# MUNICIPAL COUNCIL, JODHPUR v. PAREKH AUTOMOBILES LTD. AND ORS

- **Citation:** [1989] Supp. 2 S.C.R. 49
- **Court:** Supreme Court of India
- **Decided:** 1989-11-07
- **Case number:** Civil Appeal No. 1552 of 1981
- **Bench:** Saby Asa Chi Mukharji, M.H. Kania, S. Ranganathan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/municipal-council-jodhpur-v-parekh-automobiles-ltd-and-ors-10626
- **Pages:** 33

## Headnote

Rajasthan Municipalities Act 1959/Rajasthan Municipal Octroi Rules,
1962: Sections 104, 133 Rules, 6, 9 and 13-0ctroi-Liability for-When arises.
M/s. Parekh Automobiles Ltd., respondent No. 1, had been allotted
retain outlet by Indian Oil Corporation, respondent No. 2, for sale of its
petroleum products at Dangiawas, which was outside the limits of the appellant. Respondent No. 2 had its depot near Raikabag Station at Jodhpur where
A
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it stored petroleum products for supply to various pump stations situated C
within the limits of the appellant as well as situated outside its limits. Respondent No. 2, being a pnblic sector undertaking, was provided current account
facilities under section 133 of the Rajasthan Municipalities Act, 1959, and so
respondent No. 2 had not to pay octroi tax on such consigmnents at the time of
entry of goods within the limits of the appellant. For this purpose, respondent D
No. 2 was provided with the export facilities and supplied with entry passes
under Rule 13 of the Rajasthan Municipal Octroi .. Rilles 1962. Under rule
13(4), the amount of duty payable, in the case or persons who had the current
account facilities, was determined and collected on the basis of the total
amount of goods that had come in as reduced by the total amount of goods that
had gone out, the balance being presumed to have been consumed, used or
sold within the municipal limits.
E
It was alleged that the appellant suspended the current account facility
under section 133 of the Act and took the stand that octroi would be charged
from Respondent No. 2 on the goods brought within the municipal limits if
these were sold within the limits of the appellant although such goods were
mean for use and consumption of the consumers outside the municipal limits.
As a consequence of this action of the appellant, respondent No. 2 charged F
octroi duty on Sl'pplies made to respondent No. I at Dangiawas by adding the
amout of octroi tax in the bills.
Respondent No. l filed a writ petition in the High Court praying inter
alia for a direction or an order restraining the Municipal Coundl from
realising any tax on diesel, etc. which were supplied to respondent No. I at G
Dangiawas by respondent No. 2, and for refund of octroi tax already paid. It
was contended on behalf of respondent No. I, in the High Court, that the
Municipal Council had no jurisdiction to levy octroi on the goods brought
within the municipal limits but not sold, consumed or used therein and
subsequently exported outside the said limits; that actual sale took place only
at Dangiawas and since neither the sale nor the consumption nor the use of the
petroleum products in question took place within the limits of the municipaH
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SUPREME COURT REPORTS
[ 1989) Supp. 2 S.C.R
lity of Jodhpur, and Municipal Council was not entitled to levy any octroi
thereon; alternatively, even if the sale was held to have taken place at
J.odhpur, still, octroi could not be levied as the goods so sold were meant for
use of consumption outside the municipal limits; and that the word 'sale'
occuring under s, .104 of the Municipalities Act could not be read without
reference to use or consumption, as sale simplicitor by itself did not attract the
levy of octroi, unless the goods were meant for use or consumption of the
ultimate consumer in the area of the Municipal Council.
The defence of the Municipal Council was that because the sale took
place at Jodhpur, octroi was chargeable irrespective of the fact where it was
consumed or used; that as soon as the goods entered the octroi limits, it gave
rise to taxable event unless a declaration as contemplated under rule 9 had
been made; that respondent No. 2 did not make the declaration as required by
11ule 9 and rule 13(4) of the Octroi Rules; and that under sub-rule (4) of rule 13
the goods exported were to be lessened only if such goods had not been sold
within the municipal limits and were exported out within a period of six
months from the date of

## Text

_Characters 0–39,287 of 102,955. This is a partial read: ask again with offset=39287 for what follows._

MUNICIPAL COUNCIL, JODHPUR
v.
PAREKH AUTOMOBILES LTD. AND ORS.
NOVEMBER 7, 1989
[SABY ASA CHI MUKHARJI, M.H. KANIA AND
S. RANGANATHAN, JJ.]
Rajasthan Municipalities Act 1959/Rajasthan Municipal Octroi Rules,
1962: Sections 104, 133 Rules, 6, 9 and 13-0ctroi-Liability for-When arises.
