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PETITIONER: MAN MOHAN TULI

       Vs.

RESPONDENT: MUNICIPAL CORPORATION OF DELHI & ORS.

DATE OF JUDGMENT18/02/1981

BENCH: FAZALALI, SYED MURTAZA BENCH: FAZALALI, SYED MURTAZA KOSHAL, A.D. VARADARAJAN, A. (J)

CITATION:  1981 AIR  991            1981 SCR  (2) 894  1981 SCC  (2) 467        1981 SCALE  (1)352

ACT:      Delhi Municipal  Corporation Act, 1957, section 158 and rule 26  of the  Terminal Tax  Rule framed  under  the  Act, interpretation of-Exigibility of Terminal Tax, explained.

HEADNOTE:      Man Mohan Tuli, appellant in C.A. 2004/80, is the owner of a  piece of land situate on the Grand Trunk Road near the sixth  milestone  as  one  goes  from  Delhi  to  Ghaziabad. Appellant Tuli has constructed various buildings on his land for use  as godowns  and has  rented  them  out  to  various transport companies  engaged in  bringing goods  from  other States and  storing them  before their transhipment to Delhi and other States beyond Delhi. The trucks carrying the goods for various  destinations pass  along the G.T. Road and move into Tuli’s land. After the trucks enter the land, the goods are unloaded  into the godowns, sorted out and reloaded into the  respective   trucks  meant  for  various  destinations. Thereafter, the  trucks move  out of  the land  and, passing through the  Union Territory  of Delhi  after  crossing  the border line,  proceed to  their destinations.  The Municipal Corporation of  Delhi by  its Orders  dated May 23, 1975 and July 7,  1975 directed that a Terminal Tax post be set up at the entrance to Tuli’s land in order to collect terminal tax on goods carried into that land. A writ was filed before the High Court  by the  owners of transport companies as also by Tuli for  quashing the  orders of the Corporation seeking to levy Terminal  Tax on  the goods  which were  not meant  for Delhi but  for places beyond Delhi. The High Court held that the Corporation was legally entitled to levy Terminal Tax at the point  of territory of the Union Territory of Delhi even though the  goods were  sorted out  in the  godown of  Tuli, resorted out  and re-loaded  since  as  they  while  passing through the  territory of Delhi undoubtedly entered the said territory. Hence  the appeals  by special leave by appellant Tuli and others.      Allowing the appeal in part, the Court ^      HELD: 1.  It is  well settled that taxing statutes must be strictly interpreted giving every benefit of doubt to the tax-payer. A  Terminal Tax  could  be  levied  only  by  the

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Corporation or  the State  which is the final destination of the goods sent from any other area. A Terminal Tax signifies that there  must be a terminus for the journey of the goods. Terminus means  the point  to which main action tends, goal, end, finishing  point, the point at which something comes to an end. [899 D, 901 B-D]      2.1 From  a consideration  of the  decided cases of the Supreme Court, the following propositions emerge:-      (i) Terminal tax and octroi are similar kinds of levies which are  closely interlinked  with (a)  destination of the goods (b) the user in the local area 895 on arrival of the goods. Where the goods merely pass through a local  area   without being consumed therein the mere fact that the  transport carrying the goods halt within the local area for  transhipment or  allied purposes would not justify the levy  of either the terminal tax or octroi duty. This is because the  halting of  the goods is only for an incidental purpose to  effectuate the journey of the goods to the final destination by  unloading, sorting  and reloading  them at a particular place. [803 A-C]      (ii) There  is a very thin margin of difference between a terminal  tax and  octroi.  In  the  case  of  the  former (terminal tax)  the goods  reach their final destination and their  entry  into  the  area  of  destination  immediately, attracts, payment  of terminal  tax  irrespective  of  their user. In  the case  of octroi, however, the tax is levied on goods for their use and consumption. [903 D-E]      (iii) But  at the same time, the goods while halting at a local  area should  leave for  their destination  within a reasonable time  which may  depend on  circumstances of each case and  if the  goods are  kept within the area for such a long and  indefinite period that the purpose of reaching the final destination  lying in a dicerent area is frustrated or defeated, they may be exigible to terminal tax. [903 E-F]      (iv) Where  the goods  enter into a local area which is also the  destination of  the goods  either  temporarily  or otherwise, the terminal tax would be leviable. For instance, if A consigns goods from Patna in Bihar to Delhi in the name of X  and X after having received the goods at Delhi rebooks or reloads  the same  on a  transport for  Chandigarh in the name of Y, terminal tax would be leviable by the Corporation at Delhi  because the  destination of the goods in the first instance was  Delhi and  that by  itself would  attract  the imposition of  terminal tax. The fact that X rebooks them to Chandigarh would  not make any difference because the act of rebooking by X at Delhi would constitute a fresh transaction by which  the goods after having been carried into Delhi are further exported  to Chandigarh.  On the  other  hand,  when there is  one continuous  journey of the goods from Patna to Chandigarh without any break, the final destination would be Chandigarh even  though the  goods may  have to be halted in Delhi for  the purpose  of unloading,  sorting and reloading and may  have to  be kept in Delhi for a reosonable time. In such a  case terminal  tax would  not be exigible. [903 G-H, 904 A-C]      Punjab Flour  & General  Mills v.  Lahore  Corporation, A.I.R. 1947  F.C. 14; The Central India Spinning & Weaving & Manufacturing Co.  Ltd., The  Empress Mills,  Nagpur v.  The Municipal Committee,  Wardha,  [1958]  SCR  1102;  Bangalore Woollen,  Cotton   &  Silk   Mills  Co.  Ltd.  Bangalore  v. Corporation of  the City  of Bangalore,  [1961] 3  SCR  707; Diamond Sugar  Mills Ltd.  & Anr.  v.  The  State  of  Uttar Pradesh, [1961]  3 S.C.R.  242; Burmah  Shell Oil  Storage & Distributing  Co.   India  Ltd.   v.  The   Belgaum  Borough

