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PETITIONER: TATA ENGINEERING AND LOCOMOTIVECOMPANY LTD. AND ANR.

       Vs.

RESPONDENT: MUNICIPAL CORPORATION OF THE CITY OF THANE AND ORS.

DATE OF JUDGMENT22/11/1991

BENCH: RAMASWAMI, V. (J) II BENCH: RAMASWAMI, V. (J) II AHMADI, A.M. (J) RAMASWAMY, K.

CITATION:  1992 AIR  645            1991 SCR  Supl. (2) 445  1993 SCC  Supl.  (1) 361 JT 1991 (6)   322  1991 SCALE  (2)1111

ACT: Maharashtra Municipalities (Octroi) Rule, 1968:     Rule  25 (3) (d)--Octroi--Levy of-Goods imported  within municipal  limits  and  stored in  Warehouse  for  temporary detention and eventual exports--Goods sold within  municipal limits   for  export  and  consumption   outside   municipal limits---Held   octroi   not  leviable--Taxable   event   of octroi--What is.     Rules  28,29 and  30--Octroi---Refund  of-Non-compliance with  procedure-Effect of--Compliance with procedure  not  a condition precedent for eligibility of  refund----Compliance with  procedure shall be tested having regard to the  nature of transaction and the object of procedure.     Doctrine  of unjust enrichment--No evidence  to  suggest that  octroi levied was recovered from  customers-Refund  of octroi would not lead unjust enrichment. Rule  24--Octroi--"Breaking the bulk"--Procedure to be  fol- lowed-Rule 24 held not inconsistent with Rule 62 of  Chapter VIII  of  the schedule to the  Bombay  Provincial  Municipal Corporation Act, 1949  Object of Rule 24(2) explained.     Rule  28(2) (b)---Refund of  octroi-Requirements  of-Re- quirement of exporting goods out of municipal limits  within six  months of import-Proof of--Equitable  principle  "first export was of goods first imported"---Applicability of.

HEADNOTE:     The appellant-company was carrying on business of  manu- facture  and  sale of motor vehicles, spare parts  of  motor vehicles  and  excavators. Their  manufacturing  units  were located  outside  the  municipal limits  of  the  respondent corporation.  Pursuant  to  the permission  granted  by  the Respondent Corporation under Rule 10(2) of 446 the  Maharashtra  Municipalities (Octroi)  Rules,  1968  the appellant company was maintaining a bonded warehouse  within the  municipal  limits of  the  Respondent-Corporation.  The motor  vehicles parts and excavators parts brought from  the Company’s  own factories as well parts imported from  abroad were  stored in this warehouse. These products were  brought in bulk and thereafter taken or sent out from the  Municipal

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limits in smaller packings depending on the requirements  of the customers in various parts of the country.       The  appellants  were  also  granted  current  account facilities  without the requirement of immediate payment  of octroi at the Octroi Naka. Accordingly, the appellants  were carrying  out their activities of imports and exports  under the current account procedure with facility of unpacking the bulk, repacking and exporting.      Under  the Octroi Rules the octroi  becomes  refundable when  the  goods  in respect of which octroi  was  paid  are exported  out of octroi limits within 6 months of their  im- port. During the period 1st    January, 1983 to 31st  March, 1984  the appellant-Company made 1182 claims for  refund  of octroi  which  were  rejected  by  the  Corporation  on  the grounds:  (1) the Company had "sold" the spare parts  within the  octroi  limits of the Corporation in  contravention  of Rule  25(3) (d) of the Maharashtra  Municipalities  (Octroi) Rules, 1968; (2) the procedure prescribed for export and the claim of refund had not been strictly followed.      The appellants filed a writ petition under Article  226 in  the High Court of Bombay contending that the  action  of the Municipal Corporation in refusing refund was unconstitu- tional  and  illegal. The Division Bench of the  High  Court dismissed the writ petition. The Company filed an appeal  in this Court against the decision of the High Court.      In  appeal to this Court it was contended on behalf  of the  appellant (i) since the sales were not for  consumption or use within the octroi limits and that the parts were sold to  parties outside the octroi limits and also for  consump- tion or use outside such limits the rejection of the  claims by  the Respondent-Corporation on the ground that the  sales were  within the municipal limits in contravention  of  rule 25(3)  (d)  of the Rules is illegal; (ii) Under Rule  62  of Chapter VIII of the Schedule to Bombay Provincial  Municipal Corporation Act, 1949, prior intimation of the intention  to ’break the bulk’ is enough and there is no necessity for the company to get the sanction 447 of  Superintendent  of  Octroi  or break  the  bulk  in  the presence  of an officer deputed for the purpose as  required under sub-rule (2) of Rule 24 of the Maharashtra Municipali- ties (Octroi) Rules, 1968; Rule 24(2) of the Octroi Rules is inconsistent with Rule 62 and to the extent of inconsistency it shall be deemed to be not applicable.     On behalf of the respondent Corporation it was contended (i) that the meaning of words "sales therein" in the defini- tion of octroi in the Acts and in Entry 52 of List II of VII Schedule  to the Constitution could not be limited to  sales of  the goods for purposes of consumption or use within  the municipal  limits; (ii) there was a change in the  ownership of the goods since a sale in law had taken inside the octroi limits  though  the purchaser was residing and  carrying  on business  outside the octroi limits and under the  sale  the goods  were  intended  to be and in fact  exported  for  the purpose  of consumption and use outside the  octroi  limits; (iii)  that  while Rule 62 (c) deals with  prior  intimation Rule 24(2) deals with the sanction and breaking of the  bulk in  the presence of an officer deputed for that purpose  and both the rules can stay together and operate and there is no inconsistency; (iv) since the appellants have recovered  the amounts paid by them by way of octroi duty from their  deal- ers  or customers they are not entitled to refund;  ordering of refund would amount to allowing the appellants to unjust- ly  enrich themselves at the cost of the public to whom  the burden had already been passed.

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Allowing the appeal, this Court,     HELD:  1.  In the case of impost of octroi  the  taxable event  is  the entry of goods which are meant  to  reach  an ultimate  user or consumer in the area. Mere physical  entry into  the  octroi limits would not attract levy  of  octroi. When the goods are brought in not for consumption within the area but for temporary detention and eventual export, octroi is  not leviable. The octroiable event in such a case  shall be  deemed  not to have happened. This  is  particularly  so because in the case of goods not consumed or used within the octroi  area but exported there is a constitutional bar  for the  levy  of  octroi. In view of  the  constitutional  bar, octroi is not leviable if the goods are not brought into the octroi  area for purposes of consumption or use in the  area but for export and in fact exported by the importer  himself or  the sale by him occasions the export. [458-B-C,  472  H, 473-A, 475-E]     1.1 Having regard to the nature and incidence of  octroi unless  the  octroiable goods are consumed or  used  or  are meant to reach an 448 ultimate  user or consumer in the octroi area no  octroi  is leviable.  The words ’sale therein’ in the  words  ’consump- tion,  use or sale therein’ in the definition  octroi  means sale  of  octroiable goods to a person for  the  purpose  of consumption  or  use by such person in the octroi  area.  If sale was intended for consumption or use in the octroi  area whether  the purchaser actually consumed inside  or  outside octroi area is irrelevant. Therefore octroi rules cannot  be read as enabling the municipality to levy and collect octroi even  in  cases where the goods have not been  imported  for consumption or use. [475-C, 474-B]     Burmah  Shell Co. v. Belgaum Municipal, ll963I Suppl.  2 S.C.R. 216; Hira Lal Thakur Lal Dalai v. Brash Broach Munic- ipality, [1976] Suppl. SCR 82; Municipal Council of  Jodhpur v.  Parekh Automobiles Ltd. & Ors., [1990] 1 S.C.C. 367  and H.M.M.  Ltd. v. Administrator, [1989] 4 S.C.C.  640,  relied on.     Khandelwal Traders Akola v. The Akola Municipal Council, AIR 1985 Born. 218, approved.     1.2 Since the goods were sold by the Company to  outside purchasers and the goods under the transactions of sale were intended  to  be  exported and were in  fact  exported,  for consumption  or use outside the municipal limits  no  octroi duty was leviable and the octroi duty paid on entry into the municipal  limits  was, therefore, liable  to  be  refunded. Accordingly the rejection of the refund claims on the ground that  Rule 25(3) (d) had not been strictly complied with  is illegal and could not be sustained. [457 G-H]     2.  Once octroi is not leviable the deposit made by  the importer  pending  export is in the nature of  a  trust  and refundable in the event of the export of the goods.  [473-G- H]     2.1  Under the octroi scheme, when the goods in  respect of  which  octroi is paid are exported, the  octroi  becomes refundable. Right to refund arises because the goods are not consumed  inside the area but exported and the  tax  becomes not leviable. [458-C]     2.2  If  there is no consumption or use, octroi  is  not attracted  and  if  any levy has been made  and  the  amount collected, the same becomes legally refundable even when the goods are exported in parts and in smaller packages. [472-H]   3.  The rules merely regulate the system on  which  refund shall 449