M/s. Parekh Automobiles Ltd., respondent No. 1, had been allotted
retain outlet by Indian Oil Corporation, respondent No. 2, for sale of its
petroleum products at Dangiawas, which was outside the limits of the appellant. Respondent No. 2 had its depot near Raikabag Station at Jodhpur where
A
B
it stored petroleum products for supply to various pump stations situated C
within the limits of the appellant as well as situated outside its limits. Respondent No. 2, being a pnblic sector undertaking, was provided current account
facilities under section 133 of the Rajasthan Municipalities Act, 1959, and so
respondent No. 2 had not to pay octroi tax on such consigmnents at the time of
entry of goods within the limits of the appellant. For this purpose, respondent D
No. 2 was provided with the export facilities and supplied with entry passes
under Rule 13 of the Rajasthan Municipal Octroi .. Rilles 1962. Under rule
13(4), the amount of duty payable, in the case or persons who had the current
account facilities, was determined and collected on the basis of the total
amount of goods that had come in as reduced by the total amount of goods that
had gone out, the balance being presumed to have been consumed, used or
sold within the municipal limits.
E
It was alleged that the appellant suspended the current account facility
under section 133 of the Act and took the stand that octroi would be charged
from Respondent No. 2 on the goods brought within the municipal limits if
these were sold within the limits of the appellant although such goods were
mean for use and consumption of the consumers outside the municipal limits.
As a consequence of this action of the appellant, respondent No. 2 charged F
octroi duty on Sl'pplies made to respondent No. I at Dangiawas by adding the
amout of octroi tax in the bills.
Respondent No. l filed a writ petition in the High Court praying inter
alia for a direction or an order restraining the Municipal Coundl from
realising any tax on diesel, etc. which were supplied to respondent No. I at G
Dangiawas by respondent No. 2, and for refund of octroi tax already paid. It
was contended on behalf of respondent No. I, in the High Court, that the
Municipal Council had no jurisdiction to levy octroi on the goods brought
within the municipal limits but not sold, consumed or used therein and
subsequently exported outside the said limits; that actual sale took place only
at Dangiawas and since neither the sale nor the consumption nor the use of the
petroleum products in question took place within the limits of the municipaH
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SUPREME COURT REPORTS
[ 1989) Supp. 2 S.C.R
lity of Jodhpur, and Municipal Council was not entitled to levy any octroi
thereon; alternatively, even if the sale was held to have taken place at
J.odhpur, still, octroi could not be levied as the goods so sold were meant for
use of consumption outside the municipal limits; and that the word 'sale'
occuring under s, .104 of the Municipalities Act could not be read without
reference to use or consumption, as sale simplicitor by itself did not attract the
levy of octroi, unless the goods were meant for use or consumption of the
ultimate consumer in the area of the Municipal Council.
The defence of the Municipal Council was that because the sale took
place at Jodhpur, octroi was chargeable irrespective of the fact where it was
consumed or used; that as soon as the goods entered the octroi limits, it gave
rise to taxable event unless a declaration as contemplated under rule 9 had
been made; that respondent No. 2 did not make the declaration as required by
11ule 9 and rule 13(4) of the Octroi Rules; and that under sub-rule (4) of rule 13
the goods exported were to be lessened only if such goods had not been sold
within the municipal limits and were exported out within a period of six
months from the date of entry. The claim of refund was contested on the
ground that there was no privily of contract between respondent No. I and
0
the Municipal Council as the demand of octroi was not made from respondent
No. I.
The case of the Indian Oil Corporation, respondent No. 2, was that
under the terms of the agreement respondent No. 2 was obliged to transport
pertrolenm products out of its depots and supply petroleflm products to its
dealers at the destination in its own truck-tankers, and Iii.I the supplies were
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made at the destination, the goods were at the risk of respondents No. 2 and
therefore the goods were sold at the retail outlet where the deliveries were
made and not at Jodhpur.
The learned Single Judge did not permit the petitioners to raise the
question that the sale took place only outside the municipal limits of Jodhpur
since that involved an investigation into facts which could not be undertaken
F
in a writ petition, and proceeded on the footing that the sale of the products in
question took place within the limits of Jodhpur. He, however, accepted the
contention of IOC and the dealer that even if the sale was taken to have been
effected within Jodhpur, no octroi was leviable as admittedly the goods had
been sold in Jodhpur only for their onward transmission for use and consumption in Dangiawas outside the municipal limits. The prayer for refund of
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the octroi tax was, however, refused.
The Division Bench dismissed the appellant's appeal and partly allowed
the appeal filed by respondent No. I. On the basis of the judgments of this
Court in Burmah Shell Oil Storage & Distribution Co. Tndia Ltd. v. The
Belgaum Borough Municipality, [!963] Supp. 2 SCR 216 and Hiralal
Thakorlal Dalal v. Broach Municipality, [1976] Supp. SCR 82 wherein it was
H
held that the sine qua non for levy of octroi was consumption, and that the sale
in order to attract levy of octroi shall be for the purpose of use or consumption
MUNICIPAL COUNCIL v. PAREKH AUTOMOBILES
51
of the ultimate consumer, the Division Bench held that sale simplicitor would ot
attract the levy of the octroi, that the word 'sale' in this context had to beread
with reference to the use or consumption and •use, consumption and sale' had
to read in a disjunctive manner.
