Hyprecision Hydraulik vs State Of Maharashtra And 3 Ors
2022 Latest Caselaw 13378 Bom

            Digitally
            signed by
            MULEY
MULEY       SHUBHAM
SHUBHAM
PRAVINRAO
            PRAVINRAO
            Date:                                    1        Writ Petition No.1573 of 2019.doc
            2022.12.22
            11:38:31
            +0530


                             IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                                   ORDINARY ORIGINAL CIVIL JURISDICTION

                                      WRIT PETITION NO. 1573 OF 2019

            Hyprecision Hydraulik
            34, Sanjay Building No.6,
            Mittal Industrial Estate,
            Andheri-Kurla Road,
            Andheri-East, Mumbai - 400 059,
            Through its (General Man.)
            Shri. Gaurav Rajani.                                         .....Petitioner

                            V/s.

            1. State of Maharashtra
            Through the Revenue Secretary,
            Ministry of Finance, Department of
            Revenue, Mantralaya, Mumbai - 400 001


            2. The Additional Municipal Commissioner,
            Octroi (A & C), Municipal Head Office,
            Annex Building, Mahapalika Marg,
            Mumbai - 400 001


            3. The Deputy Assessor & Collector (Octroi),
            Lodha Complex, Gate No.3,
            1st Floor Kanjurmarg (E),
            Mumbai - 400 042,


            4. The Deputy Municipal Commissioner,
            Octroi (A & C), Municipal Head Office,
            Annex Building, 6th Floor, Mahapalika Marg,
            Mumbai - 400 001                                            .....Respondents



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                                           2              Writ Petition No.1573 of 2019.doc


Mr. Bharat Raichandani a/w Mr. Rishabh Jain i/by UBR Legal for Petitioner.
Mr. Anoop Patil a/w Smt. Pooja Yadav i/by Mr. Sunil Sonawane for BMC.
Mr. Amit Shastri (AGP) a/w Mr. Himanshu Takke (AGP) for State.


                        CORAM                  :     S. V. GANGAPURWALA, ACJ &
                                                     ARIF S. DOCTOR, J.

RESERVED ON : 25th NOVEMBER, 2022 PRONOUNCED ON : 21st DECEMBER, 2022

JUDGMENT:- (PER ARIF S. DOCTOR, J.)

1. The present Writ Petition impugns a letter dated 16 th December,

2017 issued by Respondent No.3 i.e. the Deputy Assessor & Collector Octroi, by

which the Petitioner's claim for refund of octroi came to be rejected.

Facts Briefly Stated


2.              On     15th   July,   2015     the     Petitioner     entered      into      a

Contract/Agreement with the Weapons Department (Indian Navy) which was

essentially in the nature of a repair, refit and service contract. Pursuant to the

said contract, a Work Order Bearing No.

DYT/INCOD/12-13/204(d)PL-WEA/FACT 81-TYPHOON//455 (the said work

order) was issued to the Petitioner by the Indian Navy. The said work order inter

alia specified the details of the spare parts that were to be imported and supplied

by the Petitioner to the Indian Navy.

Shubham Muley 2/29

3. On 17th March, 2016, an octroi exemption certificate was issued by

the Ministry of Defence to Respondent No.3. The said certificate made reference

to the said work order and certified that the items listed therein would be

exempted from payment of octroi duty. The said certificate further stated that

the items which were being imported were being transported to the Naval

Dockyard, Mumbai.

4. It is the Petitioner's case that on 28 th March 2016 the Petitioner

filed a declaration of the same date with Respondent No. 3 under Rule 194 (2)

of the MMC Act. By the said declaration the Petitioner called upon Respondent

No.3 to register the Petitioners letter under Section 194 (2) of the MMC Act and

also informed Respondent No.3 that the Petitioner would in due course be

submitting its claim for refund of octroi duly supported with the octroi

exemption certificate from Naval Dockyard Mumbai. On 30 th March, 2016,

Petitioner cleared the said goods and made payment of octroi duty thereon in an

amount of Rs.16,71,401/- (Rupees Sixteen Lakhs Seventy One Thousand Four

Hundred One) vide demand draft No.387622. Petitioner had filed Bill of Entry

No. 4720347 dated 28th March, 2016 and Form-B dated 30 th March, 2016 with

Air Cargo Complex, Sahar, Andheri East, Mumbai.

5. On 22nd April, 2016, the Weapons Department issued a " Goods

Receiving Certificate" which made specific reference to the said work order and

Shubham Muley 3/29

certified that the said goods as per the said work order had become the property

of the Government. The said Certificate also enclosed the particulars of the said

goods.

6. It was in the backdrop of these facts that the Petitioner on 28 th

April, 2016 filed its claim for refund of octroi paid under Section 194(2) of the

MMC Act with Respondent No.3 and enclosed the following documents in

support of its claim, viz.

