Bombay High Court
Municipal Corporation For Greater ... vs Monopol Chemicals Pvt. Ltd. on 14 March, 1988
Equivalent citations: AIR1988BOM217, 1988(3)BOMCR197, AIR 1988 BOMBAY 217, (1988) 2 LANDLR 384, (1988) 25 REPORTS 294, (1988) 3 BOM CR 197, (1988) MAH LJ 353, (1988) MAHLR 884
JUDGMENT Jahagirdar, J.
1. This appeal has been placed before the Full Bench by the learned Chief Justice on the recommendation made by a Division Bench (Pendse and Kotwal, JJ.), which was inclined to differ from the view taken by another Division Bench (Bharucha and Daud, JJ.) in the letter's judgment in The Municipal Corporation of Greater Bombay v. Forage and Co. (AIR 1987 Bom 321), hereinafter referred to as ("the Forage and Co.'s case"). Some provisions of the Bombay Municipal Corporation Act, 1888, hereinafter referred to as "the Act", are the subject-matter of interpretation over which there is a differences of opinion between the two Division Benches. Before proceeding to notice the relevant provisions of the Act, it is, naturally, necessary to mention the facts involved in this appeal.
2. Writ Petition No. 898of 1981 (see 1985 Mah LJ 114) was filed by Monopol Chemicals Pvt. Ltd, praying for a writ of mandamus requiring the respondents in the writ petition, namely, the Municipal Corporation of Greater Bombay, to refrain from levying octroi duty at any amount in excess of the rate prescribed under Entry No. 22(a) of Schedule H to the Act. The petitioner company had imported into the area of the Bombay Municipal Corporation a product described by it as an insulating varnish which, according to the petitioner, is used by industries manufacturing insulated and varnished wires. It had been alleged by the petitioner in the Court of first instance that the said product, namely the insultating varnish, sold under the trade name of "Monopol" was not being used for the construction of buildings-- a fact which was not denied by the Municipal Corporation. Indeed, the learned single Judge, who decided the petition, proceeded on the assumption that the averment that the insulating varnish imported by the petitioner was not usable in the construction of buildings, roads and other structures, was correct. This was also the asumption upon which the appeal was heard in the first instance before the Division Bench which has referred the matter to the larger Bench.
3. The importance of the article not being used or was not capable of being used in construction of buildings, roads and other structures can be easily appreciated if it is noticed that varnish used in the construction of buildings falls in Class IV of Schedule H, while varnish being described as mineral oil would fall under Entry No. 22(a) of Class III of Schedule H. The octroi duty on items in Entry No. 26 is 4 per cent ad valorem, while the octroi duty on items in Entry No. 22(a) is 2 paise per litre, the latter being very such lower at least in the present cases.
4. The learned single Judge, who decided the petition, referred to the judgment of another single Judge sitting on the Appellate side, namely, the judgment in Bombay Municipal Corporation v. Glaxo Laboratories (India) Pvt. Ltd. (First Appeal No. 755 of 1967, decided on 3oth of April, 1974 by Vaidya, J.) and agreed with the said judgment. The learned single Judge also referred to and agreed with the view taken in Onkarmal Radhikishan v. State of Madhya Pradesh, . It was held by the learned single Judge that it could not be said that the heading was just a convenient mode to group together various articles mentioned in each class. The heading was the key opening the mind and led to the interpretation of the entries. This was the language used in the Madhya Pradesh 'High Court's judgment, which was endorsed by the learned single Judge. He refused to accept the submission made on behalf of the Corporation that the heading must be ignored while interpreting the Schedule. Consistent with this view, he made the rule absolute in the petition by his judgment and order dated 16th of November, 1984, which was challenged in the appeal.
5. Before the appeal came up for hearing before the Division Bench (Pendse and Kotwal, JJ.), an earlier Division Bench had the occasion to consider the question involving a similar point in the Forage and Co.'s case (AIR 1987 Bom 321), which was decided on 9th of June, 1987. In this judgment, the earlier Division Bench, after referring to the necessary provisions of the Act, held that the entries in the different classes are to be interpreted independently of the headings of the classes. It was thought that "the headings are only meant to provide a convenient index to assist the importer of an article or, for that matter, an officer of the Municipal Corporation to locate the article in the Schedule". Disagreement with the views expressed by Vaidya, J. was recorded in the judgment. The view taken by the learned single Judge in the petition from which the present appeal arises was not brought to the notice of the Division Bench in the Forage and Co.'s case.