The Division Bench further held that rule 13 was a special provision in
regard to the persons who had been granted current account facilities and this
rule was not subject to either rule 6 or rule 9 but was an overriding rule
independent of rules 6 and 9. The Division Bench was of the opinion thats.
· 133 of the Municipalities Act, alongwith rule 13 of the octroi Rules left no
doubt that no conclusive presumption of the goods having been brought
within the municipal limits for consumption, use or sale therein could be
drawn in cases where special current account facilities had been given to a
person.
The Division Bench also held that the claim ofrefund by respondent No.
1 was not maintainable. The Bench however directed that the Municipal
Council would have to refuud to the Indian Oil Corporation, respondent No.
2, the amount of octroi duty paid on the petroleum products re-exported by it
to Dangiawas outlet for supply to respondent No. I, who would recover the
same from the Indian Oil Corporation.
Mis. Motilal PadampatSugar Mills Co. Ltd. v. StateofUttar Pradesh
& Ors., AIR 1979 SC 621 and State of Madhya Pradesh & Anr. v. Bhailal
Bhai, AIR 1964 SC 1006, relied upon.
Before this Court, the parties reiterated their contentions raised befure
the High Court. In additiou, it was contended on behalf of the appellant that
there was nothing in the two judgments of this Court to the effect that if goods
were brought into a local area for sale to a dealer who then transported the
goods outside the local area for sale to consumers, no octroi would be
chargeable. It was further contended that during the period in dispute, as
also today, there was no current account facility to the respondent No. l
under rule 13 of the Octroi Rules and as admittedly the respondent No. l was
not complying with the requirements of rules 6 and 9 of the said Rules and not
filing any declaration, the Municipal Council had the right to treat the goods
brought within the Municipal limits, as tli0se brought for consumption, use
or sale under sub-rule (2) of rule 9 of the said Rules and thereby attracting
octroi. On the other hand; it was contended on behalf of the respondents that
it was incorrent to say that the current account facility was suspended or
withdrawn.
Dismissi!'g the appeal, this Court,
HELD: (Sabyasachi Mukharji and M.H. Kania, JJ.-Per Sabyasaehi
Mukharji, J).
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( 1) The High Court was right in holding that it was difficult and
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inappropriate under Article 226 to determine the question as t9 where the sale
52
SUPREME COURT REPORTS
[1989] Supp. 2 S.C.R.
A
took place, and that even ifothe sale took place within the octroi limits of
Jodhpur Municipal Coundl for the- use or consumption of the ultimate
consumer outside the octroi limits of Jodhpur then the taxable even did not
take place in the octroi limits of Jodhpur. [66F-GJ
B
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(2) In view of the decisions of this Court and in view of the language of
section 104 of the Municipalities Act and the facts, the High Court was right in
holding that no octroi was leviable on petroleum products re-exported outside
the mullicipal limits for consumption and use outside the municipal limits. l65FI
Burmah Shell Oil Storage & Distributing Co. Ltd. v. The Belgaum
Borough Municipality, [1963) Supp. 2 SCR 216 and Hiralal Thakorelal Dalal
v. Broach Municipality & Ors., 119761 Sup. SCR 82, followed.
(3) In view of the facts of this case, the title passed to the goods outside
the municipal limits even in respect of the petroleum products which were
sold within the municipal limits. If the goods were brought within the municipal limis for the purpose of sale (sale means passing of the title to the
purchaser), then different considerations might have applied. [7 3D]
( 4) Analysis of Section 133 and the current account facility therein indiD
cates that only on the goods for use, consumption or sale, octroi is leviable.
Under this provision, octroi tax is paid at the time of settlement of periodical
account, say after every month. Thus, question of complying with rule 6 or
rule 9 does not arise as they apply when octroi tax is paid at the time of entry of
goods. The delivery of entry passes and transport passes is only to facilitate
settlement of octroi account on goods which have been retained in Municipal
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area for use and consumption. l73H; 74AI
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( 5) A perusal of section 133 would show that current account facility is
provided by substantive section, whereas rule 13 is procedure provided with
the object of providing facility of settlement of account of payment of ociroi
tax. In other words, according to rule 13( 4), octroi tax is charged on quantity
mentioned in entry passed minus the quantity mentioned in transport passes,
i.e., on quantity of petroleum products used or consumed within the Municipal limits of Jodhpur Municipality. [75A-B)
( 6) In view of the confu.<ed state of pleadings and averments, it was not
possible to hold that current account facilities were withdrawn or cancelled.
