KATHIAWAR INDUSTRIES LIMITED Vs. JAFFRABAD MUNICIPALITY

JUDGEMENT

(1.) These two Civil Appeals are by the Kathiawar Industries Ltd. by special leave against the judgment of the Gujarat High Court holding that the appellants are liable to pay octori duty on uncrushed salt which is brought by the appellant to the factory situate within the octroi limits and crushed there.

(2.) The appellant is running a salt manufacturing works at Jaffrabad called "Newabsidi Mohmad Khan Salt Works". The company had constructed salt works, grinding mills, trolly tracks and a jetty at the port site. The major portion of the salt works is situate out of the municipal limits. The salt is manufactured outside the municipal limits. The grinding mills and the part of the trolly-track leading to jetty come within the municipal limits of the respondent Jaffrabad Municipality. The Municipality by a notice dated 3-11-1955 demanded from the appellant Rupees 7289-6-0 as arrears of octroi. The appellant paid under protest and filed the suit out of which this appeal arises before the Civil Judge Gohilwad, District Bhavangar, against the respondent for a declaration that the salt manufactured by the appellant at its salt works at Jaffrabad and exported uncrushed and/or crushed was not liable to octori duty and that the goods passing through municipal limits from the salt works are not liable to octori duty, and for an injunction restraining the respondent from recovering an amount of Rs. 7289-6-0 and for a further injunction restraining the Municipality from hindering or obstructing the free passage of salt and goods and for the refund of Rs. 250/-. The appellant also filed another suit for the refund of Rs. 1271-14-0 paid under protest. These two suits were decreed, the court declaring that the salt manufactured by the appellant company is not liable to octroi duty. The court also granted an injunction as prayed for. The Municipality preferred appeals. The appellate court while dismissing the appeals and confirming the decree of the trial court observed that the perpetual injunction granted by the trial court would not apply to the salt entering the octroi limits for consumption or use for the factory situated within the octroi limits of the municipality. The municipality preferred two Second Appeals to the High Court of Gujarat at Ahmedabad. A Bench of the High Court allowed the appeals except to the extent of confirming the declaration that uncrushed salt of the appellant company which is directly sent from the stacking ground to the Jetty is not liable to octroi provided the plaintiff company followed the prescribed rules and formalities. The other claims in the suits were dismissed. Against the judgment of the High Court the plaintiff company has preferred these two appeals.

(3.) The only question that falls for consideration in these civil appeals is whether the salt manufactured by the appellant outside the octroi limits of the respondent and brought by the appellant within those limits for the purpose of being crushed into powder in the appellant's factory situate within those limits and then exported is liable to octroi. The facts as found by the High Court and which cannot be questioned, are that the salt works consists of (i) salt pans; (ii) stacking ground for the salt collected from the pans; (iii) trolly track for carrying salt from stacking ground to the factory within the octroi limits of the Municipality and to the jetty which is outside the octroi limits; (iv) Jetty; (v) Power house; (vi) store-room; (vii) workshop and (viii) grinding mill which is referred to in the evidence as the crushing factory. Of these, the crushing factory and part of the trolly track (about 1400 feet) are within the octroi limits of the Municipality and the rest outside those limits. Thus it is not in dispute that only the crushing factory and part of the trolly-track are within the octroi limits. The salt is prepared in the salt pans outside the octroi limit and the salt which is to be crushed is taken to the crushing factory and the salt which is not to be crushed is taken in uncrushed form directly to the jetty over the trolly-track part of which passes through the octroi limits of the Municipality. The salt that is crushed in the crushing factory is also after crushing taken by the trolly to the jetty. From the jetty the salt whether crushed or uncrushed as the case may be, is exported by steamers. The High Court has found that the salt which is taken to the crushing factory within the octroi limits for the purpose of crushing and is crushed and later taken to the jetty is liable to octroi. The question is whether this levy is sustainable in law.