Judgment:
D.R. Dhanuka, J.
1. By this petition filed under Article 226 of Constitution of India, the petitioners have challenged Municipal Circular No. AC/23/OCT/89-90 dated 6th October 1989 denying 'N' Form facility to the Bombay based importers and thus denying the benefit of octroi exemption. By this circular, the staff working at the Octroi Work Centres was directed not to allow exemption from octroi under 'N' Form to Bombay-based importers. The petitioners in this petition and in companion petitions have challenged the validity of the said circular on the ground that the said circular has been issued by the concerned respondents without authority of law and the petitioners are considerably prejudiced thereby. A copy of the said circular is annexed to the petition as Exhibit-'A'.
2. The facts and circumstances leading to the filing of this petition are as such:---
(a) The petitioners carry on business as merchant-exporters. The petitioners carry on business in Bombay. The petitioners obtain orders from the foreign customers having base outside India for supply of various kinds of goods by exporting the same out of India. The petitioners procure these goods from their upcountry suppliers for the purpose of exportation out of the India for the purpose of fulfilling their obligation to export the said goods, abroad. The contracts of sale are duly concluded between the petitioners and their foreign buyers much prior to procurement of the said goods by the petitioners from their upcountry suppliers. The said goods are conveyed directly from the Octroi Naka in Greater Bombay to the Docks under supervision and escort of Municipal staff for the purpose of immediate exportation out of India. The said goods are never consumed, used or sold in Greater Bombay and are in Greater Bombay only during the course of their transit for the purpose of onward transmission to the Docks for being shipped and exported out of India. The said goods are not even stored in Bombay. The packages are not even opened in Bombay.
(b) Since last 25 years, the petitioners and other merchant-exporters similarly situate have been granted the benefit of exemption from Octroi and facility of 'N' Form, as prescribed under the relevant rules. While submitting application on 'N' Form, the merchant-exporters are required to declare that the said goods are imported for immediate export out of India and submit relevant particulars in that behalf. The practice followed by the Municipal Corporation in this behalf was in conformity with the Bombay Municipal Corporation Act and the relevant rules.
(c) On 6th October 1989, a circular was issued by the Municipal authorities to its staff working at the Octroi Work Centres purporting to change age old practice. The said circular is the impugned circular. It was stated in the said circular as under:---
'Circular No. AC/23/OCT/89-90, 6th October 1989.
Sub: N Form facility to the Bombay based importers. Non-admissibility of the...
The issue of grant of 'N' Form facility in cases wherein Bombay based importers collect orders from foreign countries for export of articles, and in order to fulfil the orders of the foreign customers, place orders with up-country manufacturers receive the goods in Bombay and export the same was got thoroughly examined legally. The Law Officer has advised that 'N' Form facility is not admissible in such cases as per the provisions of the B.M.C. Act and the octroi rules framed thereunder.
The staff working at the Octroi Work Centres is, therefore, directed not to allow exemption from Octroi under 'N' Form to Bombay based importers.'
3. By his interim order dated 11th December 1989, R.A. Jahagirdar, J., held at interlocutory stage, while admitting similar petition, that the petitioners had been consistently using the 'N' Form facility and the petitioners could not be deprived of the said facility by the respondents. By the interim order passed by this Court, the petitioners were allowed to use the 'N' Form facility as hereinbefore and claim exemption from payment of octroi accordingly. The respondent No. 1-Corporation preferred an appeal against the said order. By its order dated 13th February 1990, a Division Bench of this Court consisting of Mrs. Sujata Manohar and M.P. Kenia, JJ., dismissed the said appeal.
4. It is necessary to refer to the relevant provisions of the Bombay Municipal Corporation Act, hereinafter referred to as 'the Act' and the rules before the submissions of the learned Counsel on either side are examined.