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Municipality, [1963] Supp. 2 SCR 216; Khyerbari Tea Co. Ltd. JUDGMENT:      Champlain Realty  Co. v. Town of Brattleboro, 67 L. Ed. U.S. 309, quoted with approval. 896      2.2. What would be a reasonable time for interpretation of the  goods or halting, in the instant case, at the godown of Tuli,  will naturally depend upon the special features or circumstances of each case, namely, the nature of the goods, the time  taken  in  loading,  sorting  and  unloading,  the obstacles  or   difficulties  which  may  be  faced  by  the transporters and  similar other factors. Normally, a time of two to  three days  or even  a week  should be sufficient to clear the goods for its journey to the ultimate destination. It may  sometimes happen  that goods  may have to be kept in the godowns  in the  territory of  Delhi for  circumstances, beyond the  control of  the consignee  or the consignor, for example,  a   garnishee  order.   In  considering   what  is reasonable time  these circumstances  would have to be taken into consideration. [906 H, 907 A-C]      2.3. Rule  26 of the Terminal Tax Rules will have to be interpreted on  the footing  that section  178 of  the Delhi Municipal Corporation Act, 1957 does not contemplate levy of terminal tax  for goods  meant for  destinations other  than Delhi. The word "immediately" appearing in Rule 26 has to be liberally construed  so as  to imply a reasonable period and if the export is delayed the rules may apply if a reasonable explanation has been given. So far as rules regarding taking of passes, etc., at the barrier are concerned they would, of course, apply  but subject  to the  conditions  under  which terminal tax  can be  imposed under  section 178  of the Act which is the main charging section. [907 C-E]      Amti Banaspati  Co. Ltd  v. The  Union of  India I.L.R. 1973 Delhi 237, distinguished.      3.1. Section  178 of  the Delhi  Municipal  Corporation Act, cannot  be interpreted  so as  to justify imposition of terminal tax  even on  goods which merely passed through the territory of  Delhi, although their destination is not Delhi but places beyond Delhi. [908 F-G]      3.2.  Merely   because  the  goods  after  having  been unloaded  in  the  godown  of  appellant  Tuli  are  sorted, reloaded in different trucks and thereafter pass through the territory of  Delhi, they do not become exigible to terminal tax. [908 G-H]      3.3. Rule  26 of the Terminal Tax cannot be interpreted so that  exemption could  be granted  only if  the goods are exported immediately  which means  within a  very short time irrespective of any other consideration. Terminal tax can be leviable only if it is proved that the goods remained at the godown for  an indefinite and unexplained period which could not be  said to  be reasonable in the circumstances. [908 H, 909 A-B]      3.4. Where  the goods  are carried  by trucks  into the territory of Delhi and unloaded there and are also meant for Delhi and  soon thereafter  may be re booked by the receiver of the  goods to  some other  place, terminal  tax would  be leviable  because  in  this  case  there  are  two  separate transactions-(i) by  which the goods are meant for Delhi and (ii) by  which after having reached and having been unloaded at Delhi they are rebooked and reloaded for some other place and which therefore is a fresh and different transaction. In such a  case, terminal  tax would  be leviable  at the entry point in the territory of Delhi. [909 B-C]      3.5. The  direction given  by the  High  Court  to  the Terminal Tax Officer to fix a reasonable time for unloading,

