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Municipal Borough of Belgaum Vs. Durga Prasad Company - Court Judgment

LegalCrystal Citation
SubjectOther Taxes;Civil
CourtKarnataka High Court
Decided On
Case NumberR.S.A. No. 456 of 1973
Judge
Reported inILR1985KAR1004
ActsBombay Municipal Boroughs Act, 1925 - Sections 61(1) and 206A
AppellantMunicipal Borough of Belgaum
RespondentDurga Prasad Company
Appellant AdvocateG.D. Shirgurkar, Adv.
Respondent AdvocateS.K. Joshi, Adv. for ;W.K. Joshi, Adv.
DispositionAppeal allowed
Excerpt:
.....act -- limitation for suit six months commencing after expiry of 24 hours of collection of octroi duty.;octroi was collected although the betelnuts were not for use and sale within municipal borough limits but were for export. the suit for re-fund of octroi collected was held barred by limitation not having been filed within six months from accrual of cause of action. the lower appellate court decreed the suit on the ground collection being ultra vires the powers, the collection could not be said to be in execution of the act to attract bar of limitation. in appeal, it was contended that collection being in execution of the act, cause of action for refund arose within 24 hours of collection and suit had to be filed within six months, present suit being barred; resisted on the ground..........the betelnuts by passing vengurla toll naka which would be the importing end and then by passing goods naka which is: the exporting end to reach the railway station. it may be stated here that these two nakas find place in the octroi rules and bye-laws governing the appellant-the belgaum municipal borough. he brought betelnuts for such export between 9-2-1959 and 13-6-1959 from karve shop. octroi was collected at vengurla naka as per receipts exhibits 57 to 95 on various dates though the betelnuts were not for use and sale within the limits of belgaum municipal borough but were for export and in fact were exported. he applied for refund of the octroi amount, but there was no favourable response from the defendant. ultimately he issued a notice through his advocate on 21-8-1959 as per.....
Judgment:

Nesargi, J.

1. This appeal is directed against the judgment and decree dated 29-9-1972 passed by the Principal Civil Judge, Belgaum, in R. A. No. 202 of 1965 allowing the appeal and setting aside the judgement and decree dated 17-3-1965 passed by the Munsiff, Belgaum, in Reg. O.S. No. 68 of 1962.

2. The defendant in the said suit is the appellant. The suit by the Respondent-firm was dismissed by the Munsiff, but decreed by the Lower Appellate Court.

3. The facts held proved are that the plaintiff was dealing in betelnuts and was having two shops, one in Belgaum and the other at Karve. He was exporting betelnuts. After securing betelnuts at Karve shop he used to convey them to Belgaum Railway Station to export outside the Belgaum Municipal Borough. To do so, he had to convey the betelnuts by passing Vengurla Toll Naka which would be the importing end and then by passing Goods Naka which is: the exporting end to reach the Railway Station. It may be stated here that these two Nakas find place in the Octroi Rules and Bye-laws governing the appellant-the Belgaum Municipal Borough. He brought betelnuts for such export between 9-2-1959 and 13-6-1959 from Karve shop. Octroi was collected at Vengurla Naka as per receipts Exhibits 57 to 95 on various dates though the betelnuts were not for use and sale within the limits of Belgaum Municipal Borough but were for export and in fact were exported. He applied for refund of the octroi amount, but there was no favourable response from the defendant. Ultimately he issued a notice through his Advocate on 21-8-1959 as per Exhibit 100. The defendant sent its reply dated 23-9-1959 as per Exhibit 102. He instituted the suit for recovery of the sum of Rs. 3,186-99 towards the refund of the actual amount of octroi collected and six per cent interest from 21-8-1959 the date of notice.

4. The defendant contended that it was not liable to refund the amount as betelnuts were not meant for export but were meant for sale and use within the Municipal limits of Belgaum. Other contentions were also raised. One of the most important contentions was that the suit was bad in law in view of Section 206A of the Bombay Municipal Boroughs Act, 1925 (hereinafter referred to as the Act).

5. Both the Courts below have, on facts, concluded that the plaintiff-firm owned two shops as contended by him, that the betelnuts covered by the receipts Exhibits 57 to 95 had been brought for 'rapid transit' for export outside the limits of Belgaum Municipal Borough and that the amounts mentioned in those receipts have been levied, as octroi duty.

6. The Trial Court held that in view of Section 61 of the Act and the Rules and Bye-laws alreadyrefered to above, the transaction fell within the ambit of Section 206A of the Act and the suit having not been filed from six months from the date when the cause of action arose, it was barred by limitation.

7. The Lower Appellate Court has, without going into the relevant Sections of the Act and the Octroi Rules and Bye-laws, concluded that collection of octroi by the defendant was ultra vires the powers under the Act and therefore it could not, in law, be said that the defendant had, inexecution of anything in the Act, collected the octroi duty and therefore Section 206 A of the Act would not be attracted and as such the suit ought to be decreed as not being barred by the period of limitation.