5. Section 139 of the Act makes provision for imposition of various taxes by the Municipal Corporation of Greater Bombay. The Municipal Corporation levies property taxes, a tax on vehicles and animals, a theatre tax and octroi. As far as octroi is concerned, sections 192 to 195-1A of the said Act appear to be relevant. Section 192 of the Act provides for levy of octroi at rates not exceeding those specified in Schedule 'H' to the said Act in respect of the items mentioned in the said Schedule. Section 194 of the said Act provides that no octroi shall be leviable on any article which at the time of its importation is certified by an officer empowered by the Government concerned in this behalf to be the property of the Government. Section 194-A of the said Act is directly relevant for the purpose of disposal of this writ petition. The said section reads as under:---
'194-A. Subject to such rules, not inconsistent with this Act, as the Commissioner, with the approval of the Standing Committee, shall from time to time frame in this behalf, any article imported into Greater Bombay for the purpose of immediate exportation shall be exempted from the levy of octroi, if such article is conveyed direct from the place of import to the place of export under such supervision and on payment of such fees therefor as shall be determined in the said rules; provided that no rule framed as aforesaid shall have effect unless and until it is confirmed by the State Government.'
The said section clearly provides for total exemption from the levy of octroi if the article is imported within the octroi limits for the purpose of immediate exportation and if such article is conveyed direct form the place of import to the place of export under the supervision and on payment of such fees as are prescribed by rules. The rules required to be framed, under section 194-A of the said Act can be brought into force only after the same are approved by the State Government. It is well-known that octroi is a tax payable on importation of an article within the octroi limits for the purpose of consumption, use or sale. The said section makes it clear that if the article is imported for the purpose of immediate exportation and is conveyed direct from the place of import to the place of export under the Municipal supervision, then the importer is entitled to exemption from payment of octroi on his complying with the procedure prescribed by rules.
6. Section 195(1) of the Bombay Municipal Corporation Act provides for refund of octroi on export. It is obvious that section 195 of the said Act has no application to the cases which are directly covered under section 194-A of the said Act. In other words, section 194-A deals with the subject-matter of importation of goods within the octroi limits for purpose of immediate exportation. Section 195 deals with the subject-matter of levy when imported goods are ultimately exported abroad and the subject-matter does not fall within section 194-A of the Act. There are cases when the goods are imported within the octroi limits and as kept stored in Greater Bombay before the same can be exported. There are case where the articles imported are exported later on and not immediately i.e. within a period of six months from the date of importation. Such cases are separately dealt with by section 195. In such cases octroi is payable and there is no question of exemption at the threshold. If, however, the importer makes the necessary declaration as prescribed under the relevant rules concerning section 195 of the said Act, such importer can export goods within a period of six months from the date of importation and on complying with such rules, the importer is entitled to obtain refund of the octroi paid after deduction therefrom of certain percentage of octroi specified in section 195-1A of the said Act. In other words, the scheme of the said Act is quite clear. Sections 194-A and 195 of the Act operate in different situations. It is well-known that special provision excludes the general provision and the rule of interpretation in this behalf cannot be disputed. Section 192 of the Act cannot therefore be invoked so as to nullify section 194-A and section 195 of the said Act.
7. In order to give effect to the provisions of section 194-A of the Bombay Municipal Corporation Act, the Municipal Corporation of Greater Bombay, with the sanction of the State Government, has framed the Bombay Municipal Corporation Exemption of Octroi (Immediate Exportation) Rules, 1965, hereinafter referred to as 'the rules'. These rules are operative from 1st April 1965. Rule 4 of the rules provides that articles imported into Greater Bombay for the purpose of immediate exportation shall mean 'the articles in transit' being the goods not imported into Greater Bombay for the purpose of consumption, use or sale therein but for immediate exportation by being conveyed direct from the place of import to the place of export under such supervision and on payment of such fees as are prescribed under the rules. Rule 5 of the rules prescribes an elaborate procedure to the effect that the importer claiming exemption from octroi under section 194-A has to make an application in Form 'N' appended to the rules and submit various documents, and a process of verification is prescribed. Only when the competent authority is satisfied, on scrutiny of the documents and the particulars furnished by the importer, that the particulars furnished by the importer are correct and that the goods are imported for the purpose of immediate exportation, that an endorsement is made behind the shipping bill to the effect 'please allow'. Thus the procedure and machinery is prescribed in detail for making of the application by the importer who imports such goods for the purpose of immediate exportation and grant of such application after verification of data. At the time when the goods reach octroi naka, the importer is required to declare the name of the ship in which goods are to be loaded and furnish all other particulars. Not merely that, but as prescribed under section 194-A itself, the relevant rules also provide for conveying of the said articles by the escort of the Municipal Corporation to the place of export.