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sorting and reloading the goods which are 897 meant for  different destinations  taking into consideration the quantity  of the  goods. the time for unloading, sorting etc. and  for further  reloading and  transhipment should be done within  a time to be fixed by a Terminal Tax Officer is correct. [909 E-F]

&      CIVIL APPELLATE  JURISDICTION: Civil  Appeal Nos. 2004- 2005 Of 1980.      Appeals by  Special Leave  from the  Judgment and Order dated 13-10-1978  of the  Delhi High Court in LPA Nos. 73/77 and 103/77.      Madan Bhatia and Sushil Kumar for the Appellant in both the appeals.      R.B. Datar,  Lalit Bhardwaj  and Miss Madhu Mulchandani for Respondent Nos. 1-3.      P.R. Rao,  S.R. Venkataraman,  P.C. Kapur,  R.C. Bhatia and S.L.  Sharma for  Respondent No.  5 in  Civil Appeal No. 2004/80.      N.B. Sinha and S.K. Sinha for Respondent No. 4.      The Judgment of the Court was delivered by      FAZAL ALI,  J.  These  appeals  by  special  leave  are directed against  a Division  Bench  common  judgment  dated October 13,  1978 of  the High  Court of  Delhi by which the Letters Patent  Appeals were allowed and the impugned Orders dated May  23, 1975  and July 7, 1975 passed by the Terminal Tax Officer, Municipal Corporation of Delhi were quashed.      The facts  of the case lie within a very narrow compass and may  be summarized  as follows. Manmohan Tuli, appellant in C.A. No. 2004/80, is the owner of a piece of land situate on the Grand Trunk Road near the sixth milestone as one goes from Delhi  to Ghaziabad.  Appellant  Tuli  has  constructed various buildings  on his  land for  use as  godowns and has rented them  out to  various transport  companies engaged in bringing good  from other  States and  storing  them  before their transhipment  to Delhi  and other States beyond Delhi. The trucks  carrying the goods for various destinations pass along the  G.T. Road  and move  into Tuli’s  land. It is not disputed that after the trucks enter the land, the goods are unloaded into  the godowns, sorted out and reloaded into the respective trucks meant for various destinations. Thereafter the trucks  move out  of the  land and  passing through  the Union Territory  of Delhi  after crossing  the border  line, proceed to  their destinations. The Municipal Corporation of Delhi (hereinafter  referred to  as the Corporation,) by its Orders dated  May 23,  1975 and  July 7,  1975  (hereinafter referred to  as  the  "inpugned  orders’)  directed  that  a Terminal Tax  post be sets up at the entrance to Tuli’s land in order to collect 898 terminal tax  on goods carried into that land. The Ghaziabad Nagar Palika  also purported  to levy  terminal tax  on such goods but  this levy  was neither  assailed before  the High Court nor  has been  challenged before  us and  is therefore left out  of consideration. A writ was filed before the High Court by  the owners  of transport companies as also by Tull for quashing  the orders  of the Corporation seeking to levy terminal tax on the goods which were not meant for Delhi but for places  beyond Delhi.  Further details are not necessary for the decision of these appeals and both the appeals (C.A. Nos. 2004  and 2005 of 1980) will be disposed of by a common

