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

Citation: [1989] SUPP. 2 S.C.R. 49

Court: Supreme Court of India

Bench: SABYASACHI MUKHERJI, M.H. KANIA, S. RANGANATHAN

Case summary

It was further stated that the disputed question of fact could not be adjudicated under Article 226 of the Constitution. of the ultimate consumer, the Division Bench held that sale simplicitor would ot attract the levy ofthe octroi, that the word 'sale' in this context had to...

Judgment text

MUNICIPAL COUNCIL, JODHPUR v. PAREKH AUTOMOBILES LTD. AND ORS. NOVEMBER 7, 1989 [SABYASACHI MUKHARJI, M. H. KANIA AND S. RANGANATHAN, JJ. ] Rajasthan Municipalities Act 1959/Rajasthan Municipal Octroi Rules, 1962: Sections 104, 133 Rules, 6, 9and 13-0ctroi-Liabilityfor-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. 2had its depot near Raikabag Stationat Jodhpur where it stored petroleum products for supply to various pump stations situated within the limits ofthe 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 ofgoods within the limits ofthe appellant. For this purpose, respondent 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 ofduty payable, in the case or persons who had the current account facilities, was determined and collected on the basis of the total amount ofgoods that had come in as reduced by the total amount ofgoods that had gone out, the balance being presumed to have been consumed, used or sold within the municipal limits. 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 ofthe consumers outside the municipal limits. As a consequence of this action of the appellant, respondent No. 2 charged 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 Dangiawas by respondent No. 2, and for refund ofoctroi 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 ofthe petroleum products in question took place within the limits of the municipa- 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 itselfdid not attractthe 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. 2did not make the declaration as required by 11ule 9 and rule 13(4) ofthe Octroi Rules; and that under sub-rule (4) ofrule 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 the Municipal Council as the demand ofoctroi was not made from respondent 0 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 made at the destination, the goods were at the risk of respondents No. 2and 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 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 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 held that the sine qua non for levy ofoctroi was consumption, and that the sale in order to attract levy ofoctroi shall be for the purpose ofuse or consumption MUNICIPAL COUNCIL v.

PAREKH AUTOMOBILES 51 of the ultimate consumer, the Division Bench held that sale simplicitor would ot attract the levy ofthe 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 ofoctroi 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 behalfof the appellant that there was nothing in the two judgments ofthis Court to the effect that ifgoods 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 ofthe Octroi Rules and as admittedly the respondent No. l was not complyingwith the requirements ofrules 6 and 9ofthe 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 behalfofthe 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).

(1) The High Court was right in holding that it was difficult and inappropriate under Article 226 to determine the question as t9 where the sale 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 ofJodhpur. [66F-GJ (2) In view ofthe decisions of this Court and in view ofthe language of section 104 ofthe 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. 2SCR 216 and Hiralal Thakorelal Dalal v. Broach Municipality & Ors. , 119761 Sup. SCR 82, followed.

(3) In view ofthe facts ofthis 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. Ifthe 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. [73D] (4) Analysis of Section 133 and the current account facility therein indicates 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 9does not arise as they apply when octroi tax is paid at the time ofentry of goods. The delivery of entry passes and transport passes is only to facilitate settlement ofoctroi account on goods which have been retained in Municipal area for use and consumption.

l73H; 74AI (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 ofpetroleum products used or consumed within the Municipal limits of Jodhpur Municipality. [75A-B) (6) In view ofthe confu. <ed state of pleadings and averments, it was not possible to hold that current account facilities were withdrawn or cancelled. Ifthat 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 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 ofthe 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 ofentry passes. The duty payable in resFCt ofthe goods transported outside is later on credited to his account on the basis of the transport passes. [79E-Gr (4) The High Conrt was fully justified in holding that the terms ofrules 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 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 ofrule 13 and the Indian Oil Corporationis entitled to go on paying octroi duty on the basisofthe goods brougbt by it within the Municipality less the goods transported outside the Municipality, may he in pursuance ofa sale within the Municipality, so long as such sale is in pursuanee ofan intention that the goods should he consumed or used outside the Municipal limits. [80GI (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. [8ICI CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1552 of 1981. From the Judgment and Order dated 1. 2. 1980 of the Jodhpur High 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, D. Mehta, S. M. Sarin, Aman. Vathher, Atul Nanda, Mrs. P. S. Shroff, R. Sasiprabhu, S. S. Shroff, S. A. Shroff, R. Jagannath Goulay and 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 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. 1in 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 to the respondent herein at Dangiawas bythe 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 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 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 respondent No. 2 to respondent No. 1 took place at Jodhpur, and only the delivery was effected at Dangiawas as respondent No. 1did not have its own tankers but for this the respondent No. 2was 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 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 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 ifsuch goods had not oeen sold within the Municipal limits and ·were exported out within a period ofsix months' from the date of entry. The 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 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 (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 asthe 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 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. " 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 Act for the payment of octroi. The list stiall be· kept corrected 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 onlyj(sμch goods have not been sold within the Municipal limits and 'if"they have been exported out of such . H limits within a period of (six months) from the date of their import in such limits. 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 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, 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.

