SHIKSHAN PRASARAK MANDAL Vs. MUNICIPAL COUNCIL

JUDGEMENT

(1.) The important question which inter alia is debated in this writ petition is whether under the provisions of the Maharashtra Municipalities Act, 1965 (the Act for short) octroi is payable and recoverable only at the point of time of the entry of the goods within the octroi limits and not thereafter.

(2.) A few facts which emerge from the material on record and which are relevant for the decision of this question may be stated at the outset. The first petitioner is a registered Society which is running a college within the municipal limits of the first respondent Municipal Council at Katol (Municipal Council for short). This College has been impleaded as the second petitioner. For the sake of convenience the first and second petitioners would hereinafter be referred to as "the Society" and "the College" respectively. By its resolutions passed on 5-9-1670 under Rule 4(iii) of the Maharashtra Municipalities (Octroi) Rules, 1968 (the Rules for short), the Municipal Council has exempted educational material and equipment for science laboratory imported by the College, from payment of octroi. The college had imported goods from time to time by rail and road from 17-5-1968 onwards without paying the octroi thereon. The Municipal Council states that the College was allowed to take delivery of these goods at the octroi naka without recovering the octroi on its undertaking to produce the relevant bills for the assessment of the tax. On 5-5-1971 by its letter the Municipal Council called upon the College to pay octroi within five days on the goods imported by it as at red in the list annexed to the letter. The petitioners allege that reply was sent on 21-6-1971 requesting the Municipal Council to exempt the College from payment of octroi and that the demand was dropped since the Municipal Council never made any demand till 1975. However, the Municipal Council says that no reply was received from the College and denies that the demand was dropped. On the other hand, it states that it had issued notices to the College on various dates from 5-5-1971 to 22-4-1975, calling upon it to produce bills and make payment of octroi, but in vain. By its notice dated 14-2-1975, the Municipal Council informed the College that it had imported considerable goods without paying octroi from 17-5-1968 to 30-3-1974 by railway and from 11-7-1969 to 7-11-1974 by road as per list attached to the notice and called upon it to bring the original bills in respect of these items, within seven days in its office and arrange to pay the octroi. It seems that the College did not comply with this notice and subsequent notices sent by the Municipal Council. On 6-5-1976, the College complained to the Collector of harassment by the octroi official at the orders of the President of the Municipal Council. It alleged that material needed for University examinations were withheld by the Municipal Council and contended that the Council was not entitled to recover octroi on goods imported 5 to 7 years ago. It seems that after calling both the parties before him the Collector by his letter dated 20-8-1976 directed the College to place the relevant record before the Municipal Council to enable it to assess the octroi. However, it appears that the College did not comply with this direction of the Collector in spite of demands made by the Municipal Council. The Municipal Council again served notices on 12-11-1976 and 31-12-1976 but without effect. It was at this stage that this petition was filed apprehending action on the part of the Municipal Council. Thereafter, the Municipal Council started distress proceedings and seized some moveable articles from the College which were directed by this Court to be released on the College furnishing security. The Municipal Council is demanding a total amount of Rs. 22,874,63 on account of octroi for the period from 1968 to 1975. The petitioners pray for quashing this recovery.

(3.) Before adverting to the rival contentions of the parties, we may take a quick survey of the provision s of the Act and the Rules relating to levy and recovery of octroi. Octroi is a tax on the entry of goods into a municipal area for consumption or use therein, which under section 105(1)(b) it is obligatory on a Municipal Council to impose. Sections 136 to 139 and 141 to 143 deal with octroi. Sections 137, 138 and 141(1) alone are relevant for our purpose. Section 136 lays down that unless otherwise determined by a Municipal Council, its octroi limit should be deemed to be co-terminous with the limits of its municipal area. Section 139 prescribes penalty for evasion of octroi. Section 142 empowers the Municipal Council to direct persons specified therein to keep current account on its behalf of the octroi due from such persons. Section 143 provides for joint collection of octroi by agreement. Sections 137, 138 and 141(1) are in the following terms :