Holding

Octroi may be levied on bottles only if they are brought into the municipal limits for consumption, use or sale; if empty bottles are re‑exported, the duty on their weight is refundable provided the duty was not passed on to consumers.

Summary

Mis Aqueous Victuals Pvt. Ltd. bottled soft drinks and sold them through wholesalers in four Uttar Pradesh municipalities. The municipalities levied octroi on the gross weight of the beverages plus the weight of the glass bottles, even though the empty bottles were returned to the company for recycling. The company challenged the levy, arguing that octroi could be imposed only on goods brought into the municipal limits for consumption, use or sale, and that empty bottles re‑exported should not be taxed. The Supreme Court held that octroi is chargeable on bottles only if they remain within the municipal limits for consumption, use or sale; if the empty bottles are taken out for recycling, the duty on their weight is refundable provided the duty was not passed on to consumers. The Court directed the company to file refund claims with the municipal authorities within a stipulated period and set aside the High Court’s order, allowing the appeals.

Issues considered

Whether the weight of glass bottles containing soft‑drink beverages imported into municipal limits can be included in the taxable gross weight for octroi under the U.P. Municipalities Act, 1916.
Whether octroi levied on empty bottles that are re‑exported after consumption can be refunded, subject to the doctrine of unjust enrichment.
Whether the petitioner must first approach the municipal authorities for refund before invoking the writ jurisdiction of the High Court.

Legislation cited

General Clauses Acts. 21
U.P. Municipalities Act, 1916s. 128(i)(viii), s. 134, s. 135, s. 296

Subjects

octroimunicipal taxglass bottlesrefundunjust enrichmentU.P. Municipalities Actre‑exportconsumptionusesale

Judgment

A MIS. AQUEOUS VICTUALS PVT. LTD.
v.
STATE OF U.P. AND. ORS.

MAY 8, 1998

B [S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.]

U.P. Municipalities Act 1916, Ss.128 (i)(viii) r/w Ss. 134,135- Octroi
on soft drinks-Whether weight ofglass bottles containing beverages imported
within municipal limits could be included for purposes of levying octroi
C duty-Held; if empty bottles were re-exported from municipal limits, exporter
liable to get refund provided octroi duty on empty bottles not passed on to
consumers-Doctrine of unjust enrichment.

The appellant bottled soft drinks at its plants at Bareiley and thereafter
distributed them to wholesalers including those in the respondent-
D municipalities. From 1980 onwards, the respondents sought to levy octroi
duty on the basis of the gross weight of the beverage as well as the .bottles
in which thy were brought into the municipal limits. This was challenged by
the appellant in writ petitions before the Allahabad High Court in 1983. The ,. · -<
High Court granted stay of recovery from 1983 till 1987 when the weight
E of bottles got exempted from octroi. The dispute was thus confined to the
period 1980 to 1987.
Relying on it earlier decision in Prem Nath Monga Bottlers (P) Ltd.
v. Municipal Board, Meerut, the High Court dismissed the writ petitions. In
this court the appellant contended that while the municipalities could validly
impose octroi on the weight of liquid contents of the bottles, thy could not
F on the weight of bottles which were, after taking out the liquid contained
therein, being sent back in their empty state to the appellant by the wholesalers
for recycling. Thus these bottles were not imported within the local limiis
of the municipalities for consumption, use or sale therein. On the other
hand, the municipalities contented that even the weight of bottles containing
G these liquids could legitimately be taken into consideration for imposing the
octroi duty thereon.
Allowing the appals, this Court

HELD: 1.1. The weight ofbardana or packing which contained the
consignments of octroiable beverage would remain liable to be included in
H the taxable gross weight of the consignment provided such bardana or packing
290
ACQUEOUS VICTUALS PVT.LTD. v. STA TE 291

l> .. was shown to be brought within the municipal limits for the purpose of its A
sale, consumption or use within the municipal limits. If such packing was
not brought within the municipal limit for the purpose of consumption or
sale or use tbereofand was found to have be taken out of the municipal limits
after its contents were discharged within the municipal limits, then the
weight of such outgoing bardana or packing, on the express language of the B
charging provision, could not be brought to octroi tax or if such a tax was
levied at the entry point, it would become liable to be refunded. [299-E-G) -

Burmah Shell Oil Storage & Distribution Company India Ltd. v. The
Belgaum Borough Municipality, 11963) Supp. 2 S.C.R. 216, followed.

Prem Nath Monga Bottlers (P) Ltd. v. Municipal Board. Meerut, (decided C
by Allahabad High Court in Civil Misc. Writ Petition No. 6883of1973 on
11.2.80, overruled.

S.M. Ram Lal & Co. v. Secretary to Government of Punjab, (1969) 1
U.J., (S.C.) 373.
D
Ba/sore Talkies (P) Ltd. v. Balasore Municipality, AIR (1986) Orissa
230; Nagar Mahapalika, Meerut v. Prem Nath Monga Bottlers Pvt. Ltd.,
[1996] 8 SCC l; Premier Breweries v. State of Kera/a, 11986] 1 SCC 641
and Tata Engineering & Locomotive Company Ltd. v. Municipal Corporation
of the City of Thane, 11992] Suppl. l SCC 361, referred to.
E
Shorter Oxford Dictionary, Volume 2, 3rd Edition, p. 179, referred to.

1.2. If the writ petitioner satisfied the authorities concerned that the
bottles containing the original consignments after getting emptied within
the municipal limits were actually taken out of the municipal limits for F
recycling, then the writ petitioner would be entitled to claim proportionate
refund of the octroi duty assessed on the weight of such empty bottles only
subject to the burden of such amount of duty not being shown to have be
passed on to the consumers of beverage or to anyone else. (306-B)

Mafatlal Industries Ltd. v. Union of India, [1977) SCC 536, referred G
to.

1.3. The writ petitioner was permitted to lodge claims for refund of
octroi duty paid on the weight of re-exported empty bottles during the relevant
period from 1980 to 1987 backed up by relevant material before the authorities
concerned within a period of 12 weeks. [309-B-D) H
292 SUPREME COURT REPORTS (1998] 3 S.C.R.

A CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2623-2625 .. '°-
of 1998.

From the Judgment and Order dated 10.9.87 of the Allahabad High Court
in C.M. W.P. No. I 7 and 734of1983.

B Dr. Meera Agarwal and Ramesh Chandra Mishra for the Appellant.

A.K. Goel, Kavin Gulati and R.B. Mishra for the Respondents for State.

Pramod Swarup, Ms. Pareena Swarup, Praveen Swarup, for the
Respondent No. 3 in C.A. No. 2623/98 Alok Singh, V.B. Joshi, for the
C Respondent in C.A. No. 2623 and 2625/98.

The Judgment of the Court was delivered by

S.B. MAJMUDAR, J. Leave granted.

D All these three appeals arising from a common judgment rendered by
the High Court of judicature at Allahabad in three writ petitions project a
short question whether the common appellant, original writ petitioner, was •
liable to pay octroi duty during the relevant period from 1980 to 1987 to the
respondent-Municipalities on the weight of the glass bottles which were
brought within the municipal limits when they were containing soft drinks like
E Gold Spot, Limca, Thumps-up, Soda, Rim-Zim etc. For the sake of convenience,
we shall refer to the appellant as the writ petitioner and the respondents as
the respondent-Municipalities in the latter part of the judgment. The
contention of the writ petitioner was that the beverages in liquid form were
imported by the wholesalers to whom the soft drinks were sold. The
F Municipalities, therefore, could validly impose octroi on the weight of liquid
contents of the bottles and not on the weight of bottles which were mere
containers as these bottles after taking out the liquid contained therein were
being sent back in their empty state to the writ petitioner by the wholesalers
for re-cycling and thus these bottles were not imported within the local limits
of the Municipalities for consumption, use or sale therein. This contention of
G the writ petitioner was rejected by the Division Bench of the High Court
relying on its earlier decision in the case of Prem Nath Monga Bottlers (P)
Ltd. v. Municipal Board, Meerut & Ors., in Civil Misc. Writ Petition No. 6883
of 1973 decided on 11.02.1980. We shall refer to the said judgment at the
appropriate place in the latter part of the judgment. In the impugned common
H judgment, the Division Bench of the High Court held that even though the
ACQUEOUS VICTUALS PVT. LTD. v. STA TE [S.B. MAJMUDAR, J.) 293

, . cold drinks were being imported for being sold within the municipal limits, the
bottles in which they were carried and filled in could be said to have been
A

used within the municipal limits, the bottles in which they were carried and
filled in could be said to have been used within the municipal limits for the
purpose of storing these liquids till they were ultimately utilised by the
consumers concerned. Therefore, even the weight of bottles containing these
liquids could legitimately be taken into consideration by the Municipalities for B
imposing the octroi duty thereon.

It is the aforesaid decision of the High Court which is brought in
challenge by the writ petitioner. We have heard learned counsel for the writ
petitioner as well as learned counsel appearing for the respondent- C
Municipalities of Rampur and Moradabad and the State of Uttar Pradesh in
support of the decision rendered by the High Court. The Municipalities of
Pilibhit and Shahjahanpur, though served, have not thought it fit to appear
and contest these proceedings.

Relevant Facts : D
, It will be necessary to keep in view a few relevant facts leading to these
proceedings. The writ petitioner is a Private Limited Company incorporated
under the Indian Companies Act, 1956. Under an agreement with Mis Parle
(Exports) Pvt. Ltd., Bombay, the writ petitioner is engaged in the business of
bottling soft drinks like Gold Spot, Limca, Thumps-up, Soda, Rim-Zim etc. E
Which are manufactured by Parle Exports. After bottling these beverages at
its Plants at Bareily, the writ petitioner distributes the same to who'Iesalers in
ten districts of Uttar Pradesh, which include amongst others, the respondent-
Municipalities, namely, the Municipal Boards of Moradabad, Rampur,
Shahjahanpur and Pilibhit. According to the writ petitioner-company after the F
beverages are consumed by the consumers within the municipal limits the
bottles empty state are returned to it and the title and ownership in the bottles
also remain with it. The Uttar Pradesh State Legislature enacted an Act in 1916
called the U.P. Municipalities Act, 1916 (hereinafter referred to as 'the Act').
Under Section 128 thereof powers were conferred on the Municipal Board
governed by the State Act to impose an octroi on goods or animals brought G
within the municipality for consumption, use or sale therein. Under Section
298 of the Act, the Municipal Boards are empowered to frame bye-lays for
various purposes of the Act. The bye-laws of Municipal Boards of Moradabad,
Rampur, Pilibhit and Shahjahanpur were enforced during the period from
12.05.1977 to 01.09.1982. According to the writ petitioner, these bye laws H
. '\.
294 SUPREME COURT REPORTS [1998] 3 S.C.R.

A provided for levying octroi on soft drinks like Cococola, Fanta, Vimgo, Soda
Water, Lemon etc. but they did not permit levying octroi on the weight of • 4.

bottles which contained these soft drinks. As the respondent- Municipalities
were seeking to levy octroi on the basis of gross weight not only of the
beverages contained but also of the bottles containing the beverages which
were brought within the municipal limits of the aforesaid Municipalities, the
B writ petitioner company filed three writ petitions in the High Court of judicature r--
at Allahabad in the year 1983. The grievance made in the writ petition was
that from 1980 onwards the respondent-Municipalities were illegally recovering
octroi also on the weight of bottle-containers which they were not entitled
to do and hence the respondent- Municipalities were required to be ordered
c to refund the requisite amount of octroi levied on the basis of the gross
weight of bottles from 1980 onwards. During the pendency of the writ petitions
in the High Court from 1983 till 1987, by interim orders, the respondent-
Municipalities were restrained from recovering octroi on the gross weight of
bottles meaning thereby the octroi duty was required to be confined only on
the net weight of the beverages contained in these bottles that were imported
D by the writ petitioner within the municipal limits of the aforesaid four
Municipalities. During the pendency of these writ petitions, the State ofUttar
Pradesh issued a Government Order on 06.04.1987 directing all the • '
Municipalities functioning under the Act in the State not to charge octroi on
the basis of gross weight but only on the weight of beverages contained in
E the bottles. Thus, from 06.04.1987 onwards, the weight of bottles and crates
containing the bottles got exempted from the octroi duty. Consequently, it
must be held that dispute got confined only from 1980 till 06.04.1987. We
may also note a further development, namely, that after 1991 the provision of
Section 128 (i) (viii) got deleted, therefore, from that date in the State ofUttar

F
Pradesh no octroi duty is levied by any of the Municipalities on any goods
or animals imported within the municipal limits of the Municipalities . /i
-
In the light of this factual backdrop, the main grievance putforth by
learned counsel for the writ petitioner has to be examined.