(2) Declaration under clause (i) of sub'iule (1) may be oral, 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 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 notbee sold within the municipal limits and were exported out within a period ofsix 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 respon- • 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 re-exported outside the said municipal limits to its retail outlets for the use 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 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 re-exported by it to Dangiawas outlet for supply to the writ petitioner who would recover the same from the Indian Oil Corporation. 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 ofJodhpur, 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 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 No. 2 minus the goods exported by it to its other distributing centres in· Rajasthan. The respondent No. 1also 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. 1was that the goods were not sold at Jodhpur but actually the sale took place at Dangiawas, the retail outlet of the respondent No. JSecondly, 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. (l) for sale by respondent No. 2 to its consumers such as Railways, 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 outside the limits of Jodhpur Municipal Council. I I According to the respondent No. 2, it had allotted the retail outlets to various dealers under dealers agreement. Under the terms of the said I agreement, the respondent No.

2 was obliged to transport petroleum pro- J 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 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 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 • 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 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 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. Ithat 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 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 event for the purpose of levy of octroi duty takes place, according to respondent No. l, only if the entry ofthe 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 of this case, was liable to pay octroi duty and secondly, whether in view of 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 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 ofthe 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 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 sold these to others.

According to the Company, the goods brought by it within the octroi limits could be divided into four separate categories, namely: (i) goods consumed by the company within the octroi limits, (ii) goods sold by the company through its dealers or by itself and consumed within the octroi limits by persons other than the company, (iii) goods sold by the company through its dealers or by itself inside the octroi limits to other persons to be consumed by them outside the octroi limits. (iv) goods sent by the company from its depot inside the octroi limits to extra municipal points where these were brought and consumed by persons other than the company. In that case, the company had objected to the levy of octroi on the goods which were sent by it out of the octroi limits for the outside ultimate consumers and claimed refund of the amount so charged as octroi.

Clause (4) of sub-section (1) of section 73 of the Bombay Municipal Boroughs Act, 1925 which was under consideration in that case was analogous to subsection (2) of section 104 of the present Act in question. The words 'use or sale' were substituted for the words 'for use' by the Bombay Act of 35 of 1954. This Court examined the scheme of the taxation under the Bombay Boroughs Act and the Rules and bye-laws made by the Municipality for the levy of octroi. After examining the history of octroi, this Court in that decision held 'octrois were tax on goods brought into the local area for consumption, use 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. ' This Court specifically clarified that the word 'sale' was included only in 1954 in order to bring the description of the octroi in the Act in line with the Constitution of India.

While doing so this Court further observed that the expression 'consumption' and 'use' together 'connote' the bringing in of the goods and animals not with a view to taking them out again but with a view to their retention either for use without using them up or for consumption in manner which destroys, wates or uses them up. This Court further obse• ·ed in that case that octroi and terminal tax resemble each other in the sense that they are both leviable in respect of goods brought into a local area. Otherwise, these are quite different from each other. While terminal taxes are leviable on goods 'imported or exported' from municipal limits denoting thereby that they are connected with the traffic of goods, octrois are leviable in respect of the goods brought into a municipal area for consumption or use or sale.

The history of these two taxes showed that while terminal taxes were a kind of octroi which were concerned only with the entry of goods in a local area irrespective of whether they would be used there or not, octrois were taxes on goods brought into the area for consumption, use or sale. These MUNICIPAL COUNCIL v. PAREKH AUTOMOBILES [MUKHARJI, J. ] 63 were leviable in respect of the goods put to some use or the other in the area but only if these were meant for such user. Another difference between the two is that there is no system of refund under terminal tax but that is so for octroi. This Court held that the sale by it directly to consumer or 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 acts of consumption must take place in the area of the municipality. Hidayatullah, J. (as the learned Chief Justice then was) speaking for this Court observed at p.

233 of the report 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 bought 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, 0 the word '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 are also 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 others for the purpose ofuse or consumption by them in the area. Itwas only when the goods were re-exported out of the area that the tax could not legitimately be levied and in this case the municipality has agreed to refund the amount of tax on goods re-exported without being used or consumed in the municipal area. In this view of the matter, it was not necessary for the municipality to follow the procedure for imposing taxes when the section was amended. The tax still remained the same. Its nature, incidence or rate were not altered. '' The aforesaid observa! Jons were approved by this Court in Hirata/ Thakor/al Dalal v.

