Supreme Court of India
CANTONMENT BOARD, DEHU ROAD & ANR.versusMAHINDRA OWEN LTD. & ANR.
- Citation
- 1986 INSC 52
- Decided
- 31 March 1986
- Disposal
- Dismissed
- Bench
- V BALAKRISHNA ERADI
Holding
Trailers and water tankers are not covered by the specified schedule items and are exempt as military stores; therefore, octroi duty cannot be levied.
Summary
The Bombay Cantonment Board sought octroi duty on trailers and water tankers supplied by Mahindra Owen Ltd. to the Defence Department under a 1959 notification. The Board claimed the items fell within items 3, 11, 14 and 16(b) of the First Schedule of the notification, making them chargeable. The Supreme Court held that the trailers and water tankers do not fit any of those schedule entries and, even if they did, they are exempt as "military stores" under clause (vi) of Schedule 11, which bars octroi on such articles. The Court also noted that the requirement of police certification does not apply to military stores. Consequently, the levy of octroi duty was illegal and the appeals were dismissed.
Issues considered
- Whether trailers and water tankers supplied to the Defence Department fall within items 3, 11, 14 or 16(b) of the First Schedule of Notification No. SRO 318, thereby attracting octroi duty.
- Whether, irrespective of the above classification, the items are exempt from octroi duty under clause (vi) of Schedule 11 of the same notification as "military stores".
- Whether the certification requirement by the Superintendent of Police is applicable to the items in question.
Legislation cited
Subjects
octroi dutymilitary storescantonment boardexemption clausedefence procurementtrailerwater tankerschedule interpretation
Judgment
961
A
CANTONMENT BOARD,
DEHU ROAD & ANR.
v.
MAllINDRA OWEN LTD. & ANR.
MARCH 31, 1986
B
[V, BALAKRISllNA ERADI AND D.P. MADON, JJ.]
The Bombay Cantonment Board Act read with Notification
No.SRO 318 dated 29.L0.59 - Items 3, 11, 14 and 16(b) of the
First Schedule· thereto, scope of - Whether trailers and water
tankers manufactured by the Respondent and supplied to the
Defence Department falls under the aforesaid items - Whether-
c
the levy of octroi duty ia illegal, in view of the specific
provision (vi) contained in Schedule II.
The first reapondent company manufactures trailers and
water tankers at its factory at Pimpri in . the District of
D
Poone. Pursuant to the acceptance of the tenders submitted to
the Defence Department of the Union of India, the first
reapondent sold different quantitiea of 100 C.W.D. and 10
c.w.D. trailers and two-wheeled water tankers. Under the telWI
of the contract, the ownership passed to the Government of
India on inspection of the goods at the first respondent's
E
factory premises at Pimpri and appropriation thereof to the
contract consequent on approval of the goods but delivery was
to be effected by the company free of charge within the
cantonment limits of Dehn Road.
The first appellant Board claimed from the reapondent
F
company payment of octroi-duty aggregating Rs.3,37,628-08 on
the trailers/water tankers so supplied to the Defence
Department. In the appeal preferred by the first respondent
under section 84 of the Cantonment Boards' Act, the District
Magistrate held that the trailers/water tankers supplied did
not fall within the- scope of any of the items enumerated in
G
the First Schedule to the Notification No. SltO 318 dt.
29.10. 59 and therefore the levy of octroi-duty l(ll8 illegal.
The appellants preferred a batch of Writ Petitions before the
High Court which were dismissed upholding the Magistrate's
judgment. Hence the appeal by certificate granted by the
Bombay High Court under Article 133(1)(a) and (c) of the
H
Constitution.