"1) Purchase order No.DYT/INCOD/12-13/204(D)PL-WEA/FACT 81-TYPHOON/455 dated 15.07.2015.

2) Octroi paid (Form-B) No.0496275 dated 30.03.2016.

3) Import invoice No.326014755 dated 15.02.2016.

4) Delivery Challan No.012 dated 13.04.2016.

5) Octroi Exemption Certificate from Naval Dockyard Mumbai.

6) Goods Receiving Certificate.

7) Our bank details are as under Bank: Bank of India BR: Chakala A/C: 006730100050114 MICR No.: 400013012"

7. By a letter dated 16th December 2016, Respondent No.3 called

upon Petitioner to submit the following;

i. Original registration certificate book for verification, and

ii. Original declaration duly certified by the Octroi Inspector.

Shubham Muley 4/29

Petitioner, by its letter dated 1 st March, 2017, addressed to Respondent No.3

informed Respondent No.3 that the Custom House Agent (CHA) engaged by the

Petitioner to clear the said consignment had erroneously not mentioned Section

194(2) of the MMC Act when filing in the details of Form-B and therefore the

Petitioner was unable to process the said declaration. Petitioner pointed out that

this had also resulted in Petitioner's claim for octroi being rejected. Petitioner

explained that they had since met several officers in the Octroi Department and

tried to explain that this failure to mention Section 194(2) on Form-B was

purely on account of human error. That the Petitioner had also re-sent the

challan copies duly certified by the Indian Navy confirming along with good

receiving certificate that the items have been supplied to Naval dockyard,

Mumbai only. However, since there was no response from the Respondents,

Petitioner made further representations to the Respondents seeking a refund of

octroi paid. Petitioner had vide a letter dated 1 st March, 2017 addressed to

Respondent No. 4 and a letter dated 20 th March, 2017 to addressed Respondent

No. 3 requested for a refund of octroi paid.

8. However, Respondent No. 3 by its letter dated 16 th December, 2017

(the impugned communication) informed the Petitioner that its claim for refund

of octroi had been rejected and no further correspondence would be entertained

with regard to this matter in the future. By the said letter, Respondent No. 3

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called upon the Petitioner to collect the original documents failing which the

documents would be filed and case would be treated as closed.

9. Thereafter, the Petitioner once again made several representations

to Respondent Nos. 2 and 3 and also personally visited the office of Respondent

Nos.2 and 3. Vide a letter dated 9 th February, 2018, the standing committee of

the Mumbai Municipal Corporation set out the grievance of the Petitioner and

directed the concerned officers of Respondent No. 3 to issue necessary orders for

refund paid by Petitioner as octroi. However, even despite this, there was no

response from either Respondent No. 2 and/or 3.

10. Petitioner thus filed an Appeal before Respondent No. 2 vide its

letter dated 18th March, 2019 and once again submitted all the relevant

documents and requested for a refund of octroi. However, no action was taken

or communication received on the said Appeal. It was thus that Petitioner filed

the present Petition.

Submissions of Mr. Raichandani on behalf of the Petitioner.

11. Mr. Raichandani, learned counsel appearing on behalf of the

Petitioner submitted that rejection of Petitioner's claim for octroi was manifestly

unjust and with complete non application of mind on the part of the

Respondents. He submitted that Petitioners were squarely eligible for a refund of

Shubham Muley 6/29

octroi under Section 194(2) of the MMC Act, as the Petitioner had fully

complied with the provisions thereof. He invited our attention to Section 194 (2)

of the MMC Act which reads as thus viz,

"If any article on which octroi is paid is imported under a written declaration signed by the importer that such article is being imported for the purpose of fulfilling a specified contract with the Government or otherwise for the use of the Government, the full amount of the duty paid thereon shall be refunded on production, at any time within six months after importation, of a certificate signed by an officer empowered by the Government concerned in this behalf certifying that the articles so imported has become the property of Government, is used or intended to be used solely for a public purpose and is not used or intended to be used for purposes of profit."

He pointed out from a plain reading of the said Section that in order to be

eligible for a refund of octroi under Section 194(2) of the MMC Act the

following two criteria were required to be fulfilled viz.,

i. A written declaration signed by the importer that such article was being

imported for the purpose of fulfilling a specified contract with the

Government or otherwise for the use of the Government; and

ii. A certificate signed by an officer empowered by the Government in this

behalf certifying that the article so imported had become the property of

the Government.

Shubham Muley 7/29

Mr. Raichandani submitted that in the present case, both the said criteria had

squarely been complied with . Insofar as the first requirement namely a written

declaration signed by the importer, he invited our attention to the octroi

exemption certificate dated 17 th March, 2016 issued by the Government of

India, Ministry of Defence in favour of Respondent No.3. Insofar as the second

requirement namely a certificate signed by an officer empowered by the

Government, in this regard he placed reliance upon the Goods Receiving

Certificate dated 22nd April, 2016, issued by the Weapons Department. He thus

submitted that the requirements and/or conditions for being entitled and eligible

for a refund of octroi under Section 194 (2) of the MMC Act had fully been

complied with and that the Petitioner was thus entitled and eligible for a refund

of octroi paid in terms of Section 194(2) of the MMC Act.