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be allowed. In a given set of facts, whether the rules  have been  complied with will have to be tested having regard  to the  nature  of the particular transaction and  whether  the object  of the procedure provided is otherwise fully  satis- fied. [458-D, 473 H, 474-A]     3.1  The object of requiring intimation or sanction  and presence of an officer when breaking the bulk in the  scheme of  octroi levy and refund is to ensure that dutiable  goods do  not escape the assessment and refunds are made  only  in respect of goods exported. In other words the whole require- ment  relates  to the identification of the goods.  In  that sense  if the same is otherwise complied with the  right  to refund cannot be denied. [474 A-B]     3.2  Rules  24 to 30 of the  Maharashtra  Municipalities (Octroi) Rules, 1968 and the forms in the system of levy  of Octroi are intended to regulate the procedure for collection identification  of dutiable goods and correlation  of  goods exported with the goods imported for the purpose of  refunds of octroi collected. [475-D]     The rules do not contain any specific provision that  an applicant for refund who has failed to follow the  procedure would be disentitled to claim the refund. [473-G]     3.3  Compliance  with the procedure  prescribed  in  the Rules for filing claims of refunds are not conditions prece- dent for the right or eligibility for refund or the liabili- ty to refund but are provisions regarding proof of export of the  goods imported and are not meant to be  exhaustive  ei- ther.  They  are to be interpreted and  understood  in  that sense. [475 E-F]     Municipal  Committee Khurari v. Dhannalal Nethi &  Ors., [1969] 1 S.C.R. 166; Kirpal Singh Duggal v. Municipal Board, Ghaziabad, [1968I 3 S.C.R. 551, applied.     3.4  Since  the rejection of the claims for  refund  was merely  on  the ground that either form 4 and  original  in- voices  were not produced or columns 5 and 6 of Form  11  or the  corresponding  columns in Form 12 had not  been  filled with  reference to an original invoice or Form 4 or  deposit receipt and the refusal to issue export pass certificates on those very grounds are untenable the orders of rejection are invalid. 1475 G-H]    4. The object of the Rules fixing a period of  limitation for 450 export  however  is different. The export cannot be  put  in perpetual doubt and the goods may be considered to have come to  a repose if they were not exported within  a  particular period provided in the rules. [475-F]     4.1 However an equitable principle could be followed  in this regard and it may be presumed that the goods which came in first have gone out first. If the goods are mixed up  and unidentifiable due to breaking bulk and repacking in smaller and  assorted packages before export the principle that  the first export was of the goods first imported, subject to any evidence  available to the contrary, may be applied and  the six months period prescribed under Rule 28(2) (b) for export may be determined accordingly. [475 A-B, H, 476-A] Clayton’s case, 1814-23 All. E.R. 1, applied.     5.   There is no inconsistency between Rule 62 and  Rule 24(2). The intimation contemplated in Rule 62 imply that the breaking  the bulk shall be done with the knowledge  of  the octroi  authorities.  But it cannot be said that  the  rules further  provide that after intimation the breaking  of  the bulk shall be done in the presence of the officers and after sanction that would in any case be inconsistent.  Therefore, both the rules can stand together. [471 F-G]

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   6.   There in no evidence that any of the articles  sold by  the Company is subject to any price control by the  Gov- ernment or that the Company had charged any octroi separate- ly in the bills. Documentary evidence do not also show  that any  octroi  was  separately charged and  collected  by  the Company.  Therefore the question of unjust  enrichment  does not arise. [476 F-H]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4702 of 1991.     From the Judgment and Order dated 26.8.88 of the  Bombay High Court in W.P. No. 2264 of 1984.     T. Andharujina, F.H. Talyarkha, R.F. Nariman, R. Narain, Ashok Sagar and Ms Amrita Mitra for the Appellants. K.K.  Singhvi,  B.N. Singhvi and Anil K. Gupta for  the  Re- spondents. The Judgment of the Court was delivered by 451 V. RAMASWAMI, J. Leave granted.     The  First  appellant--Tara Engineering  and  Locomotive Company  Limited  (hereinafter called the ’Company’)  is  a. company registered under the Indian Companies Act, 1913  and the second appellant is one of its Directors. The Company is carrying on business of manufacture and sale of motor  vehi- cles and spare parts of motor vehicles and excavators. Their manufacturing  units are at Pune and Jamshedpur outside  the Thane  Municipal  Corporation  limits. They  have  a  bonded warehouse  within the municipal limits in which  they  bring and  stock  motor vehicles parts’and excavators  parts  from their own factories at Pune and Jamshedpur. They also  bring in parts manufactured by their ancillaries within India  and also parts imported from aboard. These products or parts are brought  in bulk and thereafter taken or sent out  from  the Municipal  limits in smaller packings depending on  the  re- quirements of the customers in various parts of the country. It  is  stated  that the parts imported  or  purchased  from others and brought in are relatively very small in  quantity and  the major portion of the activity related to their  own factory produced parts.     On  and  from 1 st October, 1982 with  the  notification under Section 3 of the Bombay Provincial Municipal  Corpora- tion Act, 1949, the Thane Municipal Council became a Munici- pal Corporation (hereinafter called the Corporation).  Prior to the constitution of the Corporation it was a municipality and were governed by the Thane Municipal Council constituted under the Maharashtra Municipality Act, 1965. Prior to 1  st October, 1982 the Thane Municipal Council had granted to the Company current account facilities in respect of payment  of octroi  under the Maharashtra Municipalities Act,  1965  and the  Maharashtra  Municipalities (Octroi) Rules,  1968  made thereunder.  The Municipal Council had also granted  permis- sion  under  Rule 10 (2) to the Company  for  maintaining  a godown  or warehouse of their own. Their is no dispute  that even after the coming into existence of the Thane  Municipal Corporation  the appellants were permitted to have  a  ware- house  of  their  own and keep a  current  account  facility without  the requirement of immediate payment of  octroi  at the  Octroi Naka. In terms of granting those facilities  the Company  had made as security a cash deposit of Rs. 7  lakhs with the Corporation and had also given a Bank Guarantee for an  equivalent amount as agreed to between the  Company  and the  Corporation. However, there is some dispute as to  what

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were the formalities that were dispensed with in the  matter of claiming refund of the octroi when the goods were export- ed. But suffice it to say at this stage that the  appellants were permitted to carry out their activities of imports  and exports under the current account procedure with a  facility of unpacking the bulk, repacking and exporting. 452     During the period 1st January, 1983 to 31st March,  1964 it  is stated that the appellants had made 1182  claims  for refund. All these claims were rejected by the letters of the Corporation  dated  31.8.1983,  12.1.  1984,  5.4.1984   and 6.4.1984.  They were rejected on the following two  grounds: (1) the Company had "sold" the spare parts within the octroi limit  (which is co-terminus with the Corporation limit)  in contravention of Rule 25 (3) (d) of the Maharashtra  Munici- palities  (Octroi)  Rules,  1968  (hereinafter  called   the "Rules"),  (2) the procedure prescribed for export  and  the claim  of  refund had not been strictly followed.  The  non- compliance with)the procedure prescribed referred to in  the second ground according the Corporation were: (i) Form 4  of the Octroi Rules and the original invoices were not  submit- ted,  or (ii) Forms 11 and 12 filed were incomplete and  all the required information were not given or (iii) certificate of  the Octroi exit Naka Officer had not been obtained.  The rejection of the claim was either on one or more than one or all the grounds mentioned above. The appellants filed a writ petition  under Article 226 in the High Court of  Judicature at Bombay contending that the action of the Municipal Corpo- ration  in refusing refund is unconstitutional  and  illegal and  for  certain other reliefs. The Division Bench  of  the High Court which heard the same dismissed the writ  petition on  the 26th August, 1988. It is against this judgment  that the present appeal has been filed.     It appears that during the hearing of the writ  petition the  learned counsel appearing for the Corporation  did  not counter  the  contention of the Company that  the  rejection under Rule 25 (3) (d) was not correct and the learned Judges have also recorded the same in the judgment. But the learned counsel  for the respondent before us stated that it is  not correct to say that he had conceded any point and that since he  could  not argue that point in view of the  decision  of another Division Bench of the same High Court in  Khandelwal Trader Akola v. The Akola Municipal Council, AIR 1985 Bombay 218  which  was binding on the Bench which  heard  the  writ petition  and also in view of certain observations  of  this Court  in Burmah Shell Company v. Belgaum Municipal,  [1963] Suppl. 2 SCR 216 and Hiralal Thakorlal Dalai v. Brash  Broch Municipality,  [1976]  Suppl. SCR 82 he did  not  press  the point.  We have therefore, permitted the point to be  argued in this appeal.     Before we discuss the points in controversy we may state that in the counter-affidavit filed in the writ petition the respondents have admitted that the Company was enjoying  the current  account  facility prior to 1.10. 1982 and  the  re- spondent-Corporation had also given the said facility to the Company even after 1st October, 1982 on their making a  cash deposit of Rs. 7 Lakhs and furnishing a Bank Guarantee for a like sum as security 453 for grant of that facility. The respondent had also admitted that the Company had been given permission under Rule 10 (2) to  maintain  their  own godown from  12th  December,  1982. Broadly  stated under the current account facility  granted, no octroi duty is recoverable in cash from the appellants at the  entry octroi naka point. However, the Company  was  re-

