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TMI Blog1991 (11) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... o whom they had sold the goods or that the dealers in turn have recovered the octroi duty from the customers". In view of this the question of unjust enrichment does not arise. X X X X Extracts X X X X X X X X Extracts X X X X ..... cted by the letters of the Corporation dated 31st August, 1983, 12th January 1984, 5th April, 1984 and 6th April, 1984. They were rejected on the following two grounds: (1) the company had "sold" the spare parts within the octroi limit (which is co-terminous with the Corporation limit) in contravention of rule 25(3)(c) of the Maharashtra Municipalities (Octroi) Rules, 1968 (hereinafter called "the Rules"); (2) the procedure prescribed for export and the claim of refund had not been strictly followed. The non-compliance with the procedure prescribed referred to in the second ground according to the Corporation were: (1) Form 4 of the Octroi Rules and the original invoices were not submitted, or (ii) Forms 11 and 12 filed were incomplete and all the required information were not given, or (iii) certificate of the Octroi Exit Naka Officer had not been obtained. The rejection of the claim was either on one or more than one or all the grounds mentioned above. The appellants filed a writ petition under article 226 in the High Court of Judicature at Bombay contending that the action of the Municipal Corporation in refusing refund is unconstitutional and illegal and for certain other rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Mr. Andiyarujina, learned counsel for the appellants, was that the sales were not for consumption or use within the octroi limits and that the parts were sold to parties outside the octroi limits and also for consumption or use outside such limits and therefore the rejection of the claims on the ground that the spare parts were sold within the municipal limits and that it amounted to a contravention of rule 25(3)(d) of the Rules is illegal. Mr. K.K. Singhvi, learned counsel for the Corporation, on the other hand contended that the meaning of words "sales therein" in the definition of "octroi" in the Acts and in entry 52 of List II could not be limited to sales of the goods for purposes of consumption or use within the municipal limits. When an importer wants to export dutiable goods temporarily detained by him in his own godown he shall present an intimation-cum- application for written permission in form 11 to the Superintendent of Octroi to export such goods. Rule 25(3)(d) states that no such intimation shall be accepted unless: "the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership." The case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case related to transactions under which (1) goods were sold by the company through its dealers or by itself and consumed within the octroi limits by persons other than the company and (2) goods sold by the company through its dealers or by itself inside the octroi limits to other persons but consumed by them outside the octroi limits. The company contended that the tax could not be collected on goods which were merely sold but not consumed inside the octroi limits. In connection with this contention this Court considered the meaning of words "consumption, use or sale therein" and observed: "It is not the immediate person who brings the goods into a local area who must consume them himself, the act of consumption may be postponed or may be performed by someone else but so long as the goods have been brought into the local area for consumption in that sense, no matter by whom, they satisfy the requirements of the Boroughs Act and octroi is payable." "....................The goods must be regarded as having been brought in for purposes of consumption when a person brings them either for his own use or consumption, or to put them in the way of others in the area, who are to use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and obtains permission for export he is not liable to pay octroi on such goods notwithstanding that in the larger sense for purposes of export he sells the goods within the octroi limits, that is to say even where the situs of the sale could be fixed within the octroi limit. The matter is now put beyond any pale of doubt by the latest decision of this Court in Municipal Council v. Parekh Automobiles Ltd. [1990] 1 SCC 367. Rule 13(4) of the Rajasthan Municipal Octroi Rules, 1962, which was one of the provisions considered in this case provided that: "In cases provided for in sub-rule (3) (that is who is given the account current facility)-amount of octroi duty payable shall be based on the total amount of the octroi as shown by the entry passes less the total amount of goods transported outside the municipal limits as shown by the transport passes: Provided that in computing the octroi duty payable under sub-rule (4), the goods transported outside the municipal limits shall be lessened only if such goods have not been sold within the municipal limits and if they have been exported out of such limits within a period of six months from the date of their import in such limits." Rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the company to outstation purchasers. The goods were transported by the company themselves across the octroi limits. The consignment or lorry receipt mentioned the consignee as self. The bills for collection were sent through bank and the goods were not to be delivered to the consignee until the payment was made by the consignee through the bank. Right of disposal expressly