G Riva{ Contentions :
Learned counsel for the writ petitioner submitted that under Section 135
of the Act, the State Government or the prescribed Authority has to notify
in the Official Gazette the imposition of the tax from the appointed date as laid .
down by Section 135(2) of the Act. The Governor ofUttar Pradesh had issued
H a Notification dated 26.5.1979 in exercise of powers conferred under Section
ACQUEOUS VICTUALS PVT. LTD. v. STA TE [S.B. MAJMUDAR, J .] 295
135(2) of the Act read with Section 21 of the U.P. General Clauses Act A
,,.,.. • notifying that the concerned Municipality had in exercise of the powers under
clause (viii) of Sub-section (1) of Section 128 of the Act imposed the following
tax in the Munidpality of Moradabad with effect from the date of the said
Notification. The description of the taxes was to the following effect:-

"Octroi on goods and animals brought within the limits of the B
Municipality of Moradabad for consumption, use or sale therein be
levied according to the rates given in Schedule I below subject to the
exemptions in Schedule II thereunder :

SCHEDULE 1 c
Class 1.- Articles of food and drink for human and animal's consumption

SI. No. Description of goods Rate of Octroi
1 to 16. Rs. P.
D
17. Aerated water like Cococola, Fanta, Vimto,
sodawater· lemon etc . 2.25 per quintal
• It is of course true that the notification regarding Municipality of
Moradabad was brought on record of this case at page no. 47 of the main
paper-book but we may mention that similar notifications were issued by the
Governor of Uttar Pradesh concerning the other three Municipalities also. E
Learned counsel for the writ petitioner submitted that aforesaid entry at SI.
No. 17 includes aerated water like cococola, fanta, vimto, sodawater, lemon
etc. for which the rate of octroi prescribed is 2.25 per quintal. That this would
show that no separate rate of octroi was sought to be levied on the bottles
containing these beverages. Therefore, there could be no octroi imposed F
under the Act so far as the bottles or containers of these beverages were
'
concerned. It was also submitted that the High Court in the impugned judgment
had erroneously held that these bottles containing the beverages were being
used within the municipal limits and were imported for that purpose. That they
were brought within the municipal limits only as containers, as only beverages
were sold and not the bottles within the municipal limits. In fact, two G
Municipalities out of four contesting Municipalities, namely, Moradabad and
Sahajahanpur had not disputed that the title of bottles remained with the writ
.,.
:--
- petitioner and only the liquid contents thereof were being sold to the consumers
through the wholesalers within the municipal limits of the Municipalities and
the empty bottles were being sent back to the writ petitioner for the purpose H
296 SUPREME COURT REPORTS (1998] 3 S.C.R.

A of recyclin~ at its plant at Bareily for further circulation. It was further
submitted that the bottles containing the beverages, though physically entered
the municipal limits of the respondent-Municipalities, they i.e. the bottles
were neither consumed nor used nor sold within the municipal limits. Therefore,
no octroi could be levied on the weight of bottles brought within.the municipal
B limits. As at the entry point weight of these bottles was also subjected to the
charge of octroi duty, the action of the respondent-Municipalities must be
held to the ultra vires the Act, rules and the notification issued ·under the
Act. Consequently, respondent-Municipalities were required to refund the
illegally collected octroi duty on the gross weight of bottles. The writ petitions
were, therefore, required to be allowed. They were erroneously rejected by the
C High Court. In support of this contention, strong reliance was placed on some
of the decisions to which we shall make a reference hereafter.

Learned counsel for the State of Uttar Pradesh as well as learned
counsel appearing for the two Municipalities, as aforesaid, on the other hand,
contended that beverages of different types of cold drinks cannot enter the
D municipal limits in loose or liquid from unless they are contained in bottles
and other receptacles or containers and these containers are, therefore, in the
nature of primary packing. Consequently,, the gross weight of bottles
containing beverages as well as weight of beverages colltained therein has
to be taken into consideration for imposing the octroi duty, that the bottles
E can be said to have been brought within the municipal limits for the purpose
of use or consumption till the bottles get emptied at the end of the consumers
within the municipal limits and that the bottles remained in use for storing the
cold drinks. A lot of time is taken for consumption of cold drinks. Bottles may
also get destroyed in the meanwhile or may not be returned by the consumers
F to the retailers or wholesalers for being re-sent to the writ petitioner for
recycling. Therefore, for an indefinite period the bottles can also be said to
have entered the municipal limits for the purpose of use. Learned counsel for
the respondent-Municipalities accordingly submitted that the view taken by
the Division Bench of the High Court in the impugned judgment and also the
G view taken by the earlier Division Bench of the High Court in Civil Misc. Writ
petition No. 6883 of 1973 cannot be said to be erroneous in any manner. They
also invited our attention to some of the judgments of this Court anr1 also
one judgment of the Orissa High Court to which we shall make a reference
hereafter.

