(1) This is an appeal by the Sholapur Municipal Corporation against a decree of injunction granted by the Courts below in favour of the plaintiff.
(2) The plaintiff filed the suit under the following circumstances: The plaintiff-respondent is a shop at Sholapur dealing in coconut and safety matches. As such dealer, it used to import both these articles and at the time of import paid octroi duty for the same and got import octroi bills on such payment, that from time to time it exported the very articles that it had imported outside municipal limits of Sholapur Municipal Corporation, and that after making such export, it applied for refund of the octrois paid by it. Its allegation is that it attached the receipted import bill and an export certificate relating to the goods signed by the Naka Karkun along with its application for refund. The Commissioner, however, insisted on the plaintiff's furnishing further particulars as per a general circular Ex. 615, issued by the Municipal Corporation on August 24, 1954. By this circular, readers were required to furnish some other extra material along with their application for refund. When the plaintiff was called upon to furnish this extra material in proof of its claim he protested by serving a notice and informing the Municipal Corporation that under the existing rules, it had not right to call for additional evidence in support of its application. As the corporation did not agree with its contention and required the plaintiff to produce that material, the plaintiff ultimately filed the present suit.
(3) The plaintiff claims in the plaint that the circular published by the Municipal Corporation, and which is at Ex. 615, is illegal and unwarranted under the existing rules and it further asked for an injunction against it restraining it from insisting upon furnishing the sales and the purchase bills along with the refund application. It also claimed refund of Rs. 3,460-9-0 for which it had submitted a refund application as required by the rules. The suit was resisted by the Municipal Corporation. According to it, under rule 11(C) of the Sholapur City Municipality Octroi Rules, 1958 the Chief Officer before making an order for refund was required to be satisfied that the claim was just and proper, and it was within his powers to require the additional evidence in support of the refund application. It, is therefore, contended that the circular, Ex. 615, issued by it was in compliance with the existing rules and was not illegal and/or unwarranted. It also contended that the notice under Section 206A of the Bombay Municipal Boroughs Act. 1925, was illegal and that the suit was, therefore, untenable. The trial Court held that the circular was illegal. But ordered refund regarding the claim which fell within six months of the filing of the suit. The Corporation filed an appeal in the District Court and the plaintiff, in so far as the decree was against him, filed cross-objections, the learned Assistant Judge, who heard the appeal, dismissed the appeal of the defendant Corporation and allowed the cross-objections. The appellate court granted a perpetual injunction to the plaintiff and also ordered the refund of the entire amount which it had paid as octroi. The defendant Corporation appeals to this Court.
(4) In order to consider whether the circular issued by the Chief Officer falls within his powers or not, one has to consider the scheme of the octroi rules framed by the Corporation. Though the defendant-appellant is not a Corporation under the Provincial Municipal Corporation Act, it is still governed, so far as the present tax is concerned, by the rules framed under the Bombay Municipal Boroughs Act. 1925. Section 58 of that Act requires the Municipal Authority to make rules not inconsistent with the Act, and among other things, clause (j) requires prescribing the taxes to be levied in the Municipal Borough for municipal purposes, circumstances in which exemption will be allowed, the conditions under which and the extent to which remissions will be allowed and paid, in respect of such taxes . . . . . . .There is a proviso to the section, and it is that, 'no rule or alteration or rescission of a rule made under this section shall have effect unless and until it has been approved by the State Government.' It is under this provision that the Sholapur City Municipality Octroi Rules. 1958, have been framed.
(5) Rule 3 of these Rules defines the Octroi limits of the Municipality and provides for import and export Nakas for the same. Rule 4 provides that a tax on all goods as provided by Schedule A shall, on import thereto, be payable to the Municipality at the rates specified in Schedule (2). It also makes certain exemptions in the imposition of tax, Rule 4(c) provides that except in those cases where a current account is maintained the tax shall be payable to the Import Naka Karkun at the time of the import of the goods, and Rule 5 provides for maintaining of accounts in respect of this tax regarding large business houses by arrangement . Rule 6 provides for arrangements to be made by the Chief Officer Rule 7 provides for preparation and issue of an import bill which has to contain several particulars prescribed in the rule and also dues in respect of the collection of the tax . Rule 8 provides for refunds. The main part of the rule provides that except in the case of grain which cannot be recognised if the bulk is broken, refund of octroi shall be made subject to the conditions of the rules even if the bulk has been broken or the goods have changed hands. Rule 8(1) provides for refund on goods vesting in public authority and rule 8(2) provides for refunds on exported goods. Rule 8(2) reads as follows:-
'Rule No 8(2) Except as aforesaid no refund shall be made in respect of goods, unless-
(a) the goods have been exported within three months next after the date of import and
(b) a claim has not later than seven days next after the export thereof been made for such refund in the prescribed manner to the prescribed officer or authority, and
(c) the claimant has if so required by such officer or authority produced:-
1. a receipted import bill.
2. and an export certificate relating to such goods
(d) when the ownership of the goods to be exported is to be changed the receipted import bill must bear an endorsement from the first owner under the signature indicating the fact of his having relinquished the ownership in respect of goods mentioned in the import bill.
