HMM LIMITED & ANR. versus ADMINISTRATOR BANGALORE CITY CORPORATION, BANGALORE & ANR.

Citation: [1989] SUPP. 1 S.C.R. 353 · Decided: 04-10-1989 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Appeal(s) allowed

Judgment (excerpt)

• 
HMM LIMITED & ANR. 
v. 
ADMINISTRATOR BANGALORE CITY CORPORATION, 
BANGALORE & ANR. 
OCTOBER 4, 19$9 
[SABYASACHI MUKHARJI AND B.C. RAY, JJ.] 
Bangalore Municipal Corporation Act, 1949: Section 98(2) and 
Bye Law 45/Rules 24 to 27-0ctroi-Levy of-Mere physical entry into city 
limits-Would not attract levy of octroi unless goods brought in for use, 
consumption or sale. 
Words And Phrases: "Without Breaking bulk"-Not an expres-
sion of art-Should be construed liberally. 
The appellant company was engaged in the manufacture and sale 
A 
B 
c 
of a ·malted milk product marketed under the brand name "Horlicks". 
D 
The appellant bronght the product within the octroi limits of Bangalore 
in bulk containers, rebottled the same in small bottles and exported the 
major portion of the rebottled product beyond the octroi limits of 
Bangalore. The appellants made representation protesting against the 
levy Of octroi on Horlicks in respect of the quantity of the goods which 
was exported outside the municipal limits after being rebottled, and 
E 
sought refund of the octroi duty on the ground that there was·no use or 
consumption or sale of the said milkfood within the municipal limits, 
and that the imposition of octroi 'was illegal and nnwarranted'. The 
respondent-Corporation rejected the claim. Thereupon the appellant 
filed a writ petition in the High Court challenging the levy /r~tention of 
the octroi duty on Horlicks exported out of the municipal limits. 
F 
The petition was resisted by the Corporation on two grounds, 
namely, (i) the transferring the Horlicks imported in bulk into bottles 
amounted to use of the Horlicks within the city; and (ii) the octroi 
collected was in accordance with law and unless the procedure pre-
scribed under rules 24 and 25 of Bye-law 45 framed by the Municipal 
G 
Corporation under the City of Bangalore Municipal Corporation Act, 
1949 was followed no obligation or duty was cast 110 the part of tbe 
Corporation to refund any part of the octroi collected. 
The learned Single Judge allowed the writ petition and held that 
when the Horlicks powder was transferred into bottles of dilierent sizes, 
H 
353 
A 
354 
SUPREME COURT REPORTS 
[1989] Supp. 1 S.C.R. 
the appellant did not use Horlicks within the city of Bangalore. 
In the appeal, the Division Bench agreed with the learned Single 
Judge on the first point. On the second point, however, the Division 
Bench rejected the contention of the appellant that opening or breaking 
open the drums and putting the powder in the bottles amounted to 
B 
breaking bulk and as such there was no scope of applying for refund 
under rule 24 which provided for refund in the case of articles on which 
octroi duty had been paid and which were subsequently exported 
beyond the octroi limits without breaking bulk. According to the Divi-
• 
siou Bench, no ilnportance could be attached to the expression 'without 
breaking bulk', and the appellant not having applied in accordance 
C with rules 24 and 25, no amount could be refunded. 
D 
Before this Court, the Corporation sought to raise an additional 
plea that where refund was due in respect of the duties like this, the 
amount could not be refunded because there was possibility of undue 
enrichment of the claimant. 
Allowing the appeal, this Court, 
HELD: (I) Octroi in this case is a duty on the coming in of the 
raw materials which is payable by the producer or the manufacturer. It 
is not the duty on going out of the finished products in respect of which 
E the duty might have been charged or added to the costs passed on to the 
consumers. In such a situation, no question of 'undue enrichment' can 
possibly arise. [362G] 
(2) There is no dispute that the Horlicks powder was brought in 
bulk in drums. After being imported, the entirety of the Horlicks 
F powder had not been sold. A part of the powder has been put in the 
bottles and exported outside the city of Bangalore. [361E] 
(3) Octroi cannot be levied or collected in respect of goods which 
are not used or consumed or sold within the municipal limits. [364F) 
G 
( 4) Indubitably, amounts have been realised as octroi on the en-
try of the goods on which octroi was not leviable because these were not 
for use or consumption within the municipal limits. Mere physical entry 
into the city limits would not attract the levy of octroi unless goods were 
brought in for use or consumption or sale. [364C•D I 
H 
(S) In this case, putting the powder from the drums

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