12. Mr. Raichandani submitted that the only reason for rejecting

and/or disallowing the Petitioner's claim for refund of octroi was that the

Petitioner had failed to produce the original declaration duly certified by the

Octroi Inspector. He submitted that even assuming this to be correct the same

would not by itself deprive the Petitioner for a refund of octroi since the

Petitioner had fulfilled the requirements of Section 194(2) of the MMC Act and

was thus eligible for a refund of octroi. He submitted that it was incumbent

upon the Respondents to apply their mind and ascertain whether the Petitioner

had complied with the substantive provisions of Section 194(2) of the MMC Act,

Shubham Muley 8/29

and not merely reject the Petitioner's claim for refund on the ground that the

requisite procedure had not been followed. He submitted that the conduct of

Respondent No.3 belied a total non application of mind which resulted in

manifest in justice to the Petitioner. He submitted that it was a settled legal

position that the doctrine of substantial compliance was a judicial invention

based on equity and designed to avoid hardship in cases where a party has done

all that it was reasonably expected to do but had failed to comply with some

procedural aspect. He submitted that it was in these cases that the Court was

required to determine whether statute had been followed sufficiently so as to

carry out the intent of the statute and accomplish the reasonable objective

thereof.

13. He submitted that a choice between a strict and a liberal

construction would arises only in the case of doubt. He submitted that, if the

words of the statute are plain and clear and leave no manner of doubt then there

is no need for any interpretation. It is well settled that the stringency and

mandatory nature of an exemption provision must be justified by the purpose

intended to be served. He submitted that law on exemption provision was very

clear and that once it was established that a person/entity claiming an exemption

establishes that such person/entity was eligible to claim the benefit of such

exemption, then the entitlement to such benefit ought not to be rejected and/or

denied on the ground of technicalities and/or procedural lapses. In support of

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his contention, he placed reliance upon a judgment of the Hon'ble Supreme in

the case of Mangalore Chemicals & Fertilizers Ltd. Vs. Deputy Commissioner 1

with particular reference to paragraph Nos.11 and 12 which read thus viz.,

11. We have given our careful consideration to these submissions. We are afraid the stand of the Revenue suffers from certain basic fallacies, besides being wholly technical. In Kedarnath's case, the question for consideration was whether the requirement of the declaration under the proviso to Sec. 5(2)(a)(ii) of the Bengal Finance (Sales-tax) Act, 1941, could be established by evidence aliunde. The Court said that the intention of the Legislature was to grant exemption only upon the satisfaction of the substantive condition of the provision and the condition in the proviso was held to be of substance embodying considerations of policy. Shri Narasimhamurthy would say the position in the present case was no different. He says that the notification of 11th August, 1975 was statutory in character and the condition as to 'prior permission' for adjustment stipulated therein must also be held to be statutory. Such a condition must, says counsel, be equated with the requirement of production of the declaration form in Kedarnath's case and thus understood the same consequences should ensue for the non-compliance. Shri Narasimhamurthy says that there was no way out of this situation and no adjustment was permissible, whatever be the other remedies of the appellant. There is a fallacy in the emphasis of this argument. The consequence which Shri Narasimhamurthy suggests should flow from the non-compliance would, indeed, be the result if the condition was a substantive one and one fundamental to the policy underlying the exemption. Its stringency and mandatory nature must be justified by the purpose intended to be served. The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve.

In Kedarnath's case itself this Court pointed out that the stringency of the provisions and the mandatory character imparted to them were matters of important policy. The Court observed:

1   1991 (55) E.L.T. 437 (S.C.)

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" ..... The object of S. 5(2)(a)(ii) of the Act and the rules made thereunder is self-evident. While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and collusion in an attempt to evade tax. In the nature of things, in view of innumerable transactions that may be entered into between dealers, it will wellnigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section. Therefore, presumably to achieve the two fold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall furnish a declaration form in the manner prescribed under the section. The liberal construction suggested will facilitate the commission of fraud and introduce administrative inconveniences, both of which the provisions of the said clause seek to avoid."

