CIVIL APPELLATE JURISDICTION: Special Leave Petition (Civil) No. 6497 of 1991.
From the Judgment and Order dated 18.4.1990 of the Bombay High Court in W.P. No. 419 of 1990.
S. Ganesh, Ravinder Narain, P.K. Ram and Ms. Amrita Mitra for the Petitioner. K.K Singhvi and A.K Gupta for the Respondent. The Order of the Court was delivered by:
K. JAYACHANDRA REDDY, J. The petitioner Company is engaged in the business of manufacture of aluminium products and its factory is located at Kalwa in Thane District (Maharashtra). The Company obtains aluminium as raw materials for consumption from another factory of theirs situated in a different State. With effect from 1.10.82 the Company at Kalwa was included in the municipal jurisdiction of Thane. Prior to that date the factory was not within the jurisdiction of Thane Municipality and did not have to pay any octroi on the raw materials brought into its factory at Kalwa. By a notification dated 23.8.82, the Government of Maharashtra constituted the Municipal Corporation of the City of Thane and Kalwa was brought within the jurisdiction of the Thane Municipal Corporation, the respondent herein and all goods imported into the area of the Thane Municipal Corporation were subjected to octroi at the rates mentioned in Schedule I to the Maharashtra Municipalities (Octroi) Rules, 1968 (’Rules’ for short). Schedule I to the said Rules contains description of various goods and articles which were liable to octroi and minimum and maximum rates are prescribed. Item No.77 in the said Schedule I to the said Rules covered non-ferrous metals, including aluminium and Entry provided for the levy of octroi duty on the aluminium and_other goods mentioned therein at the minimum rate of 0.5% and at the maximum of 4%. The respondent Corporation was levying octroi duty on the imports of aluminium raw materials made by the petitioner Company into Kalwa at the rate of 1.3% from 1.10.1982 to 14.4.1987. Then with effect from 15.4.87 the respondent Corporation was levying octroi at the rate of 2%. On 18.5.87 the Thane Manufacturer’s Association made a representation to the respondent Corporation about the increase in octroi rates pointing out that the increase was having a disastrous effect on their industrial units located within the limits Of the Corporation. In reply to the said representation, the respondent Corporation addressed a letter dated 20.11.1987 in which it was pointed out and clarified inter alia that goods specified in Entry 77 in Schedule I to the said Rules, when raw material is imported for use in the manufacture of finished goods it would be subject to the levy of octroi not exceeding 1.25% and not less. On receipt of this letter the petitioner Company made detailed enquiries and was informed that under Rule 4 of the said Rules the goods mentioned in Part IA of that Schedule which were imported by certain industrial undertakings are liable to be subjected to octroi at a lower rate. The Company also noticed further that Part IA of the Rules provided that the goods specified in Entry 77 when imported by an industrial undertaking for use as a raw material for processing within that undertaking and if a declaration in Form 14 is filed, the levy. octroi in such cases would not exceed 1.25% and would not be less than 0.25%. The petitioner, however, did not file any such Form 14 duly filled in and according to them they acted under a mistake of law and under the bonafide impression that the octroi levied on and recovered by the Corporation at the rate of 1.3% in respect of the period from 1.10.82 to 14.4.87 and at the rate of 2% from 15.4.87 onwards, represented the correct rate. The petitioner however having later realised by going through the records and the financial accounts and other documents which are duly audited claimed refund of the excess of octroi duty which has been paid by them. On 8.3.88 the petitioner Company addressed a letter to the respondent Corporation pointing out that under a mistake of law they paid excess amount and therefore the excess amount so paid should be refunded. The respondent Corporation in their reply dated 16.5.88 stated that the petitioner company had not complied with the procedure specified in Part IA of the Schedule II to the said Rules for availing such concessional rates therefore the refund cannot be sanctioned. However, the petitioner Company by their letter dated 19.4.89 claimed a refund of total amount of Rs. 13,54,101.79 p. The respondent again rejected the claim reiterating that the procedure specified in Part IA of Schedule II to the Rules was not complied with. Being aggrieved the Company filed a writ of mandamus seeking’ refund. A Division Bench of the High Court dismissed the. same holding that the concessional rate of octroi duty was available only if the declaration in Form 14 was filed with the octroi authorities. Questioning the said Order, this special Leave Petition has been filed and it is being disposed of at the admission stage itself after notice.
