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Dy. Assessor and Collector and ors. Vs. Frizair Corporation - Court Judgment

LegalCrystal Citation
SubjectLimitation;Other Taxes
CourtMumbai High Court
Decided On
Case NumberFirst Appeal Nos. 775 of 1980 and 95 of 1982
Judge
Reported in1984(1)BomCR234
ActsBombay Municipal Corporation Act, 1888 - Sections 217(2) and 218; Bombay Municipal Corporation (Levy of) Octroi Rules, 1965 - Rule 26
AppellantDy. Assessor and Collector and ors.
RespondentFrizair Corporation
Appellant AdvocateS.D. Gavaskar, ;M.V. Shetty, ;N.V. Kamat and ;P.B. Karhadkar, Advs.
Respondent AdvocateS.N. Kapadia, Adv.
DispositionAppeal allowed
Excerpt:
.....under item 52 while they were to be classified as machinery under item 50 liable to be charged with octroi at 2% ad valorem - application rejected - in appeal by petitioners it was contended that respondent's appeal barred by limitation under sections 217 and 218 - tax fixed or charged by officer at 'naka' and not fixed by deputy assessor and collector on rejecting refund application - held, respondent's appeal barred by limitation. - - on or before 15-11-1976. therefore, the appeals filed by the respondents on 28-3-1977 were clearly time-barred......52 while they were to be classified as machinery under item 50 of the said schedule liable to be charged octroi at 2% ad valorem and therefore, octroi duty at the excess rate of 2% was recovered from them which was liable to be refunded.5. the said applications of the respondents for refund were rejected by the dy. assessor and collector by his order dated 9-3-1977 which was received by the respondents on 12-3-1977.6. against the said order of the dy. assessor and collector, dated 9-3-1977, the respondents on 28th march, 1977 filed appeals to the chief judge of the small causes courts, as provided under section 217 of the said act.7. before the additional chief judge of the small causes court two contentions were raised. it was firstly contended on behalf of the municipal corporation.....
Judgment:

D.M. Rege, J.

1. These two appeals under section 217 of the Bombay Municipal Corporation, are against the judgment and order of the Additional Chief Judge of the Court of Small Causes dated 3rd June, 1980. Appeal No. 775 of 1980 is against the reasoned judgment and order of the Additional Chief Judge dated 4-9-1980, allowing the appeal by the respondents being Municipal Appeal No. M. 182/77 under section 217 of the said Act against the order of Dy. Assessor and Collector under section 192(1) dated 9-3-1977 received by respondents on 12-3-77 rejecting the respondents' application for refund under Rule 26 of the Bombay Municipal Corporation (Levy of) Octroi Rules, 1965. Appeal No. 95 of 1982 is against the combined order of the Additional Chief Judge of Small Causes Court dated 5-6-1980 in Municipal Appeal No. M. 183 of 1977 along with 76 other appeals on the same basis as the above-mentioned M. Appeal No. 182 of 1977. In allowing the said Appeal No. M. 193/77 along with the other appeals the learned Additional Chief Judge has adopted the reasoning of his judgment in Appeal No. M. 182/77. In fact by consent of the parties in all the said appeals the evidence led in Appeal No. 182 of 1977 was taken to be evidence in all other cases.

2. Since the facts involved and contentions raised in these two appeals are the same, they are being disposed of by a common judgment.

3. The matter relates to the octroi payable on air conditioners. The respondents are manufactures of Air Conditioners. On 3-10-1976 they brought into the jurisdiction of Greater Bombay, consignment of certain air conditioners. At the octroi check post, they filled in the necessary form and the octroi duty on the said air conditioners was charged and collected at the rate of 4% ad valorem on the basis of the said air conditioners being appliances falling under Item 52 of Schedule H to the Bombay Municipal Corporation Act (hereinafter called the said Act).

4. Thereafter on 21st January 1977, the respondents made an application to the Dy. Assessor and Collector under Rule 26 of the octroi rules for refund of part of the said octroi duty paid by them on the footing that as a result of error or misinterpretation their goods i.e. the air conditioners were classified as appliances under the said Item 52 while they were to be classified as machinery under Item 50 of the said Schedule liable to be charged octroi at 2% ad valorem and therefore, octroi duty at the excess rate of 2% was recovered from them which was liable to be refunded.

5. The said applications of the respondents for refund were rejected by the Dy. Assessor and Collector by his order dated 9-3-1977 which was received by the respondents on 12-3-1977.

6. Against the said order of the Dy. Assessor and Collector, dated 9-3-1977, the respondents on 28th March, 1977 filed appeals to the Chief Judge of the Small Causes Courts, as provided under section 217 of the said Act.

7. Before the Additional Chief Judge of the Small Causes Court two contentions were raised. It was firstly contended on behalf of the Municipal Corporation that the respondents' appeals were barred by limitation by virtue of the provisions of section 217 of the said Act read with section 218 of the said Act. While it was contended by the respondents that the air conditioner was an item of 'machinery' falling within Item 50 of Schedule H to the Act and was not an 'appliance' falling under Item 52 of the said Schedule.