962 SUPREME COURT REPORTS [1986] 1 s.c.R.
A
Dismissing the appeals, the Court,
llELD : 1.1 None of the items 3, 11, 14 and 16(b) of the
First Schedule to the Notification No. SRO 318 dt. 29.10. 59
will take within its scope the trailers/water tankers' in
respect of which the notices of demand of octroi-duty were
B issued to the first respondent company. The imposition and
demand of the octroi duty in relation to thelll was wholly
unwarranted. Entry No.3 read as a whole contains clear
indication of the nature and type of the articlea intended to
be comprehended by the description "All articles of
Galvanised, Iron or steel", Entries 11 and 14 deal with
c "machinery" and "machines" and the trailers/water tankers by
themselves cannot be regarded as "machinery" or "machines".
Under Entry 16(b), they cannot be regarded as "accessories" of
conveyances either. (965 E; 966 C-G]
1,2 Even if it is assUllled that any of the entries in the
o First Schedule to the Notification did cover the trailers/
water tankers, the levy of octroi duty in respect of them
110Uld still be illegal in view of clauae (vi) of Schedule 11
to the Notification since no octroi duty shall be levied on
"Military Stores" etc. (966 G-H; 967 A]
E 1.3 The expression ''Military Stores" used in Schedule
Il is comprehensive enough to cover articles essential for
military use inclusive of trailers/water tankers' supplies of
which are acc:unmilated in the depot for being drawn upon when-
ever needed. The matter is placed beyond doubt by the signifi-
cant fact that in the Schedule to the acceptance of tenders
p Annemre 'A' , pursuant to which the trailers/water tankers
were supplied, paragraph 12 which contains "despatch instruc-
tions" specifically refers to the trailers/water tankers as
'stores'. Further, as per the tender terms the trailers/water
tankers supplied to the Defence Department of the Governmmt
of India, had become the property of the Defence Department
G even prior to their entry into the Dehu Boad cantonment Board.
The requirement regarding certification by the Superintendent
of Police has no application in respect of the ''Military
Stores". (967 G-H; 968 A-<:]
H
CANTONMENT BOARD v. MAHINDRA OWEN [ERADI, J,] 963
A
CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 48, 362
to 379 of 1972,
From the Judgment and Decree dated 23/24.11.1970 of the
Bombay High Court in Special Civil Appln. No. 2217 of 1969.
B
V.M. Tarkunde and K.L. Hathi for the Appellants.
F,J,S, Talyarkhan, B.H. Wahi, A.N. Haksar, P.K, Ram, A.
Narayan and s. Sukumaran for the Respondents.
The Judgment of the Court was delivered by
c
BALAXRIS1lllA l!RADl, J. These appeals which have been filed
on the strength of a certificate dated September 14, 1971
granted by the High Court of Bombay under Article 133(l)(a)
and (c) of the Constitution of India, as it then stood, are
directed against the judgment of the High Court of Bombay
dated November 23, 1970 dismissing a batch of Writ Petitions D
filed by the appeilants herein challenging the order dated May
23, 1969 passed by the District Magistrate, Poone setting
aside the notices of demand of Octroi Duty issued by the
appellants to the first respondent-company.
The first appellant herein is the Cantonment Board, Dehu E
Road and the second appellant is its Executive Officer. The
first respondent is a public limited company manufacturing
trailers and water tankers at its factory at Pimprl in the
District of Poone. The first respondent had submitted tenders
to the Defence Department of the Union of India for the
manufacture and supply of trailers and water tankers. Pursuant F
to the acceptance of those tenders, the first respondent
manufactured and sold to the Union of India different
quantities of 100 C.W.D and 10 C.W.D. trailers and two-wheeled
water tankers. Under the terms of the contract the ownership
passed to the Government of India on inspection of the goods
at the first respondent's factory premises at Pimpri and G
appropriation thereof to the contract consequent on approval
of the goods but delivery was to be effected by the first
respondent-company free of charge within the Cantonment limits
,r., of Dehu Road. Accordingly, by June-July, 1965, 8,953
trailers/water tankers w~re delivered by the first respondent
H
964 SUPREME COURT REPORTS [19861 i s.c.R.
A
company within the limits of the Cantonment Board. Thereafter,
682 more such trailers/water tankers were also delivered by
the first respondent-company to the Defence Authorities within
the Dehu Road Cantonment limits during 1965 and 1966.