reserved with the vendor. On the other hand on behalf of the Corporation it was contended that orders were both received and accepted in Thane, goods were despatched from Thane and challans were also made in the name of the buyers and the property in the goods passed within Thane. The sale had in fact taken place within municipal area. In fact he further contended that being a question of fact we are not entitled to go into the same in view of the finding of the High Court. It is not necessary for us, however, to consider this aspect and we would for the purpose of this case proceed on the assumption that technically the sale in law had taken place inside the municipal limits. Since the goods were sold by the company to outside purchasers and the goods under the transactions of sale, were intended to be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended to be temporarily detained within the municipality in the bonded warehouse maintained by the Corporation and eventual export; (iv) goods intended for temporary detention in the private licensed bonded warehouse of the importer and eventual export; and (v) goods imported by any person, mercantile firm or body which has been permitted by the municipal Corporation to keep a current account. In the first case, since octroi is attracted on arrival of the dutiable goods at the octroi naka the importer pays the amount of octroi assessed by the octroi officer and takes the goods inside the municipal limits. In the second case, the importer gives a declaration-cum-application that the goods are not being imported in the municipal limits for consumption, use or sale but are intended for immediate export outside the octroi limits. He is required to deposit an amount in accordance with the scale fixed under clause (b) of sub-rule (1) of rule 5. On such deposit being made a receipt is given in the form prescribed by the Entrance Naka Inspector and a written permission-cum-transit pass issued by the octroi officer. On arrival of the goods at the exit naka and on surrender of the writte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed warehouse of their own with a current account facility. The rules which were relied on by the respondent and some of which are said to have not been complied with by the company may be set out: "10. Maintenance of bonded warehouses.-(1)................ (2) A council may permit any importer to maintain a private bonded warehouse for keeping goods which are imported by such importer for temporary detention and eventual export and grant a licence to such importer for that purpose subject to the conditions and restrictions laid down in such licence. A fee shall be charged for such licence at the rates specified in the bye-laws relating to the grant of such licence." "14. Declarations to be made by importer, etc.-(1) On arrival of any dutiable goods at the octroi naka, the octroi officer shall call upon the importer or the driver of the vehicle or conveyance or the person incharge of the pack-animal or other persons bringing the goods- .......................... (d) to make a declaration in form 1, in respect of the goods intended for temporary detention with himself and eventual export; (e) to make a declaration in form 5, in respect of the goods imported by, or on behalf of, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication shall be given by each importer on his own goods. One such intimation-cum-application shall be sufficient for a single consignment. When such consignment contains goods of different descriptions, full details shall be given separately in the intimation-cum-application. Not more than one intimation-cum-application for export can be given by an importer for goods passing through an exit naka in a day. (3) No such intimation-cum-application shall be accepted unless- (a) it is complete in all respects and signed by the importer himself or by a person authorised by him in writing in this behalf; (b) it is supported by the receipt for the deposit paid at the time of import and is accompanied by the original invoice, if any, filed at the time of import; (c) the goods produced for inspection and intended to be exported are, subject to the provisions of sub-rule (2) of the last preceding rule, identical with what they were at the time of import. (d) the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership. Note.-The requirement of clause (c) shall not be applicable in the case of dutiable goods to whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months of their import. (c) The application for refund is supported by a duly certified written permission-cum-refund export pass. (d) All the conditions in sub-rule (3) of rule 25 are fulfilled. (e) The amount claimed as refund is withdrawn within three months from the date of intimation to the importer to receive the amount. (f) The goods exported were declared to be intended for temporary detention with the importer and eventual export at the time of import: Provided that the said period of six months shall not apply to goods imported by the Food Corporation of India established under section 3 of the Food Corporation Act, 1964." "29. Procedure for refund.