RANBAXY LABORATORIES LTD.versusMUNICIPAL COUNCIL, ROPAR

A                       RANBAXY LABORATORIES LTD.
                                          v.
                         MUNICIPAL COUNCIL, ROPAR

                               NOVEMBER 2, 2006

B         [DR. AR. LAKSHMANAN AND TARUN CHATTERJEE, JJ.]


           Punjab Municipal Committee Act: Schedule, Entries 40(a) and 40(e)-
    Commercial Heavy Chemicals-Octroi duty-Levy of-Assessee paying octroi
C   duty under Entry 40(a) for 13 continuous years-Revenue seeking classification
    under Entry 40(e)-High Court holding in favour of revenue-Correctness
    of-Held: Not correct as burden to prove that a product falls under a particular
    tariff item is on revenue which it failed to discharge-Matter remitted to High
    Court for fresh consideration.

D         The appellant had been paying octroi duty on Commercial Heavy
    Chemicals brought by it to its factory continuously for 13 years under
    Entry 40(a) of the Schedule of the Punjab Municipal Committee Act. The
    respondent sought to change the classification of the said product to Entry
    40(e) without change of circumstance and without discharging the burden
E   of proof·cast on it to show that the product falls in that entry. The High
    Court allowed the claim of respondent. Hence the present appeal.

         Disposing of the appeal and remitting the matter to High Court, the
    Court

F         HELD: 1. The High Court has not properly interpreted the Entries,
    which is contrary to the settled principles of interpretation. The burden
    of proof to show that a product falls within a particular tariff item is
    always on the revenue. The respondent, Municipal Council has failed to
    establish and justify the burden of proof, the taxability ingredient of the
    appellant's goods under Entry 40, sub-clause (e). The High Court has failed
G   to appreciate that it is the respondent-Revenue Authority which is cast
    with the duty of assessing octroi to be imposed on the appellant and that
    the said respondent, Municipal Council has for 13 continuous years
    assessed the goods in question under Entry 40(a) of the Schedule as heavy
    commercial che.micals. (363-G, H; 364-A-BJ
H                                        360
      RANBAXY LABORATORIES LTD. v. MUNICIPAL COUNCIL, ROPAR [LAKStt¥ANAN, J.] 361

          2. The High Court, iq cases, like this, ought to have ordered notice          A
    to the respondent and disposed of the matter after hearing both the parties
    and after ascertaining as to which rate of duty Entry is applicable and
    payable for the product in question. The interest of justice would require
    that another opportunity should· be given to both the parties to argue the
    appeal afresh and on merits. The appellant is directed to pay a Yi% duty            H
    for the product till the disposal of the Second Appeal. The Respondent -
    Municipal Council is directed to receive the same without prejudice to the
    rights and contentions in the Second Appeal and the final outc{)me of the
    Second Appeal. (364-B, D, F, G)

          CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4657 of2006. (!:

         From the Final Judgment and Order dated 18.2.2005 of the High Court
    of Punjab and Haryana at Chandigarh in R.S.A. No. 704/2005.

         Arun Jaitley, Soli J. Sorabjee, H.S. Mathew, Rupinder Singh Suri, Vinay
    K. Shailendra and Ajay Dahiya for the Appellant.                                    D
          A.P. Bhandari and S.C. Patel for the Respondents.

          The Judgment of the Court was delivered by

          DR. AR. LAKSHMANAN, J. Leave granted.

          The above appeal is directed against the final judgment/order dated
    18.2.2005 passed by the High Court of Punjab and Haryana at Chandigarh
    in R.S.A. no.704 of 2005. The unsuccessful plaintiff is the appellant in this
    appeal. The respondent is the Municipal Council, SAS Nagar, Mohali.

          We have perused pleadings and the judgments of all the three courts
    and heard the arguments of Mr. Arun Jaitley, learned Senior Counsel for the
    appellant and Mr. A.P. Bhandari, learned counsel for the respondent.

          The issue which arises for consideration in the present appeal is whether
    an entry in a tariff schedule which after specifying the subject matter of the      G
    entry and illustrating it with examples by using the word 'like' can be construed


-   as being limited to only the items listed by way of illustration or includes all
    such products as answer the classification of the entry and further whether
    the revenue· can change the classification of the product from the specific
    enumerated entry, which was accepted for 13 years to the residuary clause           H

!
     362                      SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.

A without any change of circumstance and without discharging the burden of
    . proof cast on the revenue to show that the particular product falls in the
      residµary tariff item and not in the specific enumerated entry.

           In the plaint, in paragraph 4, it has been mentioned that the description
     of Annexure-'A' itself shows that the quantity of the Heavy Commercial
B    Chemicals is brought to. the factory premises in bulk, for example, in a period
     of nine months from April to December 29, 199 5 the receipts of Commercial
     Heavy Chemicals like Ascetic Acid Glacial - 3,06,415 kg; Caustic Lye -
     6,82,205 kg; Ethyl Acetate - 3,65,270 kg. Hemane - 3,45,094 kg., Hydrochloric
     Acid - 39,22,195 kg., Methylene Chloride - 7,82,203 kg.; Penicillin G-4,32,812
C    Bous, Pen V Acid-1,75,027 kg. The quantities as highlighted above would
     show that the Heavy Commercial Chemicals are being brought to the factory
     premises by the ,appellant/Plaintiff is bulk.

           The case of the appellant, according to the learned Senior Counsel, is
     covered for the purposes of payment of octroi duty only under clause (a) of
D    Entry 40 as mentioned in the heading of the plaint which reads as under and
     the appellant is liable to pay octroi duty @ 'Ii% only on Heavy Commercial
     Chemicals.

