Holding

The Supreme Court dismissed the appeal, affirming that empty bottles of the aerated drink are exempt from octroi under Entry 13 of the exemption list, as "mineral water" then meant aerated water or cold drinks.

Summary

The Meerut Municipal Corporation attempted to levy octroi on empty glass bottles of the aerated drink "Double Seven" that were brought into the municipal area for refilling. The bottling company contended that the bottles were exempt under Entry 13 of the 1975 Notification, which exempts "mineral water bottles" imported for refilling. The High Court, relying on the 1956 exemption list, held that "mineral water" at that time referred to aerated water and cold drinks, thus exempting the bottles. The corporation appealed to the Supreme Court, raising the question of whether the entry of empty bottles for refilling constituted "use" under Section 128(1)(viii) of the Uttar Pradesh Municipalities Act and whether "mineral water" could be interpreted to include aerated drinks. The Supreme Court, noting the historical context and the earlier decisions, dismissed the appeal and upheld the exemption, without addressing the "use" question. Consequently, the appeal was dismissed with no order as to costs.

Issues considered

Whether empty bottles of an aerated drink are covered by the exemption for "mineral water bottles" under Entry 13 of the 1975 Notification.
Whether the entry of empty bottles for the purpose of refilling constitutes "use" within the meaning of Section 128(1)(viii) of the Uttar Pradesh Municipalities Act, 1960.
Interpretation of the term "mineral water" in the 1956 and 1975 notifications in the commercial context of that period.

Legislation cited

Constitution of Indias. Seventh Schedule, Entry 52

Subjects

octroientry taxexemptionmineral wateraerated drinksmunicipal corporationinterpretation of notificationSection 128Uttar Pradesh Municipalities Act

Judgment

NAGAR MAHAPALIKA, MEERUT A
v.
M/S. PREM NATH MONGA BOTTLERS PVT. LTD. AND ANR.

MARCH 18, 1996

(B.P. JEEVAN REDDY ANDS. SAGHIR AHMED, JJ.] B

Uttar Pradesh Municipalities Act, 1916.

S.128-Entry Ta.x'-Municipal Corporation of Meeruf-Notificatio11
dated 4.1.1975-Entries 13,40,138-Enlly Tax 011 empty bottles of "Double C
Seven'L-Hefd, empty bottles brought into the municipal area for pwpose of
being refilled with the drink are exempted from en/ly tax.

The respondent-Company, situated within the municipal limit of
Meerut, carried on the business of bottling a drink known as 'Double
Seven'. The drink was sent out of the Meerut Local area in bottles to D
various dealers for sale, with the condition that after the drink was
consumed the bottles would be returned to the company; and accordingly,
the bottles were returned. The Municipal Corporation of Meerut proposed
to levy entry tax on the entry of the empty bottles on the ground that the
bottles were being dropped into the municipal area for the purpose of use, E
i.e. for being tilled with the drink "double seven" and the empty bottles
being" articles made of glass" within the meaning of Entry 138 of Notifica-
tion dated 4.1.1975, were subject of entry tax. The company resisted the
levy inter alia on the ground that the empty bottles were covered by Entry
13 of the exemption clause contained in the Notification. TI1e Corporation
rejected the claim; but, the appellate authority in the appeal filed by lite F
Company, as also the High Court in the writ petition filed by the C<trpora-
tion, taking note ol" the item "mineral water bottles", mentioned in the list
of exemptions drawn up at Item 15 in the year 1956, an entry correspond-
ing to Entry 13 ol" the Notification dated 4.1.1975, accepted the case of the
company that 'mineral water bottles' in Entry 13 of the Exempted Articles G
would include empty bottles of "aerated water (and) could drinks of all
kinds" mentioned in Entry 40 of the Taxable Articles and held that the
empty bottles of Double Seven being bottled by mineral water were ex-
empted from octroi. Aggrieved, the Corporation filed the present appeal.