6. When the present appeal came up before the Division Bench, as already mentioned above, the Division Bench was inclined to disagree with the view taken by the earlier Division Bench in the Forage and Co.'s case (AIR 1987 Bom 321). In a detailed judgment, under which the appeal has been referred to the larger Bench, reasons have been given as to why the Division thought that the view taken by the earlier Division Bench in the Forage and Co.'s case seems to be incorrect. Two questions were formulated in the following manner for determination by the larger Bench, namely : --
(1) Whether the Headings annexed to each of the Classes in Schedule 'H' to the Bombay Municipal Corporation Act serve as an Index and are thus merely surplus ages, or whether the headings are the integral part of the said Schedule itself?
(2) Whether the said Headings should be ignored completely so that the entries and the articles covered therein under various Classes should be read by themselves in isolation, or whether the entries with the articles therein should be read in association with the said Headings to fix the identity of all the said articles within the said field in consonance with the prescription in these Headings?
With respect, the answer to the first question framed by the Division Bench will necessarily determine the answer to the second question. The basic question is whether the heading of each Class in Schedule H to the Act is only by way of an index without controlling the meaning of the articles mentioned in each Class, or whether the heading implies necessarily the description of the articles mentioned in each class so that the identity of the articles in each Class cannot be established correctly without reference to the heading of each Class.
7. Mr. Dalai, the learned Advocate appearing for the appellants, has reiterated the arguments which did not commend themselves to the learned single Judge, but he has pressed for the acceptance of the same by urging that while interpreting any statute, the heading or the marginal note of any part of the statute cannot control the clear meaning of the substantive provision in the statute. Reliance was naturally placed upon Maxwell on Interpretation of Statutes and in particular on the following paragraph to be found on page 11 (12th Edition) : --
"The headings prefixed to section or sets of sections in some modern statutes are regarded as preambles to those sections. They cannot control the plain words of the statute but they may explain ambiguous words."
For reasons which we now proceed to give, we are reluctant to accept, in the first place, that the description of the Class is the heading as used in the statute or that the heading of each class in Schedule H is analogous to the marginal note in a section. Mr. Nain, appearing for the respondent has pointed out that the provision which is being interpreted being one of taxation must be strictly construed and if so construed, it would be clear that the contention of the appellant cannot be sustained.
8. Section 139 of the Act permits the Municipal Corporation to impose, among other taxes, octroi duty. But for this provision, naturally, no octroi duty could have been levied on any article or on the articles which have been imported by the respondent-petitioner in the present case. Section 192(i) of the Act is as follows : --
"Except as hereinafter provided, a tax, at rates not exceeding those respectively specified in Schedule H, shall be levied in respect of the several articles mentioned in the said Schedule, or so many of them or such of them as the Corporation shall from year to year in accordance with Section 128 determine, on the entry of the said articles into Greater Bombay for consumption, use or sale therein. The said tax shall be called an 'octroi'."
It is clear to us, therefore, that when power has been given to the Municipal Corporation to levy a tax called octroi, it can be given subject to certain restrictions and conditions. One such restriction is that the rates shall not exceed those respectively specified in Schedule H. It is also specifically provided that the octroi rates shall be levied in respect of the several articles mentioned in the said Schedule. Schedule H is, therefore, an integral part of the Act. The power of the Municipal Corporation to levy a tax known as octroi is circumscribed by the provisions contained in Section 192(1) of the Act. It can be levied only at the rates mentioned in Schedule H; it can be levied only in respect of the articles mentioned in Schedule H. Schedule H is headed by the words "Articles liable to payment of octroi". The articles themselves have been grouped into nine Classes and each Class has been given what has been called heading in the different judgments and in the arguments before the learned Single Judge as well as before us. We would rather think that the articles which are included in each Class have been given a description and the words used are not so much of a heading. Class I bears the description of articles of food and drink and includes items such as grain, flour, sugar, wines, tea, coffee and several edible items against Entry No. 8. There are in all 10 Entries in Class I. Class II bears the description of animals and contains three items, while Class III bears the description of articles used for fuel, lighting, washing and industrial use and consists of nine Entries. One Entry is Entry No. 22(a), to which reference has already been made. Then comes Class IV having the description "Articles used in construction of buildings, roads and other structures and articles made of wood or cane". Entry No. 26 in this Class is as follows : --
"Paints, distemper and colour washes used for painting buildings, varnish, boiled linseed oil, turpentine, zinc oxide and red oxide."