Most of the facts in this case are not in dispute. Admittedly the aluminium raw material was imported by the petitioner Company and octroi duty at the normal rate was paid and no declaration in Form 14 was filed. It is only after the lapse of long time that the petitioner Company has made a claim for refund. The learned counsel for the petitioner Company submitted that a procedural failure should not disentitle the petitioner Company provided if otherwise the Company could have legitimately claimed. The learned counsel appearing for the respondent Municipal Corporation submitted that the concessional rate would be available only if the raw material was utilised by the Company for manufacturing goods within the industrial undertaking. If a declaration had been filed in proper Form 14 there could have been a scope for verification and in the absence of such a declaration the question of refunding at this distance of time does not arise. It is also his further submission that the concession should have been availed at the time when it was available. Having failed to avail the question of claiming the same later does not arise and consequently no refund can be claimed.
The amended Rules came into force in 1970. Rule 4(2) provides for payment octroi at a lower rate by certain industrial undertakings in respect of the goods mentioned in Part IA of Schedule II to the Rules. Aluminium is at Entry No.77. Part I-A reads thus:
"PART I - A
List of goods on which octroi shah be payable
at a lower rate by Certain industrial under-
takings.
(1) All goods specified in entries 6(c), 35,
40, 64, 65, 71, 77 and 86 in Schedule I, and
khobra mentioned in entry 25, raw rubber and
latex mentioned in entry 70 in that Schedule,
when imported by an industrial undertaking for
use as raw material for processing within that
undertaking and when declaration in respect
thereof is issued by the undertaking in Form
14, shall be subject to octroi by any Council
at a rate not exceeding 1.25 per cent and not
less than 0.25 per cent.
XX XX
XX
It can be seen from the above rule that to avail the concession, a declaration in Form 14 has to be made in respect of the raw material imported. Form 14 is as under:
"FORM 14
(Part I-A and I1 of Schedule II )
Declaration to be made by an importer import-
ing dutiable ’goods as raw material for his
industrial undertaking
I ............. do hereby declare that the
goods in respect of which I have separately
given a declaration under rule 14 have been
imported by me as raw material to be used in
the manufacture of ............. in my
industrial undertaking, viz. (here give full
name and address of the undertaking
) ................. and I shall not use them
for any other purpose for sale or otherwise
dispose them of to any other party for any
other purpose, except having previously paid
the difference between the octroi due on such
goods at ordinary rates and the octroi paid on
concessional rates under Schedule I1 to the
Maharashtra Municipalities (Octroi) Rules,
1968.
Date ................. Signature of the
Importer"
The declaration contemplated in Form 14 is to the effect that the goods imported shall not be used for any other purpose for sale or otherwise etc. It can thus be seen that an incentive is sought to be given to such entrepreneurs by such concession if the raw material which is imported is also utilised in the industrial undertaking without selling or disposing of otherwise. That being the object a verification at the relevant time by the octroi authorities becomes very much necessary before a concession can be given. In the absence of filing such a declaration in the required Form 14, there is no opportunity for the authorities to verify. Therefore the petitioner Company has definitely failed to fulfil an important obligation under the law though procedural. The learned counsel, however, submitted that even now the authorities can verify the necessary records which are audited and submitted to the authorities and find out whether the material was used in its own undertaking or not. We do not think we can accede to this contention. Having failed to file the necessary declaration he cannot now turn-around and ask the authorities to make a verification of some records. The verification at the time when the raw material was still there is entirely different from a verification at a belated stage after it has ceased to be there. May be that the raw-material was used in the industrial undertaking as claimed by the petitioner Company or it may not be. In any event the failure to file the necessary declaration has necessarily prevented the authorities to have a proper verification.
