HINDUSTAN COCA-COLA BEVERAGE PVT LTD Vs SANGLI MIRAJ & KUPWAD MUNICIPAL CORP&ORS
Bench: MUKUNDAKAM SHARMA,ANIL R. DAVE, , ,
Case number: C.A. No.-004917-004917 / 2011
Diary number: 1545 / 2011
Advocates: PRAVEEN KUMAR Vs
VISHWAJIT SINGH
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REPORTABLE
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4917 OF 2011 [Arising out of S.L.P (C) No. 16769 of 2011]
CC No. 1039 of 2011
Hindustan Coca-Cola Beverage Pvt. Ltd. …. Appellant
Versus
Sangli Miraj & Kupwad Municipal Corporation & Ors. ....Respondents
WITH
CIVIL APPEAL NO. 4918 OF 2011 [Arising out of S.L.P (C) No. 16771 of 2011] CC No. 2284 of 2011
JUDGMENT
Dr. MUKUNDAKAM SHARMA, J.
1. Delay condoned.
2. Leave granted.
3. As both the appeals involve identical question of law the same
were heard together and are disposed of by this common
judgment. Both the present Civil Appeals are filed against the
judgment dated 08.10.2010 in the Writ Petition No. 5510 of
2010 and against the judgment dated 08.10.2010 in the Writ
Petition No. 5867 of 2010, passed by the Division Bench of
the High Court of Judicature at Bombay whereby the Division
Bench has dismissed the writ petitions filed by the appellants
herein challenging the validity of the bill issued by the
Respondent Corporation, levying and demanding octroi from
the appellants on glass bottles and crates.
4. In the Civil Appeal filed against the judgment dated
08.10.2010 in the Writ Petition No. 5510 of 2010 the
appellant company is, inter alia, engaged in the manufacture
of aerated beverages marketed under different brands. The
products of the company are distributed from its plant
located at Pirangut Taluka, Mulshi, District Pune to amongst
other places like Sangli Miraj and Kupwad.
5. According to the appellant, their products are distributed and
sold in returnable and reusable glass bottles. Glass bottles
are stored in plastic crates. Glass bottles and crates are
owned by the appellant. They are never sold to any
distributor or retailer. Once the product in the glass bottles
kept in crates is consumed, glass bottles along with crates are
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returned to the appellant for filling after cleaning and
washing them. The appellant pays octroi levied on the aerated
beverages when they enter octroi limits of Municipal
Corporations. The impugned bill has the effect of levying
octroi separately on the glass bottles and plastic crates
utilized by the appellant to pack and transport the aerated
beverages manufactured by them. The aerated beverages
cannot be separated from bottles and crates. The bottles and
crates are neither consumed nor sold but are returned. The
glass bottles and plastic crates are both reusable and durable
and are repeatedly used by the appellant. Moreover, it is
alleged that the cost of the glass bottles and crates is
amortized and included in the retail sale price of the aerated
beverages. Hence, it was suggested that Octroi cannot be
levied on the value of the glass bottles and crates and the
impugned bills are, therefore, illegal and arbitrary.
6. The said challenge did not find favour with the High Court
and the High Court after placing reliance on the judgment of
this Court in the case of Acqueous Victuals Private Limited
v. State of Uttar Pradesh & Ors. reported at (1998) 5 SCC
474 dismissed the Writ Petition. However, liberty was granted
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to the appellant company to claim refund by filling
appropriate application, in case, the bottles and crates are
not sold, used, or consumed in the Municipal limits of the
respondent-corporation, that is to say, if they have not finally
rested in the Municipal limits of the respondent-corporation;
and a further direction was issued that if such an application
is filed, the same will be considered in its proper perspective
by the concerned authority and if a case is made out the
refund shall be granted.
7. We heard the learned senior counsel appearing for the parties
at length. Similar submissions, as were made before the High
Court, were also made before this Court. It was submitted by
the learned senior counsel appearing for the appellant that
plastic crates and glass bottles are durable and reusable.
They are used a number of times by the appellant. The bottles
and crates are not sold. They are not consumed. The bottles
are used but again sent out and refilled. The crates are also
similarly sent back.