Class V bears the description of perfumes, toilet requisites, colours and household goods. In this Class, there is an Entry, namely, crockery of all sorts, whereas in Entry No. 28 of Class IV, there is an item called "all kinds of crockery used for construction or decoration of buildings and sanitary fittings." It may also be noted, at this stage, that Entry No. 28 in Class IV has items, such as glass, glassware, chinaware, while Entry No. 35 in Class V has also items called glass and glassware. Class VI bears the description of tobacco requisites and has only one Entry. Class Vii bears the description "piece goods cotton, yarn and threads of all sorts and starching and sizing materials, leather and articles of leather and rubber goods". Class VIII bears the description of metals and articles of metals. Class IX bears the description of miscellaneous.
9. When the Legislature permitted the Municipal Corporation to levy duty on the articles mentioned in Schedule H, naturally the question of identifying the articles assumes importance. We are now concerned with an article known as varnish which, according to the Municipal Corporation, is covered by Entry No. 26, while it is the contention of the respondent-petitioner that it is not so covered because the varnish imported by it is not an article used in the construction of buildings, roads and other structures. Both the learned Single Judge and the Division Bench making the reference have tested the proposition advanced by the Municipal Corporation by noting that some of the articles are mentioned in different Classes. This may be one of the tests which can be used for appreciating the different view points canvassed by the two sides before us. It will, however, be more correct to proceed first on the question as to whether the Legislature uses words to describe Classes merely by way of a heading or an index. The argument against accepting this view is that there was no necessity for resorting to such a method because the list of articles in Schedule H cannot be said to be unusually long. There are in all 60 Entries, including the Entries in the Class described as the miscellaneous Class. Each Entry bears an accurate description. In such a situation, it would be incorrect to say that the Legislature used certain words to describe the Classes of articles included in Schedule H. If Schedule H is a part of the statute, it is necessary to give meaning to every part of Schedule H itself. If we do so, naturally we must also proceed on the well established rule of the interpretation of statutes, namely, that the Legislature does not use surplus words while enacting legislations. We are also inclined to hold that the Legislature itself classified the various items in Schedule H by reference to the use to which those articles were going to be put and, with that object in view, gave the description of the articles in each Class. For example, instead of repeating the words "used in construction of buildings, roads and other structures" against each of the items mentioned in the Entries covered by Class IV, the Legislature thought it more convenient, as indeed it is, to give that description to the Class itself under which Entries Nos. 23 to 31 are mentioned. It is a legislative device to avoid repetition of the description against the items in each Entry covered by Class IV.
10. It has also been urged by Mr. Nain that the classification with the appropriate description made by the Legislature has not been done blindly. Each Class consists of articles having something in common either in their construction or in their end-usage. There is a considerable substance in this submission of Mr. Nain because under Schedule H every bottle cannot be the subject matter of an octroi. Bottles appearing against Entry No. 35 in Class V can be the subject matter of an octroi duty only if they are toilet requisites or household goods. It is in this sense that Vaidya, J. in the case of Glaxo Laboratories (India) Pvt. Ltd. negatived the contention of the Municipal Corporation that bottles of every description must be held to be liable to octroi. Answering the question as to whether bottles could have been intended as household goods, Vaidya, J. pointed out that there were many kinds of bottles which may be household goods. All bottles may not be perfume bottles or toilet bottles. The bottles imported by Glaxo Laboratories (India) Pvt. Ltd into Greater Bombay not being bottles of household goods could not be subjected to octroi duty.
