SHROFF AND CO TRADE LINKS LIMITED Vs. MUNICIPAL CORPN OF GREATER BOMBAY:MUNICIPAL CORPN OF GREATER BOMBAY

JUDGEMENT

(1.) This appeal by special leave is directed against the decision of the division bench of the High court of Bombay dated November 24/25, 1987. The other two special leave petitions challenge the same Judgment and the points and the facts involved are also more or lessidentical and it is, therefore, desirable to deal with the facts of the first appeal. Disposal of the first appeal would entail the disposal of the other two special leave petitions.

(2.) The appellants are registered partnership firms carrying on business of dealing in wines and spirits and are licensed to import and store liquors in their bonded warehouse at Maulana Shaukat Ali Road, Bombay. The appellants are also holders of licence issued under the Maharashtra Foreign Liquor (Import and Export) Rules, 1963 framed under the Prohibition Act of 1949 being Act No. 25 of 1949 of the State government. As early as 1888, Bombay Municipal Act was enacted empowering the Bombay Municipal Corporation to levy octroi on goods brought to the city. We shall refer to the provisions of the said Act as relevant to the present purpose later. In 1949 Bombay Prohibition Act (hereinafter called 'the Act') was passed. The provisions of the Act and the Rules which will be referred to hereinafter empowered the State government to impose excise and other duties. In 1965 Maharashtra Foreign Liquor (Storage in Bond) Rules, 1964 were enacted. Under these rules, the importer can import liquor and store the same in warehouses without payment of countervailing duty. The Octroi Rules were amended time and again on 28/07/1976 and 28/06/1983 to impose octroi on the assessable value which includes customs duty paid on import of liquor. The appellants herein filed writ petition challenging the inclusion of countervailing duty in the assessable value for octroi on the ground that the said duty was not incurred 'till the date of removal of the goods from the place of import'. On 28/06/1983 the words 'countervailing duty were included in the definition of Rule 2 (7 (a) of the Bombay Municipal Corporation Levy of Octroi Rules, 1965. A learned Single Judge of the High court of Bombay allowed the writ petition on 14/01/1986 holding that countervailing duty was neither incurred nor was it liable to be incurred until after the bonded liquor had been removed from the place of import and allowed the writ petition. Respondents herein filed Letters Patent Appeals against the decision of the learned Single Judge. The division bench by the impugned judgment reversed the judgment of the learned Single Judge and held that countervailing duty was includible in the assessable value for the imposition of octroi. In pursuance of the same the Deputy Assessor and Collector (Octroi) , Bombay, issued notice demanding payment of octroi amounting to Rs. 76,70,308.71. The facts and circumstances of the other two special leave petitions are more or less identical and are governed by the same judgment.

(3.) The sole question, therefore, involved in this appeal is, whether countervailing duty is includible in the octroi. Octroi, as Shri Soli J. Sorabjee appearing for the appellants in the instant appeal drew our attention, is governed by entry 52 of List II of the Seventh Schedule being tax on the entry of goods into a local area for consumption, use or sale therein. It is submitted that in order to be a valid octroi, there must not only be a physical entry of the goods within the limits of the municipality but the entry of the goods must be either for consumption, use or sale. Bearing in mind the basic constitutional provision, therefore, octroi should be so construed as to follow upon the entry of goods either for consumption or for use or for " sale and not mere physical entry.