Broach Municipality & Ors. , (supra). On the basis of the aforesaid decisions of this Court, the Division Bench of the High Court in the instant case in appeal filed from the aforesaid judgment of the learned Single Judge held that sale simplicitor would not attract the levy of the octroi. The word 'sale', in this context, has to be read in reference to the use or consumption, according to the Division Bench and 'sue, consumption and sale' have to be read in disjunctiye manner. Reference, in this connection, was made to rule 6 of the said Rules, which provides that no goods liable to payment of octroi shall except as otherwise provided in these Rules be brought within the Municipal limits until the octroi duty leviable in respect of such goods have been paid at the octroi outpost situated on the route of the entry as notified by the Board from time to time.

Rule 9 of the said Rules further provides that every person bringing within the Municipal limits goods liable to payment of octroi shall produce such goods at the octroi, outpost and shall declare whether the goods are intended (i) for consumption, use or sale within the Municipality, or (ii) for immediate transport outside the Municipality or (iii) for temporary detention within Municipal • limits and eventual transportation outside the Municipal limits. It further provides that if no succh declaration is made the goods shall be treated as having been brought within the Municipal limits for consumption, use or sale therein. On the basis of these rules, it was contended before the Division Bench that as soon as the goods enter within the octroi limits it gives rise to taxable event unless a declaration as contemplated rule 9 has been made by the person bringing such goods.

It was submitted that no such declaration had been made in this case, and therefore, a conclusive presumption arose that the goods should be treated as having been brought within the Municipal limits for consumption, use or sale therein. The division bench was unable to accept this submission. The division bench was of the view that this argument ignored the import of rule 13. Rule 13 dispensed with the requirements of rules 6 and 9 and it was a special rule applicable to the persons, firms and individuals under section 133 of the Act. Section 133 of the Act provides that the Board if it thinks fit instead ofrequiring payment of octroi due from any mercantile firm or public body it may at the time when the articles in respect of which it is leviable are introduced within the octroi limits of the municipality, 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.

It further provides that every such account shall be settled at the intervals not exceeding one month and such firm or public body shall make such deposit or furnish such security as the Board or any committee or officer authorised by it in this behalf shall consider it sufficient to cover the amount which may at any time be due to such firm or body in respect of such dues. Rule 13, therefore, dispenses with the requirement of rule 6. It further dispenses with the requirements of rule 9 in regard to declaration. The division bench of the High Court also referred to sub-rule (3) of rule 13, which has been set out before. The High Court held that rule 13 is a special provision in regard to the persons who had been granted current account facilities and this rule is not subject to either rule 6 or rule 9 but is a over-riding rule independent of rules 6 and 9. The High Court found that respondent No. 2 had been granted current account . MUNICIPAL COUNCIL v.

PAREKH AUTOMOBILES [MUKHARJI, J. l 65 facilities and, therefore, the octroi duty shall be charged from it under s. ub-rule (4) of rule 13 on the goods brought by it in the Municipal area minus the goods transported by it outside the Municipal limits. Therefore, the contention of the appellant herein on rules 6 and 9 was rejected. It is, therefore, necessary for these appeals to consider the validity or otherwise of the said findings of the High Court in these appeals. The High Court dealt with the contentions based on sub-rule (4) of rule 13 and considered if the sale of the goods had taken place within the Municipal limits to see if the octroi shall be leviable or not. The High Court feld that the rule had to be construed in consonance withs. 104 of the Act. As mentioned hereinbefore, section 104 of the Act was analogous to s.

73 of the Bombay Boroughs Act which had been interpreted by this Court in the aforesaid two decisions, wherein it was held that the sale in order to attract levy ofoctroi should befor the purpose ofuse or consumption ofthe ultimate consumer in the area. (Emphasis supplied). The High Court further observed that the meaning of the word 'sale', therefore, has to be given as per this Court's view and any other meaning to 'sale' contained in the rules shall not be justified as it will be repugnant to s. 104 of the Act. The High Court found that the goods were re-exported by the Indian Oil Corporation from its depot to its retail outlet for the use or consumption of the ultimate consumer outside the municipal limits. (Emphasis supplied). The Municipal Council was not entitled to levy octroi on goods so exported by respondent No. 2 to its retail outlet for use and consumption by the ultimate consumer outside the local limits of the Municipal Council.