11. It has been argued by Mr. Dalai that it we hold that the heading of each Class controls the meaning of the items mentioned against the Entries in each Class, it would lead to certain anomalous positions. For example, he pointed out that Class VIII headed "Metals and articles made of metals" includes an Entry called "instruments, apparatus and appliances and parts thereof." Mr. Dalai pointed out that this Entry in terms includes several items, one of such items being "optical goods, their spares and accessories, surgical instruments and hospital requirements, including their spares and accessories". Mr. Dalal suggests that the optical goods, their spares and accessories cannot be said to be metals or articles made of metals. This is a matter which cannot be decided on the basis of arguments. When the Legislature enacted Schedule H, one must proceed on the basis that it had in its mind instruments, such as optical goods, their spares and accessories which were made of metals and only such items would be the subject of levy of octroi. We also do not see how it could be convincingly suggested that optical goods cannot be said to be articles made of metal because even in optical goods, such as the ones which probably Mr. Dalai has in his mind like microscopes and telescopes, considerable metal is used and the lenses do not form major part of the articles themselves.
12. Several examples which are capable of being used in support of one or the other of the two propositions canvassed before us have been given in the judgment of the learned Single Judge as well as in the referring judgment. The interpretation suggested by Mr. Nain commends itself to us because it is consistent with the rule of interpretation that the Legislature does not use surplus age while enacting a statute. It is also not impossible to find, as Mr. Nain has suggested, certain common features among the articles mentioned in each Class with their particular descriptions. Moreover, we also notice that the rates of octroi are related in most of the cases not merely to the use to which they are put, as it is in respect o f the items under Class IV, but sometimes they are related to the material from which the items are made as in the case of the articles under Class VIII.
13. The argument of Mr. Dalai that the inclusion of cotton ropes in Entry No. 52 under Class VIII is an indication that the heading, either of the Entry or of the Class, does not control the meaning of the items therein is not sufficiently strong to be accepted by us. We should notice that "cotton ropes" is placed in juxtaposition with "mill and gin stores, including crucibles" in Sub-item (h) against Entry No. 52 in Class VIII. It cannot be suggested that mill and gin stores are not instruments or apparatus which are not made of metals. When Sub-item (h) talks of cotton ropes along with mill and gin stores, it necessarily talks of mill and gin stores as the main item and cotton ropes when they form part of that apparatus. If cotton ropes are imported separately without being part of the main article under Sub-item (h) in Entry No. 52, the same would not naturally be subject to octroi. In any case, the report to the examination of the articles under different Classes in order to find out what they exactly mean is, in our opinion, not a sufficiently safeguide to find the answer to the questions posed before us. We have borne in mind certain considerations. One is that the Legislature does not use surplus age while enacting a law.
Secondly, what have been described as headings are not analogous to marginal notes to sections in an enactment, but are descriptions of the articles mentioned in that Class. Thirdly, the use of the word "Class" in respect of a group of articles cannot be regarded as without any significance. Fourthly, the articles grouped under each Class by the Legislature in its wisdom have some characteristics or features in common either in construction or in their end-uses which, the Legislature thought, warrant a particular rate of octroi. For these reasons, we are of the opinion that the headings of the descriptions of each Class of articles mentioned in Schedule H are not surplus age or not mere index to guide the importer or the staff of the Municipal Corporation. They necessarily control the identity of the articles contained in each Class. We agree with the view taken by the learned Single Judge, which also agreed with the view taken by Viadya, J. in the case of Glaxo Laboratories (India) Pvt. Ltd. We are, therefore, also of the opinion that the Forage and Co.'s case (AIR 1987 Bom 321) is not correctly decided. We, therefore, proceed to answer the questions framed by the Division Bench as follows : --
(1) The headings annexed to each of the Classes in Schedule H do not serve as an index, nor are they surplus age; on the other hand, they are an integral part of the Schedule itself.
(2) The said headings cannot be ignored; on the other hand, the Entries should be read in association with the said headings to fix the identity of all the said articles.
Since these were the only questions involved in the appeal, it is not necessary to return the appeal to the Division Bench for disposal. Hence, we proceed to pass the following order : --
The judgment of the learned Single Judge in Writ Petition No. 898 of 1981 is hereby confirmed. The appeal is dismissed with costs.