H Learned counsel for the respondent-Municipalities further submitted
ACQUEOUS VICTUALS PVT. LTD. v. STATE[S.B. MA.JMUDAR,J.] 297
that the writ petitioner never filed relevant statement of objections as required A
j
by the Act and that no details were furnished to the effect that the empty
bottles were being re-exported after the contents thereof were taken out by
the consumers. It was also contended that in substance the bottles could also
be said to have been sold within the municipal limits as the full value of
bottles was recovered in advance by the writ petitioner company by way of
security deposits and under these circumstances if the bottles were not B
returned they remained sold through the wholesalers. Some bottles may also
., get destroyed and may never get out of the municipal limits for recycling and
that all these disputed questions of fact could not have been decided by the
}.
High Court under Article 226 of the Constitution nor can they be decided by
us in the present proceedings. It was, therefore, contended that the writ c
petitioner was not entitled to any refund in these proceedings and in any case
no refund can be ordered to the writ petitioner without satisfying the concerned
authorities that they had not passed on the burden of disputed octroi duty
to their consumers. It was accordingly submitted that the writ petitions were
rightly dismissed by the High Court.
D
In the light of these rival contentions, the following points arise for our
consideration :-

POINTNO. I:

Whether the weight of bottles containing beverages imported within the E
municipal limits of the respondent Municipalities during the period from 1980
to 1987 could be legally subjected to octroi duty by the respondent-
Municipalities under the Act ?

POINT NO. 2:
F
... .. In the light of the decision on point No. I what further directions, if any,
can be issued in the present proceedings.?

We shall proceed to deal with the aforesaid two points which arise for
our consideration.
G
POINT NO. I:

It is not in dispute between the parties that the writ petitioner which
~+
is bottling beverages in its plant at Bareily in the State of Uttar Pradesh is
selling beverages through wholesalers functioning within the municipal limits
of the aforesaid four Municipalities for making them available to the consumers H
298 SUPREME COURT REPORTS (1998] 3 S.C.R.

A within the municipal limits. The writ petitioner has, therefore, to sell these
beverages to the wholesalers within the municipal limits. Consequently, the
cold drinks and beverages contained in bottles can be said to have been
•
brought within the Municipalities for the purpose of sale. Accordingly, on the
weight of beverages contained in the bottles, octroi duty could b..: legally
B levied by the respondent-Municipalities. There is no dispute on this point.

The dispute centres round the weight of bottles containing beverages.
In order to resolve this controversy between the parties, it is necessary to
have a look at the relevant provisions of the Act which heldJhe field during
the period from 1980 to 1987. Section 128 of the Act provides for taxes which
C may be imposed. Sub-section (I) clause (viii) thereof lays down that subject
to any general rules or special orders of the State Government in this behalf,
the taxes which a Board may impose in the whole or par of a Municipality
can consist of octroi on goods or animals brought within the Municipality for
consumption, use or sale therein. It is, therefore, obvious that before any
octroi is levied on any commodity by the Municipality, it must be shown that
D the said commodity was brought within the municipal limits for consumption,
use or sale therein. Section 134 of the Act deals with resolution of Board
directing imposition of tax. Sub-section ( 1) thereof lays down that when the
proposals have been sanctioned by the State Government, the State
Government after taking into consideration the draft rules submitted by the
E Board, shall proceed forthwith to make under Section 296 such rules in
respect of the tax as for the time being it considers necessary. Sub-section
(2) of Section 134 provides that when the rules have been made, the order
of sanction and a copy of the rules shall be sent to the Board, and thereupon
the Board shall by special resolution direct the imposition of the tax with
effect from a date to be specified in the resolution. Then follows Section 135
F regarding imposition of tax to which·we have made a reference earlier. A
conjoint reading of Section 128(l)(viii) and Section 134 and 135 leaves no
room for doubt that tax by way of octroi on goods brought within the
municipal limits for consumption, use or sale could legitimately be imposed
by the authorities concerned functioning under the Act. It is true, as pointed
G out by learned counsel for the writ petitioner, that under Section 135(2),
notifications were issued by the Governor of Uttar Pradesh permitting
imposition of octroi duty on goods and animals brought within the limits "f
the Municipalities according to the rates given in Schedule I to the Notification
and subject to the exemptions in Schedule II thereof. It is also true that in
Schedule I at entry 17 for aerated water like cococola, fanta, vimto, sodawater
H lemon etc. the rate of octroi was specified. However, learned counsel for the
-!..

ACQUEOUS VICTUALS PVT.LTD. v. STATE [S.B. MAJMUDAR,J.] 299
writ petitioner could not effectively contend that merely because the rate of A
octroi as laid down in the Notification, Schedule I refers to the aerated water
etc. and because the rate does not contain any reference to the aerated water
bottles, no octroi duty can be imposed on such bottles. The imposition of
octroi duty is in general terms on goods or animals brought within the
municipal limits for consumption, use or sale therein. If it is so, the bottles
containing beverages - aerated water like cococola etc. When brought within B
the municipal limits for the purpose of consumption, use or sale would also
become liable to bear the burden of octroi tax. Our attention was invited to
specimen rules framed under the Nagarpalika Moradabad Octroi Rules, 1978
which are at page 35 of the main paperbook. Rule 2(vi) thereof defines 'octroi'

•
to mean a tax on goods or animals brought within the Municipality for c
consumption, use or sale therein. According to Rule 2(vii) 'Schedule' means
the schedule ofrates at which octroi shall be levied. Rule 4 thereof lays down
that if the octroi is levied according to weight it shall be calculated on the
gross weight of the consignments including bardana and packing etc. Therefore,
as per this rule it can be said that if the packing or bardana by utilisation of
which the consignments of goods liable to octroi entered the municipal limits D
.., the former would also as packing materials become liable to bear the burden
of octroi duty and gross weight thereof would remain chargeable for octroi.
However, despite the said Rule 4, it has to be considered whether the said
rule falls within the four corners of the charging provision of Section 128(1 )(viii).
In the light of this main charging provision, it must be held that weight of E
bardana or packing which contains the consignments of octroiable beverages
would remain liable to be included in the taxable gross weight of the
consignment provided such baradana or packing which, even may be primary
packing or secondary packing, is shown to be brought within the municipal
limits for the purpose of its sale, consumption or use within the municipal
" limits. If such primary or secondary packing is not brought within the municipal F
limit for the purpose of consumption or sale or use thereof and is found to
have been taken out of the municipal limits after its contents were discharged
within the municipal limits. then the weight of such outgoing bardana or
packing, on the express language of the charging provision, cannot be brought
to octroi tax or if such a tax is levied at the entry point, it would become liable G
to be refunded. But this question in its turn will raise further questions of fact
whether such consignments including packings contemplated by Rule 4 were
-+
='" actually sold with their contents to the local consumers or wholesalers, as the
case may be, or whether they were consumed or used up within the local
limits or whether they were used for an indefinite period and had ultimately
rested within the municipal limits and had not been taken out. These are all H
300 SUPREME COURT REPORTS (1998] 3 S.C.R.

