52  of List  II. That  is  not  permissible.  The expression  "  imported  into  the  city"  in  section  113, therefore, has  to be interpreted as meaning " imported into the municipal  limits for  purpose of  consumption,  use  or sale" only.  thus, construed  in the  limited sense, section 113 of the Municipal Act is not ultra vires Entry 52 of List II of  Schedule VII.  In fairness to the learned counsel for the appellant,  it must  be recorded,  that the  finding the High court  regarding vires  of section 113 of the Municipal Act was not seriously questioned before us.      There is  no dispute  before us  on  the  legal  issue, namely, that  no octroi is leviable on the goods re-exported by the  IOC from  its depot  inside  the  octroi  limits  to

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outside such  limits to  its dealers  where those  goods are meant ’for  use,  consumption  or  sale’  by  the  consumers outside the octroi limits.      The only  controversy before  us is  whether        the transaction  within   the  municipal   limits  reflected  in category (4)  above, in  the facts  and circumstances of the case, can  be treated to be sale to the dealers at the depot or is  only in the nature of  re-export. Learned counsel for the respondent-Municipal Corporation did not dispute that if the transaction  is only  in the  nature of re-export, it is not exigible  to the levy of the octroi duty but he asserted that the  finding recorded  by the High Court on that aspect did not call for any interference and that the nature of the transaction could not call for any interference and that the nature of  the transaction  could not  be said  to  be  ’re- export’      With a  view to  resolve the controversy, we shall have to examine  the   agreement executed between the IOC and its dealers and  other relevant  material  produced  before  the authorities as also the pleadings of the   parties. We must, however, hasten  to add  that the pleadings, both before the High Court  as also  before the  appellate  authority,  were neither clear non specific on this issue and left much to be desire.  But  mere  vagueness  of  the  pleadings  or  their confused state  cannot relieve  us of our obligation to sift the  material   and  ascertain   the  true   nature  of  the transaction.      The High  Court referred  to the copy of the Memorandum of Agreement between the IOC and its dealers, which had been filed by  the Municipal  corporation as  Annexure R-7 to the written statement  and observed  that the  agreement did not contain any  clause which  could lead to the conclusion that the property  in the  goods did not pass to the dealers when the goos  contacted to  br supplied  were separated from the main bulk and located in the tank lorries. Observed the High Court  that  the    goods,  on  their  separation  from  the unascertained bulk,  became ascertained and  the property in such ascertained  goods passed  on to the dealers as soon as they got  ascertained., The  High Court also opined that the terms of  the  contract  did  not  lend  themselves  to  the construction  that   the  property  in  the  goods  was  not transferred to the dealer at the time the  goods were loaded in the tank lorries for transmission to the buyers. It found that the IOC had not placed on the file any document to show that the  IOC had  reserved the  right of    disposal of the goods even  after they had been delivered to the carrier for the purpose  of supply to the buyer which could have altered the nature  of the  transaction. Relying  upon the bills and cash memos  prepared and  the payments  received by  the IOC within the  municipal limits  of Jullundhar,  the High Court held that  the sale was complete at the depot of IOC and did not take  place at  the respective places of business of the dealers outside  the municipal  limits. The  Court held that the property in the goods passes to the dealers at the depot of IOC  and rejected  the case of the IOC to the effect that the property  in the  goods passes  to the  dealers only  on their delivery  at the  place at  the time of delivery only. The High court then went on to say that since the goods were not re-export  as contended by the IOC, it was liable to pay the octroi  duty on  the sale  of  their products within the municipal  limits   of  Jullundhar   Municipality  to  their dealers, irrespective  of the  fact whether  the goods  were ultimately sold, used and/or consumed by persons, other than the IOC and the dealers, outside the municipal limits.      In our  opinion, the  circumstances relied  upon by the