Therefore, it was held that the Municipal Council had no jurisdiction to levy octroi on the goods re-exported by the respondent No. 2, the Indian Oil Corporation to the retail outlets of its dealers located outside the Municipal limits for the use of the ultimate consumers outside the Municipal limits. Though the aforesaid finding of the High Court has been assailed before us in this appeal, in view of the decision of this Court referred to hereinbefore and in view of the principles laid down therein and the language of s. 104 of the Act and the facts, we are unable to accept the challenge on behalf of the appellant herein. It was, however, contended by the respondent No. 1before the High Court that the taxable even had taken place at Dangiawas and not at the octroi limits ofJodhpur as the sale had not taken place in. the octroi limitsbut had taken place at Dangiawas. It was contended by the respondent No. I that goods were supplied by the respondent No.

2in its ta~kers at Dangiawas and till the goods were supplied at the respondent no. l's outlet at Dangiawas, the risk in respect of the goods was with. the respondent no. 2, the Indian Oil Corporation. This fact, it was stated, had been admitted by the Corporation in its return wherein it had been clearly admitted that till the goods are supplied to the respondent No. l's outlet stations the goods were at the risk of respondent no. 2. It was, therefore, contended that till the goods wer delivered at Dangiawas, there was no contract for sale. The contract for·sale, it was contended, had taken place at Dangiawas where the goods were delivered at the respondent no. l's outlet and receipt was obtained from the respondent no. l's outlet acknowledging the delivery of the goods at that place. In this connection, reference was made to para 25 of the model agreement Ex. B. I.

According to para 25, the quantity of petroleum and other allied products shall be delivered by the Corporation as measured by the Corporation's measuring device and a receipt signed by or on behalf of the dealer at the time of delivery by the Corporation would be conclusive evidence that the petroleum products mentioned therein were in fact delivered to the dealer. It was submitted that the delivery was made by the respondent No. 2's tankers at Dangiawas and the receipt obtained there. On the other hand before the High Court, as mentioned hereinbefore, it was contended on behalf of the appellant that this question involved disputed questions of facts, which was beyond the pale of jurisdiction under Article 226 of the Constitution.

It was submitted that neither indents in regard to the transactions of sale had been produced nor there was any evidence as to the quantities for which the sale had taken place and in the absence of material documeuts it was not possible to determine the question as to where the sale had taken place. It further appeared that the respondent No. l used to deposit the amount in advance against the supplies to be made to its retail outlet at Jodhpur. According to the appellant, as the material and relevant evidence had not been produced on the record, it would be hazardous to reach a definite conclusion as to where the contract of sale had taken place. The High Court held that it was difficult and inappropriate to go into under Article 226 of the Constitution. The High Court referred to certain decisions.

The High Court, however, rested on the view that even if the sale took place within the octroi limits of Jodhpur Municipal Council for the use or consumption of the ultimate consumer outside the octroi limits of Jodhpur then the taxable event did not take place in the octroi limits of Jodhpur. In those circumstances, the High Court held that the Municipal Council had no jurisdiction to levy octroi on the goods so exported. We have considered the submissions of the appellant on this point. We are, however, in view of the facts and circumstances of the case, of the opinion that the High Court was right. The High Court issued an order of restraint. It directed that the Municipal Council be restrained by way of Mandamus not to levy octroi on the goods exported by the respondent No. 2 for the use of the ultimate user outside the octroi limits of Municipal Council even if the sale took place within the octroi limits of Municipal Council, Jodhpur.

The next aspect of the matter, is, whether the respondent No. l was entitled to refund of the octroi realised from respondent No. 2. It had been contended by the respondent No. l that although the octroi had been realised directly from the respondent No. 2 but in fact and in reality it was the respondent No. 1who had been made to pay the octroi as the same had been realised by the respondent No. 2 by adding the octroi realised by the Municipal Council in its bills for the supply of the goods made to respondent No. l. It was contended on behalf of the appellant that there was no ]Jrivity MUNICIPAL COUNCIL v. PAREKH AUTOMOBILES [MUKHARJJ, J. ] 67 of obligation between respondent No. I and the appellant and therefore, respondent No. l had no right to ask for a refund of the octroi.

Secondly, it was urged that the respondent No: l had realised the amount of octroi while selling the petroleum products to the retail consumers by adding the same in the retail price charged from the consumers. So far as the first contention is concerned, the division bench found that there was no privily of obligation between respondent No. 1 and the appellant. The same had not been realised from the respondent No. I. It was, therfore, held that there being no privily of obligation between respondent No. l and th_e appellant, the respondent No. 1 could not ask for a refund of the money which it has not paid to the appellant. There was no provision for refund in the Act or in the Rules which enabled the respondent No. l to claim refund from the appellant even though it had been paid by the respondent No. 1indirectly. There was, however, an undertaking given to the Hign Court by the appellant on 3rd February, 1976 in the High Couurt.

