Satish Chandra, J. - (1.) THIS and the companion wrist petitions raise the same points. They can conveniently be decided by a common judgment.
(2.) MR . S.C. Khare, who led the various counsel appearing in the different writ petitions, treated the writ petition filed by Messrs. Elgin Mills Co. Ltd., Kanpur, as the leading case. This group of writ petitions challenges the validity of the notification dated 1st April, 1973, whereby the Nagar Mahapalika, Kanpur, imposed octroi duty on a large number of goods. The Elgin Mills Co's. case is that it imported mineral oils, steam coal and spare parts of machinery amongst a large number of other things for manufacturing cotton textiles and cotton piece goods at its factory. The aforesaid commodities were exempt from octroi duty under a notification dated 24th October, 1925, issued by the State Government under Section 128 of the U. P. Municipalities Act. This notification was continued in force by Section 577 (a) of the Nagar Mahapalika Adhiniyam 1959, and so, in any event, the Nagar Mahapalika, Kanpur, could not validly levy the octroi on mineral oil, steam coal and spare parts of machinery. The imposition of octroi was challenged on the following main grounds:- (a) That the procedure prescribed by the Nagar Mahapalika Adhiniyam for imposition of such a tax was not followed. (b) That the petitioner company did not import goods and commodities either for use, consumption or sale within the territorial limits of the Nagar Mahapalika, Kanpur. It was hence not liable to pay octroi. (c) That the levy of octroi violated the freedom of trade guaranteed by Articles 301 and 304 (a) of the Constitution. Since the requirements of Article 304 (b) of the Constitution were not complied with, the levy was unconstitutional.
(3.) THE first contention raised by Sri S.C. Khare, learned counsel for the petitioner, was that in the exercise of power under Section 172 of the Uttar Pradesh Nagar Mahapalika Adhiniyam, 1959, by its sub-section (2) (b) octroi can be levied on goods or animals brought within the city for consumption, use or sale therein, which is co-extensive with the legislative power of the State under Entry 52, List II, of Seventh Schedule of the Constitution, conferring power on a State Government to levy taxes on the entry of goods into a local area for consumption, use or sale therein. It was submitted that the Mill does not import any of the raw materials in the local limits of Kanpur Nagar Mahapalika for consumption, use or sale therein. The contention was that the Mill in its manufacturing process uses raw materials so imported which undergo a process of conversion only, they being neither used, consumed or sold by the Mill. There is no tenability in this contention. The raw materials like steam coal, dyes and chemical cotton yarn are all used by the Mill in manufacturing cotton textiles and cotton piece goods. The argument that these materials only undergo a process of conversion and, therefore, do not get consumed by use but simply under go, transformation is devoid of force. Steam coal is burnt away in the process of producing steam for supplying energy or movement for the machinery or for supplying heat to other manufacturing process and is thus consumed. It does not transform itself into some other material. Likewise, the machinery or spare parts of the machinery are all used and consumed in course of time. Similarly, dyes and other chemicals are consumed. Even for a moment if it were assumed that they merely transform themselves by a process of conversion and they become an ingredient of final product, meant for sale, then such material in a transformed form is sold along with the product. There is no escape from the conclusion that the raw materials imported by the Mill in the limits of Nagar Mahapalika, Kanpur, are consumed, used or sold. The legality of the imposition of octroi on this ground cannot be questioned.;