Gujarat High Court
Gujarat Guardian Ltd. & vs State Of Gujarat & 2 on 7 July, 2016
Author: Mohinder Pal
Bench: Mohinder Pal
C/SCA/16030/2003 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 16030 of 2003
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE MOHINDER PAL
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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GUJARAT GUARDIAN LTD. & 1....Petitioner(s)
Versus
STATE OF GUJARAT & 2....Respondent(s)
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Appearance:
NANAVATI ASSOCIATES, ADVOCATE for the Petitioner(s) No. 1 - 2
MR ROHAN YAGNIK AGP for the Respondent(s) No. 1 - 2
MR JOY MATHEW, ADVOCATE for the Respondent(s) No. 3
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CORAM: HONOURABLE MR.JUSTICE MOHINDER PAL
Date : 07/07/2016
ORAL JUDGMENT
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1. By way of this petition, the petitioners are challenging the order dated 14.10.2003 passed by the Joint Secretary, Panchayat Gram Gruh Nirman Gram Vikas Department, Government of Gujarat (hereinafter referred to as respondent no. 2) under section 201 of the Gujarat Panchayat Act, 1992 (hereinafter referred to as "the said Act"), whereby, the proposal of the petitioners for payment of lump sum contribution in lieu of the taxes (octroi) levied by the Gram Panchayat is not sanctioned.
2. The petitioner is a company engaged in the business of manufacturing and sale of flot glass in the area of village Kondh, Valia Road, Ankleshwar, District Bharuch since the year 1993.
For this purpose, they engaged about 500employees at the said factory. Initially, there was no octroi levied by the Kondh Gram Panchayat for the goods imported within the revenue limits of the said panchayat. However, the panchayat has passed a resolution on 11.1.1999 to levy octori for the goods imported in the revenue limits of that village from 1.4.1999. As per section 201 and the Rules thereunder, the petitioner-company made an application proposing to make payment of lump-sum amount in lieu of taxes to the respondent-Gram Panchayat, and accordingly, vide their application dated 6.4.1999, requested respondent-Gram Panchayat to stay the recovery of octroi from the company Page 2 of 12 HC-NIC Page 2 of 12 Created On Tue Jul 12 00:58:22 IST 2016 C/SCA/16030/2003 JUDGMENT pending the sanction of their proposal. Further, on 10.7.1999, the petitioner-company made another representation to the Taluka Development Officer, Taluka Valia for fixing lump-sum amount of Rs. 8 lacs p.a. towards octroi leviable by the respondent - Gram Panchayat. The proposal was sent to the Government. The Government considered the proposal and declined to accept the same vide impugned order dated 14.10.2003. Aggrieved from this order, the petitioners approached this Court by way of this petition.
3. After notice, this petition has been contested by the respondent-Gram Panchayat by filing reply, wherein it has been admitted that the petitioner-company has spent about Rs. 15.51 lacs for distribution of water to the village and the surrounding area and further has also spent approximately Rs. 1 lac for laying down pipelines for water distribution. It is further their stand that out of Rs. 15.51 lacs spent on distribution of water, the petitioners were entitled to refund of Rs. 9 lacs from the Government and accordingly, only Rs. 6 lacs were spent on distribution of water in the village. However, an amount of Rs. 8 lacs alleged to have been spent on laying down the pipelines for supply of water has been admitted. It is specific denial of the respondent - Gram Panchayat regarding expenditure on construction of road, street light in the colony, expenditure on education, school and Page 3 of 12 HC-NIC Page 3 of 12 Created On Tue Jul 12 00:58:22 IST 2016 C/SCA/16030/2003 JUDGMENT hospital etc. It is their stand that all these amenities were needed by the workers of the factory who were imported from outside and was not at all for the benefit of the residents of the village. Further, it is the stand of the respondent-Gram Panchayat that the company was liable to pay taxes in the form of octroi at the rate of Rs. 90 lacs per annum and the offer made by the company to pay lump sum amount at the rate of Rs. 8 lacs per annum was too meagre and has been rightly rejected by the State Government as it was in violation of Rule 4.2 of the Gujarat Panchayat (Payment of Lump sum Contribution by Factory in Lieu of Taxes) Rules, 1998. Finally, it has been prayed that the petition being devoid of merits, is liable to be dismissed.
