Bombay High Court
Shah Velji Narsi Kumkum Factory vs Municipal Corporation Of City on 25 April, 2003
Equivalent citations: 2004(1)BOMCR186, 2003(4)MHLJ322
Author: V.M. Kanade
Bench: V.M. Kanade
JUDGMENT V.M. Kanade, J.
1. The appellant is the original plaintiff and the respondent is the original defendant.
2. The brief facts are as under :
The Plaintiff is registered partnership firm and the Defendant is Municipal Corporation, Amravati. The defendant is empowered to impose compulsory tax under Section 105(1) of the Act. Under the said provisions, the Municipal Council is empowered to levy octroi tax on the articles imported within the limits of Amravali Town. The Plaintiff filed a suit for refund of the amount of octroi tax levied on the goods and also for declaration against the defendant. Schedule I of the Act prescribed the levy of octroi tax on the articles mentioned under the Heading "Goods and Drugs, Medicines for Human or Animals consumption eating and drinking". The plaintiff disputed the levy of octroi on the following items; (Goods at Sr. No. 14 Ayurvedic Medicines such as Harda Power and Sr. No. 14(c) Haldi so also the goods described at Sr. No. 25 goods not mentioned elsewhere Gulal Ral, Sindoor. Similarly.
Part-II :-
Animals;
Part-III :-
Goods used for fuel, lighting and for cleaning S. N. 38(B):
Part-IV :-
Building Material ----
S. NO. 45: Dolomite powder barytis powder S. NO. 47: Khadi S. NO. 48: Zinc Oxide S. NO. 63(b) -- Plastic bags.
Part-V :-
perfume, toilet requisites, colour and household goods.
Part-VI :-
Tobacco and tobacco requisites.
Part-VII :-
The piece goods and other textile material and articles of leather and rubber goods.
Part-VIII :-
Metals, articles or metal and articles of metal.
Part-IX :-
Miscellaneous.
The plaintiff's case in the suit was that the items which were included in different classes as mentioned hereinabove do not fall within the ambit of the Heading which is defined under Schedule I and as such they are not liable to pay octroi tax. The case of the plaintiff in the plaint was that the octroi tax was levied on the articles as per their classifications in the Schedule and it is their case that if the import is not for the purpose of classification mentioned in the Heading then the octroi tax could not be levied on these articles. The Municipal Council - the defendant filed their written statement and denied the claim of the plaintiff. It was further averred by the Municipal Council in the written statement that the suit was not maintainable as it was barred by the provisions of Section 172 of the Maharashtra Municipalities Act, 1965. The trial Court decreed the suit. The Municipal Council preferred the appeal before the lower appellate Court. The lower Appellate Court allowed the appeal and the Judgment and Decree of the trial Court was set aside. Against the said order, the plaintiff appellant herein has preferred this Second Appeal.
3. The substantial question of law raised in this Second Appeal is whether the goods which were imported as described by Exh-20 do not come within the specified Articles and hence they ought to have been exempted from the duty of octroi or in other words, whether Heading which is given to the said Schedule would determine which articles would be liable to pay octroi?
4. The learned counsel appearing on behalf of the appellant submitted that the Schedule I - lays down the table in respect of the description of the goods and ad valorem rates of octroi duty which is leviable. Class I of the said Schedule I reads as under :
"Class I - Articles used for food or drink by men or animals and drugs".
5. It is submitted by the learned counsel appearing on behalf of the appellant that items at Sr. No. 25 viz. Ral, Sindoor, are not the items which are used for food or drink by men or animals and drugs and, therefore, they could not be said to be the articles for which tax could be levied. Similarly, in respect of the other articles, he submitted that said articles did not conform with the classification as made by the Heading to that particular class. He submitted that in this view of the matter, the Municipal Council had no authority or power to levy octroi tax or duty on the said articles. He relied on the Judgment in the case of Municipal Corporation for Greater Bombay and Ors. v. Monopol Chemicals Ltd. where this Court has observed :
"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 no Entry. Class VII bears the description piece goods cotton, yarn and threads of all sports 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. In such a situation it would be incorrect to say that the Legislature used certain words to describe the Class articles included in Schedule H. If Schedule H is a part of the statute, it is necessarily give meaning to every part of Schedule itself. If we do so, naturally we must proceed on the well established rule of interpretation of statutes, namely, the Legislature does not use surplus words enacting legislations. We are also inclined to hold that the Legislature itself classified various items in Schedule H by referring the use to which those articles were to be put and, with that object in view, the description of the articles in each class example, instead of repeating the word in construction of buildings, roads and structures against each of the mentioned in the Entries covered by Class IV. The Legislature thought it convenient, as indeed it is, to give description to the Class itself under Entries Nos. 23 to 31 are mentioned legislative device to avoid repetition description against the items in each Entry covered by Class IV."