On that date, the appellant had given an undertaking that the appellant would refund the octroi charged from the respondent No. 1 on the diesel re-exported outside the Municipal limits of Jodhpur in case the writ petitions were allowed. The undertaking is however, fOnfined to the refund ofthe amount charged from the respondent No. 1 by the appellant and not from respondent No. 2. The basis for refund of the amount undertaking from respondent No. 2 has not been established. To that extent, the writ petition was bound to fail, the High Court held. If that was the position, there cannot be any basis for refund of the same on the basis of the undertaking. The Division Bench of the High Court held that as the challenge in this case was that the words 'use or sale' could not make any difference so far as the event oftaxability was concerned, as according to this Court, 'sale' simplicitor would not attract the levy of the octroi.

The sine qua non for levy ofoctroi is consumption, according to this Court. Therefore, no octroi could be levied in respect of goods which were re-exported for consumption or use outside the Municipal limits, the Division Bench held. In that view ofthe matter, the Division Bench ofthe High Court jheld that in view of the decisions of this Court, no octroi was leviable on petroleum prod.. ccts re-exported to the retail outlets situated outside the municipal limits for consumption and use -outside the limits. In our opinion, the division bench is rig_ht insofar as it held as aforesaid. It was, however, submitted that the ratio of the decisions of this Court had no application because of rules 6 and 9 of the sa;d Rules. We have referred to the said rules.

The contention of the appellant on the basis ofthe aforesaid rule was that since the goods were brought within the octroi limits, these became liable to octroi unless a declaration as contemplated by rule 9 had been made by the person bringing such goods. It was submitted by the appellant that no such declaration had been made in the present case. According to the High Court rule 13 contemplates, as we have noticed, special facilities for current account under which in case of a person to whom such facilities are given, amount of octroi duty payable is determined by deducting the total amount ofgoods transported outside the municipal limits as shown by the transport passes from the total amount of octroi as shown by the entry passes. The High Court noted thats. 133 of the Act confers power on the Board to direct that current accounts may be kept on behalf of the Board with fhe firm or public body in lieu of octroi on introduction of goods. The Division Bench was of the opinion thats.

. 133 of the Act along with rule 13 of the said 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 were given to a person. In the instant case, special facilities for current accounts had been given to the respondent No. 2. Therefore, rule 9 had no application according to the Division Bench. Learned counsel for the respondent No. I had contended before the Division Bench that at the time of entry of petrol or diesel, it was not possible for the Indian Oil Corporation to give a declaration as to how much would be re-exported to retail outlets situated outside the Municipal limits. The Division Bench found that the argument on behalf of the Municipal Council regarding necessity of giving a declaration was vital. The appeal filed by the Municipal Council was, therefore, dismissed.

Coming to the appeal for refund, it was urged before the Division Bench that Municipal Council had given an undertaking that it would refund the octroi charged from the respondent No. 1 on the petroleum products re-exported outside the Municipal limits of Jodhpur. The Division Bench noted that the learned Single Judge had disallowed fhis firstly on the ground that the octroi had been charged from the respondent No. 2 and not from the respondent No. I and, secondly, the respondent No. 1 had not succeeded in establishing his claim for refund against the respondent No. 2. The Division Bench held that the refund was not possible. In fhis connection, reliance was placed on the decisions of this Court in MIs Moti/al Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh & Ors. , AIR 1979 SC 621 and State ofMadhya Pradesh & Anr. v. Bhai/al Bhai etc. , AIR 1964 SC 1006.

The Division Bench of the High Court, therefore, held that the claim for refund is not sustainable but the High Court found that the octroi had been paid by the Indian Oil Corporation and not by the respondent No. 1an\[ therfore, directed that the Municipal Council would have to refund to the Indian Oil Corporation the amount of octroi paid on the petroleum products re-exported by it to Dangiawas outlet for supply to the respondent No. 1 and the respondent No. I may recover the same from the Indian Oil Corporation. The appeals were allowed to the extent indicated above. Otherwise, the decision of the learned Single Judge was confirmed. As mentioned hereinbefore, being aggrieved, the appellant came up for appeal by special leave to this Court. On behalf of the appellant, Shri Soli Sorabjee and Shri Tapash Ray made their submissions. On the main point as held by the division bench of the High Court there was not much substantial challenge. We agree with the High Court.

It was, however, contended that during the period in respect of MUNICIPAL COUNCIL v. PAREKH AUTOMOBILES [MUKHARJI, J. J 69 which the claim had been made by the respondent, there was no continuation of the current account facilities in favour of the rspondent No. 2, Indian Oil Corporation as provided under s. 133 of the Act read with rule 13 of the said Rules, and the question was whether the goods brought within the Municipal limit by the Indian Oil Corporation were liable to payment of octroi because of non-compliance with the procedure in rules 6 and 9 of the said Rules. The other question which required consideration is that assum- B· ing that current account facilities in favour of respondent No. 2 existed, whether by reason of such, respondent No. 2 was exempted from complying with the rules 6 and 9 of the said Rules. Counsil submitted that it was strange that the respondent No. 1was purporting to make out a case that the current account facility to the respondent No.