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High Court  to  negative  the  case  of  the  IOC  were  not sufficient much  less clinching  to come  to the  conclusion that the  transaction, as  per the  fourth category,  in the facts and circumstances of this case, was not ’re-export’.      From a perusal of the order of the appellate authority, we find  that some  affidavits had  been filed by the IOC of their dealers to establish that the title in the property of the goods  passes on  to the dealers only after delivery and till that  time the  goods remained in the ownership of IOC. In reply,  the  Municipal  Corporation  had  only  submitted before the appellate authority that the affidavits were ’not correct’  and  that  it  had  been  wrongly  stated  in  the affidavits that  the petroleum products were supplied at the responsibility of  IOC or  that any  loss or  damage in  the transportation was  to be  made good  by the  IOC till  they reach the  dealer. No  material was  placed by the Municipal Corporation  to   controvert  the   averments  made  in  the affidavits of the dealers. The appellate authority, however, did not  express any opinion on the correctness or otherwise of those  affidavits. it  virtually ignored the same without assigning any reasons. much less satisfactory ones. Even the High Court  did  not  advert  to,  much  less  consider  and discuss, the  effect of  the affidavits. In the affidavits , it had  been clearly  stated that the goods were transported from the  depot to the outlets of the dealers at the risk of IOC and  the property  in the goods palled on to the dealers only on  delivery of the products at their place of business and at  no point  of time prior thereto. This evidence had a material being on the case and deserved proper consideration and  in  the  absence  of  any  rebuttal  should  have  been considered in its correct perspective. IN the writ petition, in para(5)  also, it had been asserted by IOC that the goods were sold  outside the municipal limits and delivered to the dealers at  the risk  and responsibility of the IOC. In para (ii) of the writ petition also, it was averred as follows:      " It  is, thus, clear that there is      neither any consumption nor sale of      the said quantity within the octroi      limits    of     the     respondent      Corporation,  and   the  respondent      Corporation cannot  make  a  demand      for octroi."      While reply  to paragraph  5 of  the writ  petition was simply to  the effect  that contents  were ’not correct’ the reply to  paragraph (ii)  in the  counter affidavit also did not controvert  the position  and the  Municipal Corporation remained content  by stating  that "the  IOC be  directed to place on  record documents and bills through which the sales are conducted’.  The Municipal  Corporation was aware of the affidavits which  had been  filed by  the dealers before the appellate authority  yet it  took no  steps to  produce  any material to  show that the delivery of the goods outside the municipal limits  was not  at risk and responsibility of the IOC. Reference  in this  connection may  also be made to the replication/rejoinder,  filed   by  IOC   to   the   written statement, in which inter alia it was stated:      " It  may again  be mentioned  here      that   transit    loses   is    the      responsibility  of  the  petitioner      Corporation and the dealer measures      the quantity received by him at his      destination and  claims credit  for      the short  fall. In  fact,  at  the      delivery voucher  the shortages  is      recorded as  is clear from Annexure

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    P-7. There are many other incidents      where for  shortage credit has been      given to  the dealer and also where      the supplies have been diverted. It      is  incorrect   to  say   that  the      transportation  is   done  by   the      dealers and  they  have  their  own      arrangements for  the said purpose.      The transportation  is done  by the      Indian oil  Corporation and  by the      transport contractors of the Indian      oil   Corporation..........It    is      absolutely  incorrect   to  suggest      that the  supplies are insureds and      that insurance  premium is  paid by      the  carriers.   The  supplies  are      never  insured.   Of  course,   the      vehicles are  insured and insurance      premium is paid by the owner of the      vehicle it  is, therefore, wrong to      assert that  the sale  takes  place      within the  municipal  limits.  The      Municipal Corporation  has no right      to  levy  octroi  on  the  supplies      which are neither consumed nor used      or  sold   within  its  territorial      limits."      Indeed the  pleadings, as  already observed,  are vague and nonspecific  but the  High Court  did not  deal with the pleadings at  all and  dismissed the case of the petitioners by simply  stating that  " we  are not impressed". We cannot concur  with  the  approach.  