TATA ENGINEERING AND LOCOMOTIVE COMPANY LTD. AND ANR. versus MUNICIPAL CORPORATION OF THE CITY OF THANE AND ORS.

Citation: [1991] SUPP. 2 S.C.R. 445 · Decided: 22-11-1991 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

TAT A ENGINEERING AND LOCOMOTIVE 
COMPANY LTD. AND ANR. 
v. 
MUNICIPAL CORPORATION OF 
THE CITY OF THANE AND ORS. 
NOVEMBER 22, 1991 
[A.M. AHMADI, V. RAMASWAMI AND K. RAMASWAMY, JJ.J 
Maharashtra Municipalities (Octroi) Rule, 1968: 
Rule 25 (3) (d)-Octroi--Levy of-Goods imported within munici-
pal limits and stored in Warehouse for temporary detention and even-
tual exports-Goods sold within municipal limits for export and consump-
tion outside municipal limits--Held octroi not leviable-Taxable event of 
octroi-What is. 
Rules 28,29 and 3~ctroi~efund of-Non-compliance with 
procedure-Effect of-Compliance with procedure not a condition prece-
dent for eligibility of refund-Compliance with procedure shall be tested 
having regard to the nature of transaction and the object of procedure. 
A 
B 
c 
D 
Doctrine of unjust enrichment-No evidence to suggest that octroi E 
levied was recovered from customers-Refund of octroi would not lead-to.. 
unjust enrichment. 
Rule 24-0ctroi-"Breaking the bulk"-Procedure to be 
followed-Rule 24 held not inconsistent with Rule 62 of Chapter VIII of 
the schedule to the Bombay Provincial Municipal Corporation Act, 
F 
1949-0bject of Rule 24(2) explained. 
Rule 28(2) (b)-Refund of octroi-Requirements of-Requirement 
of exporting goods out of municipal limits within six months of import-
Proof of-Equitable principle ''first export was of goods first 
imported"-Applicability of 
G 
The appellant-company was carrying on business of manufac-
ture and sale d motor vehicles, spare parts of motor vehicles and 
excavators. Their manufacturing units we.re located outside the mu-
nicipal limits of the respondent corporation. P~rsuant to the per-
mission granted by the Respondent Corporation under Rule 10(2) of H 
445 
446 
SUPREME COURT REPORTS 
[1991] SUPP. 2 S.C.R. 
A 
the Maharashtra Municipalities (Octroi) Rules, 19.68 the appellant 
company was maintaining a bonded warehouse within the municipal 
limits of the Respondent-Corporation. The motor vehicles parts and 
excavators parts brought from the Company's own factories as well 
parts imported from abroad were stored in this warehouse. These 
products were brought in bulk and thereafter taken or sent out 
B 
from the Municipal limits in smaller packings depending on the 
requireinents of the customers in various parts of the country. 
The appellants were also granted current account facilities without 
the requirement of immediate payment of octroi at the Octroi Naka. 
Accordingly, the appeliants were carrying out their activities of im-
C 
ports and exports under the current account procedure with facility 
of unpacking the bulk, repacking and exporting. 
D 
E 
F 
Under the Octroi Rules the octroi becomes refundable when 
the goods in respect of which octroi. was paid are exported out of 
octroi limits within 6 months of their import. During the period 1st 
January, 1983 to 31st March, 1984 the appellant-Company made 
1182 claims for refund of octroi which were rejected by the Corpo-
ration on the grounds: (1) the Co~pany had "sold" the spare parts 
within the octroi limits of the Corporation in contravention of Rule 
25(3) (d) of the Maharashtra Municipalities (Octroi) Rules, 1968; 
(2) the procedure prescribed for export and the claim of refund had 
not been strictly followed. 
The appellants filed a writ petition under Article 226 in the 
High Court of Bombay contending that the action of the Municipal 
Corporation in refusing refund was unc,mstitutional and illegal. The 
Division Bench of the High Court dismissed the writ petition. The 
Company filed an appeal in this Court· against the decision of the 
High Court. 
In appeal to this Court it was contended on behalf of the ap-
pellant (i) since the sales were not for consumption or use within the 
octroi limits and that the parts were sold to parties outside the 
G 
octroi limits and also for consumption or use o_utside such limits the 
rejection of the claims by the Respondent-COiporation on the ground 
that the sales were within the municipal limits in contravention of 
rule 25(3) (d) of the Rules is illegal; (ii) Under Rule 62 of Chapter 
VIII of the Schedule to Bombay Provincial Municipal Corporation 
Act, 1949, prior intimation of the intention to 'break the bulk' is 
H enough and there is no necessity for the company to get the sanction 
-
-
TATA ENGINEERING CO. v. 
MUNICIPAL CORPN. 
447 
of Superintendent ofOctroi or break the bulk in the presence of an · A 
officer deputed for the 

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