8. Both the Courts below have applied Article 62 of the Limitation Act 1908 as the Article would that be applicable. Whether Article 62 or Article 120 of the Limitation Act would apply would not be of much consequence under the -facts and circumstances of the case because the suit has been filed on 12-2-1962 within the expiry of the period of three years in regard to majority number of receipts out of Exhibits 57 to 95.

9. The only question of law urged before me is applicability of Section 206A of the Act. Sri G.D. Shirgurkar, Learned Advocate appearing on behalf of the Appellant-defendant, pointed out that under Section 61(1)(n) of the Act the defendant is empowered to collect octroi fixing the octroi limits and station and so onand as per Octroi Rules and Bye-laws also the defendant is enjoined to collect octroi. He argued on this basis that collection of the octroi duty concerned in this case at Vengurla Naka is in execution of the Act and therefore Section 206A of the Act applies. He nextly argued that before a suit is instituted as against the defendant, a notice has to be given in writing as per Section 206A of the Act and it is also necessary that the suit is commenced within six months next after the accrual of the cause of action. He pointed out that cause of action arose to the plaintiff of claiming refund of the octroi duty within 24 hours of collection of each item of octroi duty under Exhibits 57 to 95 as betelnuts namely, the goods, were in 'rapid transit'. He concluded his argument by pointing out that the suit as has been admittedly filed on 12-2-1962 is much beyond the period of six months provided in Section 20 A and therefore the decree of the Trial Court ought to be restored.

10. Sri S. K. Joshi, Learned Advocate appearing on behalf of the Respondent-plaintiff, argued that collection of octroi duty in regard to commodities not meant forconsumption, use or sale within the limits of Belgaum Municipal Borough, is ultra viresthe, powers of the Municipal Borough and therefore ultra vires the provisions of the Act and as such the collection of octroi duty in question cannot, in law, be considered as any act done in pursuance of execution of the provisions of the Act. This referred is the reasoning accepted by the Lower Appellate Court.

11. Section 61(l)(n) empowers the Municipal Borough to collect octroi duty on goods brought into the limits of the Belgaum Municipal Boroughfor consumption, use or sale. Now the question is whether in view of concurrent findings on facts recorded by the two Courts below, it has to be, in law, considered that the collection of octroi duty in question was beyond the powers of the defendant Municipal Borough.

12. It is seen from the Octroi Rules and Bye-laws that there is regulation in collecting octroi duty on goods brought into the limits of Belgaum Municipal Borough. 'Goods in rapid transit' is defined in Rule 2(f) to mean goods exported within 24 hours next after their import. Collection of octroi duty pertaining to such goods is provided in Rule 10. Rule 10 readsas follows :

10 (1) Every Export Naka Karkun, whenever goods are brought to his Naka for export and are declared to be goods in rapid transitshall;

(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 --

(i) that the import bill is in due form and is signed by an import Naka Karkun.

(ii) that the goods so brought for export are included in the goods specified in the import bill.

(iii) that the goods are stated in the import bill to have been declared at time of import as 'goods in transit.'

(iv) that the goods have been brought for export within 24 hours next after the date and hour on which they appear from the import bill to have been imported; and

(v) that the amount claimed as refund in respects of the goods brought for export does not exceed the amount appearing from the import bill to have been paid in respect thereof at the time of their import and is not less than eight annas.

(2) When the Export Naka Karkum has on examination of an import bill so produced, satisfied himself as above required, he shall-

(a) out of thesum supplied to him for the purpose by the Municipal Chief Officer pay to the person in charge of the goods, on his signing and giving receipt for the same, such amount, not being less than eight annas, as so appears to have been paid at import in respect of the goods brought for export andshall.

(b) endorse on the import bill the amount of the refund so paid and shall-

(c) note on the receipt acknowledging the refund the number of the page of the import bill examined, and

(d) if the refund so paid corresponds in amount with the entire sum acknowledged in the importbill, retain the import bill, or

(e) shall if the refund so paid does not amount to the full sum acknowledged in the importbill, return the import bill, endorsed as aforesaid to the person in charge of the goods.

(3) (a) Instead of paying the octroi tax thus in cash in such cases, the importer has the option of depositing at the import naka a cloak or other article of value sufficient to cover the tax. The Import Naka Karkun will thereon grant him an import bill describing the article so deposited. This bill will be presented at the export naka, where and when the goods are exported,

(d) The Export Naka Karkun will return that import bill to the presenter thereof with a certificate mentioning the date and hour of actual exportation of the identical goods described therein without breaking bulk.

(c) On the production of such import bill at the import Naka, the Import Naka Karkun., shall, in exchange for it, return the article deposited after the person producing the import bill acknowledges in writing thereon the return of the article to him. The import bill thus retained shall then be posted by the Naka Karkun to itsoriginal.

