Punjab-Haryana High Court
Nestle India Limited vs State Of Punjab & Another on 18 January, 2012
CWP No. 2064 of 2006 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP No. 2064 of 2006
Date of Decision: 18 January ,2012
Nestle India Limited .. ... Petitioner
Versus
State of Punjab & another ....Respondents
CORAM:HON'BLE MR. JUSTICE AJAY TEWARI
Present::-Mr. Kashmiri Lal, Sr. Advocate with
Mr. Jorawar Singh, Advocate
for the petitioner
Mr. S.S. Gill, DAG Punjab.
Mr. A.K. Khunger, Advocate
for respondent No.2
AJAY TEWARI, J.
The petitioner, a Public Limited Company, has a manufacturing location at Moga. Apart from that, it gets certain food articles manufactured by third party on job work basis. After the job work the material is sent back to the petitioner-company at Moga. As per the petitioner-company the material received from the job worker was primarily designed for re-export outside the City of Moga, (and partly outside the State of Punjab). Thus, it claimed that material was not exigible to octroi. Octroi is leviable under Section 62 of the Punjab Municipal Act, 1911, and defined in Chapter V of the Municipal Account Code, 1930, as follows:-
"Octroi means a cess without refunds on the entry into a City or municipality of goods for consumption, use or sale therein".CWP No. 2064 of 2006 -2-
The same chapter also defines the Re-export Pass System in Rule 32-A, relevant portion of which is quoted as follows:-
"In a city or municipality in which no trade ware house is maintained and in which octroi (without refunds) is in force a person importing goods intended for temporary retention within octroi limits and eventual re-export may avail himself of the Re-export Pass System".
On the basis of the claim that the goods from job work were not brought for consumption or use within the municipal limits, Moga, the petitioner made an application for grant of Re-export pass. The same having been declined, the petitioner filed an appeal before the Appellate Authority, claiming re-export pass in the future and refund of octroi it had paid during the interregnum. The appeal was allowed. The respondent-Municipal Committee carried the matter in revision, and the Revisional Authority remanded the matter back to the Collector. Again the Collector allowed the claim and Municipal Committee filed revision. The revision having been allowed the petitioner is before this Court.
Learned Senior counsel has relied upon Dabur India Limited vs.. State of Punjab and others in CWP No.13599 of 2004 decided on 3.2.2010, wherein the Division Bench has held as follows:-
"12. From the judgment of the Apex Court, it is just clear that only sale within the municipal limit does not authorize the municipality to charge octroi on goods. Octroi can only be levied and charged when sale of octroiable goods is made in the octroi area for the purpose of CWP No. 2064 of 2006 -3- consumption and use within that octroi area. If a person purchases goods to be consumed beyond the octroi area then of course no octroi can be levied.
"13. Learned counsel for the petitioner has drawn our attention to the order passed by the Appellate Authority dated 23.4.2004 (Annexure P-11) and argued that octroi was levied and charged on the ground that goods are sold from its godowns which situate within the municipal limit of Zirakpur. Sales tax is also paid within the municipal limit of Zirakpur. Since sale takes place within the municipal limit of Zirakpur, hence octroi is justified. Learned counsel for the petitioner further argued that the Appellate Authority has not appreciated the fact and has not recorded any finding as to whether sale took place within the municipal limit of Zirakpur for consumption and use of the goods within the octroi limit. If goods/products are to be consumed or used beyond the octroi limit then octroi cannot be levied and charged, simply because sale takes place within the municipal limit.
"14. We are of the view that in the impugned orders, no finding has been recorded on the question as to whether goods/products sold were to be consumed or used within the municipal limit of Zirakpur. Hence we have no other option except to quash the impugned orders.
In view thereof, learned Senior counsel has proposed that this Court should hold that the petitioner is not liable to pay octroi on goods which are not intended for consumption and use in Moga, and CWP No. 2064 of 2006 -4- thereafter, the petitioner would approach the Municipal Committee, with all the records and wherever the Municipal Committee is satisfied that indeed the material was not sold for consumption and use within the Moga, the refund may be granted.
Learned counsel appearing for the Municipal Committee has fairly accepted that as regards the goods not intended for consumption and use in Moga, no octroi would be leviable as held in Dabur India Limited vs.. State of Punjab and others. He has however raised two arguments. His first argument is that the petitioner having sought a Re-export pass now cannot turn around and claim refund of octroi. This argument has only to be noticed to be rejected. At the very outset, the petitioner had moved an application for re-export pass for its business and continued to pay the octroi in anticipation of the grant of such pass. When the Municipal Committee declined it, it moved an appeal, again praying for re-export pass for the future and making a claim that the earlier duty levied upon it should be refunded. In the circumstance, it cannot be held that the petitioner is not entitled to claim refund because it had prayed only for grant of re-export pass. It is not disputed that from the year 2006, octroi has been abolished in the State of Punjab, and therefore, the dispute only survives with regard to the money paid by the petitioner prior thereto. The second argument of learned counsel is that the petitioner is not entitled to any refund because of the doctrine of unjust enrichment. He has relied upon 1997, (5) Supreme Court Cases 536 Mafatlal Industries Ltd and others Vs.. Union of India & others a decision of a Constitution Bench of nine CWP No. 2064 of 2006 -5- Hon'ble Judges, the relevant portion is as follows:-
"(iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition.
