KHANDELWAL TUBES, KANHAN Vs. GRAM PANCHAYAT, KANHAN

JUDGEMENT

(1.) By this petition M/s. Khandelwal Tubes, which is a division of M/s. Khandelwal Ferro Alloys Limited, seeks to impugn the letters of demand dated 21-2-1980 (Annexure-A) and dated 3-3-1980 (Annexure-B) as well as the orders dated 11-8-1983 and 4-4-1984 passed respectively by the respondent No. 2 Panchayat Samiti, Parseoni, and the respondent No. 3 Standing Committee, Zilla Parishad, Nagpur. By the letters of demand, which are impugned in this petition, the respondent No. 1 levied octroi tax on mild steel strips also called skelp at the time of importing such goods within the territory of octroi limits under Schedule I framed under rule 22 of the Maharashtra Village Panchayat Taxes and Fees Rules, 1960.

(2.) The facts in brief are that the petitioner manufactures steel tubes in their plant at Kanhan within the jurisdiction of the Village Panchayat, Kanhan-Pipri. The tubes are rolled out of mild steel strips/skelp and then galvanised if so required by the customers or as per the demand in market. The tubes are also then despatched to the various sales outlets outside the territorial limits of the Gram Panchayat, Kanhan-Pipri. The raw material required for manufacturing tubes is the mild steel strips/skelp which are available in huge rolls and are purchased by the petitioner directly from the plants who manufacture them through the Steel Authority of India. One such consignment of mild steel strips/skelp consisting of 18 railway receipts was received at its railway siding at Kanhan Railway Station in the month of Jan., 1980. According to the petitioner, no octroi was payable by them on the aforesaid consignment. However, a letter dated 21-2-1980 was received by the petitioner from the respondent No. 1 Gram Panchayat demanding the octroi on the consignment without specifying the amount or even the time within which the payment was to be made. Subsequent to this letter, another demand letter dated 3-3-1980 soon followed, wherein the demand for payment of octroi was reiterated calling upon the petitioner to pay the amount within 24 hours, but again without specifying the amount. Since the petitioner felt that the demand for octroi tax was contrary to the provisions of the Bombay Village Panchayats Act, 1958 (hereinafter referred to as "the Act") and the Maharashtra Village Panchayat Taxes and Fees Rules, 1960 (hereinafter referred to as "the Rules") an appeal came to be preferred to the respondent No. 2 Panchayat Samiti under sub-section (5) of section 124 of the Act impugning the demand letters. By a cryptic order dated 31-8-1983 the appeal came to be rejected. According to the order, the items on which the respondent No. 1 Village Panchayat demanded the tax were said to be covered by item 19 being goods manufactured from steel. The petitioner had no option, but to file a second appeal before the third respondent Standing Committee of Zilla Parishad, Nagpur. The said respondent in its meeting held on 4-4-1984 passed a resolution dismissing the appeal filed by the petitioner. This order of dismissal was communicated to the petitioner by the Chief Executive Officer of Zilla Parishad, Nagpur, by his letter dated 30-4-1984. It appears that the third respondent solely relied on the legal advice obtained from their counsel in coming to the conclusion that the steel strips/skelp were covered under the term "Hardware" under item 19 of Schedule I of the Rules. The two letters by which the respondent No. 1 sought to impose the octroi as well as the orders passed by the second and third respondents confirming the imposition and collection of octroi are impugned in this petition.

(3.) There is no manner of doubt that the respondents levied octroi on steel strips/skelp as an item of "Hardware" covered under item 19 in Schedule I of the Rules, which reads as "Cutlery and Hardware". It is urged on behalf of the petitioner that the respondents have completely misconstrued item 19 in Schedule I of the Rules inasmuch as steel strips/skelp purchased by them as raw material for manufacturing steel tubes could never be classified as "hardware" as contemplated by the item. It was also urged that the respondents should have interpreted the expression "Cutlery and hardware" as is normally understood by the people dealing in that trade or business, without isolating one from the other. The only question which falls for consideration is, whether the steel strips/skelp were at all taxable as covered under item 19 in Schedule I of the Rules and if not, whether recovery of octroi tax made on these goods is illegal?