If that is the position, then there is no question that the High Court was right
in the order it passed and the direction it gave. [75EJ
Per Ranganathan, J.
(I) When goods arrive at an octroi outpost, they may be coming in
either for consumption, use or sale within the municipal limits or for transportation outside these limits. Rule 9 requires every person bringing goods
within the municipal limits to make a declaration aS to what the goods are
H
intended for. l77EJ
MUNICIPAL COUNCIL v. PAREKH AUTOMOBILES
53
(2) Under the normal procedure for the assessment and collection of
octroi duty, the declaration under Rule 9 becomes important and the terms of
the declaration determines the incidence of the duty. Rule 13, however,
contemplates a totally different scheme for the assessment and collection of
octroi for the special type of cases. [78C-Df
(3) A comparison of the two sets of provisions will make it dear that
they are two independent and mutually exclusive modes of assessment and
collection of duty. Under the cash system of payment, a declaration under
rule 9 is absolutely .SS.ntial. The mode of collection of duty in respect of a
person having current a<eount facilities, however, does not depend upon any
such declaration or upon the mode of utilisation of the goods as indicated in
such declaration,_ because in the case of the current account holders, the duty
payable-in respect of the entirety of the goods brought in is straightway
debited to his account on the basis of entry passes. The duty payable in resFCt
of the goods transported outside is later on credited to his account on the basis
of the transport passes. [79E-G r
( 4) The High Conrt was fully justified in holding that the terms of rules
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6 and 9 have no relevance to the payment of duty in cases covered by the
current account facility envisaged under rule 13, and that the present case
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cannot he brought within the terms of proviso to rule 9(2) on the basis of a
deemed consumption, use or sale within the municipal limits. In cases where
rule 13 applies, rule 9 is excluded. [SOB]
( 5) The present case is governed by the terms of rule 13 and the Indian
Oil Corporation is entitled to go on paying octroi duty on the basis of the goods
brougbt by it within the Municipality less the goods transported outside the
Municipality, may he in pursuance of a sale within the Municipality, so long
as such sale is in pursuanee of an intention that the goods should he consumed
or used outside the Municipal limits. [80G I
(6) The appellant should not he permitted to raise at this stage a new
plea that the current account facility granted to the Indian Oil Corporation
had been revoked when all along, in the earlier proceedings in the High
Court, the case had proceeded on the footing that the Indian Oil Corporation
had been having and continued to have current account facilities. [8 IC I
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1552 of
1981.
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From the Judgment and Order dated 1.2.1980 of the Jodhpur High
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Court in D.B. Civil Appeal No. 9 & 31of1977.
Soli J. Soiabji, Tapas Ray, L.C. Agarwal, Mrs. Pratibha Jain,
Pradeep Aggarwal, Sushi! Kumar Jain, Sudhansu Atreya and S.D. Shal'!Ila
for the Appellant.
Dalveer Bhandari, Badridas Sharma, B.Y. Kulkarni, S.K. Mehta,
H
D. Mehta, S.M. Sarin, Aman. Vathher, Atul Nanda, Mrs. P.S. Shroff,
54
SUPREME COURT REPORTS
[1989] Suop. 2 S.C.R.
R. Sasiprabhu, S.S. Shroff, S.A. Shroff, R.Jagannath Goulay and
A D. Goburdhan for the Respondents.
The Judgments of the Court were delivered by
SABYASACHI MUKHARJI, J. This appeal by special leave is
directed against the judgment and order of the High Court of Rajasthan at
B Jodhpur in D.B. Civil Special Appeals Nos. 9 and 31 of 1977 and which
raised common questions of law and fact, and were disposed of together.
Writ Petition No. 17 of 1976 was filed by Mis Parekh Automobiles,
respondent No. 1 in C.A. No. 1552/81. The said appeal may be taken up and
disposal of the same would lead to the disposal of other appeals. In the said
writ petition, the petitioner prayed for a direction or an orderrestraining the
respondents therein from realising any tax on diesel, etc. which are supplied
C to the respondent herein at Dangiawas by the Indian Oil Corporation, being
the respondent No. 2 herein. It was further prayed that the respondents
therein be ordered to refund the octroi tax as mentioned in the Schedule to
the said petition which, it was alleged, had been illegally realised from the
petitioner. It was further prayed that the respondent No. 1 be directed to
D provide transport passes to the Indian Oil Corporation under rule 13 of the
Rajasthan Municipal Octroi Rules, 1962 read with section 133 ofRajasthan
Municipalities Act. It was the case of the petitioner in the High Court,
respondent No. 1 herein, that the Municipal Council had no jurisdiction to
levy octroi tax on the goods brought within the municipal limits but not sold,
consumed or used therein and subsequently exported outside the said limits.