The  High  Court  should  have considered the  totality  of  the  material  on  the  record including the  pleadings and  other material  on the  record including the pleadings and other material, before coming to any final  conclusion. The  observation that  the  agreement (Ex. R-7)  did not  have any  clause from  which it could be said that  the title in the goods passed on at the outlet of the dealers  or that the IOC was under no obligation to make good any  loss incurred  during transportation  of the goods from the  depot to the places of business of the dealers, is not justified  on a  careful reading  of the  terms  of  the agreement. The  terms of the agreements executed between the IOC and  its dealers (Ex. R-7) and particularly paras 25, 26 and 34 which read as follows:      " 25.  The quantities  of petroleum      and other allied products stated to      be delivered  by the Corporation as      measured  by     the  Corporation’s      measuring devices of means shall be      final and  binding upon the parties      hereto. A  receipt signed  by or on      behalf of the Dealer at the time of      delivery  by   the  Corporation  of      petroleum    products    will    be      conclusive   evidence    that   the      products mentioned  therein were in      (accord)  with   the  specification      therefor  mentioned  hereunder  and      that   the   quantities   of   such      mentioned  in   the   receipt   are      correct,  and   the  Dealer   shall      thereafter be  precluded  from  any      claim against  the Corporation  for      compensation or  otherwise  on  the

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    ground of short (quantification) of      such products.      26. The Dealer shall be responsible      for all loss, contamination, damage      or shortage  of or to  the products      whether partial  or entire  and  no      claim will  be entertained  by  the      Corporation  therefore   under  any      circumstances except in cases where      the Corporation  is satisfied  that      loss  arose   from   leakage   from      underground tank or pipes which the      Dealer could  not  reasonably  have      discovered and  of which the Dealer      gave  immediate   notice   to   the      corporation on discovery.      34. All expenses in connection with      or  incidental   to  the   storage,      handling, sale  and distribution of      the Corporation’s products shall be      done  by  the  Dealer.  The  Dealer      shall be solely responsible for the      payment  of  all  local  and  other      taxes in respect of the sale of the      Corporation’s products."      lend credence  to the  case as set up by the IOC and go to show  that in respect of the goods which were re-exported by the  IOC to its dealers outside the municipal limits. the risk, till  the delivery of the goods at the premises of the dealers, continued  to remain  with the  IOC which  was also obliged to  make good  any loss  during transit and therefor the transaction  by the  IOC with  the dealers  or agents as reflected in  category four  (supra) did  not amount  to any sale at  the  depot  within  the  municipal  limits  of  the Municipal Corporation.  The  High  court  did  not  consider various clauses of the agreement referred to herein above or the effect  of the  affidavits which  had been  filed by IOB before  the   Appellate  Commissioner   or  the  categorical statement in  the writ  petition and    rejoinder affidavit, showing that  the risk  till delivery of the products to the dealers continues  to remain  with the IOC and the goods are re-exported at  the risk  of the  IOC and not at the risk of the dealers while rejecting the case of the IOC.      In Burmah-shell  oil storage  and Distributing  Co.  of India  Ltd.,   Belgaum.  v.  Belgaum  Borough  Municipality, Belgaum, AIR  1963 SC 906 a somewhat similar question arose. A Constitution  Bench of  this Court  held that  the company which dealt with petroleum products was liable to pay octroi tax on  goods brought into the local area (a) to be consumed by itself  or sold  by it  to consumers  and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal  limits irrespective of whither such consumers brought him  for use  in the area or outside it but that the company was " not liable to octroi in respect of goods which it brought into the local area and which were re-exported."      Again, in  Municipal Council,  Jodhpur  v.  M/s  Parekh Automobiles Ltd.  and ors.,  [1990]1 SCC  367,  the  precise question which  was involved  was as  to whether  octroi was leviable on  the goods imported within the municipal limits, stored in  its depot there and exported therefore for use or consumption of  the ultimated consumer outside the municipal limits. That  case related to the sale of petroleum products by the  IOC   from its  depot within the municipal limits of Jodhpur, Rajasthan,  to its  dealers outside  the  municipal limits. After considering the facts and circumstances of the