Shri Ganesh, learned counsel for the petitioner Company relied on the judgment of this Court in Kirpal Singh Duggal v. Municipal Board Ghaziabad [1968] 3 SCR 551 in support of his submission that the non-fulfilment of procedural requirement does not bar the claimant from persuing his remedy in a court of law. That was a case where the appellant entered into a contract and supplied the goods to the Government. The Municipal Board collected toll when the trucks were passing through the toll barrier. The appellant obtained a certificate that the transported goods were meant for Government work. The appellant claimed exemption on the basis of the certificate but not within time. The Court observed thus:
"But counsel for the respondent contended that
the rules framed by the Government regarding
the procedure constituted a condition prece-
dent to the exercise of the right to claim
refund and recourse to the civil court being
conditionally strict compliance with the
procedure prescribed the civil court was
incompetent to decree the suit unless the
condition was fulfilled. We are unable to
agree with that contention. The rules framed
by the Government merely set up the procedure
to be followed in preferring an application to
the Municipality for obtaining refund of the
tax paid. The Municipality is under a statuto-
ry obligation once the procedure followed is
fulfilled, to grant refund of the toll. The
application for refund of the toll must be
made within fifteen days from the date of
payment of the toll. It has to be
accompanied by the original receipts. If these
procedural requirements are not fulfilled, the
Municipality may decline to refund the toll
and relegate the claimant to a suit. It would
then be open to the party claiming a refund to
seek the assistance of the court, and to prove
by evidence which is in law admissible that
the goods transported by him fell within the
order issued under s. 157(3) of the Act. The
rules framed by the Government relating to the
procedure to be followed in giving effect to
the exemptions on April 15, 1939, do not
purport to bar the jurisdiction of the civil
court if the procedure is not followed."
Relying on these observations, Shri Ganesh, learned counsel for the petitioner Company contended that in the instant case though the procedural requirement is not fulfilled by filing a declaration in Form 14, still that is not a bar to invoke the jurisdiction of the civil court or the High Court by way of a writ and seek a refund. We are unable to agree. In Duggal’s case, the appellant, as a matter of fact, obtained certificate but failed to make the application for refund within time. It is in that context this Court observed that the Municipality was under a statutory obligation once the procedure followed is fulfilled and if it is not fulfilled the Municipality may decline. The granting of a certificate that the appellant used the goods for Government work made all the difference. But, in the instant case, the non-fulfillment of the requirement even though procedural, has disentitled the petitioner Company because there was no way to verify whether it was entitled for such concession. In HMM Limited and another v. Administrator, Bangalore City Corporation and another, [1989]4 S C C 640 no doubt the view taken in Dugal’s case was confirmed but it does not make any difference so far as the present case is concerned for the reasons stated above. In that case the question was whether the goods namely Horlicks was consumed within the city or not and there was no dispute as to the quantum which was credited pursuant to the directions of the High Court. Hence no further verification was necessary. Therefore these two cases are distinguishable.
However, a concession has to be availed at the time when it was available and in the manner prescribed. The common dictionary meaning of the word "concession" is the act of yielding or conceding as 10 a demand or argument, something conceded; usually implying a demand. claim, or request, "a thing yielded", "a grant".
In the Dictionary of English Law by Earl Jowitt, the meaning of "concession" is given as under:
"Concession, a grant by a central or local
public authority to a private person or pri-
vate persons for the utilisation or working of
lands, an industry, a railway waterworks,
etc."