The case of the respondent No. 2 was that H.S.D. (diesel) which was
E brought by the Indian Oil Corporation within the local limits of Jodhpur
Municipality was ultimately exported and sold to respondent No. 1 at
Dangiawas for use, consumption or sale outside the Municipal limits and as
such the Municipal Council had no jurisdiction to levy octroi tax on the
same. In reply to the said writ petition, it was stated by the Municipal
Council, being the appellant herein, that the sale of H.S.D. (diesel) by the
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respondent No. 2 to respondent No. 1 took place at Jodhpur, and only the
delivery was effected at Dangiawas as respondent No. 1 did not have its own
tankers but for this the respondent No. 2 was charging mileage for transmission of goods from its depot to Dangiawas. It was stated that the appellant
was charging octroi from the respondent No. 2 and not from respondent No.
I. It was stated that the question whether the contract of sale between the
G respondent No. 2 and respondent No. l took place at Jodhpur or at
Dangiawas was a disputed question of fact to be decided by reference to the
original agreement qua each transaction. It was further stated that the
disputed question of fact could not be adjudicated under Article 226 of the
Constitution. In reply to para 6, it was stated that the current account facility
was still provided and had not been stopped, that respondent No. 2 did not
H make the declaration as required by"* 9 and rule 13(4) of the Rajasthan
Municipal Octroi Rules, 1962 and that the goods exported were to be
MUNICIPAL COUNCIL v. PAREKH AUTOMOBILES
55
lessened only if such goods had not oeen sold within the Municipal limits and
· were exported out within a period of six months' from the date of entry. The
A
relevant provisions of s. 104 of the Rajasthan Municipalities Act, 1959
(hereinafter referred to as 'the Act') are as follows:
"Sec. 104: Obligatory Taxes-Every board shall levy, at such
rate and from such date as the State Governnient may in each
case direct by notification in the official gazette and in such
B
manner as is laid down in this Act and as may be provided in the
rules made by the State Government in this behalf, the following
taxes, namely:
(1) ...
(2) an octroi on goods and animals brought within the limits of
the municipality for consumption, use or sale therein; and
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(3) ...
Section 133 of the Act provides as follows:
"133. POWER TO KEEP ACCOUNT CURRENT WITH
FIRMORPUBLICBODYINLIEUOFLEVYINGOCTROI
ON INTRODUCTION OF GOODS:
The Board if it thinks fit instead of requiring payment of octroi
due from any mercimtile firm or public body to be made at the
time when the articles in respect of which it is leviable are
introduced within the octroi limits of the municipality, at any
time direct that an account current shall be kept on behalf of the
board of the octroi so due from any such firm or body as the
board specifies in this behalf.
(2) Every such account shall be settled at intervals not exceeding one month and such firm or public body shall make such
deposit or funish such security as the board or any committee or
officer authorised by it in this behalf shall consider sufficient to
cover the amount which may at any time be due from such firm
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or body in respect of such dues. Every amount so due at the
expiry of any such interval shall, for the purposes of Chapter
VIII be deemed to be and shall be recoverable in the same
manner as amount claimed on account of any tax recoverable
under the same Chapter."
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The Rules, being Rajasthan Municipal Octroi Rules, 1962, frru;ned
t(\ereunder are relevant and rule 13 of the said Rules provided as follows:
"13. FACILITIES FOR CURRENT ACCOUNTS: (l)The
Board shall maintain a list, in Form 6, of all persons whether
firms or individuals i.Howed special facilities under s.-133 of the
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Act for the payment of octroi. The list stiall be· kept corrected
56
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SUPREME COURT REPORTS
[1989] Supp. 2 S.C.R.
upto date and a copy of the list signed by the Executive Officer
shall be kept at each octroi out-post.
(2) The person to whom such facilities are given, printed books
of entry passes in duplicate shall be supplied in Form No. 7 on
payment of such price as may be fixed by the Board. When such
a person wishes to bring his goods into the Municipality, he shall
fill up the entry pass, the goods shall be dealt with unnder the
ordinary rules. On receipt of the entry pass, the Incharge of the
octroi out-post shall see that the person who has signed it is
named on his list, and if so, he shall, after satisfying himself that
the goods agree with the details entered in the entry pass, fill up
the certificate the at foot thereof as well as the coupon. He shall
then tear off the coupon, deliver it to the person who presents
the entry pass, and admit the goods named in the pass. He shall
se·nd the entry passes to the Octroi Superinten9ent, where they
shall be examined that the certificate covers the details of the
entry pass and the amount of octroi due shall be debited tO the
account of the person concerned.
(3) The persons to whom special facilities· have been· given,. a
printed book of transport passes shall be supplied in Form No. 5
on payment of such a price as may be fixed by the Board. When
such a person wishes to transport his goods from the Municipality, he shall fill up a tranport pass and send it with his good to the
octroi smt-post of. e)tit. On receipt of the Transport p~, the
Incharge of octroi out-post shall see that the person who has
signed it is named on the list; and if so, he shall after satisfying
himself that the goods to be transported agree with the details
entered in the Transport pass, fill up the certificate at the foot
thereof as well as the coupon. i'le shall then tear off the coupon
and deliver it to the person who presents the Transport pass. He
shall send the transport passes to the Octroi Superintendent,
where they shall be examined to see that the certificate covers
the details of the transport pass and shall be filed separately
under the name of each such person.