8. It is, therefore, clear that the impugned circular (Exhibit- A to the petition) was issued by the Municipal authorities without application of mind and it could not have been directed that the Bombay-based importers should not be allowed to make the application in 'N' Form, even if the goods were imported for the purpose of immediate exportation. The said circular dated 6th October 1989 was issued by the Municipal authorities without authority of law and is liable to be quashed as ultra vitres.
9. In the affidavit in reply filed on behalf of the Municipal Corporation of Greater Bombay, it is contended that the petitioners and other importers ought to have availed of the procedure prescribed under section 195 of the Act by first paying the octroi duty and then claiming refund of such percentage of octroi as is prescribed under the said section. I have already observed that section 195 is applicable only in those cases where the goods are not immediately exported and such exportation takes place much later. In all such cases, the scheme of levy of octroi and refund is totally different. In such cases the concerned importer is required to satisfy before claiming refund that the same goods have been exported and no processing has been done and no change is effected. In all such cases, no refund of octroi is permissible if the export is effected beyond a period of six months. In my judgment, section 195 of the said Act and the rules have no application whatsoever to the case of the petitioners. In the present case, the goods are liable to be treated as goods in transit only and the goods are directly conveyed under the Municipal directions from the octroi naka to the Docks for the purpose of immediate exportation.
10. Mr. M.N. Kothari, the learned Counsel for the Municipal Corporation, has submitted that the impugned circular was issued in view of the apprehension of the department that the transaction of sale might be concluded between the merchant-exporter and the foreign buyer in Greater Bombay after the goods in question entered the octroi naka from upcountry i.e. between the date of importation thereof in Greater Bombay and before exportation thereof out of India. There is no warrant for such an apprehension. The alleged apprehension, if any, was totally imaginary. The application to be submitted by the petitioners in 'N' form to the authorities of the Municipal Corporation for octroi exemption is required to be submitted with full details and supporting documents at the octroi naka. In the said application, the petitioners have to disclose the name of the ship by which the goods are to be exported out of India and also submit all other particulars. As a matter of fact, the goods are brought from upcountry for the purpose of immediate exportation thereof by the ship and the contract of sale between the petitioners and their foreign buyer is concluded much prior to the entry of the goods within the octroi limits. It is then contended in the affidavit filed on behalf of the Corporation that the procedure which was being followed by the Corporation for about 25 years, by allowing the Bombay-based importers to avail of the 'N' Form facility in relation to the immediate exportation of the said goods, was mistaken and the Municipal Corporation is entitled to correct this mistake. The impugned circular was mistaken and has no authority of law. The practice followed in the past was in conformity with law and was valid. This Court granted complete interim relief to the petitioners restoring status quo ante after hearing both the sides and injustice was thus prevented.
11. In this view of the matter, I hold that the impugned order/impugned circular issued by the Municipal authorities is without authority of law. I quash the said circular. I hold that the petitioners and other importers similarly situated are entitled to the benefit of exemption from octroi duty, provided the petitioners and other importers similarly situated comply with each and every rule framed by the 1st respondent-Corporation, known as 'The Bombay Municipal Corporation Exemption of Octroi (Immediate Exportation) Rules, 1965'. The 2nd respondent-Commissioner is directed to issue a fresh circular to the staff working at the Octroi Work Centres withdrawing the impugned circular dated 6th October 1989 (Exhibit-A to the petition), informing the members of the staff about this decision of the High Court and directing them to continue to allow the petitioners and other importers similarly situated to avail of the 'N' Form facility and grant exemption from octroi.
12. In light of the above discussion, I make the rule absolute and direct the respondents to pay to the petitioners costs of this petition fixed at Rs. 500/-. I, however, clarify that in case of change in the rules or the provisions of the Act, the parties shall be at liberty to seek further directions from the Court, if they so desire. The orders passed in this writ petition shall continue to be operative so long as the provisions of section 194-A of the Bombay Municipal Corporation Act and/or the Bombay Municipal Corporation Exemption of Octroi (Immediate Exportation) Rules, 1965 continue to be operative.