A disputed questions of fact which are required to be examined and adjudicated ~
upon when claims for refund on the allegation that octroi was wrongly
realised on the gross weight of such bardana or packing of bottles which were
allegedly taken out of the municipal limits are placed for consideration of the
appropriate .authorities.

B We have, therefore, to see whether on the facts of the present case the
writ petitioner was justified in invoking the writ jurisdiction of the High Court
straightaway without going to the competent authorities for lodging its claim
for refund of octroi levied on the weight of bottles in which beverages were
packed and brought within the municipal limits of the respondent-
C Municipalities. Learned counsel for the writ petitioner submitted that the High
Court had patently erred in taking the view that these bottles containing
beverages were brought within the municipal limits for use and that the
Division Bench had also equally erred in taking the further view that liability
to pay the octroi duty on the weight of bottles also got fastened on the
relevant consignments. In this connection, our attention was invited to two
D decisions of this Court. The first decision is Burmah Shell Oil Storage &
distributing Company India ltd. v. The Belgaum Borough Municipality,
[1963] Supp. 2 SCR 216. In that case, a Constitution Bench of this Court
speaking through Hidayatullah, J. examined the question whether octroi duty
was leviable from Burmah Shell Oil Storage & Distributing Company, Which
E was the appellant before this Court, when it brought within the municipal
limits of Belgaum the goods (a) for consumption by itself; (b) for re-export
either by itself or through dealers outside the area - which as was admitted
by the municipality, entitled the company to a refund of tax and (c) for sale
by it directly to consumers or to dealers who distributed the goods within the
area to ultimate consumers. Considering the case of the appellant before this
F Court, Hidayatullah, J. made the pertinent observations in connection with the
legal position concerning the imposition of octroi duty by the Municipality.
Interpreting the words found in Entry 52 of the State List in the Constitution
dealing with taxes on the entry of goods into a local area for consumptions
use or sale therein, it was held as under:-"

G "It is not the immediate person who brings the goods into a local area
who must consume them himself, the act of consumption may be
postponed or may the performed by someone else but so long as the
goods have been brought into the local area for consumption in that
sense, no matter by whom, they satisfy the requirements of the
H Boroughs Act and octroi is payable. Added to the word "consumption"
ACQUEOUS VICTUALS PVT. LTD. v. STATE [S.B. MAJMUDAR, J.] 30 I
is the word "use" also. There may be certain commodities which A
though put to use are not 'used up' in the process. A motor-car
brought into an area for use is not used up in the same sense as food-
stuffs. The two expressions use and consumption together therefore,
connote the bringing in of goods and animals not with a view to
taking them out again but with a view to their retention either for use B
without using them up or for consumption in a manner which destroys,
wastes or used them up ..... "

At page 233 of the Report, the following further observations were made
in connection with the entry regarding octroi on goods brought within the
municipal limits for consumption, use or sale therein. Emphasising the word C
"therein" at the end of the entry, it was stated:-

" ... The word 'therein' does not mean that all th<; act of consumption
must take place in the area of the municipality. It is sufficient if the
goods are brought inside the area to be delivered to the ultimate
consumer in that area because the taxable event is the entry of goods D
which are meant to reach an ultimate user or consumer in the area.
Indeed, the consumer may never consumer them as, for example, a'
motorist buys a tin of oil and finds that it does not suit his vehicle
and leaves it lying on his shelf. The goods must be regarded as
having been brought in for purposes of consumption when a person E
brings them either for his own use or consumption, or to put them in
the way of others in the area, who are to use and consume. In this
process the act of sale is merely the means for putting the goods in
the way of use or consumption. It is an earlier stage, the ultimate
destination of the goods being 'use or consumption'. The earlier F
stage, namely, the sale by him, does not save the person who brought
the goods into the local area from liability to the tax if the goods were
brought inside for consumption or use. In other words, a sale of the
goods brought inside, even though not expressly mentioned in the
description of octroi as it stood formerly, was implicit, provided the
goods were not re-exported out of the area but were bought inside for G
used or consumption by buyers inside the area. In this sense the
•· 'f amplification of the description both in the Government of India Act,
I 935 and the Constitution did not make any addition to the true
concept of 'octroi' as explained above. That concept included the
bringing in of goods in a local area so that the goods come to a repose H
302 SUPREME COURT REPORTS (1998] 3 S.C.R.

A there ..... "

In view of the aforesaid decision, it becomes obvious that the word
'retention' is held to be synonym with the word 'repose', meaning thereby
the article concerned must finally rest within the municipal limits. In the light
of the aforesaid judgment of the Constitution Bench of this Court, therefore,
B it is obvious that before a Municipality can impose octroi duty on any
commodity, it has to be shown that the commodity concerned was brought
within the municipal limits for consumption that is for being totally used up
so that it ceases to exist within the municipal limits themselves or it was to
be used for an indefinite period within the municipal limits so that it ultimately
C rests within the municipal limits and does not go out subsequently, or the
commodity concerned must be shown to have been brought within the
municipal limits for the purpose of sale within the said limits. Having laid
down the aforesaid legal position concerning the imposition of octroi in the
penultimate paragraph of the Report at page 234, the Court observed that the
Burmah Shell was liable to pay octroi tax on goods brought into local area
D (a) to be consumed by itself or sold by it to consumers direct and (b) for sale
to dealers who in their turn sold the goods to consumers within the municipal
area irrespective of whether such consumers bought them for use in the area
or o~tside it. The company was, however, not liable to Octroi in respect of
goods which it brought into the local area and which were re-exported. But
E to enable the company to save itself from tax in that case it had to follow the
procedure laid down by rules for refund of taxes.

