LexHINDUSTAN PETROLEUM CORPORATION versus OKHA GRAM PANCHAYAT AND OTHERS
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A HINDUSTAN PETROLEUM CORPORATION v. OKHA GRAM PANCHAYAT AND OTHERS SEPTEMBER 23, 1993 B [B.P. JEEVAN REDDY AND S.P. BHARUCHA, JJ.) Ciujarat Gram and Nagar Panchayats Taxes & Fees Rules, 1964: Rules 32 and 34(B )-Whether Rule 32 creates an irrebuttable presumption that goods not exported within two months should be deemed to have been con- C sumed-Rule 32 being a substantive rnle cannot override Rule 32(B) which is procedural. D · Constitution of India, 1950 : Seventh Schedule--/..,ist JJ--E,ntry 52-Sale-Goods sold within a local area-Consumption or use in the local area-Relevance of, for the purpose of levy of tax. Administrative Law : Delegated legislation--f'rocedural law in a provision-Whether can override a substantive provision in a statute . . ESSO had storage facility for its products in many places including E the respondent-Gram Panchayat. or the total quantity stored there only about 5% was released for consumption, use or sale within the territorial limits of the Gram Panchayat. The rest was taken out to places outside the Gram Panchayat for distribution and sale. The Gujarat Gram Panchayat Act, 1961 was made applicable to F Okha from 1.4.1965. ESSO had been paying octroi to the respondent Panchayat on the goods consumed, used or sold within the limits of the Panchayat and had also been maintaining a current account as con- templated by Rule 34(8) of the Gujarat Gram and Nagar Panchayats Taxes and Fees Rules, 1964. G A dispute arose between the Panchayat and ESSO. Panchayat , claimed octroi duty on all goods imported into the Panchayat limits, irrespective of the fact whether they were consumed, used or sold within the limits of Panchayat or were taken out for being sold and distributed outside the Panchayat limits. Further, while determining the value of the H goods for the purpose of octroi duty, the Panchayat added the excise duty 502 PETROLEUM CORP. v. GRAMPANCHAYAT 503 to their value, though by that of import excise duty was not paid. ESSO A contested both the claims of the Panchayat and filed two revision applica· tions before the Development Commissioner which were disposed of by him. Aggrieved, the Panchayat as also ESSO filed writ petitions in the High Court . . The High Court negatived the challenge to the validity of Rule 32 B . and at the same time directed the Panchayat to entertain the appellant's claim for refund of octrpi duty after giving it a reasonable opportunity of being heard in the matter. So far as the valuation for the purpose of levy of octroi duty was concerned, the High Court upheld the Gram Panchayat's claim. It also held that the failure to follow Rule 34 did not C extinguish appellant's right to refund if it was entitled to it in law. Hence these appeals by Hindustan Petroleum Corporation. Disposing of the appeals, this Court HELD :1. Even if the goods are sold within the local area, it must be D for the purpose of consumption or use within that local area to be· a sale for the purpose of Entry 52 of List II of Seventh Schedule to the Constitu· tion. If the goods are not consumed, used or sold within the local area, no taX can be imposed under the said Entry. [509-D·E] Tata Engineering & Locomotive Company v. Municipal Council, Thane, A.I.R. (1992) S.C. 645, referred to. 2.1. The Explanation to Rule 32 of the Gujarat Grani Panchayat Taxes and Fees Rules, makes it clear beyond any doubt that the presump· E F tion created by it is a rebuttable presumption. The main limb of the Rule provides that an importer of goods on which octroi had been paid shall be entitled to refund of the amount so paid on export of such goods from the octroi limits if the goods have not been consumed, used or sold within the limits. The Explanation then provides that in three situations mentioned therein, it would be deemed, unless the contrary is proved, that th.e gonds G have been used, consume~ or sold within the octroi limits and refund would be allowed in those cases. The three situations contemplated by the explanation are (i) where the goods have broken bulk; (ii) where the goods are not exported within two months after their import and (iii) where the ·goods have changed its form by any process whatsoever. A reading of the Explanation clearly shows that the presumption created by the Explana· H 504 SUPREME COURT REPORTS (1993) SUPP. 2 S.C.R. A tion applies to all the three situations. [510-D-F] 2.2. The essential na
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