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quired  to  submit a statement of goods imported in  Form  5 before the 10th of the following month. The officers of  the respondent  after scrutiny of the statement so filed  deter- mine the octroi duty payable thereon and debit the amount in the  current  account kept and send a demand notice  to  the company.  The Company is required to pay the amount  to  the Corporation within 15 days of the determination of duty.     The first submission of Mr. Andharujina, learned counsel for the appellants was that the sales were not for  consump- tion or use within the octroi limits and that the parts were sold  to  parties  outside the octroi limits  and  also  for consumption  or  use outside such limits and  therefore  the rejection  of the claims on the ground that the spare  parts were  sold within the municipal limits and that it  amounted to a contravention of Rule 25 (3) (d) of the Rules is  ille- gal. Mr. K.K. Singhvi, the learned counsel for the  Corpora- tion  on the other hand contended that the meaning of  words "sales therein" in the definition of octroi in the Acts  and in Entry 52 of List II could not be limited to sales of  the goods for purposes of consumption or use within the  munici- pal limits.     When  an importer wants to export dutiable goods  tempo- rarily detained by him in his own godown he shall present an intimation-cumapplication for written permission in Form  11 to  the Superintendent of Octroi to export such goods.  Rule 25 (3) (d) states that no such intimation shall be  accepted unless: .LM15               "the exporter and the importer of these  goods               are one and the same person and such  articles               have not undergone change of ownership" .LM0     The case of the Corporation was that there was a  change in the ownership of the goods since a sale in law had  taken place  inside  the octroi limits though  the  purchaser  was residing and carrying on business outside the octroi  limits and under the sale the goods were intended to be and in fact exported for the purpose of consumption and use outside  the octroi limits. Section  127 of the Bombay Provincial Municipal  Corporation Act,1949  and  the corresponding S. 105 of  the  Maharashtra Municipalities  Act,1965 authorises the Muncipality to  levy "Octroi". Both these Acts define 454 octroi  as  meaning  a tax on the entry of  goods  into  the municipal  area "for consumption, use or sale therein".  The Maharashtra  Municipalities (Octroi) Rules 1968  made  under the  Maharashtra Municipalities Act, 1965, provides for  the levy,  collection  and refunds of octroi duty on  the  goods specified  in the schedule thereunder and the procedure  for the  same. These Rules were in force in  Thane  Municipality before Thane was declared as "City" under the Bombay Munici- pal  Corporations Act LIX of 1949. However these  Rules  are continued  in the Thane Municipal Corporation by  virtue  of paragraph 5 of Appendix IV to the Act LIX of 1949.     The  legislative  entry relating to  the  constitutional power  to levy this tax is found in List II Entry 52 of  the 7th Schedule to the Constitution which reads:               "52. Taxes on the entry of goods into a  local               area for consumption, use or sale therein".     The  Bombay  Municipal Boroughs Act, 1925 which  was  in force prior to the enactment of the Maharashtra  Municipali- ties Act, 1965 also contained a similar provision in section 73  enabling the Municipalities covered by that Act to  levy "Octroi  on  animals  or goods or both  brought  within  the

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octroi  limits for consumption or use therein". This  provi- sion was amended by Amending Act 35 of 1954 by  substituting the  words "use or sale" for the words "or use" with  effect from May 5, 1954. In other words before 1954 the word "sale" was  not included in the provision of octroi on goods  which the Municipality was authorised to impose. After the  amend- ment  the  Municipality could levy octroi on  goods  brought within  the  octroi  limits "for consumption,  use  or  sale therein". This provision came up for consideration in Burmah Shell  case (supra). Two of the categories  of  transactions which  were considered in this case related to  transactions under  which (1) goods were sold by the Company through  its dealers  or by itself and consumed within the octroi  limits by persons other than the Company and (2) goods sold by  the Company  through its dealers or by itself inside the  octroi limits  to  other persons but consumed by them  outside  the octroi limits. The Company contended that the tax could  not be  collected on goods which were merely sold but  not  con- sumed inside the octroi limits. In connection with this con- tention this Court considered the meaning of words "consump- tion, use or sale therein" and observed:               "It is not the immediate person who brings the               goods into a local area who must consume  them               him-self, the act of consumption may be  post-               poned or may be performed by someone else  but               so  long as the goods have been  brought  into               the local               455               area for consumption in that sense, no  matter               by whom, they satisfy the requirements of  the               Boroughs Act and octroi is payable".               "  .....  The goods must be regarded as having               been  brought in for purposes  of  consumption               when  a person brings them either for his  own               use or consumption, or to put them in the  way               of  others  in the area, who are  to  use  and               consume".               And concluded holding:               "In our opinion, the Company was liable to pay               octroi  tax on goods brought into  local  area               (a) to be consumed by itself or sold by it  to               consumers  direct and (b) for sale to  dealers               who in their turn sold the goods to  consumers               within  the  municipal  area  irrespective  of               whether such consumers bought them for use  in               the  area  or  outside it.  The  Company  was,               however,  not liable to Octroi in  respect  of               goods which it brought into the local area and               which was re-exported". The  ratio  is  thus not a mere sale  inside  that  attracts octroi  but  a sale intended for consumption  of  the  goods inside the octroi area though ultimately the person to  whom it  was  sold  for consumption does not  consume  the  goods inside but does the same outside the limit.     After  consideration  of the judgment  in  Burmah  Shell Company’s case (supra) the Gujarat High Court in one of  the cases arising for refund of octroi duty paid, took the  view that  octroi  leviable on goods brought  within  the  octroi limits  ’for consumption, use or sale therein’ and that  the word ’sale’ could not be given the narrow meaning of a  sale for  consumption to the ultimate consumer within the  octroi limits. Accordingly if the goods were sold within the octroi limits  by  the importer even if it resulted in  export  and consumption  was also outside the octroi limit, octroi  duty paid  is  not refundable. This decision came  up  in  appeal

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before this Court and the decision of this Court is reported in  Hiralal  Thakorlal Dalai v. Brash  Broach  Municipality, [1976]  Suppl. SCR 82. On facts that case related to a  con- signment  sale and the goods were despatched to  destination outside  octroi  limits for consumption there.  A  plea  for review  of  the  decision in Burmah  Shell  Company  s  case (supra)  was also made in this case. However a  Constitution Bench rejected the request for reconsideration and held that the word "sale" in the colloquium of the words "consumption, use  or sale therein" means sale for consumption within  the octroi limits. The ratio of these two decisions was  consid- ered by the Bombay High Court in Khandelwal Traders  Akola’s case  (supra), which was referred to in the  Judgment  under appeal. It was held in this case also 456 that  where a dealer imports goods within the octroi  limits not for ultimate consumption or sale for consumption  within the limits but for the purpose of export and obtain  permis- sion for export he is not liable to pay octroi on such goods notwithstanding  that  in the larger sense for  purposes  of export he sells the goods within the octroi limits, that  is to  say  even  where the situs of the sale  could  be  fixed within  the octroi limit. The matter is now put  beyond  any pale of doubt by the latest decision of this Court in Munic- ipal  Council,  Jodhpur v. M/s. Parekh  Automobiles  Ltd.  & Ors., [1990] 1 SCC 367. Rule 13 (4) of the Rajasthan Munici- pal  Octroi  Rules,  1962 which was one  of  the  provisions considered in this case provided that               "In  cases provided for in sub-rule (3)  (that               is   who   is  given   the   account   current               facility)amount  of octroi duty payable  shall               be based on the total amount of the octroi  as               shown  by  the  entry passes  less  the  total               amount of goods transported outside the munic-               ipal limits as shown by the transport passes:               Provided  that  in computing the  octroi  duty               payable under subsection (4), the goods trans-               ported  outside the municipal limits shall  be               lessened only if such goods have not been sold               within  the municipal limits and if they  have               been  exported  out of such  limits  within  a               period  of six months from the date  of  their               import in such limits".     Relying on this provision the municipality in that  case contended that if the sale had taken place within the octroi limits though the sale was not for consumption or use within the  octroi limits, duty was payable and no refund could  be claimed.  The learned Single Judge who heard the  matter  in the  High  Court did not permit the importer  to  raise  the question  that the sale took place only outside  the  octroi limits of Jodhpur and proceeded on the footing that the sale of  product in question took place within the octroi  limits of Jodhpur. He however accepted the contention of the Indian Oil  Corporation (importer) that the sale to the dealer  was for  the  purpose of export and the dealer  did  export  the goods outside the octroi limits and that, therefore, even if the  sale was said to have been effected within  the  octroi limits  no octroi was leviable. Since admittedly  the  goods had  been sold in Jodhpur octroi limits only for  their  on- wards  transmission  for use and consumption in  Dangia  was outside  the octroi limits he held that no octroi  duty  was payable. This view of the learned Single Judge was confirmed on appeal by the Division Bench of the High Court. On appeal this Court confirmed this view and held that the Indian  Oil Corporation (importer) who had the current account  facility