8. It may be mentioned at the initial stage, that prior to 1st April, 1969 octroi duty on 'machinery' falling under Item 50 was 1% ad valorem, while that for 'appliances' falling under Item 52 was 2% ad valorem. The octroi duty both, for 'machinery' and 'appliances' was the same i.e. 2% ad-valorem after 1-4-1969 till 31-7-1976. However, from 1-8-1976 the said duty for 'machinery' under Item 50 remained at 2% ad valorem, while the same for 'appliances' under Item 52 was raised to 4% ad-valorem.

9. The learned Additional Chief Judge while dealing with the question of limitation held that the cause of complaint contemplated under section 218(c) was in the case of appeal against tax and not in case of refusal of tax paid in excess. Rule 26 of the rules framed under section 195-IB laid down the procedure for the refund of the tax wrongly recovered and the present appeal being regarding the refund of the octroi tax, alleged to have been recovered in excess through misconstruction or misinterpretation of the provisions of items 50 and 52, the limitation in this case would start on the day of receiving the rejection letter dated 9-3-1977 on 12-3-1977, and the appeal being filed on 28-8-1977 i.e. within 15 days thereafter, 27-3-1977 being Sunday, as required under section 217(1)(a) of the said Act, the same was in time.

10. On merits, the Court held that the air conditioners of the respondents fell under Item 50 being 'machinery' and not under Item 52 as 'appliances' and, therefore, they were entitled to refund of the excess octroi duty paid by the respondents.

11. Against the said judgment and order of the lower Court, the Corporation has filed these appeals.

12. The learned Counsel for the appellant Corporation has raised two contentions again on the same score : viz.,(1) the respondents' appeals before the Court of Small Causes were barred by limitation; and (2) on merits, the findings of the lower Court that the air conditioner was an Item of machinery falling under Item 50 was wrong. According to the appellants the said goods were 'appliances' falling under Item 52, liable for octroi duty at 4% ad valorem.

13. For the purpose of dealing with the said contentions, certain relevant provisions of the said Act be first referred to; Provisions of section 197 onwards deal with collection of tax. Section 199 speaks about octroi being payable on demand. (Underlining supplied)

14. Relevant part of section 213 provides :---

(a) octroi may be collected under the orders of the Commissioner by Municipal Officer and servants appointed in this behalf ;

(b) x x x x

(2) Octroi shall be collected and refunds thereof shall be made at such places and be managed and controlled in such manner as the Commissioner with the approval of the standing committee shall from time to time direct.'

Important sections are sections 217 and 218. The relevant parts of section 217 which provide for appeal are as under :---

'217(1) ; Subject to the provisions hereinafter contained appeal against any rateable value of tax fixed or charged under this Act shall be heard and determined by the Chief Judge of the Small Causes Court ;

(2) But no such appeal shall be entertain by the said Chief Judge, unless ;

(a) It is brought within fifteen days after accrual of the cause of complaint.

(b) x x x x x

(c) x x x x x

(d) in case of an appeal against tax... ... ...

has been deposited by the appellant with the Commissioner ;

(3) x x x x x

(4) x x x x x

(5) x x x x x

Relevant part of section 218, which provides for the time of accrual of the cause of action, is as under :

218 : For the purpose of the last preceding section,

cause of complaint shall be deemed to have accrued as follows :---

namely :---

(a) x x x x x

(b) x x x x x

(c) in case of an appeal against a tax, on the day when payment thereof is demanded or when a bill therefor is served.

(Underlining supplied)

The above provisions in terms show that if an appeal were to be filed in respect of tax fixed or charged it shall be brought within 15 days from the date of accrual of the cause of complaint and under section 218 Clause (c) quoted above such cause of complaint in respect of the tax fixed or charged shall be deemed to have accrued in case of appeal against tax on the date when the payment thereof was demanded.

15. In this case, a few relevant dates may be set out to appreciate the position on the ground of limitation :

On 31st October, 1976, the officer on duty at the Octroi Naka had collected from the respondents octroi duty, for the air conditioners on the basis that they were appliances falling under Item 52 of Schedule H to the said Act.

On 28-1-1977 the respondents made applications for refund.

By an order dated 9-3-1977, which was received by the respondents on 12-3-1977 respondents' and applications for refund were rejected.

On 28-3-77 i.e. within 15 days of the receipt of the orders of rejection though expiring on 27-3-1977 which was Sunday, respondents filed the said appeals. On these facts, the question was whether the respondents' appeals were in time.