The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected form him contrary to law. The power of the Court is not meant to be CWP No. 2064 of 2006 -6- exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched."
Learned counsel appearing on behalf of the petitioner clarifies that in that case dispute was with regard to the tax/duty levied on sale of good while in the present case the duty is on the entry of the goods. Further a tax on sale may or may not have been passed on to the purchaser but in the case of duties like octroi the principle of unjust enrichment would not apply. He has relied upon AIR 1992 Supreme Court, 645 Tata Engineering and Locomotive Company Limited and another Vs.. The Municipal Corporation of the City of Thane and others wherein the Supreme Court has held as follows:-
"31. The learned counsel for the respondent then contended that the appellants have recovered the amounts paid by them by way of octroi duty from the dealers or the customers to whom they had sold the goods and therefore they are in any case not entitled to get a refund. The argument was that if refund is ordered it would amount to allowing the appellants to unjustly enrich themselves at the cost of the public to whom the burden had already been passed. This argument is based on the ground that in the selling price the Company had merged the octroi duty originally paid as deposit and if a refund is made the company would be getting an additional amount over and above normal price which they would have charged but for CWP No. 2064 of 2006 -7- the fact that they were initially asked to deposit octroi. There is no evidence that any of the articles sold by the Company is subject to any price control by the Government or that the Company had charged any octroi separately in, the bills. Invoices and the other documents of sale to the outside purchaseres produced before us do not also show that any octroi was separately charged and collected by the Company. It may be mentioned that in the rejoinder filed by the appellant in the writ petition they have specifically denied that they "have recovered the amount paid by them by way of octroi duty from the dealers to whom they had sold the goods or that the dealers in turn have recovered the octroi duty from the customers." In view of this the question of unjust enrichment does not arise."
He has further relied upon AIR 1990 SC 47 HMM Vs. Administrator, Bangalor, wherein also the Hon'ble Supreme Court held to the same effect. Learned counsel for the Municipal Committee has argued that these judgments are prior to the decision in Mafatlal Industries Ltd and others Vs.. Union of India & others (supra) and relied upon subsequent decision of this Court in The Maur Mandi Co-operative Marketing-cum-Processing Society Ltd. Vs.. State of Punjab, 2002 (1) P.L.J. 493 and Indian Woollen Textiles Mills Vs.. Collector of Central Excise 1995 (2) P.L.R. 87, wherein it was held that in every case of refund the onus is on the petitioner to plead and prove that he is not passed on the burden to the buyer. It is not disputed that both these cases again relate to tax/duty on sale .
CWP No. 2064 of 2006 -8-
Learned counsel for the respondent also relied upon Indian Oil Corporation Vs.. MC, Jalandhar, AIR 1993 SC 844, wherein it was held that the Corporation was not entitled to claim refund of octroi, since it had passed on the burden to the purchaser. Learned counsel for the petitioner has argued that in that case it was pleaded and proved that in fact the octroi charged by the Municipal Committee had been specifically mentioned in the bill by Indian Oil Corporation and was collected from the purchaser. Learned Senior counsel has also averred that the petitioener is ready to go back to the respondent-Municipal Committee even on this aspect i.e. to say it will go and prove to the Municipal Committee, first that the goods are not intended for consumption and use in Moga and secondly, that it has not charged or collected the octroi and the Municipal Committee should take a decision thereon within a fixed time.
After considering the matter, I am of the opinion that the arguments of learned counsel for the petitioner would outweigh those of the learned counsel for the respondent . The Hon'ble Supreme Court has clearly held that on duties/cess like octroi on the entry the principle of unjust enrichment would not apply. Subsequent judgments pointed out by the learned counsel for the respondent whether Mafatlal (supra) or those rendered by this Court were all concerned with cess/duties/tax on the sale price of the goods. Judgment in the case of Indian Oil Corporation (supra) is clearly distinguishable because there the assessee had actually separately charged octroi from the purchaser.
In the circumstances the petition is allowed, with the direction that the petitioner would appear before the Municipal CWP No. 2064 of 2006 -9- Committee with all the materials to show that the goods which were sent by the job worker were not intended for consumption and use in Moga. Subsequently, it would also establish that it had not charged the octroi duty from its purchaser.
The apperance is fixed for 15th March, 2012 and any other date which the Municipal Committee may require it to appear. The Municipal Committee in turn is directed to take a reasoned decision within four months and make the necessary refund, if any, within a period of six months thereafter.
Petition disposed of.
18.1.2012 (AJAY TEWARI) aarti JUDGE