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Issues Involved:
1. Validity of Section 113 of the Punjab Municipal Corporation Act, 1976. 2. Authority of the Municipal Corporation to levy octroi duty on petroleum products exported outside municipal limits. 3. Determination of the point of sale and transfer of property in goods. 4. Refund of octroi duty already deposited by the appellant. Detailed Analysis: 1. Validity of Section 113 of the Punjab Municipal Corporation Act, 1976 The appellant challenged the validity of Section 113 of the Punjab Municipal Corporation Act, 1976, arguing that it authorized the levy of octroi on articles imported within municipal limits without reference to their use, consumption, or sale, which was beyond the power of the state legislature as per Entry 52 of List II of Schedule VII of the Constitution. The High Court held that the provisions of Section 113 must be read in conjunction with Entry 52, which limits the levy of octroi to goods imported for consumption, use, or sale within the local area. Thus, Section 113 was deemed intra-vires when construed in this limited sense. The court agreed with this interpretation, asserting that the state legislature's authority is circumscribed by Entry 52 and cannot extend beyond it. 2. Authority of the Municipal Corporation to Levy Octroi Duty on Petroleum Products Exported Outside Municipal Limits The appellant did not dispute its liability to pay octroi duty on goods consumed, used, or sold within the municipal limits but contested the levy on goods exported to dealers outside these limits. The High Court ruled that octroi duty is not leviable on goods re-exported outside the municipal limits, aligning with the principle that the state legislature's power under Entry 52 does not extend to goods not meant for consumption, use, or sale within the local area. This interpretation was supported by precedents, including the case of Burmah-Shell Oil Storage and Distributing Co. and Municipal Council, Jodhpur v. M/s Parekh Automobiles Ltd., which established that octroi is not chargeable on goods re-exported outside municipal limits. 3. Determination of the Point of Sale and Transfer of Property in Goods The core issue was whether the sale to dealers occurred at the appellant's depot within the municipal limits or at the dealers' outlets outside these limits. The High Court concluded that the property in the goods passed to the dealers at the depot, making the sale complete within the municipal limits, and thus, octroi duty was applicable. However, the Supreme Court found this conclusion unsupported by sufficient evidence. It emphasized the need to consider the affidavits and agreement clauses indicating that the risk and title transfer occurred only upon delivery at the dealers' outlets. The court noted that the High Court and appellate authority failed to adequately address these materials, leading to an erroneous conclusion. Consequently, the Supreme Court determined that the transactions in question were indeed re-exports, not subject to octroi duty. 4. Refund of Octroi Duty Already Deposited by the Appellant Despite ruling in favor of the appellant on the primary issue, the court held that the question of refund did not arise. The appellant had collected the octroi duty from its dealers, who had passed it on to consumers. Therefore, there was no equity in favor of the appellant to claim a refund. The court stipulated that the appellant would not be liable for future octroi duty on re-exported goods, provided it did not collect such duty from its dealers. Should the appellant collect octroi duty in the future, it must deposit the same with the Municipal Corporation. Conclusion The Supreme Court set aside the High Court's judgment, ruling that octroi duty is not chargeable on petroleum products re-exported outside municipal limits, and upheld the validity of Section 113 of the Punjab Municipal Corporation Act when read in conjunction with Entry 52 of List II of Schedule VII. The court denied the appellant's claim for a refund of octroi duty already paid, emphasizing that future collections of such duty must be deposited with the Municipal Corporation.
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