2 by the appellant was not withdrawn and the same was still continuing. An affidavit in support of this contention was filed by one Shri R. C. Parekh after the conclusion of the hearing in this case on the 30th September, 1988. The case was reargued again in Feb. 1989. It was contended thai the Writ Petition in Mis Parekh Automobiles' case showed beyond doubt that the writ petition was made on a positive case that all of a sudden on 25th July, 1975, the appellant had suspended the current account facilities in respe'ct of also the goods which were exported out of Jodhpur Municipal limit'by the respondent No. 2 and supplied to respondent No. 1at Dangiawas. It was further the case of Mis Parekh Automobiles that upon suspending such current account facility the municipality was charging octroi on all petroleum products brought by respondent No. 2 within the Municipal limits without making a distinction amongst goods which were exported outside the Municipal limits.

In this connection, reference was made to paragraph 9 of the writ petition. On behalf of the appellant, it was contended that the terrn 'export facilities' used in that paragraph was to mean 'current account facility' as it appeared from the pleadings of the respondent No. 1 in paragraph 16 of the said writ petition. Reference was also made to other paragraphs of the writ petition, namely, paragraph IO, paragraph 11 and paragraph 12 which proceeded on the basis that current account facilities had been withdrawn and a complaint was made on that basis. Reference was also made to the paragraph 17 at p. 107 of the appeal paper book. The Municipal Council, Jodhpur filed a reply to the writ petition where also statements were made. It was submited that reading of . the said pleadings make it clear that the respondent No. 2 was not making any declaration under rule 9 of the said Rules. A declaration under rule 9 of the said Rules was to be.

made in Forrn I, a specimen copy of which was enclosed to the written argument. it was further stated that in the affidavit of the Indian Oil Corporation, nowhere it was stated that the said current account facility had not been suspended and was still continuing. It was the case of the appellant that current . account facilities were not provided to the respondent No. 2 as contemplated under s. 133 of the Act. It was the case of the municipality that even now the facilities are provided to a public sector unde1taking provided they act in compliance with the provisions of. s. 104 of the Act read with rules 6 and 9of the said Rules. But so far as the facts of this case are concerned, it was submitted that during the period in dispute as also . \ today there is no facility to the respondent No. 2 under rule 13 of the said Rules and as admittedly, the respondent No.

2 was not complying with the requirements of rules 6 and 9 of the said Rules and was not filing any declaration, theMunicipality had the right to treat the goods, brought within the Municipal limits, as those brought for consumption, use or sale under sub-rule (2) of rule 9 of the said Rules and thereby attracting octroi. The Division Bench of the High Court, it was contended by the appellant, failed to appreciate the implication of the aforesaid provisions of law and the fact that in respect of the period in question, admittedly, the current account facility was not available with the Indian Oil Corporation and as admittedly, the Indian Oil Corporation did not file any declaration under rule 9 of the said Rules, the petroleum products brought within the Municipal limits by the Indian Oil Corporation were to be prsumed to be for consumption, use or sale and as such liable to octroi duty.

The High Court, according to Shri Ray for the appellant, should have appreciated that the questions raised, gone into but the questions decided by the High Court were not gennane to the issue and as such were not required to be gone into the decided. On this aspect, it was submitted that the appeals should be allowed so far as refund was concerned, and the impugned decisions of the High Court should be set aside. It was further submitted that aan analysis of law while dealing with this point would indicate that a declaration under s. 133 of the Act read with rule 13 of the said Rules cannot be interpreted as one dispensing with the requirent of the declaration under rule 9 of the Rules and if that be so then the presumption of non-declaration would be available to the Municipality. It would, therefore, be a case of deemed use or consumption.

It was submitted that the aspect whether sale alone would be sufficient to levy octroi or along with sale there should be consumption or use within the municipal limits, would require consideration. It was submitted that conceivably goods can be brought within the municipal limits of a municipality for the purposes of (i) use, consumption or sale; or (ii) for immediate transportation outside the Municipality; or (iii) for temporary detention within the Municipal limits and eventual transportation outside the Municipal limits; or (iv) goods brought by a travelling agent for sale or exhibiting them for the purposes of securing orders for sale thereafter. Octroi, it was submitted, can only be levied on goods which are brought within the municipal limits for the purpose of consumption, use or sale therein.