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judgment.      The High  Court vide  the impugned  judgment was of the opinion that even though the goods were stored in the godown of Tull,  sorted out  and reloaded but as they while passing through the  territory of Delhi undoubtedly entered the said territory, the  Corporation was  legally  entitled  to  levy terminal tax  at the point of entry into the Union Territory of Delhi.  The case of the appellant was that the goods were not meant  either to  be used  or consumed  in Delhi nor was Delhi the final destination of the goods. It was a different matter that  as the  goods were  to be  sent to  destination beyond Delhi  the transport  carrying the goods had perforce to  pass  through  the  territory  of  Delhi.  It  was  thus contended that the goods were not carried into the territory of Delhi  but were  merely carried  through the territory of Delhi to  other destinations which were beyond Delhi. It was argued that  s. 178  of the Delhi Municipal Corporation Act, 1957 (hereinafter  referred to as the ’Act’) had in terms no application to  the case and that therefore the terminal tax imposed by the impugned orders was legally invalid.      The counsel for the respondent, however, submitted that even  though  the  goods  may  have  been  meant  for  other destinations but  as they  were unloaded  in the  godown and reloaded in  various trucks  and actually  entered into  the territory of  Delhi, they  were factually  carried into  the Delhi territory  and that  was  sufficient  to  empower  the Corporation to  levy the  terminal  tax.  According  to  the argument of the counsel for the Corporation, the question of destination was  not at  all  germane  for  the  purpose  of adjudicating the  competency  of  the  Corporation  to  levy terminal tax at the point of entry into Delhi.      Thus, the entire question turns upon the interpretation of s.178  of the  Act and  some Rules  framed under the Act. Relevant portion of section 178 runs thus:           "178(1). On and from the date of the establishment      of the  Corporation under  section 3,  there  shall  be      levied on all goods carried by railway or road into the      Union Territory of Delhi 899      from any  place outside  thereof, a terminal tax at the      rates specified in the Tenth Schedule."                                          (Emphasis supplied)      The crucial  words which  have to  be interpreted  are: ’goods carried  by railway  or road into the Union Territory of Delhi  from any  place outside  Delhi’. The contention of the appellant  is that  the words  ’goods carried  into  the Union Territory’ clearly indicate that the final destination of the  goods must  be Delhi and by virtue of this fact, the natural consequence  would  be  that  the  goods  should  be carried from other places either by rail or by road into the territory of  Delhi. This  argument was  reinforced  by  the words ’terminal  tax’ used  in s.  178 which  imply that the terminus of  the journey of the goods must be Delhi and only in that  event the  Corporation would be competent to levy a terminal tax. This argument was sought to be rebutted by the respondents on  the ground  that the words ’carried into the Union   Territory    of   Delhi’   should   be   interpreted independently and  literally so  as to indicate that even if the goods passed through Delhi, the moment they entered into the territory  of Delhi terminal tax became exigible. So far as this  aspect of  the argument is concerned, we are unable to accept  the same  because it  is well settled that taxing statutes must  be strictly  interpreted giving every benefit of doubt to the tax payer.      Before, however,  examining the  respective contentions

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of  the  parties  it  may  be  necessary  to  refer  to  the authorities dealing  with the  history of  terminal  tax  or octroi duty.  To begin  with, it  is not  disputed that  the power to  subject the  goods either to octroi or to terminal tax squarely  falls within entries numbers 52 and 56 of List II to  the Seventh  Schedule of  the Constitution. In Punjab Flour &  General Mills v. Lahore Corporation the Court while drawing a  distinction between the type of taxes referred to as terminal taxes in Entry No. 58 of List I of Schedule 7 to the Government  of India  Act, and those described as cesses in Entry No. 49 of List II thereof observed as follows:      "There appears to us a definite distinction between the      type of  taxes referred  to as  terminal taxes in Entry      No. 58  of List  I of  Sch. 7  and the  type  of  taxes      referred to  as cesses  on the  entry of  goods into  a      local area in Entry No. 49 of List II. The former taxes      must  be   (a)  terminal  (b)  confined  to  goods  and      passengers carried  by railway  or air.  They  must  be      chargeable at a rail or air terminus and be 900      referable  to   services  (whether   of   carriage   or      otherwise) rendered  or to  be rendered by some rail or      air transport  organisation. The  essential features of      the cesses  referred to  in Entry No. 49 of List II are      on the  other hand simply (a) the entry of goods into a      definite local  area and  (b) the  requirement that the      goods should  enter for the purpose of consumption, use      or sale  therein.... The  grounds of taxation under the      two  entries   are,  as   indicated  above,   radically      different, and  there is  no case  for suggesting  that      taxation under  the one  entry limits  or interferes in      any way with taxation under the other."      In The Central India Spinning & Weaving & Manufacturing Co.  Ltd.,  The  Empress  Mills,  Nagpur  v.  The  Municipal Committee, Wardha  this Court  examined  the  entire  matter exhaustively and after giving the history of terminal tax or octroi observed as follows:           "If ‘terminal’  besides the  above meaning  has an      additional meaning  also and that meaning signifies the      termini or  the jurisdictional  limits of the municipal      area even  then the  construction to  be placed  on the      term should  be the  one that favours the tax-payer, in      accordance with the principle of construction of taxing      statutes, which  must be strictly construed and in case      of  doubt   must  be   construed  against   the  taxing      authorities and  doubt resolved  in favour  of the tax-      payer."           ...                  ...                   ...      "The legislative  history of  this tax  thus shows that      octroi was  leviable on  the entry  of goods in a local      area when  the goods  were for consumption, use or sale      therein. The  substituted tax was terminal tax on goods      imported into  or exported  from a  local area  and  by      rules  this   tax  in  the  case  of  Wardha  Municipal      Committee  was   imposed  on  certain  class  of  goods      imported and on others exported by railway or road."           ...       ...       ...       ...      "That by  the substitution  of terminal  tax  on  goods      imported into  a local  area the  nature of the tax had      not been  altered from  what it  was when octroi was in      force or when instead of "terminal tax" octroi (without      refund) was substituted ..... Therefore terminal tax on      goods imported  or exported is similar in its incidence      and is payable on 901

