# HIRALAL THAKORLAL DALAL v. IlROACH MUNICIPALITY & ORS

- **Citation:** [1976] Supp. 1 S.C.R. 82
- **Court:** Supreme Court of India
- **Decided:** 1976
- **Case number:** CIVIL APPELLATG JURISDICTION : Civil Appeal No. 1823 of 1969
- **Bench:** A. N. Ray, M. H. Beg, R. S. Sarkaria, P. N. Sjiinghal, Jaswant Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/hiralal-thakorlal-dalal-v-ilroach-municipality-ors-6881
- **Pages:** 5

## Headnote

Bombay Municipal Boroughs Ac1· 1925 S. 73(i) (iv)-Scope-of-Octroi July
-If could be le\lit!d-on-"through consignments".
·Section 73(i)(iv) of the Bombay Municipal Boroughs Act 192.S empowers a
municipal borough to impose octroi on animals or goods or both brought wit.hilt
the octroi limits for consumption, use of sale therein. The appellant imported
certain consignments of goods within the octroi Ii1nits of the municipality and
exported them, the consignments being termed as "through consignments" or
.. goods in transit" or .. goods for export'".
Octroi duty was imposed on the
goods and the appellant f.led a petition befo:re the High Court challen~ing the
levy. The High Court held that the expression 'sale' used in the definition of
"through consignments" in the rules had the same connotation as in the Sale of
Goods Act and, lhe-refore, if a consignment was brought within the octroi
limits and if the municipal authorities were satisfied that the consignment bad
been brought in for the purpose of sale, then the consignment did not becom•
a through consignment.
Allowing the appeal to this Court.
HELD :
The law on the subject has been clearly laid down in Burmali
Shell Oil Storage and Distributing Company (India) Ltd.
v.
The Belgaum
Borough AJunicipality and the present case is governed by that decision. lt
was held in that case that the company was liable to pay octroi on .goods
brought into the local area. if t.he Roods are :
(a) to be consumed by the Compan)I itself or sold by it to consumers
direct and (b) for sale to dealers who in their turn sold the goods to consumers
within the municipal area and irrespective .of \\o-hetlrer such consumer boush,t
them for use in the area or outs de it; but it was not liable to octroi in respect
of goods l'.-·hich were brouRhl into tf.e _tocal area and were re-exported. [86 C-D]
Bu~nwh Shell O:I Stdrc.+ge and Distributing Co. India Ltd. v. The Be/gaurn
Borou:xh 1\.funicipality [1963] Supp]. 2 S.C.R. 216, explained and 2pp1kd.
CIVIL APPELLATG JURISDICTION : Civil Appeal No. 1823
of
1969.
Apeal by Special Leave from the Judgment 11nd Order dated the
27th/28th/30th January, 1967 of the Gujarat High Court in Special
G
Civil Application No. 163 of 1962.
·
B. R. Agarwa/a for the Appellant.
I. N. Shroff for the Respondent•.
Dr. L. M. Singhvi. Advocate Gmeral, Rajasthan, V. S. Da1•e .
and S. M. Jain for Intervener, Mtt.licipal Council, Jodhpur.
H
The Judgment o( the Court was delivered by
SmNGHAL, J.-This appeal by special
ju0[Jnent o~ the Gujarat High Court &ted
le:ivc uise. from ·the
January 27, 28 .and 30,
)
•
•
t
-
'
,
-
HIRALAL v. BROACH MUNICIPALITY (Shinghal, J.)
8 3
1967. The two petitioners before the High Court were firms tradA
ing in certain commodities within the
limits
of
the
Municipal
Borough of Broach. The grievance in one of the petitions was that
the Municipality had collected certain amounts wrongfully, and the
grievance in the other petition was that the Municipality had refused
some amounts even though they were refundable under its byelaws.
Both the petitions concerned goods which were "imported"
within the octroi limits of the Municipality but came to be "exported"
B
therefrom. The first petition was in respect of a consignment which
was designated as a through consignment, and the second petition
concerned goods in transit and goods for export other thari those
which could be called goods in transit.