Under the provisions of the Cantonment Board Act, the
B appellant Board with the previous sanction of the Central
;.
Government could impose Octroi Duty in respect of articles
brought into the limits of the Cantonment Board. Under a
Notification dated October 29, 1959, bearing No. SRO 318, the
first appellant imposed a non-refundable Octroi Duty in
respect of articles brought within the Umits of the
c Cantonment Board, for consumption, use or sale therein at the
rates specified in the First Schedule.
Based on the aforesaid Notification the first appellant
demanded from the first respondent-company payment of Octroi
Duty on the trailers/water tankers which were brought within
D the limits of the Cantonment Board. The total.amount so claim-
ed from the first respondent aggregated to Rs. 3,37 ,628.08,
Out of the said amount, the first respondent paid
Rs.3,18,620.08 under protest, and approached the High Cout of
Bombay by filing Special Civil Application No.1720 of 1966
challenging the notices of demand and praying for directions
E being issued to the first appellant Board to cancel or
withdraw the notices of demand and to refund the amount of
Octroi Duty already paid under protest. On November 29, 1968,
the High Court dismissed the said Writ Petition on the ground
that the matter involved disputed question of facts and hence
the first respondent should exhaust his alternate remedy by
F ref erring an appeal to the District Magistrate before seeking
relief under Article 226 of the Constitution.
The first respondent-company thereafter pref erred
appeals before the District Magistrate, Poone under-Section 84
of the Cantonment Board's Act with a prayer for condonation
G of the delay in filing the appeals. The District Magistrate
granted the prayer for condonation of delay and by a very
detailed order allowed the appeals holding that the trailers/
water tankers manufactured and delivered by the first
respondent-company did not fall within the scope of any of the
items enumerated in the 1st Schedule to the Notification
H authorising the levy of Octroi Duty and hence the action of
CANTONMENT BOARD v. MAHINDRA OWEN [ERADI, J,] 965
A
the appellants in demanding the payment of Octroi Duty in
respect of them was illegal. He accordingly, set aside the
notices of demand and directed the appellants to refund the
amount of Duty already collected from the first respondent-
company.
B
Aggrieved by the said decision the appellants pref erred
a batch of Writ Petitions before the High Court challenging
the legality and correctness of the aforesaid order passed by
the District Magistrate. Those Writ Petitions were dismissed
by the High Court under the impugned judgment. The High Court
has upheld the view expressed by the District Magistrate that
the trailers/water tankers did not fall within the scope of C
any of the entries in the First Schedule to the Notification
authorising the levy of Octroi Duty. The correctness of the
conclusion so recorded by the High Court is challenged bY the
appellants in these appeals.
Having given our careful consideration to the arguments D
advanced by the learned Counsel appearing on both sides, we
have unhesitatingly come to the conclusion that there is no
merit in these appeals and that the decision of the High Court
does not call for any interference.
The entries in the First Schedule to the Notification E
which were relied on bY the High Court are those appearing as
Item Nos. 3, 11, 14 and 16(b), Those entries are respectively
in the following terms :-
"3. All articles of Galvanised iron, or steel such
as All Machinery parts, Buckets, channels, Iron F
Utensils, Karahi tubs, Ordinary country weighing
scales pipes, safes, springs, suit cases, tanks,
tin, containers, trunks, tubs and wheels of all
vehicles (except those specified elsewhere), Axle,
Chassis, Heavy iron chains, Wire and Wire ropes,
hardwares such as barbed wires, bolts, files, G
Hammers, Hinges, Nails, Nuts, pipes, Pliers,
Rivets, Saws, Screws, Tools, Washers, Wire
• Nettings, Wrench etc. (Excepting articles of cast
iron and those mentioned elsewhere).
H
966 SUPREME COURT REPORTS [19861 1 s.c.R.
A
11. All kinds of machinery (not specified
elsewhere.