( 4) In cases provided for in sub-rule (3) 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 bythe 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 j(sμch 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.
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MUNICIPAL COUNCIL v. PAREKH AUTOMOBILES [MUKHARJI, J.]
57
(5) Payments by such person shall be made strictly in advance,
and at the expiry of his period for which facilities have been A
given, the name of the person shall immediately be struck off."
Rule 6 deals with the payment of octroi duty and provids as follows:
"6. PAYMENT OF OCI'ROI DUTY: No goods liable to payment of octroi shall, except as otherwise provided in these rules, B
be brought within the Municipal limits until the octroi duty
leviable in respect of such goods has been paid at the octroi
out-post situated on the route of entry as notified by the Board
from time to time for the purpose."
Rule 9 deals with the declaration of goods brought into the Municipal
limits and provides as follows:
·
"9. DECLARATION OF GOODS BROUGHT INTO THE
MUNICIPAL LIMITS: (1) Every person bringing within the
Municipal limits goods liable to payment of octroi shall produce
such goods at the octroi out-post and shall declare whether
goods are intended:-
(i) for cosumption, use or sale within the municipalitiy; or
(ii) for immediate transportation outside the Municipality; or
(iii) for temporary detention witbin Municipal limits and
eventual transportation outside Municipal limits.
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(2) Declaration under clause (i) of sub'iule (1) may be oral, E
declaration under clauses (ii) and (iii) shali.oe;in writing in Form
No. 1 and shall be tendered to tbe incharge of the octroi outpost
at the time of bringing the goods shall be treated as having been
brought within the Municipal limits for consumption, use or sale
therein."
It was urged by the appellant that the respondent No. 2 had not made F
the declaration as required by rule 9 and that under rule 13(4) of the rules,
the goods exported were only. to be lessened only if such goods had not bee
sold within the municipal limits and were exported out within a period of six
months' from the date of entry. The Municipal Council also raised tbe plea
that there was no privily ·Of contract between respondent No. 1 and the
Municipal Council as the demand of octroi tax was not made from responG
•
dent No. l. The Writ petition of the respondent No. 1 along with another
writ petition being No. 82 of 1976 filed by one Shri Sukh Sarnpat Raj was
heard by the learned Single Judge of High Court of Rajasthan. The learned
Single Judge by his judgment dated 28th January, 1977 allowed the writ
petition and restrained the appellant from charging or realising octroi on the
goods brought within the municipal limits by the Indian Oil Corporation but
H
re-exported outside the said municipal limits to its retail outlets for the use
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and consumption of the ultimate consumers outside the limits of the Municipal Counsel. The prayer for refund of the octroi.tax was, however, refused.
Appeals were filed therefrom against the judgment and order of the learned
Single Judge. The appellant herein filed the appeal No. 9 arising out of the
Writ Petition No. 17 of 1976 and also Special Appeal No. 13 arising out of
Writ Petition No. 82 of 1976. Mis Parekh Automobiles also filed a Special
B
Appeal being Special Appeal No. 31of1977. Thus, three appeals were filed.
All the three appeals were heard by the Division Bench of the High Coμrt
and by its judgment and order dated 1st February, 1980, the Division Bench
dismissed the Special Appeal Nos. 9 and 13 filed by the appellant herein.
The special appeal filed by Mis Parekh Automobiles was partly allowed. It
was directed that the Municipal Council would have to refund to the Indian
Oil Corporation the amount of octroi duty paid on the petroleum products
C
re-exported by it to Dangiawas outlet for supply to the writ petitioner who
would recover the same from the Indian Oil Corporation.
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It is not necessary for the purpose of this appeal to deal with the facts
agitated and found by the High Court. We will, however, refer to the same in
brief. Respondent No. 1 had been allotted retail outlet allotted by the
respondent No. 2, Indian Oil Corporation, for sale of petroleum products
such as diesel oil, mobile, iii, etc. at Dangiawas, which was outside the limits
of Jodhpur Municipal Council, appellant herein. The respondent No. 2 had
its depot ear Raikabag Station at Jodhpur where it stored petroleum
products. The respondent No. 2 from its depot at Jodhpur supplied the
petroleum products to various pump stations situated within the limits of
appellant as well as situated outside the limits of appellant in several districts
such as Districts of Jodhpur, Pali, Barmer, Jalore, Nagaur, etc. including the
retail outlet of the appellant at Dangiawas. The respondent No. 2, being a
public sector undertaking, was provided current account facilities under
s. 133 of the Act, and so the respondent No. 2 had not to pay octroi tax on
such consignment at the time of entry of goods within the limits of appellant.