             "Heavy commercial chemicals like Sulphur, refined soda, caustic soda,
             acids, bleaching power, carbonates excluding sodium carbonate,
E            bicarbonates of ammonia, calcium, zinc and sodium, etc. magnesium
             chloride and soda silicate."

            It is the further case of the appellant that the appellant has been paying
     octroi duty on Commercial Heavy Chemicals brought by it to its factory
F    under clause 40(a) right from the beginning when octroi duty was imposed,
     without any difficulty. Some of the receipts of last five years wherein octroi
     duty has been charged under clause 40(a) were attached with the plaint.
     Thus, it is submitted that keeping in view the nature of the Commercial
     Heavy Chemicals brought by the appellant to the factory premises which is
     situated within the municipal limits of the respondent's Committee, the
G    appellant is liable to pay octori duty only at 'Ii% and not more than that. It
     is the further case of the appellant that there has been no trouble in payment
     of octroi duty as per the schedule during the last six years as it was being
     charged rightly so much so that the appellant was extended 0-4A facility for
     making the payment. But of late the respondent had started claiming that the
H    appellant is liable to pay octroi duty not under clause 40(a) but under clause
      RANBAXY LABORATORIES LTD. v. MUNICIPAL COUNCIL, ROPAR [LAKSHMANAN, J.] 363

    40(e) which is altogether illegal and has even threatened to withdraw 0-4A          A
    facility. It is further submitted that the respondent is bound to charge and
    levy only octroi duty as per the schedule mentioned above and is under
    obligation not to make any illegal false claim thus the appellant cannot be
    made liable to pay something for which the appellant is not liable at all.
    Thus, it is submitted by the learned Senior Counsel that the appellant is
    entitled to the injunction as prayed for in the plaint.
                                                                                        B

           Mr. A.P. Bhandari, learned counsel appearing for the Municipal Council
    submitted that the appellant is using different types of chemicals; some of
    them are heavy commercial chemicals and some of them are fine chemicals
    and that the chemicals which are heavy chemicals are having more weight C
    and they are in crude form and for those chemicals, the octroi will be charged
    at a Yi% whereas the fine chemicals are those chemicals which are mainly .
    produced in comparatively small quantities but are costlier and for those
    chemicals, the octroi is being charged @ I%. It is further submitted that the
    Taxing Aut~ority or a Taxing Statute does not debar to rectify the wrong
    which has already been done. And that the appellant prayed to charge I% D
    octroi for taking the goods in its factory and was submitting the Form-0(4A)
    which means that they were sending themselves suo motu the octroi of \12%
    which naturally escaped from the Taxing Authority of the respondent, because
    at that time, the tax was being paid by the appellant on his own so the wrong
    could not be detected earlier. rt was however submitted that if the wrong E
    done, this does not mean that the same cannot be set right, and as in this case,
    it has escaped in the initially from the respondent and as and when it came
    to the notice, they rectified its wrong. The learned counsel further submitted
    that the High Court has correctly appreciated the distinction between two
    entries i.e. 40(a) and 40(e) and that, therefore, it does not require for this F
    Court any interference.

           We have perused the judgment of the High Court and considered the
    rival claims. The High Court has not discussed many ~mportant issues raised
    by the appellant-plaintiff and also by the respondent~defendant. The High
    Court has not decided as to whether the onus or burden of proof to show that        G
    a product falls within a particular item is on the department or the assessee.
    The High Court has also not properly interpreted the Entries which is contrary
    to the settled principles of interpretation. It is settled by catena of decisions
•   of this Court that the burden of proof to show that a product falls within a
    particular tarrif item is always on the revenue. In our view, the respondent,
    Municipal Council has failed to establish and justify the burden of proof, the      H


•
    364                     SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A taxability ingredient of the appellant's goods under Entry 40, sub-clause (e).
    As rightly pointed out by the learned counsel for the appellant, the High ··
    Court has failed to appreciate that it is the respondent-Revenue Authority
    which is cast with the duty of assessing octroi to be imposed on the appellant
    and that the said respondent, Municipal Council has for 13 continuous years
B   assessed the goods in question under Entry 40(a) of the Schedule as heavy
    commercial chemicals.

          Since the High Court disposed of the Second Appeal at the admission
    stage and without notice to the respc:mdent, we feel that the interest of justice
    would require that another opportunity should be given to both the parties to
C   argue the appeal afresh and on m~rits.

          The High Court, in cases like this, ought to have ordered notice to the
    respondent and disposed of the matter after hearing both the parties and after
    ascertaining as to which rate of duty Entry is applicable and payable for the
    product in question.
D
          We, therefore, have no other option except to set aside the judgment
    dated 18.02.2005 and remand the matter to the High Court for fresh disposal
    of the Second Appeal in accordance with law and after affording opportunity
    to both parties.

E        Now, the Second Appeal is remitted to the High Court for fresh disposal,
    the High Court is requested to frame the substantial questions of law in
    accordance with the Section 100 C.P.C. and decide the matter on merits.

           It is stated by learned counsel for the appellant that the appellant had
    the benefit of stay during the pendency of the proceedings before the Trial
F   Court and also the Appellate Court. We, ther'!fore, direct the appellant to pay
    a Yi% duty for the product till the disposal of the Second Appeal. The
    Respondent - Municipal Council is directed to receive the same without
    prejudice to the rights and contentions in the Second Appeal and the final
    outcome of the Second Appeal.
G
          In the result, the judgment passed by the High Court in R.S.A. No. 704
    of 2005 is set aside and the High Court is requested to dispose of the Second
    Appeal as expeditiously as possible.

           The Civil Appeal is disposed of accordingly. No costs.
H
    D.G.                                                       Apped disposed of.