Dismissing the appeal, this Court H
515
~
'

516 SUPREME COURT REPORTS [1996] 3 S.C.R.

A HELD : In view of the fact that the decision of the High Court was
rendered in 1983, and the statement made before this Court that the point
would not he at issue after 1987, it would not be proper and advisable, at
this distance of time, to interfere with the opinion of the appellate
authority and the High Court. It is presumed that they were aware of the
factual situation obtaining in the State both in 1956 and in 1975. They have
B
pointed out that the notification of 1975 was preceded by a notification of
1956 and that in 1956 mineral water as is known today was not in Com-
mercial circle and, therefore, when the notification used the expression
'mineral water', it meant are aerated water of the cold drinks. (519-C-D]

c CIVIL APPELLATE JURISDICTION; Civil Appeal No. 4151 of
1983.

From the Judgment and Order dated 13.1.83 of the Allahabad High
Court in C.M.W.P. No. 925 of 1982.

D V.J. Francis for the Appellant.

R.K. Jain, P.K. Rao and Mrs. Meera Aggarwal for the Respondent. •·

The Judgment of the Court was delivered :

E B.P. JEEVAN REDDY, J. This appeal is preferred by the Nagar
Mahapalika, Meerut against the judgment of a learned Single Judge of the
Allahabad High Court dismissing the writ petition filed by it. The matter
arises under the Uttar Pradesh Municipalities Act, 1960 (the Act) and
pertains lo levy of octroi.

F The respondent is a company which runs a bottling plant in Meerul.
Inter alia, it bottles a drink known as "Double Seven" under a franchise
agreement with M/s. Modern Bakeries Limited, New Delhi, a Government
of India Undertaking. The bottles are sent out of the Meerut local area to
various dealers for sale. According to the respondent, the sale is subject to
the condition that after the drink is consumed, the bottle is to be returned
G to it. Accordingly, bottles were being returned to it from time to time. The
appellant proposed to levy octroi on the entry of such bottles on the ground
that the said bottles were being brought into the Meerut local area for the
purpose of "use", i.e., for being filled with the drink "Double Seven".
According to the appellant-corporation, the empty bottles being "articles
H made of glass" within the meaning of Entry 138 of the Notification dated
)
NAGAR MAHAPALIKA v. PREM NA1H MON GA BOITLERSPVf. LID. {B.P. JEEVAN REDDY, J.) 517

January 4, 1975 were subject to the levy of entry tax. The respondent A
resisted the levy on two grounds, viz., (1) that the entry of empty bottles
into the local area for the purpose of being filled with the said drink and
meant for being taken out for sale outside the local area does not amount
to entry of goods for "use" within the meaning of the expression "consump-
tion, use or sale therein" which alone attracts the levy within the meaning B
of Section 128(1)(viii) of the Act and (2) that in any event, the said empty
bottles are covered by the exemption clause cont.ained in the said notifica-
tion and in particular by Entry 13 thereof. Both the contentions were
rejected by appellant whereupon the respondent filed an appeal before the
learned District judge under Section 472 of the Act. The learned District
Judge upheld the contention of the appellant, which led the appellant-cor- C
poration to approach the High Court by way of a writ petition. The High
Court did not go into first of the two contentions mentioned above. It
dismissed the writ petition upholding the second contention urged by the
respondent.

The Notification dated January 4, 1975 appears to be in two parts. D
The first part mentions the articles subject to entry tax. They are as many
as 190 entries (according to the copy placed before us.) The second part
contains a lL<t of articles which are exempt from octroi and this part
contains 37 entries. Entry 40 of the taxable items (first part) mentions
"aerated water, cold drinks of all kinds" among other goods. The entry E
reads :

"Lime juice and lime cordid gas of all kinds and aerated water,
cold drinks of all kinds and sweetened milk."