4. Mr. Chudgar, learned advocate, while arguing on behalf of the petitioners has submitted that as per section 201 sub-clause 1 of the Gujarat Panchayats Act, 1993, the petitioner company was within their competence to move an application for payment of lump sum amount of taxes in lieu of octroi paid by them on the goods imported within the factory. According to him, huge amount has been spent by the petitioner-company in various schemes for the welfare of the residents of that village. According to him, the company has contributed a sum of Rs. 2.7 crores for this scheme which were being managed by GIDC. He has also referred to a chart, according to which, Page 4 of 12 HC-NIC Page 4 of 12 Created On Tue Jul 12 00:58:22 IST 2016 C/SCA/16030/2003 JUDGMENT amount has been spent by the company for providing infrastructure and civil amenities to the residents of that area, which are as under:
CHART Sr. Particulars Amount in rupees No. (approx.) 1 Water and distribution of water 15.51 2 Laying of pipelines for water 8.00 distribution 3 Road construction 36.00 4 Street lights in village 5.00 5 Street light in colony 72.30 6 Environment 3.00 7 Hospital 35.00 8 GIDC water scheme 207.00 9 School 20.00
5. He further referred to the acknowledgment of the Gram panchayat which is available at Annexure-O to this petition, wherein, the Panchayat has acknowledged by way of this letter that the petitioner-company has made a link road joining the village with the National Highway. The petitioners have also provided light, hospital and school facilities and allied activities for the villagers which were otherwise required to be provided by the Gram Panchayat.
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C/SCA/16030/2003 JUDGMENT
Finally, it has been argued that the decision of the Government of rejecting the proposal for lump-sum payment in place of day to day octroi was arbitrary as the method of calculation was on the basis of the rate of product rather than on the weight. Further, rebate for which the petitioners were entitled in this case is also not properly calculated. In support of his submission, he has referred to the decision in the case of Associated Cement Co. Ltd. vs. State of Gujarat and Anr., reported in 1985 (2) GLR 1016.
6. On the other hand, learned advocate Mr. Joy Methew representing the respondent no. 3 - Gram Panchayat as well as Mr. Rohan Yagnik learned AGP representing the State, have drawn my attention to the reply filed by the Gram Panchayat. It has been submitted that the petitioners started business in the year 1992-93. For the first five years, the company was exempted from payment of all the taxes, however, was liable to pay taxes from 1.4.1999 i.e. the date from which the Gram Panchayat has taken decision for levy of octroi. It has been submitted that even after the said date, no octroi has been paid by the petitioner- company. The proposal given by the company for a sum of Rs. 8 lacs per year was too meagre, as according to the appropriate authority, the amount of tax comes to more than Rs. 90 lacs per Page 6 of 12 HC-NIC Page 6 of 12 Created On Tue Jul 12 00:58:22 IST 2016 C/SCA/16030/2003 JUDGMENT annum. The argument regarding spending of huge amount by the petitioner-company towards the amenities provided for the benefit of the village people is also denied. It has been submitted that except for first two items i.e. water and distribution of water and laying of pipelines etc., the other items were not at all meant for the village people. Even out of total sum of Rs. 15.50 lacs spent on water and distribution of water, the company was entitled to get back Rs. 9 lacs from the State Government, and as a result of that, the total amount spent by the company for the village people comes out to Rs. 13.51 lacs. Similarly, the arguments regarding money spent on construction of road, building of colony, street light, school and hospital etc. were also without any benefit to the local residents of the area as these facilities were necessary for smooth flow of the goods imported by the petitioners and for transportation of the finished goods to its ultimate destination. It has been submitted that the labour engaged by the petitioner-company in their premises is a specialized labour who have been brought from other parts of the country, and hardly anybody from the village has been given employment by the petitioner-company.
7. This court has considered the submissions made by both the sides. The petitioner-company seems to have made offer for payment at the rate Page 7 of 12 HC-NIC Page 7 of 12 Created On Tue Jul 12 00:58:22 IST 2016 C/SCA/16030/2003 JUDGMENT of Rs. 8 lacs per annum towards octori to the respondent no. 3 in view of section 201 sub- clause (1) of the Gujarat Panchayat Act, 1993. This section reads as under:
"201.(1) Subject to any rules that may be made under this Act, and regard being had to the fact that a factory itself provides in the factory area all or any of the amenities which such panchayat provides, village any factory with the sanction of the State Government to receive a lump-sum contribution in lieu of all or any of the taxes levied by the panchayat."
So, the State Government can allow the receipt of lump-sum contribution of octroi in lieu of all or any of the taxes levied by the panchayat.