16. The respondents' complaint was as regards the act of the officer at Octroi Naka in wrongfully charging and collecting from them for their air conditioners, octroi at 4% ad valorem on the basis that they were appliances falling under Item 52 of the Schedule H, while according to the respondents, he ought to have charged and collected octroi from them at 2% ad valorem as they were 'machinery' falling under Item 50 of the Schedule. The said tax was fixed or charged and collected on 31-10-1976. Therefore, the respondents' cause for complaint as provided under section 218(c) could be said to have arisen on 31-10-1976 when said tax was demanded. If, therefore, the respondents were to file appeal against such a complaint, then under section 217(2)(a) of the Act, they were to be filed within 15 days of the accrual of the cause of complaint, which was in this case on 31-10-1976, i.e. on or before 15-11-1976. Therefore, the appeals filed by the respondents on 28-3-1977 were clearly time-barred.

17. However, according to the learned Counsel for the respondents, it was only by the order of rejection of the respondent's application for refund dated 9-3-1977, received by the respondents on 12-3-1977, that the tax was fixed and the cause for the complaint for the respondents arose on that date and not on the date on which the officer on duty at the Octroi Naka charged and collected the same from the respondents, as he was only doing an administrative act of collecting octroi. According to him, therefore the period of limitation of 15 days fixed under section 217(2)(a) would in this case commence on 12-3-1977, when the respondents received the order of rejection of the refund application and end on 27-3-1977 which being Sunday, appeal filed on 28-3-1977 was within time.

18. Firstly, there was no basis for the respondents' contention that the officer at the Octroi Naka was merely doing an administrative act of collecting octroi duty. It was not the case that under whatever item of the Schedule the respondents placed their goods, the officer at the octroi naka just had to accept it and merely collect octroi on that basis. If that were so no cause would arise for refund of octroi on the ground of error, misconstruction or misinterpretation. As a matter of fact, in this case although the respondents had claimed that their goods were 'machinery' falling under Item 50, the officer had charged and collected octroi from them on the basis of the goods being 'appliances' falling under Item 52. The basis of the respondents' application for refund was also that the officer at the Naka had wrongfully collected excess octroi from them because of error, misinterpretation or misconstruction. In my view, therefore, it was clear that at the Octroi Naka, when the respondents' goods entered the jurisdiction of the Bombay Municipal Corporation, it was the officer of the Corporation being so empowered by the Municipal Commissioner who fixed, demanded and charged the tax, octroi being always payable on demand and collected it. The cause of the complaint for the respondents was envisaged under section 218 of the said Act arose at the time when such tax was demanded at the Naka and the time of 15 days mentioned under section 217 of the said Act would begin to run from that date only.

19. Further contention of the learned Counsel for the respondent was the period of limitation of 15 days for appeal, provided by section 217(2)(a) of the said Act, was to be calculated from the date of rejection of the respondent's application for refund. The said contention is based on the premise that the officer at the Octroi Naka was an agent merely for collection of octroi and nothing more which I have negatived above. As is evidenced from the refund applications of the respondents made under Rule 26 of the Octroi Rules, the basis of the said application against the officer was for having wrongfully demanded, charged and collected excess octroi as a result of error or misinterpretation or misconstruction. The making of an application for refund was discretionary and there was no provision either in the Act or in the Rules making the filing of an application for refund a condition precedent to the filing of an appeal under section 217. There does not appear to exist any nexus between the two proceedings one being application for refund and the other being filing an appeal, both being independent of each other.

20. The contention of the learned Counsel for the respondents that it was only a result of the order of the Dy. Assessor and Collector rejecting the refund applications that the tax was fixed or charged, had equally no substance, for the tax was already fixed or charged, by the officer at the Naka and the basis of the refund applications was in fact a complaint against such wrongful fixing and/or charging tax by the officer, which was really a cause of complaint as envisaged under section 218 of the Act quoted above for the purpose of limitation. It would not be therefore, correct, to say that the tax was fixed by the orders of Dy. Assessor and Collector, rejecting the respondents' refund application or that the respondents' cause of complaint arose on the date of the order or the receipt thereof so as to calculate the period of 15 days fixed by section 217(2) (a) for filing an appeal from that date.

21. Even otherwise, the time taken for the disposal of refund applications could not be saved as the said applications for refund dated 28-1-1977 were made much after the expiry of the period of 15 days from the cause of the complaint, which arose on 31-10-1976, prescribed for the appeal, which would expire on 15-11-76.

22. In that view of the matter, the reasoning of the learned Additional Chief Judge of the Court of Small Causes for holding that the respondents' appeals were in time, on the basis that they were appeals refusal of tax, paid in excess and not appeals against tax, cannot be accepted.

23. Since I am holding that the appeals to the Court of Small Causes being barred by limitation, were liable to be dismissed on that ground alone it was not necessary to deal with these appeals on merits.

24. The result, therefore, is that these appeals are allowed. Respondents' appeals to the Court of Small Causes being M. 182/77 and M. 183/77 would stand dismissed. Under the circumstances, there would be no order as to costs.

Operation of the order stayed for a period of two weeks from today.


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