[See: (1965) 3 SCR 626 at 630] (Emphasis Supplied)

Such is not the scope or intendment of the provisions concerned here. The main exemption is under the 1969 notification. The subsequent notification which contains condition of prior-permission clearly envisages a procedure to give effect to the exemption. A distinction between the provisions of statute which are of substantive character and were built-in with certain specific objectives of policy on the one hand and those which are merely procedural and technical in their nature on the other must be kept clearly distinguished. What we have here is a pure technicality. Clause 3 of the notification leaves no discretion to the Deputy Commissioner to refuse the permission if the conditions are satisfied. The words are that he "will grant". There is no dispute that appellant had satisfied these conditions. Yet the permission was withheld-not for any valid and substantial reason but owing to certain extraneous things concerning some inter-departmental issues. Appellant had nothing to do with those issues. Appellant is now told "we are sorry. We should have given you the permission. But now that the period is over, nothing can be done". The answer to this is in the words of Lord Denning: "Now I know that a public authority cannot be estopped from doing its public duty, but I do think it can be estopped from relying on a technicality and this is a technicality" [See Wells v. Minister of Housing and Local Government: 1967 (1) WLR 1000 at 1007].

Francis Bennion in his "Statutory Interpretation", 1984 edition, says at page 683:

"Unnecessary technicality: Modern Courts seek to cut down technicalities

Shubham Muley 11/29

attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfilment of the purposes of the legislation."

12. Shri Narasimhamurthy against relied on certain observations in Collector of Central Excise, Bombay-I & Anr. v. Mis. Parle Exports (P) Ltd., [1989 (1) SCC 345 = 1988 (38) E.L.T. 741 (S.C.)], in support of strict construction of a provision concerning exemptions. There is support of judicial opinion to the view that exemptions from taxation have a tendency to increase the burden on the other unexempted class of tax-payers and should be construed against the subject in case of ambiguity. It is an equally well-known principle that a person who claims an exemption has to establish his case. Indeed, in the very case of M/s. Parle Exports (P) Ltd. relied upon by Sri Narasimhamurthy, it was observed:

"While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided."

The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the Legislature manifest on the statutory language. Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the plain words of the statute. If the words are plain and clear and directly convey the meaning, there is no need for any interpretation. It appears to us the true rule of construction of a provision as to exemption is the one stated by this Court in Union of India & Ors. v. M/s. Wood Papers Ltd. & Ors., [1991 JT (1) 151 at 155]:

" ...... Truly, speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction .... "

(Emphasis supplied)

He submitted that from the enunciation of law laid down in the case of

Mangalore Chemicals & Fertilizers Ltd. (supra), there would be no doubt that the

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Petitioner was eligible to the refund of octroi and wad denied entitlement of the

same on the venial and technical grounds. He submitted that such denial to a

benefit to which a person/entity was otherwise eligible was totally unjust.

14. He then pointed out that the declaration dated 28 th March, 2016

filed by the Petitioner constituted a valid and proper declaration. He pointed out

that the same made specific reference to Section 194(2) of the MMC Act as also

made specific reference to the said work order. The said declaration specifically

stated that the goods were being supplied to the Naval Dockyard, Mumbai. Thus

the mere failure/omission to mention the Bill of Entry number thereon would not

invalidate the said declaration or dis-entitle the Petitioner from the substantive

benefit of Section 194(2) of the MMC Act.

15. Without prejudice, Mr. Raichandani submitted that, in any event

Form-B was nothing but a declaration which a supplier was required to submit

to the Octroi Inspector. He submitted that the mere absence of the specific

mention of Section 194(2) of the MMC Act in the Form-B would not by itself

render the same as being an invalid declaration. He pointed out that Form-B

contained information of the octroi duty paid as well as description of the

imported articles as also that the same made clear reference to the description of

articles as also the amount of octroi duty paid. Mr. Raichandani submitted that

even assuming Form-B did not qualify as being a valid and/or complete

Shubham Muley 13/29

declaration that by itself would not dis-entitle Petitioner to the refund of octroi if

Petitioner had substantially complied with the requirement of Section 194(2). He

submitted that the declaration made in terms of Form-B was subject to

verification and scrutiny by the Octroi Inspector. He submitted that a declaration

made in Form-B when a party is entitled to refund of octroi would not by itself

entitle a party to seek refund of octroi. He submitted that the Octroi Inspector

was duty bound to apply his independent mind to ascertain the eligibility of a

party seeking a refund of octroi. He submitted that merely because all the details

could not and/or were omitted to be declared would not by itself lead to the

conclusion that a party, who was otherwise eligible for a refund of octroi, would

be deprived of the same. He thus submitted that the production of the said

declaration was therefore a procedural requirement and mere failure to produce

the same could not by itself be a ground to deny the Petitioner the benefit of

refund, if the Petitioner was otherwise eligible for the same.

16. Mr. Raichandani then submitted that even the standing committee

of Mumbai Municipal Corporation had seen the merit of the Petitioner's claim

and had therefore requested Respondent No. 2 to consider Petitioner's claim for

refund of octroi vide its letter dated 9 th February, 2018.

