MODI INDUSTRIES Vs. UNION OF INDIA

JUDGEMENT

(1.) The plaintiff-company instituted the suit on 3rd May, 1964 in the subordinate Court which has since been transferred lo this Court under the Delhi High Court Act for the recovery of the amount of terminal tax alleged to have been illegally collected by the Central Government. The plaintiff-manufacture Oxygen gas and brings them in gas Cylinders in the Union territory of Delhi and is required to pay terminal tax under the provisions of the Delhi Municipal Corporation Act 66 of 1957 (hereinafter referred to as the Act) and the rules framed thereunder. Under section 178(1) of the Act. the Central Government has been authorised to collect terminal tax through an organisation known as Terminal Tax Agency (hereinafter referred to as the Agency) and the Central Government has under section 180 of the Act been further authorised to distribute the collected amount of tax to various local authorities operating in the Union territory of Delhi. Section 183 of the Act provides for making rules by the Central Government in relation to the levy, assessment and collection of terminal tax. Such rules have been framed and published under Notification dated 7th April, 1968 and a copy of them has been produced at the time of arguments. They are hereinafter referred to as the rules.

(2.) In the plaint, the plaintiff has alleged that for the period from 1st August, 1961 to 3rd December, 1962. it imported Oxygen gas contained in iron cylinders into D-;lhi and the Agency charged it a sum of Rs. 52,454,93 on account of terminal tax levied under item 1 of clause V of the Tenth Schedule of the Act as per details given in Annexure 'A' attached to the plaint. The rate of tax was originally 44 Paisc and was with effect from 1st April, 1961 raised to Rs. 1.60. The plaintiff has in this suit challenged the vires of section 178 (1) of the Act imposing the tax and has contended that the same is unconstitutional and ultra vires as it infringes Articles 301 to 304 of the Constitution read with Article 265.

(3.) The second plea preferred in the alternative is that the Oxygen gas of the plaintiff is not covered by item 1 of classe V of the Tenth Schedule and the same is not a foreign medicine and the tax has been illegally collected. In this context the plaintiff has also alleged that in respect of one of the items, it took an appeal to the appellate authority under rule 36 of the rules and the authority by order dated 12th November, 1963 held that the Oxygen gas in dispute was not chargeable under item 1 of class V of the Schedule, but it did not record a finding as to what other item applied to it. The plaintiff made representations to the defendants for refund of the amount of terminal tax realised from it. The order of the appellate authority has been complied with in respect of the consignment covered by the said order, but in respect of previous recoveries, the defendants have failed to give relief to the plaintiff and so after serving a notice under section 80 of the Civil Procedure Code as well as under section 478 of the Act. it has filed this suit for refund of the amount of terminal tax as detailed in Annexure 'B' attached to the plaint. In paragraph 14 of the plaint, the plaintiff has claimed recovery of Rs. 52,454.93 together with interest at 6 per cent per annum from the date of suit till realisation besides a permanent injunction against the first defendant restraining it from charging the terminal tax on the goods in dispute. In the alternative, the plaintiff has claimed a decree for Rs. 42,619.30 on the ground that if the goods in dispute are chargeable under the residuary article 31 of class IX Miscellaneous of the Tenth Schedule, then only that amount is refundable. The plaintiff also claimed a permanent injunction restraining the first defendant from charging terminal tax on the goods in dispute under any other item except article 31 of class IX Miscellaneous, but this relief was given up by the counsel for the plaintiff during the course of arguments in the circumstances of the case.