2011 (7) TMI 1100 - SC - Indian Laws

Nature of the consignments concerned with their dates and the number of bottles packed with beverages brought within the municipal limits with their weight; Proof regarding the fact that these bottles were not sold within the municipal limits to wholesalers retailers or to any other person. Number of bottles covered by the consignments concerned which were subsequently taken out as empty bottles beyond the municipal limits for recycling and weight of such empty bottles. Whether the bottles which are actually found to have been taken out of the municipal limits were the very same bottles containing beverages brought within the municipal limits by way of relevant consignments? Whether the value of such bottles and amount of octroi duty on their weight was passed on to the consumers or not?

Summary

Issues Involved:
1. Validity of the bill issued by the Respondent Corporation levying and demanding octroi on glass bottles and crates.
2. Applicability of the judgment in Acqueous Victuals Private Limited v. State of Uttar Pradesh & Ors.
3. Definition and scope of "octroi" under Section 2(42) of the Bombay Provisional Municipal Corporation Act, 1949 (BPMC Act).
4. Amortization and inclusion of the cost of glass bottles and crates in the retail sale price of aerated beverages.
5. Mechanism for refund claims and the procedure for challenging the valuation of bottles and crates.

Detailed Analysis:

1. Validity of the Bill Issued by the Respondent Corporation:
The primary issue in both appeals was the challenge against the validity of the bill issued by the Respondent Corporation, which levied and demanded octroi on glass bottles and crates used by the appellant company. The High Court dismissed the writ petitions, upholding the validity of the bill. The appellant argued that the glass bottles and crates were returnable and reusable, and thus, octroi should not be levied on them separately from the aerated beverages. The Supreme Court, however, found that the High Court's reliance on the judgment in Acqueous Victuals was appropriate and dismissed the appeals.

2. Applicability of the Judgment in Acqueous Victuals Private Limited v. State of Uttar Pradesh & Ors.:
The Supreme Court extensively referred to its earlier judgment in Acqueous Victuals, which dealt with a similar issue of octroi levied on the weight of bottles containing beverages. The Court reiterated that octroi can be levied on goods brought within municipal limits for consumption, use, or sale. The judgment in Acqueous Victuals established that if the bottles are taken out of the municipal limits after their contents are discharged, they are not subject to octroi. The Supreme Court found that the principles laid down in Acqueous Victuals were applicable to the present case, despite the difference in the mode of computation (weight vs. value).

3. Definition and Scope of "Octroi" under Section 2(42) of the BPMC Act:
The term "octroi" under Section 2(42) of the BPMC Act is defined as a cess on the entry of goods into a city's limits for consumption, use, or sale. The appellant contended that since the glass bottles and crates are not consumed, used, or sold within the municipal limits, they should not be subject to octroi. The Supreme Court, however, upheld the interpretation that if the bottles and crates are not finally rested within the municipal limits and are taken out for recycling, the appellant can claim a refund, but the initial levy of octroi is justified.

4. Amortization and Inclusion of the Cost of Glass Bottles and Crates in the Retail Sale Price of Aerated Beverages:
The appellant argued that the cost of the glass bottles and crates is amortized and included in the retail sale price of the aerated beverages, and thus, no further octroi should be levied on them. The Supreme Court noted that no specific facts were placed before the High Court regarding this claim. Moreover, such disputed questions of fact could not be adjudicated under Article 226 of the Constitution. The Court suggested that evidence regarding amortization could be presented when claiming a refund.

5. Mechanism for Refund Claims and Procedure for Challenging Valuation:
The Supreme Court referred to the detailed provisions under the BPMC Act and the relevant rules for making an application for refund. The appellant company was directed to produce evidence on specific points, such as the nature of consignments, proof of non-sale within municipal limits, and the number of bottles taken out for recycling. The Court also addressed the appellant's concerns about the cumbersome procedure for levy and collection of octroi, directing the Respondent Corporation to consider and devise a suitable and convenient mechanism.

Conclusion:
The Supreme Court dismissed both appeals, upholding the validity of the octroi levy on glass bottles and crates. The Court affirmed the applicability of the judgment in Acqueous Victuals and clarified that the appellant could claim a refund if the bottles and crates are not consumed, used, or sold within the municipal limits. The Court also directed the Respondent Corporation to consider the appellant's proposals for a more efficient mechanism for octroi collection.