2017 (9) TMI 1997 - HC - Indian Laws

Levy of octroi on natural gas imported by the petitioner Oil and Natural Gas Commission within the municipal limits of the first respondent - whether natural gas was covered by unamended Entry 22(a)? - HELD THAT - Even without amending Entry 22(a), the Municipal Corporation had power to levy octroi on natural gas. Now we turn to the challenge to the provisions of the impugned Ordinance and the impugned Act. We have already quoted the relevant part of the impugned amendment. The impugned amendment amends clause (a) of Entry 22 by substituting the words petroleum products by the words petroleum products including natural gas and liquified petroleum gas . It seeks to make the said amendment retrospective by specifically providing that the words shall be and shall be deemed to have been substituted with effect from 1st day of April 1978 . Thus, the amendment seeks to clarify that the natural gas was always included in the petroleum products covered by Entry 22(a). In the Statement of objects and reasons appended to the impugned amendment, it is stated that natural gas was always implicitly included in Entry 22(a) as it is a part of the petroleum products. It further records that doubts were expressed whether natural gas and liquified gas were included in petroleum products. Therefore, an amendment is sought to be made though natural gas was already included and it is made retrospectively with effect from 1st April 1978 when the Municipal Corporation started levying octroi on natural gas or liquified gas products. The clear position of law is that every statute is presumed prima facie prospective unless expressly or by necessary implication it is given retrospective operation. But such presumption is not applicable to the declaratory or explanatory statues. Such statutes are made to supply an obvious omission or to clear up doubts as to the meaning of the provision or term or expression in the enactment. It is well settled that if the statute is curative or merely declaratory of the previous law, its retrospective operation is generally intended and is always open for the legislature to make enactments having retrospective operation - Law is very well settled that in case of a taxing statute, the powers of the legislature are different in the sense that more latitude is available to the legislature in the matter of fiscal statutes. Rule 25 is applicable when the importer after following the procedure of the said Rules either fails to pay octroi or the octroi paid is short or when such octroi after having been paid has been erroneously refunded due to inadvertence, error, collusion etc. In such cases, Rule 25 provides that the person primarily liable to pay such tax or difference of tax shall pay the amount of tax or deficiency on receipt of a demand issued within three months of the date of the import or payment of tax as the case may be. The present case is of complete evasion of payment of octroi. It is not the case of the petitioner that the petitioner followed procedure of filling in forms and claiming that octroi was not leviable on natural gas. There is no provision under the said Act which provides for a period of limitation or outer limit within which octroi could be levied or collected from the date of its import. Rule 25 is merely an enabling provision which enables the Municipal Corporation to take steps for recovery of octroi in the contingencies which are covered by the said Rule. By no stretch of imagination Rule 25 can be interpreted to mean that in a case of a person who evades octroi by clandestinely importing articles subject to octroi and who fails to follow the procedure laid down by the Octroi Rules is liable to pay octroi only within a period of three months from the date of import of goods and, therefore, after expiry of the said period of three months, the Municipal Corporation is powerless to take steps for recovery of octroi from the person who has evaded payment of octroi. This petition filed in the year 1989 was admitted and interim relief was granted. Thereafter this petition was dismissed and the said order of dismissal was set aside by the Apex Court. Moreover, we are dealing with a public sector undertaking which was earlier a Commission established under a central statute. Though we are not inclined to entertain this petition on merits, it is not a case where a direction can be issued to the petitioner to pay interest - Petition dismissed.

Summary

Issues Involved:
1. Powers of the Municipal Corporation to levy octroi on natural gas.
2. Validity of retrospective amendment to Entry 22(a) of Schedule-H.
3. Limitation period for recovery of octroi under Rule 25 of the Octroi Rules.
4. Exemption of natural gas as a property of the Government under Section 194 of the Mumbai Municipal Corporation Act.

Detailed Analysis:

Powers of the Municipal Corporation to Levy Octroi on Natural Gas:
The core issue in this petition under Article 226 of the Constitution of India is whether the Municipal Corporation of Greater Bombay has the authority to levy octroi on natural gas imported by the petitioner within the municipal limits. Section 192 of the Mumbai Municipal Corporation Act, 1988, grants the Municipal Corporation the power to levy octroi on articles specified in Schedule-H to the Act. Entry 22(a) of Schedule-H includes various petroleum products but explicitly excludes kerosene and crude oil. The petitioner argued that natural gas is not included in Entry 22(a), and thus, octroi cannot be levied on it. However, the court held that natural gas is a petroleum product, as established by the Supreme Court in Association of Natural Gas v. Union of India, and thus falls within the ambit of Entry 22(a).

Validity of Retrospective Amendment to Entry 22(a) of Schedule-H:
The Maharashtra Ordinance No. II of 1993, later replaced by Maharashtra Act No. XII of 1993, amended Entry 22(a) to explicitly include "natural gas and liquified petroleum gas" retrospectively from April 1, 1978. The petitioner challenged the constitutional validity of this retrospective amendment, arguing that it imposes a fresh tax and is unduly harsh. The court, however, found that the amendment is clarificatory and declaratory in nature, merely confirming that natural gas was always included in the term "petroleum products." The court cited various decisions, including Podar Cement Pvt. Ltd. v. CIT, to support the view that declaratory statutes can have retrospective effect and do not impose new taxes but clarify existing ones.

Limitation Period for Recovery of Octroi under Rule 25 of the Octroi Rules:
The petitioner contended that even if the amendment is valid, the recovery of octroi is barred by Rule 25 of the Octroi Rules, which stipulates a three-month period for recovery from the date of import. The court rejected this argument, stating that Rule 25 applies only when octroi has been paid short or erroneously refunded. In cases of complete evasion of octroi, as in this case, the Municipal Corporation retains the power to recover the dues beyond the three-month period. The court emphasized that Rule 25 is an enabling provision and does not limit the Municipal Corporation's power to recover octroi.

Exemption of Natural Gas as a Property of the Government under Section 194 of the Mumbai Municipal Corporation Act:
The petitioner claimed exemption under Section 194, arguing that natural gas procured by them should be treated as government property. Section 194 exempts articles certified as government property at the time of importation. The court found that the petitioner did not follow the required procedure to claim this exemption, such as producing a certificate from an authorized government officer at the time of import. Additionally, the court noted that the Oil and Natural Gas Commission Act, 1959, does not classify natural gas procured by the petitioner as government property.

Conclusion:
The court dismissed the petition, rejecting all grounds of challenge. It held that natural gas is included in Entry 22(a) of Schedule-H, the retrospective amendment is valid, Rule 25 does not bar the recovery of octroi in cases of evasion, and the petitioner is not entitled to exemption under Section 194. The interim relief granted earlier was extended for two months to allow the petitioner to seek further remedies.