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    goods on  their journey  ending  within  the  municipal      limits or  commencing therefrom and not where the goods      were merely in transit through the municipal limits and      had their terminus elsewhere."           ...                   ...                ...      "Therefore, according  to the  Federal Court "terminal"      has reference  to the  terminus of  the railway or air,      i.e., the end of journey."      A close  analysis of  this decision,  therefore clearly discloses that a terminal tax signified that there must be a terminus for  the journey  of the goods. The word ’terminus’ according to  Oxford Dictionary means-a point situated at or forming the  end or  extremity of something, situated at the end of a line of railway. In other words, terminus means the point to  which main  action  tends,  goal,  end,  finishing point, the  point at  which something  comes to  an end.  In Corpus Juris  Vol. 62  at p.  729  the  word  ’terminal’  in connection with  transportation means the fixed beginning or ending point  of a  given run.  It would  thus appear that a terminal tax  could be levied only by the Corporation or the State which  is the final destination of the goods sent from any other area.      A similar  view was  taken by  a later decision of this Court in  Bangalore Woollen,  Cotton &  Silk Mills  Co. Ltd. Bangalore v.  Corporation of  the City  of  Bangalore  where Kapur, J., speaking for the Court observed as follows:           "The history  of these  taxes therefore shows that      in the  Devolution Rules  under the Government of India      Act, 1915 octroi, terminal tax and taxes on professions      and callings  were three  distinct heads  of taxation..      Therefore, when s. 142-A was added in the Government of      India Act,  1935, its operation was limited to entry 46      of List II and had no reference to entry 49 which deals      with cesses  on entry  of goods. The position under the      Constitution is  exactly the same and therefore neither      s. 142-A  of the Government of India Act, 1935 nor Art.      276 has  any effect  on entry  49 in  the Government of      India Act, 1935 or entry 52 in the Constitution."      In this  case also a distinction between a terminal tax and octroi  was clearly  brought out. In Diamond Sugar Mills Ltd. &  Anr. v.  The State  of Uttar  Pradesh &  Anr.  while defining a local area within 902 the meaning  of Entry  52 of  List II of Seventh Schedule to the Constitution, the Court observed as follows:      "We are  of opinion  that  the  proper  meaning  to  be      attached to  the words  ’local area’ in Entry 52 of the      Constitution, (when  the area  is a  part of  the State      imposing the  law) is  an area  administered by a local      body like  a municipality,  a district  board, a  local      board, a union board, a Panchayat or the like."      In Burmah  Shell Oil  Storage &  Distributing Co. India Ltd. v.  The Belgaum  Borough Municipality  this Court again fully discussed  the matter  and Hidayatullah,  J., speaking for the  Court stressed  the essential  distinction  between octroi and terminal tax in the following words:      "Octrois and terminal taxes were different taxes though      they resembled  in one  respect, namely, that they were      leviable in respect of goods brought into a local area.      While terminal  taxes were  leviable on goods ’imported      or exported’ from the Municipal limits denoting thereby      that they  were connected  with the  traffic of  goods,      octrois, according  to the  legislative  practice  then      obtaining were,  leviable in  respect of  goods brought      into a Municipal area for consumption or use or sale.

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              ..             ..             ..           The history  of these two taxes clearly shows 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 consumption,  use or  sale.   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."      In Khyerbari  Tea Co. Ltd. & Anr. v. The State of Assam Gajendragadkar, J.  speaking for  the Court  drew a very apt distinction regarding  the concept of import and observed as follows:-      "In that  connection, the  legislative history  of  the      octroi duty  was examined  and it  was  held  that  the      concept of  import requires  that the  goods which  are      brought into  must mix up with the mass of the property      in the  local area  where the goods are alleged to have      been imported.  If the  goods are  just carried and not      mixed with the mass of the property in the area through      which they are carried, they cannot be said 903      to have  been imported  into that area........ The word      "carried" is  of much wider denotation, and it would be      unreasonable  to   limit  its   scope  by   introducing      considerations which  are relevant  in dealing with the      question of import."      Thus, from  a consideration  of the  cases cited above, the following propositions emerge:-           (1)  Terminal tax  and octroi are similar kinds of                levies which are closely interlinked with (1)                destination of the goods, (2) the user in the                local area on arrival of the goods. Where the                goods  merely   pass  through  a  local  area                without being  consumed therein the mere fact                that the  transport carrying  the goods  halt                within the  local area  for  transhipment  or                allied purposes would not justify the levy of                either the  terminal tax or octroi duty. This                is because  the halting  of the goods is only                for an  incidental purpose  to effectuate the                journey of the goods to the final destination                by unloading, sorting and reloading them at a                particular place.           (2)  There is  a very  thin margin  of  difference                between a  terminal tax  and octroi.  In  the                case of  the former  (terminal tax) the goods                reach their final destination and their entry                into  the  area  of  destination  immediately                attracts payment of terminal tax irrespective                of their user. In the case of octroi, however                the tax  is levied on goods for their use and                consumption.           (3)  But at the same time, the goods while halting                at  a  local  area  should  leave  for  their                destination within  a reasonable  time  which                may depend  on circumstances of each case and                if the  goods are  kept within  the area  for                such a  long and  indefinite period  that the                purpose of  reaching  the  final  destination                lying in  a different  area is  frustrated or                defeated, they  may be  exigible to  terminal                tax.           (4)  Where the goods enter into a local area which                is also  the destination  of the goods either