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and gov- 457 erned  by the terms of rule 13 was entitled to go on  paying octroi  duty "on to basis of the goods brought by it  within the  municipality  less the goods  transported  outside  the municipality even where the transport outside the municipal- ity may be in pursuance of a sale within the municipality so long  as such sale is in pursuance of an intention that  the goods  should  be  consumed or used  outside  the  municipal limits".     In  the present case the sales were to person  who  were carrying  on business outside the limits of the  Corporation and  the  goods were also intended to be  consumed  or  used outside such limits and in fact the goods were also  export- ed.  The  ratio  of the decisions  above  referred  clearly, therefore, governs this case, even if it were to be  assumed that  the  sale in the general sense took place  inside  the municipal limits.     However  we may state that it was the contention of  the learned counsel for the appellant that the sale in fact took place  outside the municipal limits and in support  of  this contention  he relied on the following facts  among  others. The spare parts were consigned by the Company to out station purchasers. The goods were transported by the Company  them- selves  across the octroi limits. The consignment  or  lorry receipt  mentioned  the  consignee as self.  The  bills  for collection were sent through Bank and the goods were not  to be delivered to the consignee until the payment was made  by the consignee through the Bunk. Right of disposal  expressly reserved with the vendor. On the other hand on behalf of the Corporation it was contended that orders were both  received and accepted in Thane, goods were despatched from Thane  and challans  were also made in the name of the buyers  and  the property  in the goods passed within Thane. The sale had  in fact  taken place within municipal area. In fact he  further contended that being a question of fact we are not  entitled to  go  into  the same in view of the finding  of  the  High Court. It is not necessary for us, however, to consider this aspect and we would for the purpose of this case proceed  on the  assumption that technically the sale in law  had  taken place inside the municipal limits.     Since  the  goods were sold by the  Company  to  outside purchasers  and  the goods under the transactions  of  sale, were intended to be exported and were in fact exported,  for consumption  or use outside the municipal limits  no  octroi duty was leviable and the octroi duty paid on entry into the municipal  limits  was, therefore, liable  to  be  refunded. Accordingly the rejection of the refund claims on the ground that Rule 25 (3) (d) had not been strictly complied with  is illegal  and  could not be sustained. Such of  those  claims which were rejected only on the grounds of contravetion of 458 Rule 25 (3) (d) shall now be taken up by the respondent  and passed for payment.     In the case of impost of octroi the taxable event is the entry of goods which are meant to reach an ultimate user  or consumer  in the area. Mere physical entry into  the  octroi limits would not attract levy of octroi. When the goods  are brought  in  not  for consumption within the  area  but  for temporary  detention  and  eventual export,  octroi  is  not leviable.  But  in order to ensure, in  such  circumstances, that the goods are exported and to prevent evasion of octroi on goods consumed inside the octroi limit, Rules provide for deposit of a certain sum of money or the actual octroi  duty payable subject to a right to get a refund of the same  when

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the  goods are exported. When the goods in respect of  which octroi  was paid are exported, the octroi became  refundable and  that  is the very scheme of the ’ levy of  octroi.  The octroiable  event  in such a case shall be deemed  not  have happened.  Right to refund arises because the goods are  not consumed  inside the area but exported and the  tax  becomes not leviable. The rules merely regulate the system on  which refunds  shall be allowed. The procedure prescribed and  the need to adhere to the procedure shall have to be  considered in  the light of these legal incidence and nature of  octroi duty.     Before we deal with the question whether the Company had not  followed any of the procedure prescribed and the  right of  the Corporation to deny refund of octroi on  non-compli- ance with any of those provisions in the Rules, it is neces- sary  to broadly set out the different types  of  procedures prescribed,  depending on different purposes of imports  and exports,  contemplated under the Rules. This may be  broadly classified  into  five categories, (i)  goods  imported  for Consumption,  use or sale in the municipal area, (ii)  goods imported not for consumption, use or sale within the munici- pality but for immediate export, (iii) goods intended to  be temporarily  detained within the municipality in the  bonded warehouse maintained by the Corporation and eventual export; (iv)  goods intended for temporary detention in the  private licensed  bonded  wharehouse of the  importer  and  eventual export;  and  (v) goods imported by any  person,  mercantile firm  or  body  which has been permitted  by  the  municipal Corporation  to keep an current account. In the first  case, since  octroi is attracted on arrival of the dutiable  goods at  the Octroi Naka the importer pays the amount  of  octroi assessed  by the octroi officer and takes the  goods  inside the municipal limits. In the second case, the importer gives a  declaration-cum application that the goods are not  being imported  in  the municipal limits for consumption,  use  or sale  but  are  intended for immediate  export  outside  the octroi limits. He is required to deposit an amount in 459 accordance with the scale fixed under clause (b) of sub-rule (1)  of  Rule (5). On such deposit being made a  receipt  is given in the form prescribed by the Entrance Naka  Inspector and  a  written permission-cum-transit pass  issued  by  the Octroi Officer. On arrival of the goods at the exit Naka and on surrender of the written permission-cum-transit pass  the deposit amount is refunded. In the third category of  cases, the  importer makes an application to the Octroi officer  at the  Entrance Naka for a written permission to deposit  such goods at the bonded warehouse maintained by the Corporation. The  Octroi Officer then makes an entry on  the  application that  the importer is allowed to proceed with the  goods  to the  bonded warehouse. The Officer in-charge of  the  bonded warehouse will receive the goods and keep them in the bonded warehouse until exported. When the importer wants to  export the goods he is required to apply for a written  permission- cum-export  pass in the prescribed form and also deposit  an amount equal to the octroi leviable therein. On such deposit made a written permissioncum-export pass is issued. When the goods  are  taken out of the municipal  limits  the  Officer Incharge of the Exit Naka endorses the export pass  certify- ing  the  export and the refund of the  deposit  is  claimed thereafter producing the certificate issued by the Exit Naka Officer. In the fourth category, the importer gives a decla- ration  in  Form 4 that the goods are  meant  for  temporary detention with him at his own warehouse for eventual export. After verification of the particulars furnished in that form