8. Now, the dispute remains whether the petitioners have provided any facilities to the residents of that village where such factory has been installed. This Court is in agreement with the arguments of the learned advocate for the respondent no. 3 that the amenities provided by the petitioners are for their own benefits and the local residents are hardly to derive any benefits out of this. It will be relevant to note that the factory premises of the petitioner- company is spreade over an area of 160 acres approximately and most of it has been leased out by the State Government, except some portion Page 8 of 12 HC-NIC Page 8 of 12 Created On Tue Jul 12 00:58:22 IST 2016 C/SCA/16030/2003 JUDGMENT which has been purchased by the petitioner- company. The facilities alleged to have been provided in this area were otherwise also necessary as smooth road and passage is required for transportation of the finished glass to the place of its destination. The residential quarters are required to be provided by the petitioners as the labour engaged in the factory is specialized trained labour who have been summoned from other parts of the country. The labour can efficiently work only if other facilities like school and hospital etc. are provided to them. Further this Court is of the considered opinion that the light and other amenities provided by the petitioners were necessary for their own benefits rather than for the benefits of the village people.
9. Learned counsel for the petitioners also referred to the arbitrary calculation made by the State Government to the proposal put forward by them. It will be relevant to note that since the day of inception in the year 1993, the petitioners have not paid a single penny towards the octroi etc. as for the first five years they were exempted from the payment of octroi, and thereafter, when respondent no. 3 - Panchayat decided to impose octroi, exemption has been sought on one ground or other. Learned counsel for the petitioner has also referred to the average octroi payable by the petitioners for the Page 9 of 12 HC-NIC Page 9 of 12 Created On Tue Jul 12 00:58:22 IST 2016 C/SCA/16030/2003 JUDGMENT last three years which should have been made the base for the Government in deciding the matter. Since the petitioner-company has not paid single penny towards the octroi, the average calculated by the petitioner-company seems to have been rightly rejected by the State Government.
10. On the contrary, learned AGP has referred to the Gujarat Panchayat (Payment of Lump-sum Contribution by Factory in lieu of Taxes) Rules, 1998 and section 4 sub-clause (2) which lays as under:
"2. The amount of lump-sum contribution may not be disproportionately less than the amount receivable by the panchayat in respect of taxes levied by it at the normal rates during any financial years, after deducting cost of amenities, if any, provided by the occupier."
11. Though there is no payment of octroi by the petitioner-company in the preceeding three years, on the basis of which the State can reach to an acceptable figure regarding payment of lump-sum octroi, however, even if we go by the own assessment made by the petitioners, average octroi would come to Rs. 36 lacs per annum. Payment of octroi at the rate of Rs. 8 lacs per annum as offered by the petitioners is definitely disproportionate to the taxes which they are liable to pay. This court has no doubt that the Page 10 of 12 HC-NIC Page 10 of 12 Created On Tue Jul 12 00:58:22 IST 2016 C/SCA/16030/2003 JUDGMENT State is within its powers to have rejected such offer when the amount offered is disproportionately less than the amount recoverable by the panchayat by way of octroi and taxes. Merely the fact that the Gram Panchayat has accepted the proposal and forwarded the same to the higher authority is no ground to presume that the same has been accepted by the Government. The Act seems to have given ample power to the Government to reject the proposal if it is disproportionate and arbitrary.
12. Learned counsel for the petitioners also referred to certain other factories which have been exempted from day to day payment of octroi and are alleged to have been permitted to pay lump-sum octroi to the panchayat. No importance can be given to such argument in absence of other details like how much local population has been engaged in the business; how much amount has been spent on the amenities provided to the residents of the area and what was the amount actually payable by way of octroi by such firms.
13. Learned counsel for the petitioners also referred to the case of Associated Cement Co. Ltd. vs. State of Gujarat and Anr. (supra). The aforementioned decision is based upon some other decisions which are also referred by the learned counsel for the petitioners. While dealing with the expenses in this case, the Court has referred Page 11 of 12 HC-NIC Page 11 of 12 Created On Tue Jul 12 00:58:22 IST 2016 C/SCA/16030/2003 JUDGMENT to per capita expenditure which the panchayat was required to spend on its population and the amount which has been spent by such firms. As discussed in the foregoing para, this formula is not applicable to the case on hand, as the amount alleged to have been spent for the amenities, is in fact, the amount spent on the labour engaged in the factory of the petitioner-company. This labour is a specialized labour which has been requisitioned from other parts of the country. Providing the amenities to these labours cannot be equated with per capita expenditure alleged to have been occurred on the residents of that village, as the villagers are not likely to get any benefit from the amenities which has been provided to the workers working in the factory.
14. In view of the foregoing discussion, this petition being devoid of merits is dismissed. Rule is discharged. Interim relief, if any, stands vacated.
(MOHINDER PAL, J.) mandora Page 12 of 12 HC-NIC Page 12 of 12 Created On Tue Jul 12 00:58:22 IST 2016