1989 (11) TMI 310 - SC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction to Levy Octroi Tax
2. Declaration Requirement under Rule 9
3. Current Account Facilities under Section 133 and Rule 13
4. Refund of Octroi Duty

Summary:

1. Jurisdiction to Levy Octroi Tax:
The primary issue was whether the Municipal Council had jurisdiction to levy octroi tax on goods brought within the municipal limits but not sold, consumed, or used therein and subsequently exported outside the said limits. The respondent No. 2 (Indian Oil Corporation) argued that the diesel brought within the Jodhpur Municipality was ultimately exported and sold to respondent No. 1 at Dangiawas for use, consumption, or sale outside the municipal limits. The High Court, referring to Section 104 of the Rajasthan Municipalities Act, 1959, held that octroi duty is chargeable only on goods brought within the municipality for consumption, use, or sale therein. The Court relied on the decisions in Burmah Shell Oil Storage & Distributing Co. India Ltd. v. The Belgaum Borough Municipality and Hiralal Thakorlal Dalal v. Broach Municipality & Ors., concluding that octroi cannot be levied on goods meant for use or consumption outside the municipal limits.

2. Declaration Requirement under Rule 9:
The appellant argued that no declaration as required by Rule 9 of the Rajasthan Municipal Octroi Rules, 1962 was made by the respondent No. 2, and hence, the goods should be treated as brought within the municipal limits for consumption, use, or sale therein. However, the High Court found that Rule 13, which provides for current account facilities, overrides the requirements of Rule 9. The Court held that Rule 13 is a special provision applicable to persons with current account facilities under Section 133 of the Act, and thus, the declaration under Rule 9 was not necessary.

3. Current Account Facilities under Section 133 and Rule 13:
The respondent No. 2 was provided current account facilities under Section 133 of the Act and Rule 13 of the Rules. The High Court held that under Rule 13, the octroi duty is calculated based on the total amount of goods brought in minus the goods transported outside the municipal limits. The Court found that the Indian Oil Corporation had been granted current account facilities, and therefore, the octroi duty should be charged accordingly. The High Court concluded that the Municipal Council had no jurisdiction to levy octroi on goods re-exported by the Indian Oil Corporation to retail outlets for use and consumption outside the municipal limits.

4. Refund of Octroi Duty:
The respondent No. 1 sought a refund of the octroi duty paid on the diesel exported to Dangiawas. The High Court held that there was no privity of obligation between respondent No. 1 and the Municipal Council, as the octroi was charged from respondent No. 2. However, the High Court noted an undertaking given by the appellant to refund the octroi charged on goods re-exported outside the municipal limits if the writ petitions were allowed. The Court directed that the Municipal Council refund the amount of octroi duty paid on petroleum products re-exported by the Indian Oil Corporation to Dangiawas outlet for supply to respondent No. 1, who could recover the same from the Indian Oil Corporation.

Conclusion:
The Supreme Court upheld the High Court's judgment, affirming that the Municipal Council had no jurisdiction to levy octroi on goods meant for use or consumption outside the municipal limits and that the current account facilities under Section 133 and Rule 13 exempted the need for declarations under Rule 9. The Court also upheld the direction for the refund of octroi duty. The appeals were dismissed with no orders as to costs.