The aforesaid authoritative pronouncement of the Constitution Bench
of this Court, therefore, sets at rest the controversy in the present case. If
it is the case of the writ petitioner that during the relevant period from 1980
F to 1987 it brought within 'the municipal limits of the four respondent-
Municipalities beverages packed in bottles and the bottles were not sold
within the municipal limits and after the beverages were taken out of these
bottles, these very bottles were returned to the petitioner and were taken back
to Bareily, then for claiming the refund of the octroi paid on the weight of
G these bottles during the relevant period when the consignments entered the
municipal limits from time to time, the writ petitioner had to follow the procedure
laid down by the Municipality concerned under its rules for refund of taxes
and had to comply with the statutory gamut of these rules. It had also to
show that the burden of disputed octroi duty was borne by it and was not
passed on to consumers of beverages contained in these bottles. In other
H words, it would not be guilty of unjust enrichment if refund was granted. If
ACQUEOUS VICTUALS PVT. LTD. v. STATE [S.B. MAJMUDAR,J.) 303
the refund claim on furnishing the relevant proofs was not ultimately granted, A
,
-
the remedy of appeal provided under the rules had to be followed.

In ti1is connection, we may also refer to a decision of a three-Judge
Bench of this Court in the case of S.M Ram Lal & Co. v. Secretary to
Government of Punjab, being an unreported judgment of this Court, reported
in (1969) I U.J. SC. 373. J.C. Shah, J. speaking for the three-Judge Bench B
considered the question whether the wool imported within the municipal limits
of Faridabad in raw from for dyeing within the municipal limits could be said
to have been used in the municipal limits or consumed therein so as to attract
octroi duty thereon. In this connection, the following pertinent observations
were made in paragraph 3 of the Report:- C

"It is common ground that the goods brought within the Notified Area
Committee of Faridabad were not brought for consumption or sale. It was
argued, however, that the goods were brought into the Notified Area Committee
for use, and on that account octroi was leviable. The expression "use" is not
defined in the Act. In its ordinary meaning the word "use" as a noun, is the D
act of employing a thing; putting into action or service; employing for or
" applying to a given purpose. But the word "use" occurs in Entry 52 List II
of the Seventh Schedule to the Constitution sandwiched between
"consumption " and "sale" and it must take colour from the context in which
it occurs. It is a settled rule of interpretation that when two or more words E
which are susceptible of analogous meaning are coupled together they are
understood to be used in their cognate sense. They take, as it were, their
colour from each other, that is, the more general is restricted to a sense
analogous to the less general: Maxwell on Interpretation of Statutes, 11th
Edition, p.321. The coupling of three words "consumption", "use" and "sale"
.. connotes that the underlying common idea was that either the title of the
owner is transferred to another, or the thing or commodity ceases to exist in
F

its original form. Unless it is proved that the wool brought within the limits
of the Notified Area Committee, Faridabad, by the appellant was intended to
be so employed that it was to become a new commodity or a component of
a new commodity, no octroi would be levied by the Notified Area Committee G
on the entry of wool. "

It is, therefore, obvious that the underlying common idea behind all the
three relevant words 'sale', 'consumption' or 'use' within the municipal limits
of the imported commodity so as to attract the levy of octroi thereon would
require proof of the fact that the concerned commodity got consumed H
304 SUPREME COURT REPORTS (1998] 3 S.C.R.

· A completely within the municipal limits or was used for an indefinite period in
such a way that it came to rest finally and permanently within the municipal
limits or was sold within the municipal limits. It is no doubt true, as submitted
by counsel for the writ petitioner, that out of the four Municipalities, Moradabad
-
and Sahajahanpur Municipalities did. not contest on the case of the writ
B petitioner that the empty bottles in which the imported beverages were packed
by the writ petitioner belonged to the writ petitioner company and were not
sold to anyone within the municipal limits but even if it is so the moot
question which would remain is to the effect whether containers, namely,
1
these bottles which were filled in with beverages imported for sale within the
municipal limits could be said to have been consumed or used within the
C municipal limits. It is, however, to be noted that other two Municipalities,
namely, pilibhit and Rampur Municipalities have not admitted the title of these
bottles inhering with the writ petitiont:!r and according to them the full market
value of the bottles was also recovered by the writ petitioner from the
wholesalers before despatching these b_ottles filled in with beverages. Therefore,
the question whether the bottles were really sold by the writ petitioner to the
D wholesalers or retailers within the municipal limits of these four Municipalities
will require resolution on consideration of relevant facts. But that apart, even
assuming that the title of the writ petitioner in these bottles might not have
been transferred to anyone else within the municipal limits, then the moot
question will remain whether these bottles on which the disputed octroi duty
E was levied by the respondent-Municipalities were brought within the municipal
limits for consumption or use. So far as the question of consumption is
concerned, it does not present any difficulty as it, it is no one's case that the
empty bottles, if in fact found to be taken out of the municipal limits can be
said to be consumed or destroyed within the municipal limits. However, a
further question still would remain for investigation, namely, whether out of
F the total consignments of bottled beverages imported within the municipal
limits, the entire consignments of the very bottles after getting emptied got
re-exported or whether some of the said bottles forming part of the original
consignments got destroyed by way of breakage etc. or were never returned
by the consumers concerned and only rest of the imported bottles were re-
G exported by enabling the consumers and the retailers or wholesalers to get
refund of the price of the bottles paid by way of advance security from the
writ petitioner on return of these empty bottles for recycling. It is axiomatic
that ifthe bottles in which beverages were brought within the municipal limits
for sale to consumers had themselves got destroyed ·by bre<:kage etc. or were
not returned by consumers, they could be said to be consumed within the
H municipal limits and hence there would be not occasion for their export at any
ACQUEOUS VICTUALS PVT.LTD. v. STATE [S.B. MAJMUDAR, J.] 305
time thereafter. But apart from these vexed disputed questions of fact, a A
further question would remain whether these bottles can be said to have been
used even temporarily within the municipal limits even on the assumption that
they were not consumed or sold within the municipal limits. So far as this
question is concerned, the High Court in the impugned judgment had taken
the view that beverages in liquid from could not have entered the municipal
limits nor could they have been brought within the municipal limits without B
being packed in receptacles or bottles. These bottles till they were emptied
of their contents at the ultimate end of the consumers would remain filled with
liquid beverages contained therein. Therefore, to that extent according to the
High Court, the bottles could be said to have been brought within the
municipal limits as containers for storing beverages and hence these bottles C
could be said to have been brought within the municipal limits for the purpose
of use for storage even leaving aside the question whether they were brought
within the municipal limits for the purpose of sale or consumption thereof. In
support of this conclusion of the High Court, our attention was invited to the
decision of a Division bench of the Allahabad High Court in Prem Nath
Monga Bottlers (p) Ltd 's case (supra) referred to earlier. Now a mere look at D
the said decision shows that relying on a decision of this Court in a sales
tax case, the Division Bench of the High Court came to the conclusion that
the bottles and shells were being used for the purpose for which they were
intended to be used, namely, as containers and this use was not merely for
bringing in the contents but was linked with the consumption of the contents E
and continued to be used till the final consumption of the contents by the
actual consumers and that it was impossible to deny that a bottle which
contained the beverage till the beverage was drunk by the actual consumer
within the municipal limits was not used by the consumer or whoever had the
custody of beverage till the consumption stage. Therefore, the bottles and
crates containing beverage could be said to have been brought within the F
municipal limits for use till the beverages contained therein were sold to the
dealers and retailers for ultimate consumption by the consumers. The aforesaid
reasoning of the Division Bench of the High Court cannot bear scrutiny for
the simple reason that this Court in the Constitution Bench decision in
Burmah Shell's case (supra) has clearly ruled that even though the use of the G
commodity brought within the municipal limits may not amount to its
destruction or total using up, the commodity concerned while being brought
in the municipal limits must have reposed within the municipal limits and was
not taken out later on. If the writ petitioner's case on facts is found true,
namely, that the bottles which contained beverages did not repose within the
municipal limits in empty form after their contents were consumed by the H
/