The expressions "rebate" and "concession" in the commercial parlance have the same concept. In Halsbury’s Laws of England, 4th edn. Para 198 it is observed as under:
"Application for rebate. When a rating author-
ity receives an application for a rebate it
has a duty to determine whether the residen-
tial occupier is entitled to a rebate and, if
so, the amount to which he is entitled; and it
must request him in writing to furnish such
information and evidence as it may reasonably
require as to the persons who reside in the
hereditament, his income, and the income of
his spouse. Unless
the rating authority is satisfied that the
residential occupier has furnished all the
information and evidence it requires, it is
under no duty to grant a rebate. "
(emphasis supplied)
In Kedarnath Jute Manufacturing Co. v. Commercial Tax Officer, Calcutta and Ors. [1965] 3 SCR 626, the appellant which was a public limited Company, sought exemption under the provisions of the Bengal Finance (Sales Tax) Act, 1941 in respect of certain sales but did not produce before the Officer the declaration forms from the purchaser dealers required to be produced under the proviso to that sub-clause granting exemption. It was contended on behalf of the appellant that proviso to the sub-clause was only directory and the dealer is not precluded where the proviso is not strictly complied with from producing other relevant evidence to prove that the sales were for the purposes mentioned in the said sub-clause. The contention on behalf of the respondent was that the dealer can claim exemption under the sub-clause but he must comply strictly with the conditions under which the exemption can be granted. Rejecting the appellant’s contention, this Court held thus:
"Section 5(2)(a) (ii) of the Act in effect
exempts a specified turnover of a dealer from
sales tax. The provision prescribing the
exemption shall, therefore, be strictly con-
strued. The substantive clause gives the
exemption and the proviso qualifies the sub-
stantive clause. In effect the proviso says
that part of the turnover of the selling
dealer covered by the terms of sub-clause (ii)
will be exempted provided a declaration in the
form prescribed is furnished. To put it in
other words, a dealer cannot get the exemption
unless he furnishes the declaration in the
prescribed form." It was further held as under:
"There is an understandable reason for the
stringency of the provisions. The object of S.
5(2) (a) (ii) of the Act and the rules made
thereunder is self-evident. While they are
obviously intended to give exemption to a
dealer in respect of sales to registered
dealers’ of specified classes of goods, it
seeks also to prevent fraud and collusion in
an attempt to evade tax. In the nature of
things, in view of innumerable transactions
that may be entered into between dealers, it
will wellnigh be impossible for the taxing
authorities to ascertain in each case whether
a dealer has sold the specified goods to
another for the purposes mentioned in the
section. Therefore,
presumably to achieve the twofold object,
namely, prevention of fraud and facilitating
administrative efficiency, the exemption given
is made subject to a condition that the person
claiming the exemption shall furnish a decla-
ration form in the manner prescribed under the
section. The liberal construction suggested
will facilitate the commission of fraud and
introduce administrative inconveniences, both
of which the provisions of the said clause
seek to avoid"
It can thus be seen that the submission namely that the dealer, even without filing a declaration, can later prove his case by producing other evidence, is also rejected. This ratio applies on all fours to the case before us. As already mentioned the concession can be granted only if the raw material is used in the industrial undertaking seeking such concession. For that a verification was necessary and that is why in the rule itself it is mentioned that a declaration has to be filed in Form 14 facilitating verification. Failure to file the same would automatically disentitle the Company from claiming any such concession.
In any event the petitioner Company cannot claim concession at this distance as a matter of right. In Orissa Cement Ltd. v. State of Orissa & Ors, A I R 1991 SC 1676, it was observed thus:
"We are inclined to accept the view urged on
behalf of the State that a finding regarding
the invalidity of a levy need not automatical-
ly result in a direction for a refund of all
collections thereof made earlier. The decla-
ration regarding the invalidity of a provision
and the determination of the relief that
should be granted in consequence thereof are
two different things and, in the latter
sphere, the Court has, and must be held to
have, a certain amount of discretion. It is
well-settled proposition that it is open to
the Court to grant, mould or restrict the
relief in a manner most appropriate to the
situation before it in such a way as to ad-
vance the interests of justice."
In the instant case the octroi duty paid by the petitioner Company would naturally have been passed on to the consumers. Therefore there is no justification to claim the same at this distance of time and the court in its discretion can reject the same. For the above reasons, this Special Leave Petition is dismissed with costs. V.P.R. Petition dismissed.