No octroi can be charged on any goods which are brought within the municipal limits either for immediate transportation outside the municipality or for temporary detention within the municipal limits or for sale or exhibition by a travelling agent, it was submitted. The provisions of the Act and the Rules have been made for the different categories in different ways, it was submitted. S. 104 of the Act is the charging section and authorises municipality to impose octroi on goods and animals brought within the limits of the municipality for consumption, use or sale. The said section, it was submitted, is to be read with rule 6 providing for payment of octroi duty on goods liable to MUNICIPAL COUNCIL v. PAREKH AUTOMOBILES [MUKHARJI, J. ] 71 payment of octroi. Rule 6 of the said Rules, would indicate that octroi is to be paid only on goods liable to payment of octroi and not other goods. Rule 7 indicates that import of the goods should be through prescribed routes.

This has been made for preventing clandestine importation of goods. Rule 8 provides that the importors are to furnish documents and information in respect of the dutiable goods to be brought. Rule 9 enjoins that the person bringing within the municipal limits good liable to payment of octroi, shaall produce such goods at the octroi outpost and shall declare whether the goods are intended for consumption, use or sale within the municipality or for immediate transportation outside the municipality or for temporary detention within the municipal limits. Referring to the scheme of the Act and the rules, it was submitted on behalf of the appellant that an analysis of s. 133 and the current account facility therein indicate that only on· the goods for use consumption or sale octroi is leviable.

Grant of current account facility does not mean providing facility to bring within Municipal limits which are liable to payment of octroi without complying with the other rules specifically applicabl!! in respect of such goods. It was submitted that respondent No. 1 knew well that current account is in respect of those goods which are brought within the Municipal limits for use, consumption and sale. In this connection, reference was made to certain paragraphs in the pleadings. There was no current acc0unt facility, according to the appellant. It was submitted that when the writ petition was moved at the particular point of time the current account facility stood suspended. Xerox copy of the Order Sheet of the Trial Court was relied upon. It would appear from that the trial court did not grant any stay because there was nothing to be stayed as by the time the writ petition was moved the current account facility stood suspended, it was submitted.

If the Court desired, a mandatory order reviving the current account facility was required to be made. That was not done. Therefore, the court of first instance heard the writ petition and disposed of the same. The Court of first instance did not grant any relief to the writ petitioner and as such the writ petitioner filed the appealbefore the Division Bench. In the appeal the appellate Court refused to stay the operation of the writ issued by the learned Single Judge. Therefore, by reason of that order also, there was no revival of the current account facility to the respondent No. 2, according to the appellant. The Division Bench, as appears from the saicl order dated 1st April, 1977, restrained the payment of the octroi duty by the respondent No. 2 to the Municipality pending the said appeal and directed the Indian Oil Corporation to maintain a separate account in respect of the same and to keep the same in a separate bank account with the State Bank of India, Jodhpur.

The said order speaks of deposit of the octroi tax payable in respect of such despatches. As the Division Bench partly allowed the writ petition, the Municipality moved this Court and this Court,stayed the operation of that order. Therefore, when the petitioner moved this Court, the Current Account facility stood wspended, accordingto the appellant, and at no stage thereafter till now the same stood revived by any order or otherwise. - But it may be noted, as mentioned hereinbefore, that an affidavit was filed by one Shri R. C. Parekh. It was stated that current account facility as mentioned ins. 133 of the Act was provided to the respondent No. 2, but the said facility was never discontinued even after 25th July, 1975 and is still being provided till the date of the hearing of the matter before this Court. The current account facility under section 133 of the Act is not to recover octroi tax on goods at the time of entry but to keep current account and recover it periodically.

Reference was made to paragraph 6 of the writ petition and in reply, the Municipal Council admitted para No. 6 of the writ petition and stated that the facilities are still provided and has not been stopped. Therefore, it is clear, according to the deponent, and according to the respondent, that according to the Municipal Council, Jodhpur itself current facilities as provided under s. 133 of the Act were never withdrawn and therefore, any submissions made by the Municipal Council to the contrary are totally unfounded. It could not have been withdrawn unilaterally without notice to the Indian Oil Corporation. According to the deponent, the petitioner ne. ver stated that the current account facility provided to the Indian Oil Corporation had been withdrawn by the Municipal Council. It only stated in paragraph 9 of the writ petition that suddenly on 25th July, 1975, the Municipal Council, Jodhpur mspended the export facilities provided to the respondent No.

2 and informed the respondent No. 2 that henceforth octroi tax would be charged from the respondent even on those goods which were exported outside the Municipal limits and which were not used or consumed within the municipal limits. The export facility, i. e. , facility on the issue of transport passes under rule 13 of the said Rules was only with the object to ascertain that quantity of petroleum products that have been exported out of Jodhpur Municipal limits and it did not amount to withdrawal of current account facilities. The object of current account facilities is not to realise octroi tax on each consignment of goods at the time of its entry in Municipal limits of Jodhpur, but to keep current account and realise octroi tax after specified time periodically. It is the case of the respondent No. l that the current account facility was never discontinued and it is still continuing.