(4) Every Export Naka Karkun shall at the close of each day -

(a) in each case in which he has made a refund under this Rule report the same to the Municipal Chief Officer,

(b) hand over to the Municipal Chief Officer -

(i) each receipt for each refund so made,

(ii) each import bill retained under No. 10(2)(d) of these Rules and By-laws and

(c) account for any unexpended balance of the money supplied him for refund.

Reading of the said provision makes it plain that the Import Naka Karkun has to collect octroi duty and make some endorsement and the Export Naka Karkun has to refund the octroi duty collected by the Import Naka Karkun out of the funds provided to him and kept with him by the Municipal Borough. In other words, the octroi duty levied is not for the purpose of making it available to the exchequer of the Municipal Borough but to see that what is represented to the Import Naka Karkun that the goods being in rapid transit is a fact and the duty legally leviable by the defendant is not avoided by persons who are bound to pay the amount collected by the Import Naka Karkun. In the case on hand , the Karkun at Vengurla Naka would have held in deposit or trust for the defendant till the goods in rapid transit reached the Export Naka. In this case, the Goods Naka Karkun after satisfying himself will refund the amount collected by the Import Naka Karkun. Therefore, it is not possible to hold that in fact octroi duty has been levied and collected by the defendant as if it is the octroi duty leviable, and collectable on goods meant for use and sale within the limits of the defendant Municipal Borough. Whatever it may be, it is absolutely clear that the acts of the two Karkuns are in execution of the aforementioned provisions which are the provisions of the Act. In view of the wording in Section 61(l) (n) of the Act, it is not possible to hold that the provisions of the Rules and Bye laws are ultra vires the provisions of the Act. If in fact the defendant had collected octroi duty as if the goods in question were mean for use and sale, through, in fact, they were in rapid transit, then there might have been some force in the reasoning of the lower appellate Court as supported by Sri S.K. Joshi. The act of collecting the octroi duty at the Import Naka namely Vengurla Naka must be regarded as in execution of this act of the Act. There is no material to show whether the plaintiff produced the said receipts at the Export Naka namely, Goods Naka and demanded refund. The receipts themselves bear out endorsements of the Export Naka Karkun that he had noticed them. That means that the plaintiff is entitled to the refund by virtue of Rule 10 of the octroi Rules and Bye laws.

13. Now it is to be seen whether a notice providing the period of one month as contemplated by the provisions of Section 206A of the Act has been given. There is no dispute on this question. The notice dated 21-8-1959 was given and the suit was instituted much more beyond the period of notice namely I2-2-1962. The other contention is that the suit has to be commenced within six months next after the accrual of the cause of action. As already noted, the cause of action of refund on each one of the receipts arose on the expiry of 24 hours from the time of collection. In this connection it is pertinent to cite the decision of the Bombay High Court in Parvateppa -v.- Hubli Municipality, A.I.R 1937 Bombay 491. Section 206A as it stands stood in different form. That was Section 205, then. That reads as follows :

'No person shall commence any suit against any municipality or against any officer or servant of a municipality or a person acting, underthe orders of a municipality for anything done or purporting to have been done in pursuance of this Act, without giving to such municipality, officer, servant or person two months' previous notice in writing of the intended suit and of the cause thereof, nor after six months from the date of the act complained of.....'

His Lordship Chief Justice Beaumont held that the suit must be brought within six months of the act complained of. The acts complained of in the case on hand are the acts ofcollecting octroi duties on the different dates between 9-2-1959 and 13-6-1959.

14. Sri S.K. Joshi, lastly contended that the non-refunding of the octroi duty by the Export Naka Karkun is an illegal act andtherefore, it cannot be said to have been done in pursuance of execution of this act and as such Section 206A of the Act would not apply. He continued and argued that that the period of six months provided in Section 206A of the Act will commence only after the rejection of the claim of refund made by the plaintiff to the defendant.

15. Reading of Section 206A shows that any alleged neglect or default in execution of this act is also included in its ambit. Non-refund of octroi duty by the Export Naka Karkun is either neglect or default on his part. The lawrequired him to refund but he neglected to refund or committed default in refunding. He has simply made endorsements on the receipts. Therefore, this argument has no force.

16. I do not find much support to the other contention of Sri S.K. Joshi, that cause of action accrues only when there is refusal by the defendant to the demand made by the plaintiff and in the case on hand no such refusal has been made even by the reply Exhibit 102 in response to the notice Ex. 100, but is for the first time made in the course of the written statement. As already pointed out in the decision in Parvateppa -v.- Hubli Municipality the cause of action accrues from the date of the act and in this case the cause of action accrued after the expiry of 24 hours after thecollection of the octroi duty on each occasion in view of the definition of the words 'goods in rapid transit'. Hence I reject this contention.

17. In view of the foregoing reasons, I allow this appeal set aside the judgment and decree dated 19-9-972 passed by the Principal Civil Judge, Belgaum, in R.A. No. 202 of 1965 and restore the judgment and decree dated 17-3-1965 passed by the Munsiff, Belgaum, in Reg. O.S. No. 68 of 1962. No order as to costs throughout under the facts andcircumstances of the case.


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