MAN MOHAN TULI versus MUNICIPAL CORPORATION OF DELHI & ORS.

Citation: [1981] 2 S.C.R. 894 · Decided: 18-02-1981 · Supreme Court of India · Bench: S. MURTAZA FAZAL ALI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

894 
.A 
MAN MOHAN TULi 
v. 
MUNICIPAL CORPORATION OF DELHI & ORS. 
February 18, 1981 
lJ 
[S. MURTAZA FAZAL ALI, A. D. KosHAL AND A. VARADARAJAN, JJ.I 
c 
·o 
E 
G 
-H 
Delhi Municipal Corporation Act, 1957, section 158 and rule 26 of the 
Terminal Tax Rule frarned under the Act, interpretation of-Exigibility 
of 
Terminal Tax, explained. 
Man Mohan Tuli, appellant in C.A. 2004/80, is the owner of a piece of 
land situate on the Grand Trunk Road near the sixth n1ilestone as one goes 
from Delhi to Ghaziabad. 
Appellant Tuli has constructed various bui1dings 
on his land for use as godowns and has rented them out to various transport 
companies engaged in bringing goods from other States and 
storing them 
before their transhipment to Delhi and other States beyond Delhi. The trucks 
carrying the goods for various destinations pass along the G .T. Road and move 
into Tuli's land. 
After the trucks enter the ln,nd, the goods are unloaded into 
the godowns, sorted out and reloaded into the respective trucks meant 
for 
various destinations. Thereafter, the trucks move out of the land and, passing 
through the Union Territory of Delhi after crossing the border line, proceed to 
their destinations. The Municipal Corporation of Delhi by i~s Orders dated May 
23, 1975 and July 7, 1975 directed that a Terminal Tax post be set up at 
the entrance to Tuli's land in order to collect terminal tax on goods carried 
into that land. 
A writ was filed before the High Court by the owners of 
transport companies as also by Tuli for quashing the orders of the Corporation 
seeking to levy Terminal Tax on the goods which were not meant for Delhi 
but for places beyond Delhi. The High Court held that the Corporation was 
legally entitled to levy Terminal Tax at the point of territory of the Union 
Territory of Delhi even though the goods were sorted out in the godown of 
Tuli, resorted out and re-loaded since as they while passing through tlle 
territory of Delhi undoubtedly entered the said territory. 
Hence the appeal'\ 
by special leave by appellant Tuli and others, 
Allowing the appeal in part, the Court 
HELD : 1. It is well settled that taxing statutes must be strictly interpreted 
giving every benefit of doubt to the tax-payer. 
A Terminal Tax could be 
levied only by the Corporation or the State which is the final destination of 
the goods sent from any other area. A Terminal Tax signifies that there must 
be a terminus for the journey of the goods. 
Terminus means the point to 
which main action tends, goal, end, finishing point, the point at which 
some 
thing comes to an end. [899 D, 901 B-D] 
2.1. From a consideration of the decided cases of the Supreme Court, the 
following propositions emerge :-
(i) Terminal tax and octroi are similar kinds of levies which are closely 
interlinked with (a) destination of the goods (b) the user in the local area 
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M. M. TULi v. M.C.D. 
895 
-on arrival of the goods. 
Where the goods merely pass through a local area 
A 
without being consumed therein the mere fact that the transport carrying the 
.goods halt within the local area for transhipment or allied purposes would not 
justify the levy of either the terminal tax or octroi duty. This is because tho 
halting of the goods is only for an incidental purpose to effectuate tho journey 
.of the goods to the final destination by unloading, sorting and reloading them 
at a particular place. [803 A-Cl 
(ii) There is a very thin margin of difference between a terminal tax. and 
octroi. In the case of the former (terminal tax) the goods reach their final 
destination and their entry into the area of destination immediately, attracts, 
payment of terminal tax irrespective of their user. 
In the case of octroi, 
however, the tax is levied on goods for their use and consumption. [903 D-El 
(iii) But at the same time, the goods while halting at a local area 1 should 
leave for their destination within a reasonable time which may depend on 
circumstances of each case and if the goods are kept within the area for such 
a long and indefinite period that the purpose of reaching the final destination 
lying in a dicerent area is frustrated or defeated, they may be exigible to termi-
nal tax. [903 E-FJ 
B 
c 
D 
(iv) \\'here the goods enter into a local area which is also the destination 
-Of the goods either temporarily or otherwise, the terminal tax would be leviable. 
For instance, if A consigns goods from Patna in Bihar to Delhi in the name
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