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case  and   various  clauses  of  the  agreement  (which  is identical to  the agreement  in the present case) Sabyasachi Mukharji, J.  (as is  Lordship then was) dealt with the case put by  the Indian  oil Corporation  Respondent  No.  2  and Noticed:      " According to respondent 2, it had      allotted  the   retail  outlets  to      various  dealers   under   dealer’s      agreement. Under  the terms  of the      said agreement,  respondent  2  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 and  obtained the signatures      of the dealers of the retail outlet      in token  of  he  delivery  of  the      goods and  till the  supplies  were      made at  the destination  the goods      were at  the risk  of respondent 2.      It   was    further   alleged    by      respondent 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 re  tail 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      respondent 2’s  account in the bank      unless  they  were  allowed  credit      facilities but  the sale took place      only whin  respondent  2  delivered      its products  at the dealers retail      outlets   outside   the   municipal      limits as  per  the  terms  of  the      dealer’s 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 consumed or used.."      The Court  then referred  to the  finding of  the  High court that  the Municipal  Corporation had  no  jurisdiction levy octroi  on the  goods  so  exported  and  accorded  its approval of  that finding.  It upheld  the order of the High court restraining  the Municipal  Corporation to levy octroi on goods re-exported by IOC to its dealers or agents for the use of  ultimate user outside the octroi limits of Municipal Corporation.      Both the above noted judgments clearly support the case of the appellant.      On  a   consideration  of   the  peculiar   facts   and circumstances of  the case,  we are of the opinion that both the judgments  of this  Court, noticed  above,  have  direct

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application to  the facts and circumstances of this case. On the basis  of the  material on record, we are satisfied that the transaction  covered by  category (4) above, viz., where the petroleum  products transported  to the depot of the IOC are meant for export from its depot inside the octroi limits to outside the municipal limits to its dealers for sale, use and consumption  of re-export  and that the appropriation of the goods  does not  take place  at the  depot  but  at  the outlets of  the dealers  or the agents outside the municipal limits. The  octroi duty  is , therefore, not chargeable  on such a  transaction. The  levy and  collection of the octroi duty  on   such  goods  by  the  Municipal  Corporation  is, therefore, not justified. The judgement in writ petition No. 3361 of  1984  is,  therefore,  set  aside  and  the  appeal accordingly allowed but without any as to order as to costs.      Before parting  with the appeal, we would however, like to take  note of  the  submission  made  on  behalf  of  the Municipal Corporation  with regard      to  the question  of refund  of   the  octroi  duty,  already  deposited  by  the appellant. The  question of  refund, in our opnion, does not arise. The  IOC has  collected  the  octroi  duty  from  its dealers and agents, who have in turn passed on the burden to the consumer. Thus, having collected  the octroi duty, there is no  equity in  favour of the IOC to claim a refund of the same. Learned  counsel for  the appellant also conceded that the question  of refund,  in the  facts and circumstances of the case,  does not  arise and  we, therefore, hold that the appellant shall  not be entitled to any refund of the octroi duty, already  deposited by the appellant with the Municipal Corporation. We  also clarify  that the  IOC  shall  not  be liable to pay the octroi duty, in respect of the transaction covered  by   the  4th  category,  hereafter,  only  on  the condition that the IOC does not collect any octroi duty from its dealers or agents in respect of the re-exported goods at the  time  of  their  appropriation  outside  the  municipal limits. Should the IOC collect any such octroi duty from its dealers or  agents, it  shall remain  liable to  deposit the same with  the Municipal  Corporation and  shall not  retain such octroi duty for its own benefit. R.P. Appeal allowed.