V. RAMASWAMI, J. - (1.) LEAVE granted.
(2.) THE first appellant - Tata Engineering and Locomotive Company Limited (hereinafter called the 'Company') is a company registered under the Indian Companies Act, 1913 and the second the appellant is one of its Directors. THE Company is carrying on business of manufacture and sale of motor vehicles and spare parts of motor vehicles and Excavators. THEir manufacturing units are at Pune and Jamshedpur outside the Thane Municipal Corporation Limits. THEy have a bonded warehouse within the municipal limits in which they bring and stock motor vehicles parts and excavators parts from their awn factories at Pune and Jamshedpur. THEy also bring in parts manufactured by their ancillaries within India and also parts imported from abroad. THEse products of parts are brought in bulk and thereafter taken or sent out from the Municipal limits in smaller packings depending on the requirements of the customers in various parts of the country. It is stated that the parts imported or purchased from others and brought in are relatively very small in quantity and the major portion of the activity related to their own factory produced parts. 2A. On and from 1/10/1982 with the notification under Section 3 of the Bombay Provincial Municipal Corporation Act, 1949, the Thane Municipal Council became a Municipal Corporation (hereinafter called the Corporation). Prior to the constitution of the Corporation it was a municipality and were governed by the Thane Municipal Council constituted under the Maharashtra Municipality Act, 1965. Prior to Ist October, 1982 the Thane Municipal Council had granted to the Company current account facilities in respect of payment of octroi under the Maharashtra Municipalities Act, 1965 and the Maharashtra Municipalities (Octroi) Rules, 1968 made thereunder. THE Municipal Council had also granted permission under Rule 10(2) to the Company for maintaining a godown or warehouse of their own. THEre is no dispute that even after the coming into existence of the Thane Municipal Corporation the appellants were permitted to have a warehouse of their own and keep a current account facility without the requirement of immediate payment of octroi at the octroi Naka. In terms of granting those facilities the Company had made as security a cash deposit of Rs. 7 lakhs with the Corporation and had also given a Bank Guarantee for an equivalent amount as agreed to between the Company and the Corporation. However, there is some dispute as to what were the formalities that were dispensed with the matter of claiming refund of the octroi when the goods were exported. But suffice it to say at this stage that the appellants were permitted to carry out their activities of imports and exports under the current account procedure with a facility of unpacking the bulk, repacking and exporting. During the period 1/01/1983to 31st March, 1984 it is stated that the appellants had made 1182 claims for refund. All these claims were rejected by the letters of the Corporation dated 31-8-1983, 12-1-1984, 5-4-1984 and 6-4-1984. They were rejected on the following two grounds: (1) the Company had "sold" the spare parts within the octroi limit (which is conterminous with the Corporation limit) in contravention of R. 25(3)(d) of the Maharashtra Municipalities (Octroi) Rules, 1968 (hereinafter called the 'Rules'), (2) the procedure prescribed for export and the claim of refund had not been strictly followed. The non-compliance with the procedure prescribed referred to in the second ground according to the Corporation were; (i) Form 4 of the Octroi Rules and the original invoices were not submitted, or (ii) forms 11 and 12 filed were incomplete and all the required information were not given or (iii) certificate of the octroi Exit Naka Officer had not been obtained. The rejection of the claim was either on one or more than one or all the grounds mentioned above. The appellants filed a writ petition under Article 226 in the High Court of judicature at Bombay contending that the action of the Municipal Corporation in refusing refund is unconstitutional and illegal and for certain other reliefs. The Division Bench of the High Court which heard the same dismissed the writ petition on the 26/08/1988. It is against this judgment that the present appeal has been filed. It appears that during the hearing of the writ petition the learned counsel appearing for the Corporation did not counter the contention of the Company that the rejection under Rule 25(3)(d) was not correct and the learned Judges have also recorded the same in the judgment. But the learned Counsel for the respondent before us stated that it is not correct to say that he had conceded any point and that since he could not argue that point in view of the decision of another Division Bench of the same High Court in Khandelwal Trader Akola v. Akola Municipal Council, AIR 1985 Bombay 218 which was binding on the Bench which heard the writ petition and also in view of certain observations of this Court in Burmah Shell Company v. Belgaum Municipal 1963 Suppl (2) SCR 216 : (AIR 1963 SC 906) and Hiralal Thakorlal Dalal v. Broach Municipality, 1976 (Suppl) SCR 82: (AIR 1976 SC 1446) he did not press the point. We have, therefore, permitted the point to be argued in this appeal.
(3.) BEFORE we discuss the points in controversy we may state that in the counteraffidavit filed in the writ petition the respondents have admitted that the Company was enjoying the current account facility prior to 1-10-1982 and the respondent-Corporation had also given the said facility to the Company even after 1/10/1982 on their making a cash deposit of Rs. 7 lakhs and furnishing a Bank Guarantee for a like.sum as security for grant of that facility. The respondents had also admitted that the Company had been given permission under Rule 10(2) to maintain their own godown from 12/12/1982. Broadly stated under the current account facility granted, no octroi duty is recoverable in cash from the appellants at the entry octroi naka point. However, the Company was required to submit a statement of goods imported in Form 5 before the 10th of the following month. The officers of the respondent after scrutiny of the statement so filed determine the octroi duty payable thereon and debit the amount in the current account kept and send a demand notice to the Company. The Company is required to pay the amount to the Corporation within 15 days of the determination of duty. The first submission of Mr. Andharujina learned counsel for the appellants was that the sales were not for consumption or use within the octroi limits and that the parts were sold to parties outside the octroi limits and also for consumption or use outside such limits and therefore the rejection of the claims on the ground that the spare parts were sold within the municipal limits and that it amounted to a contravention of Rule 25(3)(d) of the Rules is illegal. Mr. K. K. Singvi the learned counsel for the Corporation on the other hand contended that the meaning of words "sales therein" in the definition of octroi in the Acts and in Entry 52 of List 11 could not be limited to sales of the goods for purposes of consumption or use within the municipal limits.;