(e) no refunds shall be granted when it is found that the goods do not correspond with those mentioned in the import bill.'
It is not necessary to refer to Rule 9 which concerns itself for goods in transit. Rule 10 provides for export certificate to be granted on demand for exported goods not in transit and Rule 11 relates to the procedure for refunding of octroi on an application. These rules are as follows;-
'Rule No. 10(1)
Export certificate to be granted on demand for exported goods not in transit.
Every Export Naka Karkun whenever goods are brought to his naka which are not declared to be goods in transit or as to which he is unable to satisfy himself as required by rule 9(1) of these Rules and by-laws, shall if the person in charge of the goods so requires furnish to such person an export certificate by ascertaining and noting in the export certificate book in the consecutive order of the pages both on the foil and counter-foil.
(A) The description of the goods according to Schedule A hereto annexed.
(B) The weight or quantity of the goods.
(C) The name of the person exporting the goods.
(D) The time and date of the export and after signing the foil shall detach it and deliver it to the person exporting the goods and shall retain the counterfoil undetached in his export certificate book.
(2) Before issuing the export certificate the export naka karkun shall,
(A) Require the production of the receipted import bill relating to the same
(B) Examine such receipted import bill if produced and shall satisfy himself.
1. That the import bill is in due form and is signed by an Import Naka Karkun
2. That the goods so brought for export are identical with or included in the goods specified in the import bill.
3. That the goods have been brought for export within three months from their import.
Refund by the Chief Officer to person producing export certificate
Refunds shall be made by the Chief Officer without reference to other authority subject to the following conditions:-
(A) That an application in writing is made to the Chief Officer or the Standing Committee within 7 days from the date of the export of the goods in respect of which the refund is claimed.
(B) That the claimant produces with the application
1. That receipted import bill.
2. An export certificate relating to such goods.
(C) That the Chief Officer satisfies himself that the claim is just and proper.
(D) That the export of such goods have taken place within three months next after the date of their import.
(2) At the end of each month the Chief Officer shall report to the Managing Committee every case of refund made by him during that month.
Rule No. 12:- All claims under No. 8(1) of these rules and bye-laws shall be at once allowed on the genuineness of the certificate therein referred to having been ascertained. The gravamen of the reasoning of the Court below is that inasmuch as Rule 8(2) does not refer to any additional evidence for the purpose of the satisfaction of the Chief Officer being required to be furnished by the applicant and as Rule 10 requires the Naka Karkun to take elaborate care in the issue of certificate, the issue of the certificate itself is satisfactory proof of the identity of the goods in the import bill and export certificate. The learned appellate Judge in para 12 says:-
'From this it seems that the satisfaction of the Chief Officer is a double satisfaction which means that the Chief Officer wants to satisfy that export naka clerk white giving the export certificate has acted correctly and properly and even honestly. This the Chief Officer can achieve only through his inspecting or checking staff personally going to both import and export naka clerks and verifying their registers and vouchers or counterfoils or by surprise checks or inspections of the actual issuing of exports certificates.' I fail to understand how such checks can yield any results after the goods have been removed by the importer. It is also difficult to see from what provision in the Act and the rules this inference could be drawn. The learned Judge again because of the provisions of Rules 8(2)(c), 8(2)(d). 11(1)(A) and 11(1)(B), says:-
'The sme provision is repeated in Rule 11(1)(A) and (B) the compliance of which by the claimant obliges the prescribed officer or authority namely, the Chief Officer, to grant refund without reference to other authority. I have already observed in the preceding paragraph that the issue of export certificate by the export naka clerk, is a sufficient proof of the identity of the goods imported and exported. This legal position thus makes it clear that no additional burden of manner of proof can be placed upon the claimant of refund to prove the identity of the goods imported and exported than the one prescribed above under existing rules.' The question is whether the rules takes as a whole are capable of being so construed.
(6) I have already reproduced the wordings of Rule 8(2) which relates to refund on exported goods. It is cast in a negative form and prevents refunds unless, (1) the goods have been exported within three months next after the date of the import. (2) a claim has been made within 7 days of such export in respect of the same to the prescribed officer. and (3) the claimant furnishes before the authority if so required a receipted import bill and export certificate relating to the goods. and if the have changed hands. The import bill bears an endorsement from the first owner under his signature indicating the fact of his relinquishment of the ownwership. While constructing Rule 8, one cannot forget that this rule is intended to lay down principle for refund. It does not lay down the procedure for proving whether the conditions of refunds are satisfied. In view of the fact that the rule is not worded in affirmative that refund shall be made on production of the two things. (1) receipted import bill, and (2) the export certificate, it cannot be construed as has been done by the Courts below. Such paraphrasing is not permissable.