Submissions of Mr. Patil behalf of Respondent Nos. 2 to 4

17. Mr. Patil, learned counsel appearing on behalf of the Respondents

at the outset submitted that the present Petition ought to be dismissed in limine

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for the following two preliminary reasons/grounds, namely;

i. Alternative remedy: That the Petitioner had an alternate remedy which

the Petitioner ought to have availed of; and

ii. Delay: That the goods/articles had been imported by the Petitioner on 30 th

March, 2016 and octroi had been abolished throughout India in July,

2017. Thus the Petition having been in the year 2021 was filed at a

belated stage and thus deserved to be dismissed in limine without going

into merits of Petitioner's claim.

18. On merits, Mr. Patil submitted that the Petitioner was not entitled

to the refund of octroi as the Petitioner had failed and neglected to comply with

the precondition required in Section 194(2) of the MMC Act, namely to furnish

a copy of the declaration duly certified by the Octroi Inspector. He submitted

that this was a mandatory precondition for the Petitioner to be eligible for a

refund of octroi and thus failure to comply with the same would dis-entitle the

Petitioner from claiming the benefit of the refund of octroi. He submitted that it

is only when such a precondition was fulfilled that the Petitioner would be

considered eligible for a refund of octroi.

19. He submitted that the declaration relied upon by the Petitioner was

dated 28th March, 2016 while the date of import of articles took place on 30 th

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March, 2016 which itself disproved the very contention of the Petitioner that the

declaration had been submitted. Without prejudice to this contention, he

submitted that the said declaration relied upon by Petitioner was merely a

proforma of declaration which contained blanks and thus the same was bereft of

the necessary details. He also submitted that the said declaration bore no proof

of submission by way of any endorsement of the Octroi Inspector/Octroi

Department at the octroi clearing center. He submitted that endorsement of the

Octroi Inspector/octroi department was necessary for the same to be considered

as a valid declaration. He submitted that the said declaration did not even have

acknowledgment of the office of Respondent No.3 and therefore Petitioner had

not complied with the essential condition which was production of a valid

declaration as contemplated under Section 194(2) of the MMC Act and was thus

dis-entitled to the claim for refund as sought for.

20. He then submitted that Petitioner, at the time of import on 30 th

March, 2016 had paid octroi under Section 192 of the MMC Act which is a tax

on the entry of articles into Mumbai, for use, sale and consumption as was

clearly evident from the receipt which showed collection of octroi. He submitted

that where octroi payment had been made under Section 194 (2) of MMC Act,

the receipt showing collection of octroi would have a categoric mention of the

said fact as also a mention of the fact that the goods were being imported for

supply to the Government. He submitted that this was also not mentioned in

Form-B as relied upon by Petitioner. He submitted that Petitioner by its letter

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dated 1st March, 2017 had accepted that the form as filed was not in conformity

with Section 194(2) of the MMC Act. He submitted that compliance of the

conditions being mandatory rejection of Petitioner's claim was entirely justified.

He submitted that, Petitioner, without complying with the mandatory conditions

of Section 194(2) of the MMC Act, was not entitled to receive a refund of octroi.

21. He submitted that the Application for refund of octroi which was

received by the Respondents on 2nd July, 2016 did not contain any documents

which would provide proof of submission of the declaration under Section

194(2) or the declaration itself. He submitted that upon receipt of the said

Application, the office of Respondent No. 3 through the Administrative Officer

(Excess & Wrong Recovery) with a view to verify the correctness of the claim for

refund and to further verify if the Petitioner was in fact entitled to claim refund

of octroi under Section 194(2) wrote to the Superintendent, Sahar Cargo (Import

Section) and sought for entries of the register maintained at the Octroi

Collection Centre at Sahar Cargo under Section 194(2) for verifying if on the

date of import of the articles by the Petitioner i.e. 30 th March, 2016 the Petitioner

had in fact registered its claim or submitted its declaration as required under

Section 194(2) with the concerned authorities. He submitted that upon such

information being sought, a reply dated 27 th July, 2016 was received from the

Superintendent, Sahar Cargo confirming that no such entry in the name of the

Petitioner was found in the official register maintained under Section 194(2).

Shubham Muley 17/29

22. He submitted that even otherwise as the application for refund

filed by the Petitioner was incomplete as regards the documents to be submitted

for consideration of the application for refund of octroi under Section 194(2).

He submitted that, despite letters and reminders the Petitioner failed and

neglected to submit the required information/ documents and hence Respondent

No.3 was left with no other alternative but to reject the claim for refund vide its

letter dated 16th December, 2017.

23. He submitted that despite the aforementioned letter being issued to

the Petitioner intimating the rejection of its claim, the Petitioner approached the

Chairman of the Standing Committee who in turn referred the said grievance of

the Petitioner to the Additional Municipal Commissioner (Projects) requesting

that the said be considered and appropriate orders be passed therein. He

submitted that, based on the said letter, the issue raised by the Petitioner was

placed before the Additional Municipal Commissioner (Projects) vide a report

and an appropriate reply dated 25 th April, 2018 was issued to the Chairman of

the Standing Committee duly informing that the claim of the Petitioner cannot

be considered for the reasons mentioned in the reply letter. He submitted that,

for the aforementioned reasons the claim of the Petitioner for refund of the

octroi under Section 194 (2) is not maintainable and the same had rightly been

rightly rejected by the office of the Respondent. He reiterated that since

Petitioner had not complied with the mandate of Section 194(2) i.e. furnishing a

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declaration duly certified by the Octroi Inspector, the Petitioner was not eligible

for a refund of octroi.