The amounts
in
dispute
related to the levy of octroi under section 73(i) of the Bombay
Municipal Boroughs Act, 1923, hereinafter called the Act, which
provides as follows :
C
"73 (i) Subject to any general or special orders which
the
State · Government
may
make
in
this behalf and to the provisions of sections
75 and 76, a Municipality may impose for
the purposes of this Act any of the following
taxes, namely :-
•
•
•
•
(iv) an octroi on animals
or
goods
or
both,
brought, within the octroi limits for consumption, use or sale therein;."
The word "sale" was included within the amb

## Text

A
n
c
D
E
F
82
HIRALAL THAKORLAL DALAL
v.
IlROACH MUNICIPALITY & ORS.
April 15. 1976
[A. N. RAY, C.J., M. H. BEG, R. S. SARKARIA, P. N. SJIINGHAL AND
JASWANT SINGH, JJ.]
Bombay Municipal Boroughs Ac1· 1925 S. 73(i) (iv)-Scope-of-Octroi July
-If could be le\lit!d-on-"through consignments".
·Section 73(i)(iv) of the Bombay Municipal Boroughs Act 192.S empowers a
municipal borough to impose octroi on animals or goods or both brought wit.hilt
the octroi limits for consumption, use of sale therein. The appellant imported
certain consignments of goods within the octroi Ii1nits of the municipality and
exported them, the consignments being termed as "through consignments" or
.. goods in transit" or .. goods for export'".
Octroi duty was imposed on the
goods and the appellant f.led a petition befo:re the High Court challen~ing the
levy. The High Court held that the expression 'sale' used in the definition of
"through consignments" in the rules had the same connotation as in the Sale of
Goods Act and, lhe-refore, if a consignment was brought within the octroi
limits and if the municipal authorities were satisfied that the consignment bad
been brought in for the purpose of sale, then the consignment did not becom•
a through consignment.
Allowing the appeal to this Court.
HELD :
The law on the subject has been clearly laid down in Burmali
Shell Oil Storage and Distributing Company (India) Ltd.
v.
The Belgaum
Borough AJunicipality and the present case is governed by that decision. lt
was held in that case that the company was liable to pay octroi on .goods
brought into the local area. if t.he Roods are :
(a) to be consumed by the Compan)I itself or sold by it to consumers
direct and (b) for sale to dealers who in their turn sold the goods to consumers
within the municipal area and irrespective .of \\o-hetlrer such consumer boush,t
them for use in the area or outs de it; but it was not liable to octroi in respect
of goods l'.-·hich were brouRhl into tf.e _tocal area and were re-exported. [86 C-D]
Bu~nwh Shell O:I Stdrc.+ge and Distributing Co. India Ltd. v. The Be/gaurn
Borou:xh 1\.funicipality [1963] Supp]. 2 S.C.R. 216, explained and 2pp1kd.
CIVIL APPELLATG JURISDICTION : Civil Appeal No. 1823
of
1969.
Apeal by Special Leave from the Judgment 11nd Order dated the
27th/28th/30th January, 1967 of the Gujarat High Court in Special
G
Civil Application No. 163 of 1962.
·
B. R. Agarwa/a for the Appellant.
I. N. Shroff for the Respondent•.
Dr. L. M. Singhvi. Advocate Gmeral, Rajasthan, V. S. Da1•e .
and S. M. Jain for Intervener, Mtt.licipal Council, Jodhpur.
H
The Judgment o( the Court was delivered by
SmNGHAL, J.-This appeal by special
ju0[Jnent o~ the Gujarat High Court &ted
le:ivc uise. from ·the
January 27, 28 .and 30,
)
•
•
t
-
'
,
-
HIRALAL v. BROACH MUNICIPALITY (Shinghal, J.)
8 3
1967. The two petitioners before the High Court were firms tradA
ing in certain commodities within the
limits
of
the
Municipal
Borough of Broach. The grievance in one of the petitions was that
the Municipality had collected certain amounts wrongfully, and the
grievance in the other petition was that the Municipality had refused
some amounts even though they were refundable under its byelaws.
Both the petitions concerned goods which were "imported"
within the octroi limits of the Municipality but came to be "exported"
B
therefrom. The first petition was in respect of a consignment which
was designated as a through consignment, and the second petition
concerned goods in transit and goods for export other thari those
which could be called goods in transit.