Entry 13 of the second part (exempted articles) reads: F

"Empty milk cans, mineral water bottles, kerosene oil tins and
drums, gas cylinders, wine bottles and drums and gunny bags if
imported for being refilled with the commodities for which they
are in ordinary use.11
G
1he contention of the respondent which has been accepted by the
High Court is that the words "mineral water botlles" in Entry 13 of the
Exempted Articles are the empty bottles of "aerated water (and) cold
drinks of all kinds" mentioned in Entry 40 of the Taxable Articles. It is
pointed out that "mineral water" is not found in any of the taxable entries H
'\

518 SUPREME COURT REPORTS [1996) 3 S.C.R.

A and that the said expression was contemplated as referring to aerated
waters and rold drinks. It is submitted that in the year 1975, when the said
notification was issued, mineral water as is now understood was not in use
at all. On the other hand, the contention of the appellant-corporation was
that "mineral water" and "aerated water (and) cold drinks of all kinds" are
two distinct articles as understood in common parlance and in the com-
B mercial world hy people who deal in them. The submission is that the
mineral water can never be understood as comprising either aerated water
or cold drinks and, therefore, the bottles in question are not exempted
under Entry 13 of the Exempted Articles. It is also brought to our notice
by learned counsel for both the parties that since 1987, the relevant entries
C have undergone a change and that this question would not arise after the
year 1987.

While we agree with the learned counsel for the appellant- corpora-
tion that 'mineral water'' and "aerated water/cold drinksn are different and
1

distinct articles, whether in common parlance or in the commercial par-
D lance, we are not inclined to interfere in the matter in view of the following
findings recorded by the learned Single Judge :

"In the list of exemptions drawn up in the year 1956 at item No.
15 there was an entry corresponding to entry 13 which runs as
E follows:

'Empty milk cans, mineral water bottles, kerosine oil tins and
drums, gas cylinder, wine bottles and drums and gunny bags
if imported for being refilled with the commodities for which
they are in ordinary use.'
F
Judicial notice can be taken of the fact that there are no natural
waters found within the Meerut Corporation limits. When the entry
of mineral water was made mineral water was not prepared artifi-
cially in 01e year 1956. Thus the above entry in 1956 also could not
have contemplated mineral water as the learned counsel for the
G corporation would have the court understand the term. In the
circumstances, the meaning suggested by the counsel for the Com-
pany that mineral water be held to include efforscent (efferves-
cent?) drinks, should be accepted.

H The Corporation admits that Double Seven prepared by the
I
j
)
I
NAGAR MAHAPALIKA "·PREM NAIB MONGA BOTTI..ERS PVT. LID. [8.P. JEEVAN REDDY,1.J 519

Company is an aerated drink which means that it is an effort scent A
drinks and it would be a mineral water.

Thus the mineral water bottled by the Company would be
taxable under Item 138 of the VII Schedule and it can only escape
octn:ii if it is shown that it is to be found in the list of exempted
articles, I hold that the empty Double Seven bottles being bottled B
by mineral water are exempted under entry 15 of the li.<t of
exemption from octroi. 11

The decision of the High Court was rendered on January 13, i983.
It may be noted that the learned District Judge was also of the same
opinion. We are inclined to presume that the High Court and the learned C
District Judge were aware of the factual situation obtaining in that State
both in 1956 and in 1975 and that at this distance of time, it would not be
proper and advisable to interfere with their opinion. They have pointed out
that the said notification of 1975 was preceded by a notification of 1956
and that in 1956 mineral water as we know today was not known in D
commercial circles and, therefore, when the notification used the expres-
. sion "mineral water 11 , it meant aerated water or the cold drinks. This course
we are adopting also because it is stated that after 1987 this question would
not arise.

In view of the above, it is not necessary for us to go into the question E
whether the entry of empty bottles for the purpose of being filled with cold
drinks/aerated water constitutes "use" within the meaning of the expression
"consumption, use or sale therein" occurring in Section 128(1)(viii) of the
Act or for that matter in Entry 52 of List-II of the Seventh Schedule to the
Constitution of India. F
The appeal is accordingly dismissed but in the circumstances with no
order as to costs.

R.P. Appeal dismissed.