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              temporarily or  otherwise, the  terminal  tax                would  be   leviable.  For   instance,  if  A                consigns goods  from Patna  in Bihar to Delhi                in the  name of X and X after having received                the goods  at Delhi  re-books or  reloads the                same on  a transport  for Chandigarh  in  the                name of  Y, terminal tax would be leviable by                the Corporation at Delhi because the goods in                the first  instance was  Delhi  and  that  by                itself  would   attract  the   imposition  of                terminal tax. The fact that X 904                rebooks them to Chandigarh would not make any                difference because  the act of rebooking by X                at Delhi would constitute a fresh transaction                by which  the goods after having been carried                into   Delhi    are   further   exported   to                Chandigarh. On  the other hand, when there is                one continuous  journey  of  the  goods  from                Patna to  Chandigarh without  any break,  the                final destination  would be  halted in  Delhi                for the  purpose of  unloading,  sorting  and                reloading and  may have  to be  kept in Delhi                for  a   reasonable  time.  In  such  a  case                terminal tax would not be exigible.      These principles are also spelt out by the American law on the  subject which  deals with  inter-state transport  of goods. In  American Jurisprudence  (2d, Vol. 15, p.689, para 49) the following statement is made, which is spelt out from various American  decisions  including  those  of  the  U.S. Supreme Court:           "In the  determination of whether a transportation           of persons  or property  constitutes interstate or           intrastate commerce,  the essential  character  or           unity of  the movement  is  the  decisive  factor,           While the intention of the shipper or passenger is           probably  the  most  important  single  factor  in           determining whether  transportation is  interstate           or intra-state  intention alone  has been said not           to  be   a  controlling   factor  in  making  such           determination.  Inter-state  journeys  are  to  be           measured by  the commonly  accepted sense  of  the           transportation concept........The  parties cannot,           by descriptive  terms of contract, convert a local           business, serving as an agency of a transportation           company, into  an  interstate  commerce  business,           nor,  conversely,   may  a   through  shipment  be           transformed into intrastate commerce by separating           the rate  into its component parts, charging local           rates, and issuing local waybills"      Similar observations are to be found in the same volume of American  Jurisprudence (p. 697, para 56) which relate to the continuity  of transit  of goods,  and may  be extracted thus:           "The crucial question to be settled in determining           whether Personal  property  moving  in  interstate           commerce is  subject to  local taxation is that of           its continuity  of transit and this question is to           be determined  by various factors, among which are           the intention of the owner, the control he retains           to change destination.  the agency by 905           which the transit is effected, and the occasion or           purpose of  the interruption  during which the tax           is sought  to be  levied, Intent,  while not alone