-(1) The application for refund of deposit shall be made in form 13 by the importer himself or by his duly authorised agent in this behalf in writing on any working day during the hours fixed for money transactions by the Council at the Central octroi office within one month from the date of the actual export. If the last day for claiming refund falls on a public holiday such application shall be accepted on the next working day. (2) Such application shall be accompanied by the duly certified relevant written permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------|------------ | | | | | | | | | | | | | | | | Value plus | Sender's | Remarks all incidental | name and | charges which | address | are to be given | in full | separately | | | | ------------------|--------------|------------ 6 | 7 | 8 ------------------|--------------|------------ | | | | | | Full residential/business address of the importer. Date ............ Signature of the Importer I have checked the above particulars with the invoice and verified the goods, which are found to be correct. True copy of the invoice appended is verified and found to be correct. The weight or quantity or value, together with the incidental charges declared, is correct. The taxable weight/quantity/value of the goods is ......... and the rate of octroi ............ Date ........... Inspector/Clerk The amount of Rs. ........ on account of deposit has been recovered under receipt No. .......... dated ........... Date ............ Inspector/Clerk FORM 5 (Rules 14 and 15) Declaration in respect of the dutiable goods imported on behalf of person, firm, or body allowed to keep an account current. To The Octroi Officer, Octroi Naka No. .......... ....... Municipal Council. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. Entrance Naka No. .. | Counterfoil of pass | Pass for goods imported by ....... in | account current (Name of person, firm | or body) ---------------------------------|-------------------------------------- Description | No. and | Description | Weight, | description | of the goods | quantity | | | or value ---------------------------------|-------------|--------------|--------- | 1 | 2 | 3 -------------------- -------------|-------------|--------------|--------- | | | | | | | | | | | | | | | Date ........... Date .......... Entrance Naka Inspector/Clerk Entrance Naka Inspector/Clerk FORM 11 (Rules 25 and 26) Intimation-cum-Application for Written Permission for Export of Goods Temporarily detained with the Importer To The Superintendent of Octroi, ........ Municipal Council. Sir, I, ........... (insert the full name and address of the importer) hereby declare my intention to export the goods to ......... through Naka No. ........ as detailed below. The certified copy of original invoice/invoices under which these goods were imported are appended herewith. I have produced the goods for actual verification. Kindly grant me the permission to carry the goods t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed above have passed outside the octroi limits this day the ...... of the month ..... 19 .... Time .... a.m/p.m. in my presence Railway Receipt .......... /Vehicle No. ...... The seals, if any, thereon, where intact when the goods were presented to me for verification. Date .......... Signature of the Exit Naka Officer Naka No. ......... * This fee should be levied in accordance with the bye-laws framed under Section 338 for granting permission to take the goods from the Central Octroi Office or Branch Office to the Exit Naka. FORM 13 (Rule 29) Application for Refund of Deposit To The Superintendent of Octroi, ........ Municipal Council. Sir, I, .............. the resident of ........... hereby apply for refund of deposit as per enclosed Written Permission-cum-Refund Export Pass No. ......, dated ........., as the goods mentioned in the pass were exported on ....... under my intimation-cum-application, dated ..... I, therefore, request you to grant the refund of Rs. .......... and oblige. Enclosure Dated ............. Signature of Importer On a reading of these rules it appears to be that rules 24, 25 and 28 in terms would apply only to cases falling under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm 11 also refers to invoice and the date of invoice. This is again to correlate the goods exported with the goods imported. If the identity of the goods could be established by evidence other than the production of invoices that should satisfy the rules. The invoice as such has no bearing on the liability of the goods for octroi or the right of the company for refund. So far as the production of the original invoices are concerned, the learned counsel for the company pointed out that the goods are brought from their own manufacturing units at Pune and Jamshedpur and it will only be a stock transfer and this requirement of producing original invoice could not be complied with and is not applicable. Under the current account procedure the invoices, if any and all the other documents are verified when the goods reach the warehouse with reference to the description of the goods, weight/quantity, value and other particulars and it is only after verification the octroi duty leviable is determined and amount is debited in the account current and the demand also is issued. The learned counsel for the appellant also referred to certain documents to show that for every category of articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or intimation has been given to the officers specified in this behalf in the standing orders and the place or places of storage have been reported to him from time to time." Paragraph 5 of appendix IV to this Act which we have noticed earlier states that the rules framed under the Municipal Act shall "in so far as it is not inconsistent with the provisions of this Act, continue in force". Rule 62 of Chapter VIII forms part of the Act. The learned counsel for the appellant, therefore, contended that rule 62 shall prevail and prior intimation of the intention to "breaking bulk" shall be enough and