306 SUPREME COURT REPORTS [1998] 3 S.C.R.

A consumers and were actually taken out of the municipal limits, it could not
be said, as assumed by the High Court that the goods were used within the
municipal limits. We must, therefore, hold that if the writ petitioner satisfies
the authorities concerned that the bottles containing the original consignments
after getting emptied within the municipal limits were actually taken out of the
B municipal limits for recycling, then the writ petitioner would be entitled to
claim proportionate refund of the octroi duty assessed on the weight of such
empty bottles only subject to the burden of such amount of duty not being
shown to have been passed on to consumers of beverages or to anyone else. .{
But that would require investigation of facts by the authorities concerned, if
and when such claim for refund is lodged.
c
In this connection, we may also refer to a decision of the Orissa High
Court to which our attention was invited by learned counsel for the respondent-
Municipalities. In Mis Balasore Talkies (Pvt.) Ltd. & etc. etc. v. Balasore
Municipality & Ors., AIR (I 986) Orissa 230, a Division Bench of the Orissa
High Court h!d to consider the question whether cinematography films brought
D within the municipal limits for exhibition could be validly subjected to octroi
duty. The contention of the importer was that the cinematography films were
not being consumed or used within the municipal limits as after the period
for exhibiting these film by way of picture shows in cinema halls was over,
these very films were taken out of the municipal limits. The High Court on
E the facts of the case took the view that it could not be said that the films were
not consumed or used as such within the municipal limits. It is obvious that
on the facts of the case before the Orissa High Court, the said view was quite
justified as the cinematography films imported in original from would naturally
get exhausted by passage of time during which it will have to be subjected
to projection through projector on the cinema screen on as many occasions
F as the picture shows were held day in and day out spread over weeks and
by the time the picture shows were over and the films were taken out of the
municipal limits these films would never remain the same as originally imported.
Lot of wear and tear would reduce their efficacy. Therefore, on the facts of
that case, the Division Bench of the High Court was justified in taking the
G view that the term 'use' is of wider connotation than consumption. Any
article that is put to such application suffers waste or deterioration to some
extent, though not totally destroyed or used up and, therefore, it could be
held to have been used up to that extent. On the facts and circumstance of
the present cases, the aforesaid decision is of no avail to the respondent-
Municipalities as it is nobody's case that if empty bottles were actually taken
H out of the municipal limits after their contents were discharged within the
ACQUEOUS VICTUALS PVT.LTD. v. STATE [S.B. MAJMUDAR,J.] 307
municipal limits, they would get used up even partially only because they A
remained for some time within the municipal limits containing the beverages
without having reposed therein.

Learned counsel for the State of Uttar Pradesh placed reliance on the
Dictionary meaning of the term 'repose' as found in Shorter Oxford Dictionary,
Volume 2, 3rd Edition, p. 1799, wherein one of the meanings of the word B
'repose' is mentioned as 'temporary rest or cessation from activity'. That may
be the dictionary meaning but the term 'repose' in the context of octroi duty
is treated by the Constitution Bench of this Court in Burmah Shell's case
(supra) as a synonym for final resting of the commodity without being later
on taken out of municipal limits. It must, therefore, be held that the commodity C
which is imported within the municipal limits must either be sold or consumed
or used up completely or must be subjected to a continuous use without total
exhaustion but in every case the commodity concerned must not have left the
municipal limits. The word 'repose' as explained by the Constitution Bench
in the aforesaid decision, therefore.' has a special meaning and, therefore, the
dictionary meaning of the word 'repose' cannot be of any assistance in the D
context of the octroi levy as interpreted by this Court in Burmah Shell's case
(supra).

We may also mention that our attention was invited by learned counsel
for the parties to certain decisions of this Court dealing with sales tax in
deciding the question whether the value of the bottles could be subjected to E
sales tax and liable to be ·included in the taxable turn over including the value
of the Beer contained therein. The decisions in Premier Braveries v. State of
Kera/a, [ 1998] 1 SCC 641 and Tata Engineering & Locomotive Company Ltd.
& Anr. v. Municipal Corporation of the City a/Thane & Ors., [1993] Suppl.
1 SCC 361, cannot be of any avail to the learned counsel for the writ petitioner p
-.. as strictly speaking we are not concerned here with such a question in these
proceedings, and especially when we have direct decisions of the Constitution
Bench of this Court in Burmah Shell's case (supra) and S.M Ram La/'s case
(supra).