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with  the  invoices and other documents produced he  is  re- quired  to deposit at the Entry Octroi Naka point itself  an amount  equal to the amount of full octroi duty  thereon  as deposit. A receipt is given by the Octroi Inspector  stating that the said amount "on account of deposit" has been recov- ered.  When he wants to export the dutiable  goods  detained with  him he presents an intimation-cum-application in  Form 11  for written permission to export the goods. He  is  also required to produce the goods at the Central Octroi  officer along  with  the application. On satisfaction that  all  the conditions prescribed have been fulfilled and after  verifi- cation  of the goods a written permission-cum-refund  export pass  in Form No. 12 is given to the importer. On  presenta- tion of these documents the Octroi officer at the Exit  Naka gives  a certificate that the goods mentioned  therein  have passed octroi limits and with that the refund application is made and refund obtained.     The  instant  case falls under the fifth  category.  The Company  has been permitted by the Municipal Corporation  to keep  the dutiable goods in a bonded warehouse of their  own with a current account facility. The rules which were relied on by the Respondent and some of which are said to have  not been complied with by the Company may be set out:                    "10. Maintenance of Bonded Warehouses. -               460               (1)    x   x   x               (2)   A  Council may permit  any  importer  to               maintain a private Bonded Warehouse for  keep-               ing goods which are imported by such  importer               for  temporary detention and  eventual  export               and grant a licence to such importer for  that               purpose subject to the conditions and restric-               tions  laid down in such licence. A fee  shall               be  charged  for  such licence  at  the  rates               specified  in  the bye-laws  relating  to  the               grant of such licence."               "14.  Declarations  to be  made  by  importer,               etc.- (1) On arrival of any dutiable goods  at               the Octroi Naka, the Octroi Officer shall call               upon the importer or the driver of the Vehicle               or  conveyance or the person incharge  of  the               pack-animal  or  other  persons  bringing  the               goods-                (a)  X  X  X  X                (b)  X  X  X  X               (C)  X  X  X  X                    (d)  to make a declaration in Form 4,  in               respect  of the goods intended  for  temporary               detention with himself and eventual export;                    (e)  to make a declaration in Form 5,  in               respect of the goods imported by, or on behalf               of, any person, mercantile firm or body  which               has  been permitted by the Council to keep  an               account current under Section 142;               "15. Procedure for assessment and recovery  of               octroi. -               (4)  On  receipt of a declaration  in  Form  5               under  the  last preceding  rule,  the  Octroi               Officer  shall ascertain whether the  name  of               the  person, mercantile firm or body on  whose               behalf the goods are being imported is on  the               list  of persons, firms or bodies  allowed  to               keep an account current, and if so, check  the               goods with the details entered in the declara-               tion  and  fill up the certificate  below  the

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             declaration  and issue a pass in Form  6.  The               Octroi Officer shall forward all such declara-               tions together with a list in duplicate there-               of  to the Central Octroi Officer for  further               action  in accordance with the  provisions  of               Section 142.               "24.Procedure   for  temporary  detention   of               dutiable goods meant for eventual export, with               importer  himself. - (1) Where dutiable  goods               intended  for temporary detention  within  the               octroi               461               limits and eventual export are to be  detained               by  the importer at his residence or a  Bonded               Warehouse licensed under sub-role (2) of  rule               10  within the octroi limits, he may do so  on               giving a declaration to the Octroi officer  in               Form  4, and on payment of an amount equal  to               the  amount  of  full octroi  due  thereon  as               deposit either in cash or in the form of  Bank               Guarantee at the Entrance Naka.               (2)  In  case the importer cannot  export  the               goods without breaking bulk or without  assem-               ble  and testing in the case of machinery,  he               shall  do the same only with the  sanction  of               the  Superintendent of Octroi in the  presence               of an officer deputed for this purpose by  the               said Superintendent. Such goods, if  necessary               shall  be formed into packages, which  may  be               sealed and marked by the Officer so deputed.               "25.Procedure  for  export of  dutiable  goods               temporarily detained with importer. - (1) When               the  importer wants to export  dutiable  goods               detained with him, he shall present an intima-               tion-cum-application for written permission in               Form  11  to the Superintendent of  Octroi  to               export  such goods, giving necessary  details;               and produce such goods for verification on any               working  day  during the hours  fixed  by  the               Chief Officer at the Central Octroi Office  or               at  any other Branch Office, as may be  estab-               lished by the Council for the purpose.               (2)   A  separate   intimation-cum-application               shall  be  given by each importer or  his  own               goods.   One  such   intimation-cumapplication               shall be sufficient for a single  consignment.               When  such consignment contains goods of  dif-               ferent  descriptions,  full details  shall  be               given separately in the  intimation-cum-appli-               cation.  Not  more  than  one  intimation-cum-               application  for  export can be  given  by  an               importer  for  goods passing through  an  Exit               Naka in a day.               (3)  No such intimation-cum-application  shall               be accepted unless-                  (a)  it  is complete in  all  respects  and               signed by the importer himself or by a  person               authorised by him in writing in this behalf;                  (b) it is supported by the receipt for  the               deposit  paid  at the time of  import  and  is               accompanied  by the original invoice, if  any,               filed at the time of import;               462                    (c) the goods produced for inspection and               intended  to be exported are, subject  to  the

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             provisions of sub-rule (2) of the last preced-               ing rule, identical with what they were at the               time of import.                    (d)  the  exporter and  the  importer  of               these  goods are one and the same  person  and               such  articles  have not undergone  change  of               ownership.               Note.  - The requirement of clause  (c)  shall               not  be  applicable in the  case  of  dutiable               goods to which sub-rule (3) or (4) of the last               preceding rule applies.               (4) On receipt of such intimation-cum-applica-               tion and on arrival of the goods intended  for               export, at the Central Octroi Office or Branch               Office,  the Superintendent of Octroi  or  any               officer authorised by him shall-                    (a)  satisfy himself that all the  condi-               tions prescribed above are fulfilled;                   (b)  verify that the goods  actually  pro-               duced  for inspection are as described in  the               intimation-cum-application and in the relevant               import  invoice,  if  any, or  in  the  import               declaration in Form 4, and seal and mark  such               goods whenever deemed necessary; and                   (c) issue a written  permission-cum-refund               export  pass  in  Form 12  after  obtaining  a               specimen  signature  of the  importer  or  his               authorised agent on such pass.               (5) The importer accompanied by an escort,  if               provided  by the Council, shall then take  the               goods  beyond  the octroi limits  through  the               Exit  Naka  within the time limit and  by  the               route  specified in the pass. Before  crossing               the  Exit Naka, the impoter shall present  the               goods  to the Octroi Officer at the Exit  Naka               for inspection, with the pass. The time  limit               shall be fixed with due regard to the distance               of  the  Exit  Naka from  the  Central  Octroi               Office or the Branch office, but in no case it               shall  exceed 12 hours from the time of  issue               of the permission-cumrefund export pass.               (6)  The Octroi Officer at the Exit  Naka,  on               presentation  of  such goods as  well  as  the               pass, shall satisfy himself that-                   (a)  the  pass as well as  the  goods  are               presented within the specified time limit;               463                (b)the seals or marks, if any, are inact; and               (c)  the goods actually tally with those  men-               tioned in the pass.               On being so satisfied, he shall make  relevant               entries  in  the register maintained  for  the               purpose,  obtain  signature  of  the  importer               thereon,  sign a certificate as given  on  the               pass,  deliver  the same to the  importer  and               allow  the  goods to pass  beyond  the  octroi               limits.               28.  Provision  for refund  of  deposit.-  (1)               When  any goods for which a deposit  has  been               paid under rule 24 at the time of their import               are exported, the amount of deposit  recovered               shall,  subject to the provision  of  sub-rule               (2), be refunded.               (2) The refund shall be admissible, if all the               conditions below are satisfied.-

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                (a)  The refund is applied for  within  one               month from the date of e x port.                  (b)  The  goods  are exported  out  of  the               octroi limits within a period of six months of               their import.                  (c) The application for refund is supported               by  a duly certified  written  permission-cum-               refund export pass.                 (d)  All the conditions in sub-rule  (3)  of               rule 25 are fulfilled.                 (e)  The amount claimed as refund  is  with-               drawn  within  three months from the  date  of               intimation  to  the importer  to  receive  the               amount.                 (f)  The goods exported were declared to  be               intended  for  temporary  detention  with  the               importer  and eventual export at  the time  of               import:               Provided  that the said period of  six  months               shall not apply to goods imported by the  Food               Corporation of India established under section               3 of the Food Corporation Act, 1964.               29.  Procedure for refund. - (1) The  Applica-               tion  for refund of deposit shall be  made  in               Form 13 by the importer himself or by his duly               authorised agent in this behalf in writing  on               any  working  day during the hours  fixed  for               money  transactions  by  the  Council  at  the               Central  Octroi Office within one  month  from               the date of the actual export. If the last day               for claiming refund falls on a public  holiday               such application shall be accepted on the next               working day.               464               (2)  Such application shall be accompanied  by               the  duly certified relevant  written  permis-               sion-cure-refund export pass and shall contain               reference to the connected export  intimation-               cum-application already given by the importer.               There shall be a separate application for each               written permission-cure-refund export pass.               (3) If the refund application is in order  and               satisfies all the conditions specified in  the               last preceding rule, the amount of the  refund               shall  be correctly determined subject to  the               limitation  prescribed in the next  succeeding               rule".               30. Value, weight, etc. of goods for  purposes               of  refund.-  When the refund  is  claimed  in               respect  of  goods on which duty  is  leviable               ad-valorem,  the  value for  the  purposes  of               refund  shall be the value as per  invoice  on               the strength of which the duty was  originally               paid  together with such cost of carriage  and               other incidental charges that were then deter-               mined.  Where the value was determined in  the               absence of invoice on the basis of market rate               prevalent  on  the day of import,  that  value               only  should be considered and not the  market               price prevalent in the local market on the day               of export".                                      FORM 4                              (Rules 14, 24 and 25)     Declaration  in respect of the dutiable  goods  imported into  the  Municipal octroi limits, which are  intended  for