8. It was further submitted that as per the definition of the term
octroi as found in Section 2(42) of the Bombay Provisional
Municipal Corporation Act, 1949 (for short “BPMC Act”),
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“octroi” means a cess on the entry of goods into the limits of a
city for consumption, use or sale therein and as in the
present case there is no consumption, use or sale, the levy of
octroi is unjustified.
9. Strong emphasis was placed on the submission that, the cost
of the bottles and crates is amortized and included in the
retail sale price of the aerated beverage. Since the cost of
glass bottles and crates is already included in the price of the
beverage on which the octroi is levied and collected, no
further octroi can be levied on the glass bottles and crates.
10.All the above said submissions and contentions were refuted
by the learned senior counsel appearing for the respondents.
It was submitted that the issue in the present case stands
settled by this Court, long back, in the case of Acqueous
Victuals (supra) and the High Court has rightly dismissed
the Writ Petition by following the ratio laid down in the said
judgment of this Court. Further, it was submitted that the
appellant cannot be aggrieved by the said levy of the octroi on
glass bottles and crates, as in case the appellant can satisfy
the authorities that they were not used, consumed or sold in
the Municipal limits but were taken out for recycling, in the
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said case they can claim refund and as such are not
burdened with the liability of octroi on such bottles and
crates.
11.Before we proceed further it would be relevant to refer to the
judgment of this Court in the case of Acqueous Victuals
(supra). In Acqueous Victuals (supra), the petitioner-
Company was engaged in the business of bottling soft drinks.
After bottling these beverages at its plants at Bareilly, the
petitioner-Company distributed the same to wholesalers in
Districts of Uttar Pradesh. Section 128 of the Uttar Pradesh
Municipalities Act, 1916 conferred powers on the Municipal
Boards to impose octroi on goods or animals brought within
the Municipality for consumption, use or sale therein.
Byelaws of the Municipalities provide for levying octroi on soft
drinks. As the Municipalities were seeking to levy Octroi on
the basis of gross weight not only of the beverages but also of
the bottles containing the beverages which were brought
within the Municipal limits, the petitioner-Company filed writ
petition in the Allahabad High Court challenging the said
levy. According to the petitioner-Company, the bye-laws
provided for levying octroi on soft drinks but not on the
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weight of bottles which contained those soft drinks. The High
Court dismissed the petition. The High Court held that the
bottles in which the soft drinks were carried could be said to
have been used within the Municipal limits for the purpose of
storing them till they were ultimately utilized by the
consumers concerned. Therefore, even the weight of bottles
containing these liquids could legitimately be taken into
consideration by the Municipalities for imposing the octroi
duty thereon.
12.Dealing with the petition challenging the High Court's
decision, this Court referred to Section 128 (1) (viii) of the
Uttar Pradesh Municipalities Act, 1916 which states that
subject to any general rules or special orders of the State
Government in this behalf, the taxes which a Board may
impose can consist of Octroi on goods or animals brought
within the Municipality for consumption, use or sale therein.
The rates of levy were given in Schedule I. Schedule I referred
to aerated water but not to aerated water bottles. This Court
considered the main charging provision i.e. Section
128(1)(viii) which stated that Octroi can be charged on goods
which were brought within the Municipality for consumption,
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use or sale and held that packing which contains the
consignment of octroiable beverages would remain liable to be
included in the taxable gross weight of consignment provided
such packing is shown to be brought within the Municipal
limits for the purpose of its sale, consumption, or use within
the Municipal limits. But, if the packing is found to have been
taken out of the Municipal limits after its contents were
discharged within the Municipal limits, then the weight of
such packing cannot be brought to octroi tax or if such tax is
levied at the entry point, it would become liable to be
refunded. This Court further observed that the claim of
refund would involve disputed questions such as whether
such consignments with the packing were actually sold with
their contents to the local consumers, or wholesalers,
whether they were consumed or used up within the local
limits or whether they were used for an indefinite period and
ultimately rested within the Municipal limits and had not
been taken out. These disputed questions of fact are required
to be examined and adjudicated upon when claims for refund
are considered by the appropriate authorities.