As a result of the aforesaid discussion, therefore, we hold that if G
beverages in liquid form contained in bottles are brought within the municipal

-"
limits and after such beverages are taken out of these bottles, those very
empty bottles are found to have been re-exported from the municipal limits
without being sold therein, the octroi duty paid on the weight of such bottles
earlier could be subjected to claim for refund by the exporter of such empty H
308 SUPREME COURT REPORTS [1998]3 S.C.R..

A bottles if the relevant factual data is found to the satisfaction of the authorities .
before whom such claim is lodged. The first point is, therefore, answered by
holding that if the writ petitioner proves to the satisfaction of authorities that
very bottles in which beverages were imported in given contingency for sale
and consumption within the municipal limits were actually taken out of
B municipal limits as empty bottles for re-cycling without writ petitioner losing
title to these bottles in the meanwhile, the octroi duty paid at the time of their
entry on the weight of bottles could be subjected to claim for refund subject
to the rider that it is also shown by the writ petitioner that the octroi duty
on such empty bottles had not been passed on to the consumers or any other
person so that the writ petitioner will not be found to be guilty of unjust
C enrichment by getting such refund. This question has also to be examined by
the authorities before whom claim of refund is lodged. As held by the
Constitution Bench of this Court in Ma/at/al Industries Ltd & Ors. v. Union
ofIndia & Ors., [ 1997) 5 SCC 536, the question of unjust enrichment pertaining
to such refund claims has to be examined by the authorities concerned. Before
parting with discussion on Point No. I, we may also mention that one decision
D of this Court in Nagar Mahapalika, Meerut v. Prem Nath Monga Bottlers
pvt. Ltd. & Anr., (1996) 8 SCC I, was pressed in service by learned counsel
for the writ petitioner. In our view that decision is of no avail to the writ
petitioner on the facts of the present case. This Court in the said decision
was concerned with the question whether the exemption of octroi granted to
E mineral water bottles would include aerated water bottles also. It was held that
the mineral water bottles would include latter type of bottles also. Such is not
the controversy before us. Point No. I is answered accordingly.

In the light of the decision on Point No.I, Point No.2 will naturally
require consideration of the question as to what type of directions can be
F issued in the present case. It is obvious that the dispute centres round the
levy of octroi on the weight of the containers, namely, the bottles imported
and brought within the municipal limits of four respondent-Municipalities
between 1980 and 1987 and as there was already stay of recovery of octroi
duty from the High Court on the weight of such bottles from 1983 pending
G the writ petitions till 1987, the writ petitioner had no occasion to put forth their
claim for refund till then. It is of course true that for earlier period from 1980
to 1983 when there was no stay from any court, the writ petitioner could have
lodged claims for refund but presumably because the writ petitioner thereafter
raised this contention before the High Court and the writ petitions remained
pending before thp High Court for a number of years such claims were not
H lodge. Under these circumstances, the writ petitioner cannot be shut out from
ACQUEOUS VICTUALS PVT. LTD. v. STA TE [S.B. MAJMUDAR, J.] 309
asking for refund on relevant consignments by submitting appropriate data. A
Consequently, on the peculiar fact of this case, we hold that it would be unfair
> and unequitable to prevent the writ petitioner from lodging any claims for
refund of octroi duty paid on the weight of re-exported empty bottles during
the relevant period from 1980 to 1987. If the writ petitioner's claim for refund
regarding the exported empty bottles covered by the concerned consignments
is found justified during the period when there was stay against such recovery,
B
nothing further would survive and the assessments for the same will close
the chapter. However, if the claim is not justified then the questions would
survive for the authorities to proceed further for recovery of the unpaid octroi
duty on the bottles covered by these consignments as they were till then
restrained from claiming such duty. So far as earlier period of 1980 to 1983 is c
concerned, if the claim of the writ petitioner for refund is found to be justified
on the facts concerning the given consignments and on the principle of
unjust enrichment, the writ petitioner is not required to be non-suited, then
the tjuestion of refund would survive for consideration and appropriate refunds
orders will have to be passed by the authorities. The writ petitioner shall be
permitted to lodge such claims backed up by relevant material before the D
authorities concerned within the period of 12 weeks from today. The writ
petitioner will have to support such claim for refund by producing relevant
evidence on the following points:

(a) Nature of the consignments concerned with their dates and the
number of bottles packed with beverages brought within the municipal limits
E
with their weight.

(b) Proof regarding the fact that these bottles were not sold within the
municipal limits to wholesalers retailers or to any other person.
F
(c) Number of bottles covered by the concerned consignments which
' were subsequently taken out as empty bottles beyond the municipal limits for
recycling and weight of such empty bottles;

(d) Whether the bottles which are actually found to have been taken
out of the municipal limits were the very same bottles containing beverages G
brought within the municipal limits by way of relevant consignments;

( e) Whether the value of such bottles and amount of octroi duty on
their weight was passed on to the consumers or not?

When the relevant facts and figures are placed before the authorities H
310 SUPREME COURT REPORTS [1998] 3 S.C.R.

A supported by relevant documentary evidence and if the authorities concerned
get satisfied about the same then only the question of refund for the period
from 1980 to 1987 or the question of non-recovery of octroi duty on the
weight of bottles covered by the consig'lments for the relevant period would
survive for consideration and if the authorities take any adverse decision in
B this connection on the diverse claims of the writ petitioner, it will be open to
the writ petitioner to challenge such assessments by filing appeals under the
rules and relevant provisions of the Act. Point No.2 for consideration is
answered by issuing the aforesaid relevant directions.

We may also mention, in this connection, that if such claims are lodged
C by the writ petitioner within the time aforesaid, then only they will be examined
at the earliest and preferably within a period of further 12 weeks from the
lodging of such claims and after hearing the petitioner or his representative,
appropriate assessment orders and consequential refund orders, if any, may
be passed by the authorities concerned.

D The appeals are allowed accordingly to the aforesaid extent. The
judgment and order of the High Court are set aside. The writ petitions filed
by the writ petitioner before the High Court will stand granted in the aforesaid
terms with no order as to Costs all throughout.

S.M. Appeals allowed.