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temporary detention with the importer and eventual export. To The Octroi Officer, Octroi Naka No.  .............. ............  Municipal Council.   I,   ....................(insert full name and address  of the importer) hereby declare that the below mentioned  goods are  meant  for  temporary detention with  me  at   ........ (specify  address at which to be kept) for  eventual  export outside  the  octroi limits. I am willing to pay  an  amount equal  to the amount of full octroi due thereon  as  deposit either  in  cash or in the form of Bank  Guarantee  and  may claim  refund  according  to the rules if  these  goods  are exported  outside limits within six months from the date  of their  import.  The  below mentioned details  are  true  and according  to  the original invoice, true copy of  which  is filed  herewith. The said invoice covers all the  goods  im- ported by me as per Bill of Entry/Railway Receipt/Goods Transport         Memo/Air         consignment          Note No.  ..........dated  ........ 465 Sr. No   No.and  Description  Weight  Value  Senders  Rem- No  &date descri-   of the     or    plus all  name&  arks      of  ption of    goods     goods incidental address   import  packages                  charges     in full  document                           which are to                                     given seper-                                        ately 1    2      3         4       5         6         7       8 Full residential/business address of the importer. Date  ..........  Signature of the Importer     I  have checked the above particulars with  the  invoice and verified the goods, which are found to be correct.  True copy  of  the invoice appended is verified and found  to  be correct. The weight or quantity or value, together with  the incidental   charges  declared,  is  correct.  The   taxable weight/quantity/value of the goods is  .......  and the rate of octroi  ........ Date.......                                Inspector/Clerk.    The amount of Rs.  ........on account of deposit has been recovered under receipt No.  ..........  dated  ........... Date .........                             Inspector/Clerk.                      FORM5                (Rules 14 and 15)     Declaration in respect of the dutiable goods imported on behalf  of person, firm, or body allowed to keep an  account current. To,    The Cetroi Officer,    Octroi Naka No.  .........    Municipal Council. I,.................   (insert the full name and  address  of the importer) hereby declare that the below mentioned  goods are  being  imported  into the Municipal  Octroi  limits  on behalf of  ..............  (insert the name of persons, firm or  body  allowed to keep an account current) and  that  the below  mentioned value and weight/quantity of the  goods  is true  and correct and is according to the original  invoice, true copy of which is filed herewith. The said invoice fully covers  all  the goods imported by me today as per  Bill  of Entry/Railway Receipt/Goods Transport Memo/Air Consignment Note No.  .........  dated  ..........,  I further undertake to  produce  the said invoice for your  inspection  whenever demanded by you within one year from today. 466

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To be filled in by the importer            To be filled in                                             at the Central                                             Octroi Office 1.Sr.No. 2. Bill of Entry ’Railway Receipt’ Goods Transport Memo/ Air Consignment Note. 3. Number description of packages. 4. Goods. 6.  Value  plus  incidental charges which are  to  be  given seperately. 7.Rate of Ovctroi. 8. Amount of Octroi recoverable. Date.......Signature of the importer       Dues entered in I have checked the above particulars       Account Current with the invoice and verified the goods,    Date  .......... which are found to be    correct. True     Octroi copy of the invoice      appended is       Superintendent verified and found to be correct. The weight or quantity or value, together with the incidental charges declared, is correct. Issued pass No ...dated ... Date ...............  Inspector/Clerk FORM6 (Rule 15) Pass  for goods imported on behalf of person, firm  or  body allowed to keep an account current  ....Municipal    Council:.......Municipal   Council    Book No.   .....  Entrance Naka No.  .....: Book No.  .....   En- trance Naka No.  ..... Counterfoil of pass     Pass for goods                        imported by in account current  ....                        (Name of Person, firm or body) Description         No. and       Description   Weight,                    Description    of the        quantity                     of packages   goods         or value                     1             2             3 Dated  ..........              Dated  .......... Entrance Naka Inspector/Clerk  Entrance Naka Inspector/Clerk 467                     Form 11                (Rules 25 and 26) Intimation-cum-application for written permission for Export of Goods Temporarily detained with the Importer To The Superintendent of Octroi,  ..........  Municipal Council. Sir, I.......................  (insert the full name and  address of  the importer) hereby declare my intention to export  the goods to.............through Naka No. ........  as  detailed below. The certified copy of original invoice/invoices under which  these  goods were imported are appended  herewith.  I have  produced  the goods for  actual  verification.  Kindly grant me the permission to carry the goods to the said Naka. SI.  Description  Quantity  Date of  Import  Deposit  Gross No.   of the   (Number of  Import  invoice  receipt weight        goods     bags or   & No. of  No. and number &                  cases)    entrance   date    date                             Naka 1      2            3         4         5        6       7 Value Amount to be   Number of    Name and    How    Remarks       refunded    Refund Export  address of  exported                   pass granted  the consignee 8       9            10           11            12       13 Date ...........                       Signature of Importer Verified  the  contents and the weight as  above  and  found

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correct. Countersigned. Octroi Officer.     Signature of the Refund Inspector/Clerk. Receipt No....... 468 FORM Rule 25) Written Permission-cum-Refund Export Pass Receipt No..............      Date ...............  19 Sl. Month  Name and  Name and   Description  Quantity  Gross no. and  address of address of   of the   (number of  weight   date  the impoter the consignee  goods   bags or cases) 1   2       3            4           5             6     7 Value Deposit   How    Exist Date & time by  Whether Remarks       to be    exported Naka which the goods   goods       refunded          No.  should reach the  sealed or                               Export Naka     escort given 8       9       10       11        12         13       14 *Fee  for Written Permission-Cum-Refund Pass  Rs   ......... Miscellaneous Receipt No.........., dated.........., Signature of the importer     Signature of Octroi Officer I hereby certify that the goods mentioned above have  passed outside  the  octroi limits this day the..........   of  the month..........  19    Time...........    a.m./p.m.  in   my presence  Railway  receipt......../Vehicle  No.    ......... The  seals, if any, thereon were intact when the goods  were presented to me for verification. Date  ...........        Signature of the Exist Naka Officer                           Naka No.  ........... *This  fee should be levied in accordance with the  bye-laws framed under section 338 for granting permission to take the goods from the Central Octroi Office or Branch Office to the Exist Naka.                 FORM13               (Rule 29)      Application for Refund of Deposit To The Superintendent of Octroi,  ..........  Municipal Council. 469 Sir,   I,  ................the resident of..........hereby  apply for  refund  of  deposit as  per  enclosed  Written  Permis- sion-cum-Refund  Export Pass No.  ..........dated.........., as   the   goods  mentioned  in  the  pass   were   exported on.....under my intimation-cum-application, dated.........., I   therefore,   request  you  to  grant   the   refund   of Rs.  .........and oblige. Enclosure: Date..........                       Signature of Importer     On a reading of these rules it appears to be that  Rules 24,  25  and 28 in terms would apply only to  cases  failing under category four, stated above. The declaration in Form 4 referred to in Rule 24 and deposit of the amount  equivalent to octroi duty payable at the entry point, production of the goods for verification at the Central Octroi Office are  all consistent with its being applicable to a case where  dutia- ble goods are imported for temporary detention and  eventual export  by  a person having a bonded warehouse  of  his  own contemplated  in  Rule 14 (1) (d) and not Rule 14  (1)  (e). However,  Rules  29 and 30 are general in terms and  may  be invoked in both the cases falling under Rule 14 (1) (d)  and (e). Sub-rule (3) of Rule 29 refers to the compliance of the conditions  in Rule 28 and that is how it may be  said  that the  provisions of Rule 28 are attracted to the cases  of  a