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13.While arriving at the above conclusion, this Court referred to
the Constitution Bench judgment in Burmah Shell Oil
Storage & Distributing Company of India Limited v.
Belgaum Borough Municipality reported at AIR 1963 SC
906 where it was dealing with the question whether octroi
was leviable on the goods brought within the limits of
Belgaum for consumption by Burmah Shell, for re-export and
for sale. While interpreting the words found in Entry No.52 of
the State list in the Constitution dealing with taxes on the
entry of goods into a local area for consumption, use or sale
therein, this Court observed that the two expressions, “use”
and “consumption” together connote the bringing in of goods
and animals with a view to their retention either for use
without using them up or for consumption in a manner which
destroys, wastes or uses them up. This Court observed that
this authoritative pronouncement of the Court makes it clear
that before a Municipality can impose octroi duty on any
commodity, it has to be shown that the commodity concerned
was brought within the Municipal limits for consumption,
that is, for being totally used up so that it ceases to exist
within the Municipal limits or it was to be used for an
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indefinite period within the Municipal limits so that it
ultimately rests within the Municipal limits and does not go
out subsequently, or the commodity concerned must be
shown to have been brought within the Municipal limits for
the purpose of sale within the said limits.
14.This Court also referred to its judgment in S.M. Ram Lal &
Co. v. Secretary to Government of Punjab reported at
1969 UJ 373 (SC), where this Court was dealing with the
question, whether the wool imported within the Municipal
limits of Faridabad in raw form for dyeing within the
Municipal limits could be said to have been used in the
Municipal limits or consumed therein so as to attract Octroi
duty thereon. This Court observed that the word 'use' occurs
in Entry No.52 of List II of Seventh Schedule sandwiched
between 'consumption' and 'sale', and it must take colour
from the context in which it occurs. This Court further
observed that the coupling of three words 'consumption', 'use'
and 'sale' connotes that the underlying common idea was that
either the title of the owner is transferred to another or the
thing or commodity ceases to exist in its original form.
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15.However, this Court did not approve of the High Court's
reasoning that the bottles and shells were used as containers
till final consumption of contents and, therefore, the bottles
which contained the beverage were used till the final
consumption stage and were, therefore, liable to levy of Octroi
leaving aside the question whether they were brought within
the Municipal limits for consumption thereof. Referring to
Burmah Shell's case, this Court held that though the use of
the bottles may not amount to its destruction or total using
up, but to attract octroi, the bottles must have finally rested
within the Municipal limits and not taken out. This Court
concluded that to attract the levy of octroi on the goods
brought within the Municipal limits, there must be proof of
the fact that the goods got consumed completely within the
Municipal limits or were used for an indefinite period in such
a way that they come to rest finally and permanently within
the Municipal limits or sold within the said limits.
16.With reference to the facts of the case before it, this Court
observed that the moot question was whether the bottles
which were filled in with beverages imported for sale within
the Municipal limits could be said to have been consumed or
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used within the Municipal limits. The question whether the
bottles were really sold by the petitioner-Company within the
Municipal limits requires resolution on consideration of
relevant facts. If empty bottles are taken out of Municipal
limits, they cannot be said to have been consumed or
destroyed within the Municipal limits. The question which
needs investigation is whether out of the total consignment of
bottled beverages imported within the Municipal limits, the
entire consignments of the very bottles after getting emptied
got re-exported or whether some of the said bottles forming
part of the original consignments got destroyed by way of
breakage, etc. or were never returned by the consumers
concerned and only rest of the imported bottles were re-
exported by enabling the consumers and retailers or
wholesalers to get refund of the price of the bottles paid by
way of advance security from the petitioner-Company on
return of these empty bottles for recycling. It is axiomatic that
if the bottles in which beverages were brought within the
Municipal limits for sale to consumers had themselves got
destroyed by breakage, etc. or were not returned by
consumers, they could be said to be consumed within the
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Municipal limits and, hence, there would be no occasion for
their export at any time thereafter. In the said circumstance
the intention with respect to the fact that whether or not, the
said goods were brought for consumption and usage will
become clear only at the subsequent stage i.e. when the
bottles are re-exported. In the view that it had taken, this
Court held that if the petitioner-Company satisfied the
authorities concerned that the bottles containing the original
consignments after getting emptied within the Municipal
limits were actually taken out of the Municipal limits for
recycling, then it would be entitled to claim proportionate
refund of the octroi duty assessed on the weight of such
empty bottles only subject to the burden of such amount of
duty not being shown to have been passed on to consumers
of beverages or to anyone else, i.e. there is no unjust
enrichment.