24. Mr. Patil submitted that it was well settled that (a) exemption

provisions must be strictly construed (b) that the requirements/conditions of the

provisions for claiming an exemption must be strictly complied with and (c)

that the onus of proving entitlement to the benefit of an exemption was on the

party claiming the exemption. In support of his contention he placed reliance

upon the following judgments viz.

i. Krishi Upaj Mandi Samiti, New Mandi Yard, Alwar Vs. Commissioner of

Central Excise & Service Tax, Alwar2

ii. State of Jharkhand and Ors. Vs. Ambay Cements and Anr. 3

iii. Commissioner of Central Excise, Delhi Vs. Hari Chand Shri Gopal and

Ors.4

iv. State of Maharashtra Vs. Shri Vile Parle Kelvani Mandal and Ors. 5

v. Essar Steel India Limited & Anr. Vs. State of Gujarat and Anr. 6

vi. ONGC Commission of India Vs. MCGM7

Submissions of Mr. Raichandani in Rejoinder

2 (2022) 5 SCC 62 3 (2005) 1 SCC 368 4 (2011) 1 SCC 236 5 (2022) 2 SCC 725 6 (2017) 8 SCC 357 7 (2017) SCC Online Bom 9206

Shubham Muley 19/29

25. Mr. Raichandani submitted that there was no merit in the

preliminary objections raised by the Respondents. He pointed out that while

Respondents had claimed that the Petitioner had an alternate remedy, the

Respondents did not specify or set out what the alternate remedy available to the

Petitioner was. Insofar as the contention of delay, he pointed out that there had

in fact been no delay as the Petitioner had been diligently following up and

making representations to the Respondents seeking justice and that since

Respondents had failed and neglected to act upon the said representations, the

Petitioner had filed the present Writ Petition within a reasonable time.

26. Insofar as Respondent No.3's contention that tax was paid under

Section 192 and not 194(2) of the MMC Act. He submitted that Section 192 of

the MMC Act relates to rate of tax to be levied and the tax would be payable at

the rates specified in Section 192. He pointed out that it was Section 194(2) of

the MMC Act which provided for refund. Therefore, Petitioner could not have

made payment of tax under Section 194(2) of the MMC Act as submitted by

Respondent No.2. He submitted that this argument was one of desperation and

was totally bogus and without application of mind.

27. On merit, Mr. Raichandani submitted that insofar as compliance

with Section 194(2) of the MMC Act was concerned, Petitioner had fully

complied with the same as was evidenced by viz.,

Shubham Muley 20/29

i. The contract dated 15th July, 2015 entered into between the Hon'ble

President of India and the Petitioner.

ii. The octroi exemption certificate dated 17 th March, 2016 issued by the

Indian Navy.

iii. The goods receiving certificate dated 22 nd April, 2016 issued by the

Weapons Department of the Indian Navy.

He thus submitted that there had been full compliance with the requirement of

Section 194(2) of the MMC Act and thus the Petitioner's eligibility for a refund

of octroi had clearly been established. Mr. Raichandani submitted that the

requirement of producing an octroi exemption certificate was not a criteria

which determined the Petitioner's eligibility for refund of octroi under Section

194(2) of the MMC Act but was one of procedure which would entitle Petitioner

to claim the benefit of refund of octroi. He thus submitted that this requirement

of producing an octroi exemption certificate was therefore in the realm of

procedure for making the claim of octroi and nothing more. He thus submitted

that denial of the refund of octroi on this ground alone was therefore manifestly

unjust, arbitrary and perverse. He submitted that the authority, namely,

Respondent No.3 was required to apply its mind and ascertain whether the

Petitioner had in fact fulfilled the eligibility criteria for refund of octroi under

Section 194(2) of the MMC Act, and if so, then Respondent No.3 ought to have

granted such refund of octroi.

Shubham Muley                                                                       21/29




Reasons and Conclusions

28. We have heard the learned counsel appearing for the parties and

have perused the pleadings and considered the relevant case law cited. Before

however dealing with the merits of the case, we shall first deal with the two

preliminary grounds on which the Respondents have sought dismissal of the

present Writ Petition, namely, (i) the alternate remedy and (ii) delay. We have

considered both these preliminary grounds and find that there is no merit in

either of them. We find that while the Respondent has alleged the availability of

an alternate remedy, we find that no specific provision and/or details of the same

have been stated. In any event we find in the facts of the present case, that the

Petitioner is justified in approaching this Court under Article 226 of the

Constitution of India. In so far as delay is concerned, we find that there has in

fact been no delay so as to deny the Petitioner relief if the Petitioner is otherwise

entitled to the same. It is well settled law that there is no rule of law, which says

Courts under Article 226 of the Constitution cannot enquire into claims despite

the passage of time. The test is to see whether the illegality complained of is

manifest and whether the same can be sustained solely on the ground of laches.