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person having a bonded warehouse and the facility of account current.  However, the Rules have to be read and applied  in such  way that they do not conflict with but are  consistent with  the facility of current account given to the  Company. Form  5 which is applicable to a case falling under Rule  14 (1)  (e) does not require the Company (importer) to  give  a declaration at the time of arrival of the goods at the entry Naka point that the "goods are meant for temporary detention with"  the  Company at its warehouse  "for  eventual  export outside  the octroi limits". The Company need not also  make any  deposit with the Naka Inspector at the point of  entry. An  amount equivalent to the octroi duty payable in  respect of  the goods is only entered in the account  current  after the  goods  have reached the warehouse and verified  by  the Octroi  Officer. Form 4is not applicable to the case of  the Company which has got a current account facility. The Compa- ny, is, therefore, bound to give a declaration only in  Form 5, and need not give a declaration as in Form 4 nor is there any  obligation to deposit an amount equivalent to the  full octroi  duty  with the Octroi Inspector at  the  Entry  Naka Point. Further reference to original invoices/in Forms 4 and 5  is only for the purpose of checking the  particulars  en- tered  into  in the forms. The production of an  invoice  is not, having regard to the 470 purpose  of such production, to be insisted blindly. If  the particulars furnished in the form including  weight/quantity or value could be established satisfactorily by other  docu- ments,  we have no doubt that will be sufficient  compliance with  the Rules. Column 5 of Form 11 also refers to  invoice and  the  date of invoice. This is again  to  correlate  the goods  exported with the goods imported. If the identity  of the  goods could be established by evidence other  than  the production  of invoices that should satisfy the  Rules.  The invoice as such has no bearing on the liability of the goods for octroi or the right of the Company for refund.     So  far as the production of the original  invoices  are concerned,  the learned counsel for the Company pointed  out that  the  goods are brought from  their  own  manufacturing units  at  Pune and Jamshedpur and it will only be  a  stock transfer and this requirement of producing original  invoice could not be complied with and is not applicable. Under  the current  account procedure the invoices, if any and all  the other documents are verified when the goods reach the  ware- house  with  reference  to the  description  of  the  goods, weight/quantity, value and other particulars and it is  only after  verification the octroi duty leviable  is  determined and amount is debited in the account current and the  demand also is issued.     The  learned counsel for the appellant also referred  to certain  documents to show that for every category of  arti- cle,  the  Company has given a distinctive  number  and  the goods  are  easily identifiable and the number of  items  or quantity  imported are all record in the register  and  com- puterised  for  easy verification. It is  these  identifying numbers  of the articles that are mentioned in  the  intima- tion-cure-application for written permission for export.  He also relied on the fact that the Company has no  manufactur- ing unit within the Thane Municipality. Similarly, Column  6 of  Form  II also could not be complied with as  it  is  not applicable to a person who is having current account facili- ty. So far as the value is concerned the learned counsel for the  appellants have fairly stated that the  respondent  was taking 72% of the list price of the articles for determining octroi  payable, for which he has no objection. In fact,  he

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has  suggested  that since the Company publishes  the  price list periodically and that which shows the current price  at any point of time may be taken as the basis for such  valua- tion.     The  Octroi  Exit Naka Officer had refused to  give  the certificate  of export pass on the ground that the  particu- lars in Columns 5 and 6 of Form 11 could not be verified  as the  original  invoices and the deposit  receipts  were  not produced.  Since these columns could be filled only  to  the extent possible by a person having an account current facil- ity  and there is no dispute about the export of  the  goods mentioned  therein the refusal to give the export pass  cer- tificate. by the Exit Naka Officer could not be sustained. 471     The  next point to be considered is the procedure to  be followed when the importer wants to "breaking the hulk"  and repack  the goods in smaller quantities and also the  proce- dure  relating to filling up Forms 11 and 12 and the  refund applications  in such circumstances. Rules 24  (2.)   states that  for breaking the bulk and repacking in  smaller  pack- ages, sanction of the Superintendent of Octroi is  necessary and  the "breaking bulk" shall also be done in the  presence of  an officer deputed for this purpose. Rule 62 of  Chapter VIII  of  the Schedule to the  Bombay  Provincial  Municipal Corporation Act, 1949 provides that subject to the  standing orders  not  less than 90% of the octroi paid on  any  goods shall  be  refunded if such goods are  exported  beyond  the limits of the city within six months of payment:                     "provided that...... (C) in the case  of               goods  which  have  been   broken  bulk  prior               intimation  has  been given  to  the  officers               specified  in  this  behalf  in  the  standing               orders and the place or places of storage have               been reported to him from time to time".     Paragraph  5  of Appendix IV to this Act which  we  have noticed  earlier  states  that the rules  flamed  under  the Municipal  Act  shall "in so far as it is  not  inconsistent with the provisions of this Act, continue in force". Rule 62 of  Chapter VIII forms part of the Act. The learned  counsel for  the appellant, therefore, contended that Rule 62  shall prevail  and prior intimation of the intention to  ’breaking bulk’  shall  be enough and there was no necessity  for  the Company to get the sanction of the Superintendent of  Octroi or break the bulk in the presence of an officer deputed  for the  purpose as required under sub-rule (2) of Rule  24.  In other words according to the learned counsel Rule 24 (2)  of the  Octroi  Rules is inconsistent with Rule 62  of  Chapter VIII  of  the Schedule to the Act and to  the  extent.._  of inconsistency  it shall be deemed to be not  applicable.  On the  other hand the learned counsel for the respondent  con- tended that Rule 62 (c) deals with prior intimation and Rule 24  (2) deals with the sanction and breaking of the bulk  in the presence of an officer deputed for that purpose and both the  rules  can stay together and operate and  there  is  no inconsistency.  We are not impressed with the argument  that there  is an inconsistency between Rule 62 and Rule 24  (2). The intimation contemplated in Rule 62 imply that the break- ing the bulk shall be done with the knowledge of the  octroi authorities.  But it Cannot be said that the  rules  further provide that after intimation the breaking of the bulk shall be  done in the presence of the officers and after  sanction that would in any case be inconsistent. Both the rules  thus can stand together.     In  H.M.M.  Limited v. Administrator, [1989] 4  SCC  640 this  Court had occasion to consider the effect of  non-com-

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pliance with this require- 472 ment  of  a similar provision, on the right to  get  refund. Shortly stated the facts in that case were these: The appel- lant  brought  into the municipal limits  Horlicks  in  bulk containers  (large  steel drums) for being  packed  in  unit containers (glass bottles) at the packing station in  Banga- lore  and thereafter exported outside the municipal  limits. In respect of the milkfood so exported in glass bottles  the appellants sought refund of octroi on the ground that  there was no consumption, use or sale within the municipal  limits and  the  goods were exported. Rule 24 of the  Octroi  Rules that were in force in Bangalore city provided:               "24...0n all articles on which octroi duty has               been paid and which are subsequently  exported               beyond  the  octroi  limits  without  breaking               bulk, refunds shall, subject to the  following               rules,  be  granted  at  the  rate  originally               charged  at the time of import; provided  that               no  such refunds shall, except in the ease  of               timber  imported  and re-exported  in  log  be               granted unless such goods are exported  within               three months from the date on which octroi was               levied".     Relying on this provision it was contended by the Munic- ipality that breaking the bulk amounted to "use" within  the municipal limits attracting levy of octroi and no refund was permissible.  The refund application had also not been  made within  three  months  from the date  on  which  octroi  was levied. It was admitted that the appellants had not followed that  procedure prescribed in Rule 24. This Court held  that mere transferring of a bulk product in small containers like packets  or bottles for the purpose of sale does not  amount to  use of the goods in the sense the word is used in  rela- tion  to levy of octroi. It was further held that the  words "without breaking bulk" is not an expression of art and that meant only transferring the product from the drums by break- ing the seal of the drums, to the bottles for the purpose of exporting  or for taking them out of the  municipal  limits, and  that would not amount to either use or  consumption  of the  Horlicks powder within the municipal limits  attracting the levy of octroi.     The ratio of the judgment clearly is that merely on  the ground that the goods are not exported in bulk as originally imported, the levy does not become valid or that the import- er who exported the goods loses his right to a refund of the octroi  paid.  The goods neither loose  their  identity  nor cease to be identifiable. Once we reach the conclusion  that there is no consumption or use, octroi is not attracted  and if any levy has been made and the amount collected, the same becomes legally refundable even when the goods are  exported in parts and in smaller packages. This is particu- 473 larly  so because in the case of goods not consumed or  used within the octroi area but exported there is a constitution- al bar for the levy of octroi.     In this connection we may also refer to another decision reported in Municipal Committee, Khurari v. Dhannalal  Sethi & Ors., [1969] I SCR 166. The rules considered in that  case also provided that an application for refund was to be  made in  the prescribed form and that the exporter after  filling in  the  particulars had to present his application  at  the office  appointed for that purpose. There were  other  rules which provided an elaborate procedure to be followed at  the time  of  export of the goods. These rules  related  to  the