The amounts
in
dispute
related to the levy of octroi under section 73(i) of the Bombay
Municipal Boroughs Act, 1923, hereinafter called the Act, which
provides as follows :
C
"73 (i) Subject to any general or special orders which
the
State · Government
may
make
in
this behalf and to the provisions of sections
75 and 76, a Municipality may impose for
the purposes of this Act any of the following
taxes, namely :-
•
•
•
•
(iv) an octroi on animals
or
goods
or
both,
brought, within the octroi limits for consumption, use or sale therein;."
The word "sale" was included within the ambit .of octroi when the
Act was amended in 1954. The High Court took note of the rules
and the bye-laws and held that it was not possible to take the view
D
E
that the rules contemplated that no refund was payable in case the
goods had undergone a sale during the course of their stay in octroi
F
limits.
It accordingly came to the conclusion that in regard
to
goods meant for export in the sense defined in the rules, refund was
claimable even if a sale transaction in the larger sense (i.e. in a
sense other than a sale to a consumer or with the intention that the
goods must pass into bands of the ultimate consumer) took place
in regard thereto, provided that the other conditions were satisfied.
The High Court then examined the correct interpretation of the word
G
"sale" in clause (iv) of section 73(i) of the Act and after considering
this Court's judgment in Burmah Shell Oil Storage and Distributing
Co. India Ld. v. The Belgaum Borough
Municipality,(')
it held
that the word "sale" could not be given the narrow meaning of a
sale for consumption to the ultimate consumer because,
in that
~ense, the Legislature would be guilty of having introduced a word
which it was not necessary for it to introduce.
The High Court
H
made a reference to the definition of "sale" in section 4 of the Sale of
--·-....:..--'---
(1) [1963) S·1ppl. 2. S. C. IL 216.
A
B
c
D
E
F
G
84
SUPREME COURT REPORTS
[1976] SUPPLEMENTARY
Goods Act and held that the expression "sale" as used in the definition of 'through consignments" in the rules had the same connotation as in the Sale of Goods Act and therefore "if a consignment is
brought within the octroi limits and if the municipal authorities are
satisfied that the consignment has been brought in for the purpose
of effecting a sale in the aforesaid sense, then the consignment does
not become a through consignment." According to the High Court,
it was not enough merely to prove that the consignment left the
octroi limits within six hours after the goods were imported and that
it was necessary to show that the goods were intended only to pass
through in the sense that they were not meant for
consumption,
use or sale, and that in regard to such goods there was no intention
of changing hands by way of sale or that there was
no
intention
of breaking their bulk or detaining them beyond six hours or unloading them.
In the view it took, the High Court issued some
directions for compliance by the authorities concerned.
The writ
petitioners felt dissatisfied with the view taken by the High Court
and applied for a certificate under articles 132(1) and J33(1)(c)
of the Constitution.
The High Court held that no question arose
under article 132, aud no .certificate could be granted under article
133 as there was no final order.
The petitioners however applied
to this Court for special leave on the ground, inter alia, that
the
High Court put a wrong interpretation on the expression "sale" in
section 73(i) (iv) of the Act inspite of the decision of this Court in
Burmah Shell's case (supra).
As has been stated, they succeeded
in obtaining special leave from this Conrt.
When the case came
up for hearing before a Division Bench, it noticed the decision in
Burmah Shell's case (supra) and felt that there were "blurred areas"
of sale within the territory which may attract a tax under entry 52
(List II of Seventh Schedule) left uncertain by the aforesaid decision of this Court so that the matter deserved consideration by a
larger Bench.
This is how the case has come up
before us
for.
hearing.
We have allowed Municipal Council, Jodhpur, to intervene in the hearing at its request.
The short question before us is whether this Court's decision in
the Burmah Shell's case (supra) squarely covers the present controversy or whether that decision requires
reconsiderat:on.
The
learned counsel have in fact confined their arguments to this narrow
field.
In order to appreciate the controversy, it will be desirable to
refer to the basic facts of the Burmah Shell's case (supra).
The
Burmah Shell Oil Storage and Distribution Co. India Ltd., hereinafter
referred to as the Company, was a dealer in petrol and other petroleum products which it manufactured in its refineries situated outH
side the octroi limits of Belgaum Municipality.