17.Setting aside the High Court's order to the above extent, this
Court permitted the petitioner-Company to lodge its claim for
refund by producing evidence on the following points:
“(a) Nature of the consignments concerned with their dates and the number of bottles
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packed with beverages brought within the municipal limits with their weight;
(b) Proof regarding the fact that these bottles were not sold within the municipal limits to wholesalers, retailers or to any other person;
(c) Number of bottles covered by the consignments concerned which were subsequently taken out as empty bottles beyond the municipal limits for recycling and weight of such empty bottles;
(d) Whether the bottles which are actually found to have been taken out of the municipal limits were the very same bottles containing beverages brought within the municipal limits by way of relevant consignments;
(e) Whether the value of such bottles and amount of octroi duty on their weight was passed on to the consumers or not?”
18.In our considered opinion the present case is squarely
covered by the above said decision of this Court in the case of
Acqueous Victuals (supra), and the said decision was
passed on the similar facts as of the present case, the only
difference being that in the case of Acqueous Victuals
(supra) octroi was computed and levied on the basis of the
weight of the bottles and crates, whereas in the present case,
the impugned bill seeks to levy octroi on the basis of value of
the bottles and value of the crates. It was suggested by the
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learned senior counsel appearing for the appellant that due to
the said difference the judgment in the case of Acqueous
Victuals (supra) will not be applicable to the present case. In
our opinion the said difference of the mode of computation of
the octroi will not affect the applicability of the ratio of the
said decision to the present case and the same applies to the
present case on all fours.
19.It was also suggested by the learned senior counsel appearing
for the appellant that the decision in the case of Acqueous
Victuals (supra) cannot be said to be the correct law as the
said decision did not correctly appreciate the law laid down
by the Constitution Bench of this Court in the case of
Burmah Shell Oil (supra). In order to appreciate the said
submission it would be appropriate to extract the relevant
portion of the judgment in the case of Acqueous Victuals
(supra) wherein this Court has elaborately considered the law
laid down by the Constitution Bench in the case of Burmah
Shell Oil (supra):-
“15. In view of the aforesaid decision, it becomes obvious that the word “retention” is held to be a synonym with the word “repose”, meaning thereby the article concerned must finally rest within the municipal
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limits. In the light of the aforesaid judgment of the Constitution Bench of this Court, therefore, it is obvious that before a municipality can impose octroi duty on any commodity, it has to be shown that the commodity concerned was brought within the municipal limits for consumption, that is, for being totally used up so that it ceases to exist within the municipal limits themselves or it was to be used for an indefinite period within the municipal limits so that it ultimately rests within the municipal limits and does not go out subsequently, or the commodity concerned must be shown to have been brought within the municipal limits for the purpose of sale within the said limits. Having thus laid down the aforesaid legal position concerning the imposition of octroi in the penultimate paragraph of the Report at p. 234, the Court observed that the Burmah Shell was liable to pay octroi tax on goods brought into local area (a) to be consumed by itself or sold by it to consumers direct and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumers bought them for use in the area or outside it. The Company was, however, not liable to octroi in respect of goods which it brought into the local area and which were re-exported. But to enable the Company to save itself from tax in that case it had to follow the procedure laid down by rules for refund of taxes.