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octroi  officers satisfying himself that the  goods  brought for  export agree with those mentioned in  the  application, presentation of the claim within the prescribed time,  iden- tifying of the goods exported with those imported and  other matters. This Court held that:               "these  rules do provide a procedure which  an               exporter  wishing to claim refund has to  fol-               low.  But  the question is whether in  a  case               where  an  exporter  has not done  so,  is  he               disentitled from claiming the refund. The real               difficulty in the way of the appellant Commit-               tee is that though the rules lay down a proce-               dure  which such an applicant has  to  follow,               they  do not provide at the same time that  an               applicant for refund who has failed to  follow               the procedure laid down in r.r. 35 to 39 would               be  disentitled  to claim the refund.  In  the               absence  of such a provision coupled with  the               categorical  language of r. 27 giving a  right               to  an  exporter of dutiable  goods  to  claim               7/8th of the duty paid on such goods on  their               import,  it  becomes difficult to  uphold  the               denial by the appellant Committee of the right               of respondents 1 and 2 such a refund. We  are,               therefore, of the opinion that in the  present               state  of  the  rules, the  appeal  must  fail               though for reasons different from those  given               by the Board of Revenue and the High Court".     It  may  be pertinent to mention  that  the  Maharashtra Municipalities (Octroi) Rules, 1968 also do not contain  any specific  provision  that an applicant for  refund  who  has failed to follow the procedure would be disentitIed to claim the refund. It may be noted that the amount collected  which is  equivalent to the octroi duty payable on the  goods,  on entry  into  the  octroi limits while in  detention  in  the warehouse is only as a deposit pending export of the  goods. The  other  aspect is that once octroi is not  leviable  the deposit made by the importer pending export is in the nature of a trust and refundable in the event of the export of  the goods.  Further in a given set of facts, whether  the  rules have been complied with will have 474 to  be tested having regard to the nature of the  particular transaction and whether the object of the procedure provided is  otherwise  fully  satisfied.    ‘ Rule  28  also  merely states that the refund shall be admissible if all the conditions  in  sub-rule 2 of that Rule are  satisfied.  The object  of requiring intimation or sanction and presence  of an  officer when breaking the bulk in the scheme  of  octroi levy  and  refund is to ensure that dutiable  goods  do  not escape  the assessment and refunds are made only in  respect of  goods  exported. In other words  the  whole  requirement relates to the identification of the goods. In that sense if the  same  is otherwise complied with the  right  to  refund cannot be denied. These rules cannot be read as enabling the municipality to levy and collect octroi even in cases  where the goods have not been imported for consumption or use.  As held  by  this  Court in Kirpal Singh  Duggal  v.  Municipal Board,  Ghaziabad,  [1968] 3 SCR 551 the  octroi  rules  are intended  to regulate the system on which the refunds  shall be  allowed and paid. What are merely matters  of  procedure which  the municipality was entitled to  require  compliance with  in  granting  refund cannot be  treated  as  condition precedent  for  the entitlement of the  refund  itself.  The Constitution prohibits levy of tax except in accordance with

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law. When the goods are not imported for consumption or  use within  the octroi area the municipality ceases to have  any constitutional right to levy octroi. If the goods  therefore have merely entered into the octroi limits and passed out of the same no octroi duty is attracted.     The  concept  of octroi as held by this Court  in  Burma Shell  s case (supra) may include "the bringing in of  goods in  a local area so that the goods come to a repose  there". It is this concept that is reflected in Rule 28 (2) Co) when it requires evidence that the goods were exported out of the octroi  limits  within a period of six months of  their  im- ports. The learned counsel for the appellants Mr. Andharuji- na  had  expressed certain difficulties  in  satisfying  the Corporation that the goods imported were exported within the period  of  six months as provided in the rules in  view  of certain peculiar circumstances in this case. He pointed  out the  goods received in bulk are small small items and  there are  about 16000 distinctive types of articles and when  the bulks are broken and each of the categories items are  mixed up  together  it becomes difficult for him  to  individually identify  when  the goods were received and when  they  were exported. However, he was sure that the goods were  exported before  six  months. When this difficulty  was  pointed  out during  the pendency of the appeal, as an interim  direction this Court by Order dated 1.5. 1989 directed the parties  to proceed on the basis that the goods which came in first had gone  out  first unless some factors  or  features  indicate otherwise.  This is not equitable principle unknown to  law. Even  as  early as in 1816 with reference to money  paid  on account to a creditor, in Clayton’s case (1814) 475 23  All. E.R. Rep. P. 1, it was held that in the absence  of an agreement to the contrary, in the case of current account containing  debit and credit entries there is a  presumption that  the  first item on the credit side of the  account  is intended  to be applied in the payment of the first item  on the debit side of the account. This is an equitable  princi- ple  which could be followed in the instant case and it  may be presumed that the goods which came in first have gone out first and the six months period could be determined on  that basis. In any case in view of the interim direction given by this  Court on May 1,1989 that may be usefully  be  followed for the future also in this case.     To sum up: Having regard to the nature and incidence  of octroi  unless the octroiable goods are consumed or used  or are  meant  to  reach an ultimate user or  consumer  in  the octroi  area no octroi is leviable. The words ’sale  therein in the words "consumption, use or sale therein in the  defi- nition octroi means sale of octroiable goods to a person for the  purpose  of consumption or use by such  person  in  the octroi area. If sale was intended for consumption or use  in the  octroi  area whether the  purchaser  actually  consumed inside or outside octroi area is irrelevant. Rules 24 to  30 and  the forms in the system of levy of octroi are  intended to regulate the procedure for collection, identification  of dutiable  goods and correlation of goods exported  with  the goods imported for the purpose of refunds of octroi collect- ed. In view of constitutional bar octroi is not leviable  if the goods are not brought into the octroi area for  purposes of consumption or use in the area but for export and in fact exported  by the importer himself or the sale by  him  occa- sions  the export. Compliance with the procedure  prescribed in the Rules for filing claims of refunds are not  condition precedent  for  the right or eligibility for refund  or  the liability  to refund but are provisions regarding  proof  of

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export of the goods imported and are not meant to be exhaus- tive  either. They are to be interpreted and  understood  in that  sense.  The  object of the Rules fixing  a  period  of limitation  for  export  however is  different.  The  export cannot  be put in perpetual doubt and the goods may be  con- sidered  to have come to a repose if they were not  exported within  a particular period provided in the rules.  Applying these principles to the instant case, on facts the rejection of  refund applications on the ground that Rule 25  (3)  (d) had not been complied with was illegal. Since the  rejection of  the  claims  for refund was merely on  the  ground  that either  Form  4 and original invoices were not  produced  or columns  5 and 6 of Form 11 or the corresponding columns  in Form  12 had not been filled with reference to  an  original invoice  or  Form 4 or deposit receipt and  the  refusal  to issue  export pass certificates on those very grounds  which we have stated are untenable the other orders of  rejections are also invalid. If the goods are mixed up and unidentifia- ble 476 due  to breaking bulk and repacking in smaller and  assorted packages  before export the principle that the first  export was  of  the goods first imported, subject to  any  evidence available to the contrary, may be applied and the six months period prescribed for export may be determined accordingly.     When  these appeals were pending by way of  interim  ar- rangement this Court by order dated 25.4.1990 directed  that in order to obviate the difficulty of identifying the  goods at the time of export by reason of the breaking of  the)bulk and  in order avoid doubts, the respondent  Corporation  may depute their officer or officers on all working days at  the warehouse  of the Company to supervise the breaking  of  the bulk  subject to the Company reimbursing the entire  monthly payments and other allowances to be paid to the said officer or officers as per bill or pay slips sent by the Corporation to  the Company. We think that this procedure could be  con- tinued  and followed in future also so that while  the  pur- poses of the rules are served the free trade and commerce of the Company which is stated to have a large turnover is also not affected.     The  learned counsel for the respondent  then  contended that the appellants have recovered the amounts paid by  them by  way of octroi duty from the dealers or the customers  to whom  they had sold the goods and therefore they are in  any case not entitled to get a refund. The argument was that  if refund is ordered it would amount to allowing the appellants to  unjustly enrich themselves at the cost of the public  to whom  the burden had already been passed. This  argument  is based  on the ground that in the selling price  the  company had merged the octroi duty originally paid as deposit and if a refund is made the company would be getting an  additional amount  over  and above normal price which they  would  have charged  but for the fact that they were initially asked  to deposit  octroi. There is no evidence that any of the  arti- cles sold by the Company is subject to any price control  by the  Government or that the Company had charged  any  octroi separately in the bills, Invoices and the other documents of sale  to  the outside purchasers produced before us  do  not also  show that any octroi was separately charged  and  col- lected  by  the  Company. It may be mentioned  that  in  the rejoinder  filed by the appellant in the writ petition  they have  specifically  denied  that they  "have  recovered  the amount  paid by them by way of octroi duty from the  dealers to whom they had sold the goods or that the dealers in  turn have recovered the octroi duty from the customers". In  view

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of this the question of unjust enrichment does not arise. 477     This  appeal is accordingly allowed on the above  terms. There will ’however be no order as to costs. T.N.A.                                                Appeal allowed. 478