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         conclusive, is  probably the most important single           determinant of continuous carriage.                If a  break  in  the  interstate  journey  is           caused by  the exigencies  or conveniences  of the           safety of  the   goods during  transit, or natural           causes over which the taxpayer has no control, the           continuity of the transit remains unimpaired".           The following  statement of law occurs in the same      volume(para 57, p. 698):-                "If during transit, property is stored for an           indefinite time  for other  than natural causes or           for   lack    of    facilities    for    immediate           transportation, it  is subject  to state  or local           laws, including  inspection laws......On the other           hand, if  the entry of goods into a warehouse is a           convenient in  termediate step  in the  process of           getting them  to  their  final  destination,  they           remain in  interstate or  foreign  commerce  until           they reach those points".      In  the  case  of  Champlain  Realty  Co.  v.  Town  of Brattleboro one  important aspect  of the  matter  has  been dealt with,  viz., the  fact that  if the  goods halt  in an intermediate  State   whilst  on   their  journey  to  their destination for  a long  period due  to circumstances beyond the control  of the owner, whether or not the goods lose the nature of  the interstate transaction and could be free from the state  taxation, was clearly highlighted by he following observations:-           "Longs of  pulp wood  which have  been placed in a      river  to   be  floated   into  another  state  are  in      interstate commerce,  so  as  to  be  free  from  state      taxation, although,  because of  the high  water  in  a      connecting river  into which they will ultimately pass,      it is  unsafe to  permit them  to enter that river, and      they are  temporarily held  in a boom near the mouth of      its tributary".      In the  same case,  C.J.  Taft  indicated  the  various aspects of  interruptions in   the journey and the incidence thereof and observed as  follows:-           "The doubt  arises when there are interruptions in      the journey, and when the property, its transportation,      is 906      under the  complete control  of the  owner  during  the      passage If  the interruptions  are only  to promote the      safe or  convenient transit, then the continuity of the      interstate trip is not broken. ......           ......          .....           Chief among  these are the intention of the owner,      the control  he  retains  to  change  destination,  the      agency by  which the  transit is  effected, the  actual      continuity of  the transportation,  and the occasion or      purpose of  the interruption  during which  the tax  is      sought to be levied".      In Volume 78 L Ed at p. 138 the test laid down was that if the  shipment was made in good faith to a destination and the interruption  was  not  indefinite  but  reasonable  the continuity of  the journey  cannot be  said to be broken. It was also  pointed out  that where  the interruption  of  the movement of  commodities at  an intermediate  point  is  not incidental to  the transportation,  the shipment  loses  the character of  interstate commerce  so as  to be  exigible to local  taxation.   In   this   connection,   the   following observations were made:           "If the  shipment has been made in good faith to a

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    destination the  interruption is not indefinite, but is      reason-able and  solely in  furtherance of the intended      transportation  of   the  shipment   to  its   ultimate      destination, then  the continuity of the journey is not      broken by  the delay nor by the mere power of the owner      there  to   destroy   its   character   as   interstate      commerce.....any  interruption   of  the   movement  of      commodities at an intermediate point between origin and      final  destination   that  is  not  incidental  to  the      transportation or the means of transportation or, being      so incidental,  is used or extended for purposes of the      owner not incidental to the transportation or the means      used therefor,  breaks the  continuity in  transit  and      subjects the shipment to local taxation at the point of      interruption".      We have  laid special stress on the circumstances under which the  terminal tax  becomes leviable  if  the  halt  or interruption of the goods at an intermediate point is for an indefinite  and   unexplained  period.  The  answer  to  the question  as   to  what  would  be  a  reasonable  time  for interruption of  the goods or halting in the instant case at the godown  of Tuli,  will naturally  depend on  the special features or  circumstances of each case, viz., the nature of the goods, 907 the time  taken  in  loading,  sorting  and  unloading,  the obstacles  or   difficulties  which  may  be  faced  by  the transporters and  similar other factors. Normally, a time of two to  three days  or even  a week  should be sufficient to clear the goods for its journey to the ultimate destination. It may  sometimes happen  that goods  may have to be kept in the godowns  in the  territory of  Delhi  for  circumstances beyond the  control of the consignee or the consignor, e.g., while the  goods are  lying in  a godown  at Delhi a dispute occurs between the concerned parties as a result of which an injunction is issued by a court restraining the transporters from moving  the goods.  In considering  what is  reasonable time  these  circumstances  would  have  to  be  taken  into consideration.      It, was however, argued before us that according to the Terminal tax  Rules framed  under the  Act, Rule  26 exempts goods from terminal tax if the same are exported immediately and are  declared to  be intended  for immediate  export. In view of  the interpretation  we have  placed on s. 178 it is obvious that the word "immediately "appearing in Rule 26 has to be liberally construed so as to imply a reasonable period and if  the export  is delayed  the rules  may  apply  if  a reasonable explanation  has been  given.  So  far  as  rules regarding  taking   of  passes,  etc,  at  the  barrier  are concerned they  would, of  course, apply  but subject to the conditions under  which terminal  tax can  be imposed  under s.178 of the Act which is the main charging section.      The High  Court appears to have placed some reliance on Amrit Banspati  Co. Ltd.  v. The Union of India in coming to the conclusion  that in the instant case the Corporation was legally entitled  to levy  terminal tax. With due respect to the Judges  of the  High Court  who decided  the Appeals, we would like to point out that the case just above referred to is clearly  distinguishable from  the present  appeals.  The most crucial  fact in  the Delhi decision was that the goods were being carried into the Union Territory of Delhi for the purpose of  sale at  Delhi. Thus,  the case proceeded on the admitted position that the goods were carried from Ghaziabad into the  Delhi territory  for  sale  at  Delhi.  The  final destination of  the goods being Delhi, there can be no doubt