there was no necessity for the company to get the sanction of the Superintendent of Octroi or break the bulk in the presence of an officer deputed for the purpose as required under sub-rule (2) of rule 24. In other words according to the learned counsel rule 24(2) of the Octroi Rules is inconsistent with rule 62 of Chapter VIII of the Schedule to the Act and to the extent of inconsistency it shall be deemed to be not applicable. On the other hand the learned counsel for the respondent contended that rule 62(c) deals with prior intimation and rule 24(2) deals with the sanction and breaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale does not amount to use of the goods in the sense the word is used in relation to levy of octroi. It was further held that the words "without breaking bulk" is not an expression of art and that meant only transferring the product from the drums by breaking the seal of the drums, to the bottles for the purpose of exporting or for taking them out of the municipal limits, and that would not amount to either use or consumption of the Horlicks powder within the municipal limits attracting the levy of octroi. The ratio of the judgment clearly is that merely on the ground that the goods are not exported in bulk as originally imported, the levy does not become valid or that the importer who exported the goods loses his right to a refund of the octroi paid. The goods neither lose their identity nor cease to be identifiable. Once we reach the conclusion that there is no consumption or use, octroi is not attracted and if any levy has been made and the amount collected, the same becomes legally refundable even when the goods are exported in parts and in smaller packages. This is particularly so because in the case of goods not consumed or used within the octroi area but exported there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... importer pending export is in the nature of a trust and refundable in the event of the export of the goods. Further in a given set of facts, whether the rules have been complied with will have to be tested having regard to the nature of the particular transaction and whether the object of the procedure provided is otherwise fully satisfied. Rule 28 also merely states that the refund shall be admissible if all the conditions in sub- rule (2) of that rule are satisfied. The object of requiring intimation or sanction and presence of an officer when breaking the bulk in the scheme of octroi levy and refund is to ensure that dutiable goods do not escape the assessment and refunds are made only in respect of goods exported. In other words the whole requirement relates to the identification of the goods. In that sense if the same is otherwise complied with the right to refund cannot be denied. These rules cannot be read as enabling the municipality to levy and collect octroi even in cases where the goods have not been imported for consumption or use. As held by this Court in Kirpal Singh Duggal v. Municipal Board, Ghaziabad [1968] 3 SCR 551 the octroi rules are intended to regulate the sy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple which could be followed in the instant case and it may be presumed that the goods which came in first have gone out firs t and the six months period could be determined on that basis. In any case in view of the interim direction given by this Court on 1st May, 1989, that may usefully be followed for the future also in this case. To sum up: Having regard to the nature and incidence of octroi unless the octroiable goods are consumed or used or are meant to reach an ultimate user or consumer in the octroi area no octroi is leviable. The words "sale therein" in the words "consumption, use or sale therein" in the definition octroi means sale of octroiable goods to a person for the purpose of consumption or use by such person in the octroi area. If sale was intended for consumption or use in the octroi area whether the purchaser actually consumed inside or outside the octroi area is irrelevant. Rules 24 to 30 and the forms in the system of levy of octroi are intended to regulate the procedure for collection, identification of dutiable goods and correlation of goods exported with the goods imported for the purpose of refunds of octroi collected. In view of constitutional bar, oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We think that this procedure could be continued and followed in future also so that while the purposes of the Rules are served the free trade and commerce of the company, which is stated to have a large turnover, is also not affected. The learned counsel for the respondent then contended that the appellants have recovered the amounts paid by them by way of octroi duty from the dealers or the customers to whom they had sold the goods and therefore they are in any case not entitled to get a refund. The argument was that if refund is ordered it would amount to allowing the appellants to unjustly enrich themselves at the cost of the public to whom the burden had already been passed. This argument is based on the ground that in the selling price the company had merged the octroi duty originally paid as deposit and if a refund is made the company would be getting an additional amount over and above normal price which they would have charged but for the fact that they were initially asked to deposit octroi. There is no evidence that any of the articles sold by the company is subject to any price control by the Government or that the company had charged any octroi separately in the bills. ..... 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