1988 (8) TMI 371 - SC - VAT and Sales Tax

Whether countervailing duty is includible in the octroi? Held that - Appeal dismissed. So far as the two periods after July 28, 1976 are concerned, I agree with my learned brother that there can be no doubt that this is included. The specific inclusion of the word countervailing duty and broader reference to duties incurred or liable to be incurred in the 1983 amendment in my opinion, only further clarifies the position which was prevalent even prior to June 28, 1983. The word incidental charges has a very wide meaning, particularly in a context where duties and taxes are referred to and the idea seems to be to include all items that will be taken into account by an importer as part of his cost. In regard to the period till July 28, 1976, I had a little doubt as the rule included only charges incurred till the arrival of the article at the place of import . But, considering that arrival is the event which simultaneously attracts both octroi and customs, I think that the later change of language was only clarificatory and I agree with the conclusion my learned brother has reached that the position should be the same for the first period also.

Issues Involved:
1. Inclusion of countervailing duty in the assessable value for octroi.
2. Interpretation of relevant statutory provisions and rules.
3. Determination of the point of time when the liability to pay countervailing duty arises.
4. Applicability of octroi rules before and after specific amendments.

Issue-wise Detailed Analysis:

1. Inclusion of Countervailing Duty in the Assessable Value for Octroi:
The core issue in this appeal was whether countervailing duty should be included in the assessable value for the imposition of octroi. The appellants argued that countervailing duty was not incurred "till the date of removal of the goods from the place of import" and therefore should not be included. The Division Bench of the High Court held otherwise, reversing the decision of a learned single judge who had ruled in favor of the appellants.

2. Interpretation of Relevant Statutory Provisions and Rules:
The court examined several statutory provisions, including Section 105 of the Bombay Prohibition Act, 1949, which allows the State Government to impose excise and countervailing duties on specified articles. Section 2(14) defines "excise duty" and "countervailing duty" as duties mentioned in entry 51 of List II of the Seventh Schedule to the Constitution. Section 106 outlines the manners of levying excise duties, including payment upon the issue for sale from a warehouse. Section 192(1) of the Bombay Municipal Corporation Act, 1888, provides for the levy of octroi on the entry of articles into Greater Bombay for consumption, use, or sale.

3. Determination of the Point of Time When the Liability to Pay Countervailing Duty Arises:
The court had to determine when the liability to pay countervailing duty arises. The appellants argued that liability arises only when the goods enter the market for use, sale, or consumption. The court, however, concluded that the liability is attracted at the point of import, i.e., the physical entry of goods into the taxing territory, with payment deferred if the goods are stored in a bonded warehouse. The bond executed for deferred payment indicates that the duty has already become chargeable.

4. Applicability of Octroi Rules Before and After Specific Amendments:
The court analyzed the Octroi Rules as amended on different dates:
- Prior to 28th July 1976: The rule included all incidental charges incurred by the importer till the arrival of the articles at the place of import.
- From 28th July 1976 to 28th June 1983: The rule included customs duties and all incidental charges except octroi incurred till the articles are removed from the place of import.
- After 28th June 1983: The rule specifically included countervailing duty among charges incurred or liable to be incurred till the articles are removed from the place of import.

The court concluded that countervailing duty was an incident of importation and should be included in the assessable value for octroi even before the 1983 amendment.

Conclusion:
The court upheld the Division Bench's decision, affirming that countervailing duty is includible in the assessable value for octroi. The appeal was dismissed, and all interim orders were vacated. The court emphasized that the taxable event for octroi is the entry of goods into the city limits for consumption, use, or sale, and not merely the physical entry. The inclusion of countervailing duty in the assessable value was justified based on the statutory provisions and the rules governing the imposition of octroi.

← Previous Next →