It brought these
products inside that area either for use or consumption by itself or
for sale generally to its dealers and licensees who in their turn sold
them to others.
According to the Company, the goods brought by
-
•
•
•
HIRALAL v. BROACH MUNICIPALITY (Shinghal, J.)
8 5
it within the octroi limits could be divided into
follows:
1. Goods consumed by the Company;
four categories as
.!~I
2. Goods sold by the Company through its dealers or by
itself and consumed within the octroi limits by persons
other than the Company;
3. 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; an.d
4. Goods sent by the Company from its Depot inside the
octroi limits to extra-municipal points where they are
A
B
bought and consumed by persons
other
than
the
c
company.
This Court examined the scheme of taxation under the Act and the
rules and the bye-laws made by the Municipality for the levy of octroi.
It also took note of the fact that the words ''use or sale" were substitnted for the words "or use" by Bombay Act 35 of 1954, which are
the subject matter of a fresh controversy before us, and made a
reference to the Legislative Lists in the Government of India Act, 1935
and the Constitution.
After examining the history of octrois and
terminal
taxes, this Court held that "octrois were taxes on goods
brought into the local area for consumption, nse or sale", and that
"they were leviable in respect of goods put to some use or other in
the area but only if they were meant for such user." It was specilically
clarified that the word "sale" was included only in 1954 in order
to bring the description of octroi in the Act in line with the Constitntion, and that the expression "consumption" and "use" together
"connote the bringing in of goods and animals not with a view to
taking them out aguin but with a view to their retention either for
use without using them up or for
consumption in a manner which
destroys, wastes or uses them up."
Looking to the trade of the Company, this Court held that sale
by it directly to consumers or to dealers was "merely the means for
putting the goods in the way of use or consumption" and that the
word "therein" does not mean that all the act of consumption must
take place in the area of the municipality.
The Court therefore went
to hold as follows.-
"In other words, a sale of the goods brought inside, even
though not expressly mentioned in the description of octroi as
it stood formerly, was implicit, provided the goods were not
re-exported out of the area but were brought inside for use
or consumption by buyers inside the area. In this sense
the amplification of the description both in the Government
of India Act, 1935 and the Constitution did not make any
addition to the true concept of 'octroi' as explained above.
That concept included the bringing in of goods in a local
area so that the goods come to a repose there.
When the
Government of India Act, 1935 was enacted,
the
word
D
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F
G
H
A
B
c
D
86
SUPREME COURT REPORTS
[1976] SUPPLEMENTARY
'octroi' was deliberately avoided and a description added to
forestall any dispute of the nature which has been raised in
this case.
In other words, even without the description the
tax was on goods brought for 'consumption, use or sale'. The
word 'octroi' was also avoided because terminal taxes arc
also a kind of octroi and the two were to be allocated to
different legislatures.
In our opinion, even without the word 'sale' in the
Boroughs Act the position was the same provided the goods
were sold in the local area to a consumer who bought them
for the purpose of use or consumption or even for resale to
othei;s for the purpose of use or consumption by them in the
area.
It was only when the goods were re-exported out
of the area that the tax could not legitimately be levied ..... "
This Court categorically held that the Company was liable to pay
octroi on goods brought into the local area (a) to be consumed by
itself or sold by it to consumers direct, and (b) for sale to dealers
who in their turn sold the goods to consumers within the municipal
area irrespective of whether such consumers bought them for use in
the area or outside it, but it was "not liable to octroi in respect of
goods which it brought into the local area and which were re-exported."
The law on the subject matter of the present controversy has thus
been laid down quite clearly in the Burmah Shell's case (supra) and
the present case squarely falls to be governed by it. We are also in
agreement with that interpretation of the law. It may be mentioned
E
that the learne_d counsel have not been able to advance any new
argument justifying a reconsideration of the decision.
F
The appeal is allowed, the impugned judgment of the High Court
is set aside and the respondents are directed to examine and determine
the claims of the appellant in accordance with the above decision. The
appellant will be entitled to costs from the respondents.
P.B.R.
Appeal allowed.
,_
'
..
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