The test is not the physical running of time but the fact that justifiable reasons

exist for warranting a Courts action in cases where injustice has been done or

justice has been denied. All that the Court has to see is whether the delay and

laches on the part of the Petitioner is such as to disentitle a Petitioner of the relief

Shubham Muley 22/29

claimed. It is now well settled that where a case has been made out to merit

interference under Article 226 relief would not be denied solely on the ground

of delay. Thus, both the preliminary grounds of objection are rejected as entirely

baseless and without any merit.

29. Now coming to the issue on merits, we find that what we really

have to consider in the facts of the present case is viz.,

i. Whether the Petitioner was eligible for a refund under Section 194(2) of

the MMC Act, and

ii. Whether failure to provide a declaration duly certified by the Octroi

Inspector would render the Petitioner ineligible for a refund of octroi

under Section 194(2) of the MMC Act.

We have examined the provisions of Section 194(2) of the MMC Act and find

that a plain reading of the same makes clear that the purport of Section 194(2)

of the MMC Act is to exempt from octroi those articles which are imported for

the purpose of fulfilling a specified contract with the Government or otherwise

for the use of the Government . Section 194 (2) does not provide for an

exemption of octroi at the threshold i.e. at the time of import but entitles a

person/entity to claim a refund of octroi provided that such person/entity is

eligible. The eligibility criteria provided for in Section 194(2) of the MMC Act

is twofold viz.

Shubham Muley 23/29

i. A written declaration signed by the importer that such article was being

imported for the purpose of fulfilling a specified contract with the

Government or otherwise for the use of the Government; and

ii. A certificate signed by an officer empowered by the Government in this

behalf certifying that the article so imported had become the property of

the Government.

Thus, we find that the above two criteria are the only two substantive

requirements to determine the eligibility for a refund of octroi paid on articles

imported for the purpose of fulfilling a specified contract with the Government

or otherwise for the use of the Government . We find Petitioner has squarely

compiled with both the said eligibility criteria as is evident from the following

documents, viz.

i. The contract dated 15th July, 2015 entered into between the Hon'ble

President of India and the Petitioner.

ii. The octroi exemption certificate dated 17 th March, 2016 issued by the

Indian Navy.

iii. The goods receiving certificate dated 22 nd April, 2016 issued by the

Weapons Department of the Indian Navy.

Shubham Muley 24/29

Most pertinently, we find that the Respondents in their Reply are totally silent on

this aspect. The only contention raised by the Respondents to hold Petitioner

ineligible is failure to furnish a declaration duly certified by the Octroi Inspector.

We find that Section 194(2) of the MMC act does not mandate the production of

a declaration duly certified by the Octroi Inspector as a criteria to determine the

eligibility for refund of octroi under Section 194 (2) of the MMC Act. This

requirement (if any) of the production of such declaration duly certified by the

Octroi Inspector is therefore merely a procedural requirement to enable an

eligible party to claim entitlement to the benefit of such refund of octroi under

Section 194(2) of the MMC Act. We say "if any" because nothing was shown to

us by the Respondents either from the provisions of the MMC Act or the relevant

octroi rules which mandated the requirement of declaration duly certified by the

Octroi Inspector. In any event we find that even assuming that the MMC Act or

the octroi rules provide/mandate for such declaration duly certified by the

Octroi Inspector we find that the failure to provide such declaration would not

by itself render the Petitioner ineligible for a refund of octroi. Once the Petitioner

has established its eligibility by complying with the provisions of section 194 (2)

of the MMC Act the Octroi Inspector would be duty-bound in law to

issue/certify such declaration to the Petitioner. In the present case, the Petitioner

has explained that the only reason why section 194 (2) was not mentioned on

was on account of inadvertence on the part of Petitioner's CHA in omitting to

mention the same. We find that the Petitioner has explained and in fact made

Shubham Muley 25/29

repeated representations to the Respondents explaining that this was the reason

as to why there was no mention of Section 194(2) on Form-B filed with the

customs authorities. We find that the Respondents were duty-bound in law to

apply their mind to the representations and demands for justice made by the

Petitioner and ascertain the Petitioners eligibility to claim refund under section

194(2) of the MMC Act. We find that the Respondents have failed and neglected

to do so and thereby have caused grave prejudice and injustice to the Petitioner.

