LexMUNICIPAL CORPORATION OF CITY OF THANE versus M/S VIDYUT METALLICS LTD. AND ANR.
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A B MUNICIPAL CORPORATION OF CITY OF THANE v. MIS VIDYUT METALLICS LTD. AND ANR. SEPTEMBER 14, 2007 fC.K. THAKKERANDTARUNCHATIERJEE,JJ.] Maharashtra Municipalities (Octroi) Rules, 1974-Schedule, Item 71 and 77-Stainless Steel Strips-Payment of Octroi on-Between 1968 to C 1974 company paying the Octroi at the rate of 1% under Item 77-0n realizing that liability was at the rate of0.5% under Item 71 payment thereof accordingly-Demand of-At the rate of !'Yo-Demand confirmed by trial court-Revisional as well as High Court negating the demand on the basis . of evidence of Quality Control Manager and Public Servant and also on the basis of judgment in an earlier litigation-On appeal, held: Jn the facts of D the case, Company was right in paying 0.5% octroi-Though strict rule of res judicata is not applicable in taxation matters-But, a decision, on question directly in issue confirmed by superior courts would operate as res-judicata- Hence benefit of previous litigation rightly given to the Company-Code of Civil Procedure, 1908-s. J J-Res-judicata. · E Respondent No. I-Company was engaged in manufacture of safety razor F blades. For this purpose it used to import stainless steel strips and bring them to its factory within the octroi limits of the appellant-Corporation. Between 1968 and 1974, the Company paid octroi at the rate of 1 % under Item No. 77 of Schedule to Maharashtra Municipalities (Octroi) Rules, 1974. Thereafter, the Company, on going through the Rules, realized that the correct Item was 71 and started paying octroi at the rate of 0.5%. The Corporation raised additional demand at the rate of 1 %. Against the claim of the Corporation, the Company approached the Court. Trial Court confirmed the additional demand. Revisional Court reversed the G order of trial Court holding that the Company was not liable to pay octroi under Item No. 77, relying on evidence of two witnesses i.e. a Quality Control Manager and another a Public Servant It also relied on the judgment of Chief Judicial Magistrate to that effect in a previous case which was confirmed by Revisional as well as High Court. The judgment of Revisional Court was H 1016 ./ MUNICIPALCORPN. v. VIDYUTMETALLICSL TD. I 017 confirmed by High Court in Writ Petition. Hence, the present appeal. A Appellant inter alia contended that in taxation matters, rule of res- judicata has no application and in such matters each year is an independent unit Dismissing the appeal, the Court HELD: 1. The view taken by the Revisional Court as also by the Higit Court cannot be faulted. !Para 10) 11021-GI B 2.1. In taxation-matters, the strict rule of res judicata as envisaged by Section 11 CPC has no application. As a general rule, each year's assessment C is final only for that year and does not govern later years, because it determines the tax for a particular period. It is, therefore, open to the Revenue/ Taxing Authority to consider the position of the assessee every year for the purpose of determining and computing the liability to pay tax or octroi on that basis in subsequent years. A decision taken by the authorities in the D previous year would not estop or operate as res judicata for subsequent year. [Para 141 [1023-D, E) 2.2. It is necessary to distinguish a decision on question which directly and substantially arose in any dispute about the liability for a particular year, and question which arose incidentally or collaterally. If, for instance, the E validity of a taxing statute is impeached by an assessee who is called upon to pay a tax for a particular year and the matter is taken to a High Court or to this Court and it is held that the taxing statute is valid, it may not be easy to hold that the decision on this basic and material issue would not operate as resjudicata against the assessee in a subsequent year. !Para 18111024-H; 1025-A, BJ F 2.3. In the present case, in earlier litigation, the Court considered the evidence of Quality Control Manager who was described as 'expert' on the point and accepting his evidence, th~ Court held that the goods imported by the Company was ferrous in nature and not non-ferrous and the Company was right in paying octroi under Item No. 71. It was thus a 'fundamental factor' G and the nature of goods imported by the Company was directly and substantially in issue, on the basis of which the decision was taken. It would indeed be very difficult to hold that such decis
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