16. The aforesaid authoritative pronouncement of the Constitution Bench of this Court, therefore, sets at rest the controversy in the present case. If it is the case of the writ petitioner that during the relevant period from 1980 to 1987 it brought within the municipal limits of the four respondent-Municipalities beverages packed in bottles and the bottles were not sold within the municipal limits and after the beverages were taken out of these bottles, these very bottles were returned to the petitioner and were taken back to Bareilly, then for claiming the refund of the octroi paid on the weight of these bottles during the relevant period when the consignments entered the municipal limits from time to time, the writ petitioner had to follow the procedure laid down by the Municipality concerned under its rules for refund of taxes and had to comply with the statutory gamut of these rules. It had also to show that the burden of disputed octroi duty was borne by it and was not passed on to consumers of beverages contained in these bottles. In other words, it would not be guilty of unjust enrichment if refund was granted. If the refund claim on furnishing the relevant proofs was not
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ultimately granted, the remedy of appeal provided under the rules had to be followed.”
20.On a minute and detailed perusal of the judgment of the
Constitution Bench in the case of Burmah Shell Oil (supra),
and the above noted inference drawn in the case of Acqueous
Victuals (supra), we do not agree with the said submission of
the appellant. We respectfully agree with the above noted
inference drawn and are of the considered opinion that this
Court in Acqueous Victuals (supra) has correctly
appreciated the law laid down by the Constitution Bench in
Burmah Shell Oil (supra).
21.Though it was vehemently argued that the cost of the bottles
and crates is amortized and included in the retail sale price of
the aerated beverage but no facts were placed before the High
Court in that regard. Moreover, even in case the same were
placed, the same being disputed question of fact could not
have been gone into by the High Court exercising the
jurisdiction under Article 226 of the Constitution of India.
22.In the present case, the definition of “octroi” is contained in
Section 2(42) of the BPMC Act. Relevant entry in respect of
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aerated water in the octroi schedule under the said Rules is
at serial no.11 (D). Relevant entry as regards bottles is at
serial no.52. Relevant entry as regards barrel crate and
individual crate, is at serial No.53E. The said Rules contain
detailed provisions under which an importer can make an
application for refund.
23.Accordingly, in our opinion, as also laid down by this Court
in Acqueous Victuals (supra), in case the appellant-
company is sending out the same bottles for recycling and if
the bottles and crates are not sold, used, or consumed in the
Municipal limits of the respondent-Corporation, that is to say,
if they have not finally rested in the Municipal limits of the
respondent-Corporation in which they are imported, the
appellant-company can always make an application for
refund under the said Rules. The appellant-company will
have to produce evidence on the points detailed in the
Acqueous Victuals (supra) which we have quoted
hereinabove. As submitted by the appellant, in case, the cost
of the bottles and crates is amortized and included in the
retail sale price of the aerated beverage, the evidence can also
be placed in that regard, in order to claim refund on any such
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amount. Besides, it was also pointed out that bottles in which
beverages are brought are recycled and used bottles and
therefore levy of octroi cannot be at the same rate as that of
the new bottles. These are also disputes on the facts, which
would require production of evidence. On the appellant-
company making an application for refund, the concerned
authority will consider it in its proper perspective and if a
case is made out shall grant refund.
24.Needless to say, in case, the appellant is aggrieved by the
valuation of the bottles and crates on the basis of which the
impugned bill is issued they are at the liberty to file
objections before the appropriate authority, and the
appropriate authority will adjudicate the same in accordance
with the law, as against which if still aggrieved, further
remedy as available could be resorted to.
25.At this stage it is pertinent to mention that during the
hearing, the appellant has expressed its concern about the
mechanism by which the said levy could be computed and
collected as according to them the present procedure is very
cumbersome and unworkable at both the ends, and moreover,
the same would result into incurring of huge managerial time
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and administrative cost. After the present judgment was
reserved for pronouncement, the appellant has also given
proposals to the respondent corporation for devising a suitable
and convenient mechanism. The said request on the part of
the appellant requires consideration. Accordingly, the
responded corporation shall consider the said proposal in
accordance with law and even otherwise on their part devise a
suitable, convenient and workable mechanism for levy and
collection of octroi.
26.With the above said directions both the appeals are
dismissed with no order as to costs.
.............................................J [Dr. Mukundakam Sharma]
.............................................J [Anil R. Dave]
New Delhi, July 4, 2011.
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