(7) Coming to Rule 10(1). It is indeed true that the naka Karkun has to be satisfied in respect of several items mentioned in Rule 10. He has to ascertain and note in the export certificate book in the order of pages both on the foil and counterfoil the description of the goods. The weight or quantity of the goods, the name of the person exporting the goods, the time and date of the export, and then deliver it to the exporting party. He is further required to examine the receipted import bill relating to the same and satisfy himself that the import bill is in the due form and is signed by an Import Naka Karlun, that the goods are identical and are included in the goods specified in the import bill, and that the goods have been brought for export within three months from their import. This Rule also does not state that merely because an export certificate has been given by the Export Naka Karkun, the party claiming refund shall be entitled to the refund of the amount due. Moreover, it is followed by Rule 12, which I will consider later. The refunding authority is entirely a different authority and the procedure for the actual refund is prescribed by Rule 11.
(8) Rule 11, in the first instance, lays down a condition that the application must be made within 7 days. The second condition is that along with the application, the applicant must produce the receipted imported bill relating to the goods. The third condition is that the Chief Officer is satisfied that the claim is just proper and that export of such goods has taken place within three months next after the date of the import Rule 12 is very important in this context. It requires that the claims must be allowed on the genuineness of the certificate being ascertained. This necessarily indicates that certificate is not conclusive as supposed by the Court below. The lower Courts do not seem to have even considered Rule 12 at all.
(9) Merely because in some measure the rules overlap and certain duties are imposed on the Naka Karkun. It is impossible to accept the suggestion that condition (C) of Rule 11(1) 'that the Chief Officer satisfies himself that claim is just and proper'. Is merely a redundant condition. as the learned Judges below seem to think. All the rules must be construed as a whole and in their proper context. There is no limitation on the powers of the Chief Officer on the manner in which he shall be satisfied about the claim being just and proper and the certificate genuine. The reasoning of the learned appellate Judge is somewhat curious. In para 12, he poses a question as to the method adopted by the Chief Officer on the question whether the claim is established to his satisfaction. He says that because the Naka Karkun has under Rule to carry out certain duties in respect of the export of goods and is required to note all the particulars mentioned therein has to be satisfied about the matters prescribed therein, 'the necessary details about the goods are ready provided in the receipted import bill which has ro conform with the provisions in Rule 10(1). Only after satisfying on all these points that the export naka clerk issues the export certificate', and then he draws the conclusion that no further proof of the identity of the goods in the import bill and the export certificate is required by the Chief Officer, but he must depend on his private investigating machinery for doing this. As I have already pointed out above there is not a single rule which anywhere provides that merely on production of these two documents, the claimant would be entitled to a refund of octroi tax which has already paid. An important condition in Rule 11 is that the Chief Officer must be satisfied about the justness and about the propriety of the claim and under Rule 12 about the genuiness of the certificate. He is an authority who is entirely different and independent of the Naka Karkun and this has been made evidently in order that no dealer should be enabled to collude with a nake Karkun and make false applications for refund. If the meaning that is sought to be made out by the Court below were really intended by the farmers of the rules, the simplest provision would have been that as soon as these documents were produced by the claimant, a refund shall be made. As I have stated above earlier, Rule 8 cannot be paraphrased to mean that refund shall be made on the production of the receipted import bill and an export certificate relating to the goods. So far as Rule 8 is concerned, it lays down the principle of refund and has nothing to do with the proof of the fact whether or not the conditions are satisfied.
(10) If the Chief Officer has to be satisfied as above, then it is evidently within his power to call upon the dealer to produce such other evidence as he got in his possession to satisfy him that the goods were actually exported. The Chief Officer in each individual case can call down the dealer to do so. It is only for the sake of convenience and for earlier disposal of claims of refund that a general circular has been issued by the Chief Officer of the Municipality. It is as follows.
'In order that the work of refund of the amount paid for octroi may be easy, it is requested that persons claiming refund should observe the following suggestions:
(1) When asking for export certificate on the basis of import receipr, the following information should be noted and signed.
(a) Number of export articles, weight and if import duties paid on the basis of price,then its actual price.
(b) To whom the goods are sent, his name,address and name of the town.
(2) Similar information must be furnished while preparing transit receipt.
(3) At the time of making refund application, copies of bills of purchase and sales should be produced along with the application.
(4) As far as possible, for every export certificate a separate application for refund should be sent.'
If these directions are carefully examined they contain nothing except production of such material as would satisfy the Chief Officer about the actual export of the goods. I do not see anything extraordinary in this circular which would necessitate amendment of the rules.
(11) Accordingly, in my view, having regards to the rules, the Chief Officer was within his rights in requiring the plaintiff to produce the evidence required by him. The plaintiff is thus not entitled to the injunction sought.
(12) As to the claim for refund of the octroi which it has already paid, the Chief Officer has yet to determine the question. The plaintiff rushed to the Court and asked the Court to direct the refund of the amount which is really not the function of the Court under the Act. If the plaintiff now furnishes proof as required by the Commissioner, the Commissioner will decide and determine upon the claim of the plaintiff.
(13) In the result, I allow the appeal, set aside the decrees made by the Courts below and dismiss the suit with costs throughout, subject to the observations in the previous para.
(14) Appeal allowed.