It was alleged by respondent No. 1 that under rule 13 of the said Rules,
respondent No. 2 was supplied printed books for entry passes in duplicate in
Form No. 7 appended to the said Rules. Rule 13 provides, as noted before,
that if the goods which are imported within the Municipal limits are not
used, consumed or sold within the Municipal limits and are exported out of
Municipal limits for supply at various other retail outlets no octroi duty is
charged on those goods for the reason that under rule 13(4) octroi tax
payable shall be based on the total amount of octroi tax as shown by the'
entry passes less the octroi tax on the total amount of goods transported
outside the Municipal limits. It was contended that the apellant had been
following the aforesaid procedure till 24th July, 1975, but all of a sudden on
25th July, 1975, it was alleged, the appellant had suspended the transport
facilities to the respondent No. 2 and took the stand that octroi would be
charged from respondent No. 2 on the goods brought within the municipal
,_
MUNICIPAL COUNCIL v. PAREKH AUTOMOBILES [MUKHARJI, J.]
59
limits even though these were exported by it outside the municipal limits, if
these were sold within the limits of appellant although such goods were
meant for use and consumption of the consumers outside the Municipal
limits. The appellant, it is alleged, cancelled the transport passes supplied to
the respondent No. 2 from 25th July, 1975. As a consequence of this action
A
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of the appellant, the respondent No. 1 was charged octroi duty on supplies
made to the respondent No. 1 at Dangiawas by the respondent No. 2 since
25the July, 1975 by adding the amount of octroi tax in the bills for the
supplies made to the respondent No. l's retail outlet at Dangiawas. The
respondent No. 2 challenged the right of the appellant to charge the octroi
on such goods and approached the State Government. Upon that, the State
Govt. by its letter wrote to the appellant that it having granted current
account facilities under s. 133 of the Act to the respondent No. 2 should
charge octroi on the basis of petroleum products imported by respondent c
No. 2 minus the goods exported by it to its other distributing centres in·
Rajasthan. The respondent No. 1 also made representation to the appellant
challenging its right to realise octroi on the petroleum products which were
received at the depot of the respondent No. 2 at Jodhpur but were transported by it to its retail outlets but of no avail. The case of the respondent
No. 1 was that the goods were not sold at Jodhpur but actually the sale took
place at Dangiawas, the retail outlet of the respondent No. J Secondly, even
if the sale was held to have taken place at Jodhpur merely on that account
octroi could not be levied unless the goods so sold were meant for the use or
consumption of the consumers within the octroi limits. Respondent No. 2,
Indian Oil Corporation, supported the case of respondent No. J. Respondent No. 2 is a public sector undertaking and has got vast network of retail
outlets, i.e., distribution centres for distribution of petroleum products
throughout Indian including Rajasthan. For the purpose of distribution, it
had got its depots at various important places where it stored its petroleum
products for supply to its various retail outlets, i.e., distributing centres.
Likewise the respondent No. 2 had got its depot situated near Raikabag
Station, Jodhpur where it stored its petroleum products for sale and supply
of its petroleum products to its numerous retail outlets situated within the
districts of Jodhput, Pali, Barmer, Jalore, Jaisalmer, Nagaur, Sirohi, etc. It
was further alleged by respondent No. 2 that it stored petroleum products in
its depot at Jodhpur for purposes which might be classified into different
classes, namely.
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(l) for sale by respondent No. 2 to its consumers such as RailG
ways, Police, etc. and to its dealers of retail outlets situated within
Municipal limits of Jodhpur city who distributed or sold the petroleum
products within the area covered by municipal limits of Jodhpur city,
(2) for re-export by itself for supply to its dealers in charge of
various retail outlets situated outside the municipal limits of Jodhpur
city within the vari.ous districts specified above. Such retail outlets
distributed or sold the petroleum products to ultimate consumers
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A
outside the limits of Jodhpur Municipal Council.