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that the Corporation was fully entitled to levy terminal tax on such  goods. In  this connection, the High Court observed as follows:-           "The Petitioner-company was incorporated under the      companies Act,  1956, and  it had its registered office      at  G.T.Road,   Ghaziabad,  in   the  State   of  Uttar      Pradesh.... 908      It  has   a  factory,  inter  alia,  at  Ghaziabad  for      manufacturing  the  said  Vanaspati  products.  In  the      course of  its business,  the company carried and still      carries its  products by  railway and/or  road into the      Union Territory of Delhi from Ghaziabad for the purpose      of sale at Delhi.                .......        ........       ......           The words "shall be levied on all goods carried by      rail-way or  road" in sub-section (1) show clearly that      the section  imposes terminal  tax on  the carriage  or      movement of  goods from  outside the Union Territory of      Delhi into  the said  Territory. In  other   word,  the      taxable event is the carriage or movement of goods into      the Union Territory of Delhi".      The observations  last extracted  must be understood in the light of the admitted facts in Amrit Banaspati Company"s case (supra).  We are  unable to  accept  that  case  as  an authority  for  the  proposition  that  even  if  the  final destination of the goods was not Delhi but as the goods were carried through  the territory of Delhi, they would still be exigible to  terminal tax. In the impugned Judgment the High Court, however,  seems  to  have  laid  undue  emphasis  and special stress  on the fact that the goods were carried into the Union territory of Delhi, the moment they passed through it even  though the  destination of  the goods  may be  some other area.  This appeared, according to the High Court. the real purport  and intention  of s.  178.  We  are,  however, unable to  agree with  this view which is patently wrong and does not at all flow from the plain and unambiguous language of s.  178 of  the  Act  nor  does  s.178  warrant  such  an interpretation. Thus, our conclusions are follows:-      (1)  The High Court was wrong in interpreting s. 178 of           the Act  so as  to justify  imposition of terminal           tax even  on goods which merely passed through the           territory of  Delhi, although their destination is           not Delhi but places beyond Delhi.      (2)  The High  Court was  wrong in  holding that merely           because the  goods after  having been  unloaded in           the godown  of appellant Tuli are sorted, reloaded           in different  trucks and  thereafter pass  through           the territory  of Delhi,  they become  exigible to           terminal tax.      (3)  The High  Court was  wrong in interpreting Rule 26           literally and  holding  that  exemption  could  be           grant 909           ed only  if the  goods  are  exported  immediately           which means  within a very short time irrespective           of  any   other  consideration.  In  view  of  our           interpretation  of   s.  178,   Rule  26  must  be           interpreted in  the light  of the object of s. 178           and terminal  tax can  be leviable  only if  it is           proved that  the goods  remained at the godown for           an indefinite  and unexplained  period which could           not be said to be reasonable as discussed by us in           the circumstances.      (4)  Where the  goods are  carried by  trucks into  the

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         territory of Delhi and unloaded there and are also           meant  for   Delhi  and  soon  thereafter  may  be           rebooked by  the receiver  of the  goods  to  some           other  place,   terminal  tax  would  be  leviable           because  in  this  case  there  are  two  separate           transactions-(1) by  which the goods are meant for           Delhi, and  (2) by  which after having reached and           having been  unloaded at  Delhi they  are rebooked           and  reloaded  for  some  other  place  and  which           therefore is a fresh and different transaction. In           such a case, terminal tax would be leviable at the           entry in the territory of Delhi.      We might mention that the High Court while holding that terminal  tax   is   exigible   has   construed   the   word ’immediately’ in Rule 26 literally and directed the Terminal Tax Officer  to fix a reasonable time for unloading, sorting and reloading  the  goods  which  are  meant  for  different destinations taking  into consideration  the quantity of the goods, the  time  for  unloading,  sorting,  etc.,  and  has further directed  that reloading  or transhipment  should be done within  a time to be fixed by the Terminal Tax Officer. Though the  directions given  are correct but they will have to be construed in the light of the various factors which we have referred to. Rule 26 will have to be interpreted on the footing that s. 178 of the fact does not contemplate levy of terminal tax  for goods  meant for  destinations other  than Delhi.      For the  reasons given  above, we  allow these appeals, set aside  the impugned judgment except the portion quashing the impugned  orders. That  portion  we  uphold  (though  on grounds different  from the ones given by the High Court) in the light of the decision given and the observations made by us regarding the interpretation of s. 178 of the Act. In the special circumstances  of the case there will be no order as to costs. V.D.K.                                        Appeal allowed 910