14. All other machines (not specified elsewhere).
16. Vehicles:
B
••• •• • • •••
(b) All psrts and accessories of Motor cars, Motor-
trucks or similar conveyances except axles,
chassis, rubber solution, springs, tubes, tyres and
c wheels."
Entry No.3 read as a whole contains clear indication of
the nature and type of the articles intended to be
coq>rehended by the description "All articles of Galvanised,
Iron or Steel". In our opinion the High Court was perfectly
D
right in its view that the trailers/water tankers manufactured
and delivered by the first respondent-company did not fall
within the scope of the said entry. Entries Nos. 11 and 14
deal with 'machinery' and 'machines' and those entries also
will not take within their scope trailers/water tankers,
since, by theDBelves they cannot be regarded as either
E machinery or machines. While dealing with Entry ~o. 16(b), the
High Court has dwelt in detail upon the exact nature of the
trailers/water tankers manufactured by the appellants and the
uses to which they are put, and expressed the view that they
cannot be regarded as "accessories" of conveyances. We are in
agreement with the said view expressed by the High Court.
F
Thus the position that emerges is that none of the
aforesaid entries contain in the First Schedule to the
Notification relied on by the appellants will take within its
scope the trailers/water tankers in respect of which the
notices of demand of Octroi Duty were issued to the first
G respondent-company. The iqmsition and demand of Octroi Duty
in relation to them was hence wholly unwarranted.
~ite apart from what has been stated above, even if it
is assumed for purpose of discussion that any of the entries ,--'-
in the First Schedule to the Notification did cover the
H trailers/water tankers, the levy of Octroi Duty in respect of
CANTONMENT BOARD v. MAHINDRA OWEN [ERADI, J,) 967
A
them would still be illegal in view of the specific provision
contained in Schedule 11 to the Notification that -
"No.Octroi shall be levied on :-
(vi) Military Stroes and other articles of Police B
equipment pertaining to unifor11B including similar
articles of National Volunteer Corps and equipment
of Police Radio Service; provided that each
consignment is certified by the Superintendent of
Police of the district concerned or in the case of
National Volunteer Corps by an Officer authorised
by the State Commandant, National Volunteer Corps c
in this behalf, to be the property of Government in
the Police Department."
lt has been found by the District Magistrate as well as by the
High Couri: that the trailers/water tankers were supplied to
the Defence Department of the Government of India and that D
they had become the property of Defence Department prior to
their entry into the Dehu Road Cantonment Board,
The expression "stores" has been defined in the
Dictionaries as meaning -
E
"Articles of particular kind or for special
purpose accumulated for use, supply of things
needed, (military, naval etc.) " - The Concise
Oxford Dictionary.
"Supply or stock of something, especially essen- F
tials, for a specific purpose: the ship's stores."-
Collins English Dictionary.
"Supplies of provisions, ammunition etc. for an
army, ship etc. 11 -
Chambers Twentieth Century Dictionary. G
In our opinion the expression "military stores" used in
Schedule 11 is comprehensive enough to cover articles
,,.-., essential for military use inclusive of trailers/water tankers
supplies of which are accumulated in the depot for being drawn
uppn whenever needed. The matter is placed beyond doubt by the H
968 SUPREME COURT REPORTS [19861 1 s.c.R.
A
significant fact that in the Schedule to the acceptance of
tenders - Annexure 'A', pursuant to which the trailers/water
tankers were supplied, paragraph 12 which contains "despatch
instructions" specifically refers to the ·trailers/water
tankers as stores while stating thus:
ll "The stores after inspection will be delivered at
Vehicle Depot, Dehu."
The requirement regarding certification by the Superintendent
of Police has no application in respect of "military stores".
The exemption provision was therefore clearly attracted and
c the levy of Octroi Duty on the trailers/water tankers was
clearly illegal.
These appeals are, therefore, devoid of merit and they
will accordingly stand dismissed. The parties will bear their
respective costs.
D
S.R. Appeals dismissed.
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