I
According to the respondent No. 2, it had allotted the retail outlets to
I
I
various dealers under dealers agreement. Under the terms of the said
agreement, the respondent No. 2 was obliged to transport petroleum proJ
ducts out of its depots and supplied petroleum products to its dealers at the
destination in its own truck-tankers or the tankers of its contractors and
B
obtained the signatures of the dealers of the retail outlet in token of the
delivery of the goods and till the supplies were made at the destination the
goods were at the risk of the respondent No. 2. It was further alleged by
respondent No. 2 that the pump tank and other outfits which were fitted at
the retail outlets belonged to it and these were its property. It was, therefore, alleged that the goods supplied at retail outlets situated outside the
c limits of Municipal Council, Jodhpur were sold at the retail outlets where the
deliveries were made and not at Jodhpur although the dealers were required
to deposit the price of the petroleum products in the respondent No. 2's
account in the bank unless they were allowed credit facilities but the sale
took place only when the respondent No. 2 delivered itc pcoducts at the
dealers' retail outlets outside the municipal limits as per the terms of the
• D dealers' agreement. The appellant, Municipal Council, had, h,1wever, disputed the aforesaid position. It contended that whenever the sale was made
at the Jodhpur depot at Jodhpur, Octroi was chargeatle irrespective of the
fact where it was consumed or used. It was further contended that whether a
contract of sale had taken place at Jodhpur or retail outkl is a question of
fact and unless the contracts (agreements) were placed on the record by the
E respondent No. 1, the Court should not decide whether the sale by the
respondent No. 2 had taken place at Jodhpuror at Dangiawas. Rule 13(4) of
the said Rules would be operative only in those cases where the goods had
not been sold within the Municipal limits or if they had been exported out of
such limits within a period of six months from the date of its import. The
Municipal Council's further case was that the respondent No. 2 sold the
goods at Jodhpur. The respondent No. 2 never submitted its declaration as
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required by rule 9 of the said Rules and, therefore, the goods brought within
the limits of Municipal Council were, according to the appellant, liable to
octroi. It was contended on behalfof the respondent No. I that the appellant
was not entitled to levy the octroi on lhe petroleum products which were
re-exported by the respondent No. 2 to the retail outlet of the respondent
No. l at Dangiawas as the goods were neither brought for consumption or
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use in the limits of the Municipal Counci! of Jodhput, nor sold in the
Municipal area. It was further contended that evenif it was assumed that the
petroleum products which had been exported to the_ respondent No. l's
outlet at Dangiawas have been sold at Jodhpur then to the appellant had no
jurisdiction to levy the octroi and realise the same as good so sold were not
meant for the use of ultimate consumer in the municipal area. The taxable
H
event for the purpose of levy of octroi duty takes place, according to
respondent No. l, only if the entry of the goods in the limits of appellant was
MuNICIPAL COUNCIL v. PAREKH AUTOMOBILES [MUKHARJI, J.]
61
meant for the use of ultimate consumer or user. lt was contended that the
petroleum products which had been exported to the respondent No. l's
retail outlet at Dangiawas were meant for the use of ultimate consumer for
use outside the limits of the Municipal Council so these were not chargeable
to octroi. It is not necessary in view of the findings of the High Court to deal
with the preliminary objections of the appellant, namely, respondent No. l
was a firm and not competent to bring the writ petition, that the respondent
No. 1 had no locus standi to file the writ petition, or that there was an
alternative remedy under rule 40 of the said rules and as such writ petition
would not be maintainable. The learned Single Judge of the High Court
rejected these contentions of the appellant. Two main contentions involved
before the High Court and us were and are, namely, where the taxable even
took place and whether respondent No. l, in the facts and the circumstances
A
B
of this case, was liable to pay octroi duty and secondly, whether in view of c
the maintenance of the current account facilities, as ,nentioned hereinbefore, the Municipal Council was entitled to charge the octroi duty in the
manner it has purported to do from the 25th July, 1975 and whether that the
appellant was liable to refund the said duty.
Section 104 of the Act by sub-section (2) provides that an octroi on D
goods and animals brought within the limits of the municipality for consumption, use or sale therein, is liable to be charged by the State Government. It was contended on behalf of the respondent No. I that the taxable
event in respect of the goods supplied at its reail outlet at Dangiawas had not
taken place within the limits of the appellant. It was submitted that the goods
brought by the respondent No. 2 and exported to the respondent No. l's
retail outlet at Dangiawas were in the first place not sold at all within the
E
Municipal limits; secondly, even if the sale of the goods so exported was held
to have taken place within the Municipal limits than too the taxable event
had not taken place as such goods were not meant for sale or use or
consumption of the ultimate consumer residing within the local limits of the
appellant but were meant for the consumption of the ultimate consumer
residing outside the local limits of the appellant. It was contended that the
word 'sale' occurring under s. 104 of the Act cannot be read without
reference to use or consumption. Sale simplicitor by itself did not attract the
levy of octroi, it was submitted, unless the goods were meant for use or
consumption of the ultimate consumer in the area of the appellant. Reference was made before the High Court as before us to the decision of this
Court in Burmah Shell Oil Storage & Distributing Co. India Ltd. v. The
Belgaum Borough Municipality, [1963] SCR Supp. 2 216 as well as the
decision of this Court in Hirata/ Thakorlal Dalal v. Broach Mur.icipality &
Ors., [1976] Supp. SCR 82. In Burmah Shell's case (supra), the company
was a dealer in petrol and petroleum products which it manufactured in its
refinery situated outside the octroi limits of Belgaum Municipality. It
brought those products inside that area either for use or consumption by
itself or for sale generally to its dealers and the licensees who in their turn
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sold these to others.