30. We have considered the various judgments cited by learned

counsel for the Respondents and find that all of them deal with the

interpretation of exemption provisions/notifications. The said judgments inter

alia hold that exemption provisions/notifications must be strictly construed and

that the person/entity claiming exemption must strictly comply with the

provisions of the relevant exemption provision/notification. The said judgments

reiterate that exemption notifications especially in taxing/fiscal statutes must be

construed strictly and not liberally and that there must be strict compliance with

the provisions of the exemption statutes/notifications so as to grant the

benefit/exemption contemplated therein to a person/entity claiming the benefit

of such exemption. We are in complete agreement with the proposition laid

down in the judgments relied upon by the Respondents. However, the same is of

no assistance to the Respondents in the facts of the present case and in view of

our finding above that in the facts of the present case, the Petitioner has

Shubham Muley 26/29

complied with the substantive provision of section 194 (2) of the MMC act and

that the submission of the duly certified octroi exemption form was not a

substantive requirement of section 194 (2) of the MMC Act but was one of

procedure so as to entitle the Petitioner to claim the benefit of refund of octroi to

which the Petitioner was eligible having complied with the substantive

requirements of Section 194 (2) of the MMC Act. We find that even the

judgment of this Hon'ble Court in the case of Oil and Natural Gas Commission

of India Vs. Municipal Corporation of Greater Bombay & Ors. 8 upon which

heavy reliance was placed since the same dealt with Section 194 of the MMC

Act is of no assistance to the Respondents as the facts in the said case are entirely

different from the facts in the present case. In the case of ONGC the issue

involved pertained to the powers of the Municipal Corporation of Greater

Bombay to levy octroi on natural gas that was being imported by the Petitioner

in that case (ONGC) within the Municipal limits of the Municipal Corporation of

Greater Bombay. In the facts of that case Section 139 of the MMC Act

specifically conferred powers upon the Municipal Corporation to impose four

different types of taxes including octroi in terms of Entry 22(a) of Schedule-H.

Entry 22(a) of Schedule-H reads as under:

"22(a) Mineral Oils of all sorts, diesel oil, petrol, aviation spirit, all kinds of lubricating oils, while oil, spindle oil, furnance oil, petroleum products, mava oil, sevasol, solvent oil, other fuel oils, oils used as insecticides, natural gasoline, paint solutions and compositions, Turkey Red Oil, and by-products of mineral oils, but nothing herein before contained shall include kerosene and Crude Oil ..... 1 percent ad-valorem."

8 2017 SCC OnLine Bom 9206

Shubham Muley 27/29

It was in this context that the Municipal Corporation of Greater Bombay had

demanded octroi on natural gas imported by the Petitioner in that case (ONGC)

on the ground that natural gas was similar to liquefied petroleum gas and was

therefore chargeable under Class-IV Entry 22(a). Therefore the finding in

paragraph 28 of the said judgment which reads thus:

"28. If exemption is to be claimed, the same is required to be claimed under sub-section (1) of Section 194 by producing a certificate of an officer empowered by the Government concerned in this behalf stating that the article at the time of importation is a property of the Government. Such certificate has to be produced at the time of importation of the goods. This procedure is admittedly not followed in this case. Hence, the petitioner is disentitled to claim exemption."

Therefore even the said judgment of ONGC is of absolutely no avail to the

Respondents as the same was delivered and applicable in entirely different facts.

Additionally as we have already held in the facts of the present case, the

Respondent No.3 was duty bound to duly certify the octroi exemption since

Petitioner had fulfilled the eligibility criteria. Petitioner could not therefore be

deprived of its entitlement to octroi refund on failure of Respondent No.3

discharging its duties as required in law. Thus we hold the judgment relied

upon is of no avail to the Respondents.

31. We therefore have no hesitation in holding that the Petitioner is

eligible for a refund of octroi under Section 194 (2) of the MMC Act of an

Shubham Muley 28/29

amount of Rs.16,71,401/- (Rupees Sixteen Lakhs Seventy One Thousand Four

Hundred and One only) paid as octroi on the said articles imported pursuant to

the said work order under Bill of Entry No.4720347905001/2S-MAR-16. We

also find that in the facts of the present case the failure to provide a declaration

of duty certified by the octroi officer would not render the Petitioner ineligible

for a refund of octroi of Rs.16,71,401/- (Rupees Sixteen Lakhs Seventy One

Thousand Four Hundred and One only) paid as octroi on the said articles

imported pursuant to the said work order.

32. The Petition is therefore allowed. The impugned letter dated 16th

December, 2017 is set aside. The Respondents shall refund amount of

Rs.16,71,401/- (Rupees Sixteen Lakhs Seventy One Thousand Four Hundred and

One only) to the Petitioner within three months from today, failing which

interest at the rate of 7% per annum shall be payable on the said amount from

the date of filing of Petition till realisation.

 (ARIF. S. DOCTOR, J.)                             (S. V. GANGAPURWALA, ACJ.)




Shubham Muley                                                                       29/29