LexMUNICIPAL COUNCIL, JODHPUR versus PAREKH AUTOMOBILES LTD. AND ORS.
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MUNICIPAL COUNCIL, JODHPUR v. PAREKH AUTOMOBILES LTD. AND ORS. NOVEMBER 7, 1989 [SABY ASA CHI MUKHARJI, M.H. KANIA AND S. RANGANATHAN, JJ.] Rajasthan Municipalities Act 1959/Rajasthan Municipal Octroi Rules, 1962: Sections 104, 133 Rules, 6, 9 and 13-0ctroi-Liability for-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 appel- lant. Respondent No. 2 had its depot near Raikabag Station at Jodhpur where A B it stored petroleum products for supply to various pump stations situated C within the limits of the appellant as well as situated outside its limits. Respon- dent 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 of goods within the limits of the appellant. For this purpose, respondent D 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 of duty payable, in the case or persons who had the current account facilities, was determined and collected on the basis of the total amount of goods that had come in as reduced by the total amount of goods that had gone out, the balance being presumed to have been consumed, used or sold within the municipal limits. E 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 of the consumers outside the municipal limits. As a consequence of this action of the appellant, respondent No. 2 charged F 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 G Dangiawas by respondent No. 2, and for refund of octroi 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 of the petroleum products in question took place within the limits of the municipa- H 49 A B c 50 SUPREME COURT REPORTS [ 1989) Supp. 2 S.C.R 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 itself did not attract the 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. 2 did not make the declaration as required by 11ule 9 and rule 13(4) of the Octroi Rules; and that under sub-rule (4) of rule 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 0 the Municipal Council as the demand of octroi was not made from respondent No. I. The case of the Indian Oil Corporation, respondent No. 2, was that under th
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