6. He submitted that in view of the ratio as laid down by the Full Bench of this Court the Municipal Council had no power to levy octroi tax in respect of the said articles as it did not conform with the Heading given to the said Class of articles. The learned counsel appearing on behalf of the respondent submitted that the said question has now been decided by the Apex Court in the case of Forage & Co. v. Municipal Corporation of Greater Bombay and Ors., wherein the Apex Court has held that the Heading which is given to a particular class of articles was not decisive and was meant only to provide convenient index and no more. The Apex Court in paras 10 and 11 has observed as follows :
"It is quite evident that Section 192 has to be read along with Schedule H. The said section provides that octroi is to be levied in respect of several articles mentioned in the Schedule. The articles which are mentioned in the Schedule are contained in Items I to 60, Zinc oxide is contained in Article 26. It is no doubt true that Schedule H has been divided into different classes. As has been observed by the Division Bench, the subheadings were meant only to prove a convenient index and no more. In this regard we may usefully refer to a decision of this Court in the case of Frick India Ltd. v. Union of India where in connection with the question of referring to the heading in connection with the interpretation of statute it was observed at p. 405 as follows: (SCC para 8)."
"8. It is well settled that the headings prefixed to sections or entries cannot control the plain words of the provision; they cannot also be referred to for the purpose of construing the provision when the words used in the provision are clean and unambiguous; nor can they be used for cutting down the plain meaning of the words in the provision. Only, in the case of ambiguity or doubt the heading or sub-heading may be referred to as an aid in construing the provision but even in such a case it could not be used for cutting down the wide application of the clear words used in the provision. Sub-item (3) so construed is wide in its application and all parts of refrigerating and air-conditioning appliances and machines whether they are covered or not covered under sub-items (1) and (2) would be clearly covered under that sub-item. Therefore, whether the manufacturer supplies the refrigerating or air-conditioning appliances as a complete unit or not is not relevant for the levy of duty on the parts specified in sub-item (3) of Item 29-A."
In any case, therefore, heading is not decisive of the question whether an article mentioned in the Schedule can be subjected to tax or not. The Division Bench, in our opinion, was therefore, correct in coming to the conclusion that the heading of the class cannot affect the taxability of zinc oxide to octroi."
7. The Apex Court has followed the earlier Judgment of the Apex Court in the case of Frick India Ltd. v. Union of India and Ors., . In this view, the matter is now finally concluded by virtue of the said decision of the Apex Court and the ratio of the said case would be squarely applicable to the facts and circumstances of the present case. The finding of the lower appellate Court will have to be confirmed.
8. The second substantial question of law which is raised in this Second Appeal is whether the Civil Suit is maintainable or is barred by the provisions of Section 172 of the Maharashtra Municipalities Act. The learned counsel appearing for the appellant relied on a case of Municipal Council, Ahmednagar v. Bhaskar Pandurang Hivale Education Society, Ahmednagar, 1994 Mh.L.J. 948 and submitted that since the suit was filed challenging the power and authority of the Municipal Council to levy octroi tax, the suit was maintainable. The learned counsel appearing on behalf of the respondent, however, relied on the Judgment of the Court in the case of Chief Officer, Sangamner, Municipal Council v. Narayandas Jagannath Karva and Anr., reported in 1959 Mh.L.J. 26; one unreported Judgment in Second Appeal No. 527/94 decided on 10-2-1995 at Bombay in the case of Gandhi Agencies, Barshi v. Municipal Council, Barshi [Reported in 1995(2) Mh.L.J. 76] also a Judgment of Apex Court in the case of Bata Shoe Co. Ltd. v. Jabalpur Corporation, . In order to decide the said issue, it would be necessary to examine the relevant provision of the Maharashtra Municipalities Act, 1965. Section 172 reads as under :
"172. No objection shall be taken to any valuation, assessment or levy nor shall the liability of any person to be assessed or taxed be questioned, in any other manner or by any other authority than is provided in this Act."
9. From the perusal of the said section, it is evident that any objection pertaining to the valuation, Assessment or levy or the liability of any person to be assessed or taxed cannot be questioned before any other authority. In the present case, the appellant had challenged the jurisdiction of the concerned officer to levy octroi duty on the ground that said article was not covered by the said classification which was made in Schedule I. In this view of the matter, in my view, the distinction will have to be made in respect of the cases where the suit is based on the valuation, assessment or levy of tax or where the liability of any person to be assessed or taxed is questioned such class of cases would be covered under Section 172 and as per the ratio laid down by the Apex Court in the case of Bata Shoe Co. Ltd., ; in the case of Chief Officer, Sangamner Municipal Council, 1989 Mh.LJ. 26 and in the case of Gandhi Agencies, Barshi, cited supra, would be applicable and as such the suit would not be maintainable. However, in a case where the power and authority of the Municipal Council to levy tax on a particular article is questioned, it cannot be said that such a suit is also barred by the provisions of Section 172 and in my view the said suit would be excluded from the implied bar of Section 172 of the said Act. I, therefore, hold that the present suit was maintainable before the Civil Court. In this view of the matter, the Second Appeal is dismissed. Under the circumstances, there shall be no order as to costs.