In fact it is the duty of the Municipal Council to provide passes under rule 13 to person who have been provided current account facility. In reply to para 9 of the writ petition, it was stated by the Municipal Council that it never suspended the export facilities of Indian Oil Corporation. It was further stated that it was decided between the officers of the Indian Oil Corporation and Administrator that export facility shall remain in force only for goods exported to such distribution centres in respect of goods ofwhich no sale is done atJodhpur. Therefore, the affidavit stated that there was no suspension. Reference was made to the order of the High Court dated 9th February, 1976 and other orders. Shri Soli Sorabjee referred to the scheme of the Act and submitted that the two decisions of this Court referred to by the High Court were not applicable. Neither of these cases, it was submitted, was concerned with the MUNICIPAL COUNCIL v. PAREKH AUTOMOBILES [MUKHARJI, J.

l 73 situation where the goods were sold within the octroi limits and thereafter exported for consumption outside the said limits. In the Burmah Shell's case (supra), there was no sales by the company to its dealers. The company solci goods through its dealers to the customers both"within and outside the local area. He submitted that the observations of this Court to the effect that octroi is chargeable on goods brought into the area for sale to cosumers must be understood in that context. It was submitted that there was nothing in the said judgments of this Court to the effect that if goods are brought into a local area for sale to a dealer who then transports the goods outside the local area for sale to consumers, no octroi would be chargeable. It was submitted that as the goods were brought into the local area for sale within that area, octroi would be chargeable.

It is significant to note, it was submitted, that the Burmah Shell's case (supra) makes it clear that to attract liability to pay octroi duty it is not necessary that the goods should be consumed within the octroi limits. We are, however, unable to accept these cnntentions. If the goods were brought within the municipal limits for the purpose of sale (sale means passing of the title to the purchaser), then different considerations might have applied. But in view ofthe facts ofthis 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. It was contended by Shri Sorabjee that rule 13 had no application. Shri Sorabjee drew our attention to certain paragraphs of the writ petition, in particular to paragraph 18(b) where it was stated that it is obligatory for the respondent No. I to grant respondent No. 2 transport passes and it had no jurisdiction to withdraw that facility.

It was submitted with reference to that and other paragraphs that it was the case of the respondent No. I that facility was withdrawn and suspended and prayer was made for restoration of that facility. It was, therefore, submitted on behalf of the appellant that in the absence of facilities being granted under rule 13, it was incumbent on the parties to make a declaration under rule 9 of the said Rules. As no such declarations had admittedly been made, rule 9(2) of the said Rules was attracted. Accordingly, the goods in the present case were to be treated as having been brought within the municipal limits for consumption, use or sale therein and as such liable for octroi duty, according to the appellant. Therefore, Shri Sorabjee submitted that this appeal should only be confined to the applicability of rule 9(2) of the said Rules. On the other hand, it was disputed by Shri Dalveer Bhandari and others that it is incorrect to say that the facility was suspended orwithdrawn.

Reading of the pleadings, according to Shri Bhandari, would make it clear that these were not suspended or withdrawn. Reference was made to paragraphs 6 and 7of the reply to the writ petition at p. 116of the paper book to the effect that it was the case ofthe appellant that facilities provided to the Indian Oil Corporation were never stopped and this submission. has been repeated several times. It was further submitted that when current account facility has been provided, there is no question of payment of octroi at the time of entry ofpetroleum products. On the other hand, the octroi tax is paid at the time of settlement ofperiodical account, say after every month. Thus, question of complying with rule 6or rule 9 of the said Rules does not arise as they apply when octroi tax is paid at the time of entry of goods.

In fact, the account of petroleum products imported and exported is kept by delivery-of entry passes and transport passes by Indian Oil Corporation at Octroi outpose, which passes are given by Municipal Council. In fact, it is obligatory duty, according to counsel, of Municipal Council to provide entry passes and transport passes to Indian Oil Corporation which have been provided current account facilities. The delivery of entry passes and transport passes is only to facilitate settlement of octroi account on goods which have been retained in Municipal area for use and consumption. If municipality does not provide transport passes, it cannot take advantage of its own default, according to Shri Bhandari. It is obligatory duty of Municipality, it was urged, to provide transport and entry passs to Companies and persons who have been provided current accout facilities.

In any way, even it transport passes are not given by the Municipal Council, the quantity exported can be ascertain by other means also. In the present case, there is no dispute regarding diesel exported to Dangiawas from Jodhpur Municipality. The Municipal Council has not refuted in its reply in