Bombay High Court: Petitioner filed the present petition seeking the relief to declare that the determination of the value for the purposes of levy of octroi by respondents in petitioners’ case under Rule 2(7)(b) of the Bombay Municipal Corporation (Levy) of Octroi Rules, 1965 (‘1965 Octroi Rules’) as unconstitutional, illegal, and ultravires the provisions of Rule 2(7) of the 1965 Octroi Rules and/or the provisions of the Municipal Corporation Act, 1888. The Division Bench of M.S. Sonak* and Kamal Khata, JJ., opined that as petitioner paid octroi at the rates demanded without any protest or demur for the period from 1995 to 2001, it was dissuaded from exercising its discretionary jurisdiction under Article 226 of the Constitution and granting any relief regarding the levies from 1995 to 2001 would result in petitioner’s unjust enrichment.
Background
Petitioner paid octroi duties to Respondent 1, Mumbai Mahanagar Palika between April 1995, and March 2001 and there was neither any record nor any clear averment that the octroi duty paid was “under protest” or “without prejudice” to petitioner’s rights to question the levy or to question the alleged overcharging. However, from March 2001, petitioner protested the alleged overcharging and required Respondent 2, the Deputy Assessor and Collector (Octroi) to decide on merits of petitioner’s application dated 16-03-2001. By an interim order dated 27-11-2001, this Court had directed Respondent 2 to decide the application on merits after giving an opportunity of personal hearing to petitioner.
Analysis, Law, and Decision
The Court stated that if the party was aggrieved by the determination by Respondent 2, the party could appeal against the same to the Small Causes Court and since all this procedure was never followed by petitioner in so far as the levies from 1995 to 2001 were concerned, the Court’s discretionary jurisdiction under Article 226 of the Constitution could not be conveniently exercised to adjudicate, disputed questions of fact or to grant some general declaratory relief to petitioner.
The Court opined that as petitioner paid octroi at the rates demanded without any protest or demur for the period from 1995 to 2001, it was dissuaded from exercising its discretionary jurisdiction under Article 226 of the Constitution. The Court thus held that granting petitioner any relief regarding the levies from 1995 to 2001 would result in petitioner’s unjust enrichment.
The Court stated that it was reasonable to infer that petitioner had already passed on the burden of such octroi duties to its millions of consumers. Therefore, if the Bombay Municipal Corporation (‘BMC’), a public authority, was directed to refund the alleged excess octroi duty collected by it to petitioner, then petitioner would certainly be unjustly enriched, and it was impossible to direct or enforce the direction for petitioner to return this amount to millions of its consumers.
The Court relied on Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 (‘Mafatlal Industries Ltd. Case’), wherein the Supreme Court held that “a claim for refund, whether on the ground that excess tax has been collected by misinterpreting or misapplying the provisions of relevant law or on the ground that the relevant provision of the law under which it was levied is or has been declared to be unconstitutional, can succeed only if the Petitioner alleges and establishes that he has not passed on the burden of duty on another person/other persons”. The Supreme Court in Mafatlal Industries Ltd. Case (supra) also held that “where the burden of the duty has passed, the Petitioner cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden, and only that person can legitimately claim its refund. But where such a person does not come forward, or it is not possible to refund the amount to him for one reason or another, it is just and appropriate that the amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition”.
In Mafatlal Industries Ltd. Case (supra), the Supreme Court explained that the doctrine of unjust enrichment was a just and salutary doctrine and no person could seek to collect the duty from both ends, i.e., the person could not collect the duty from the purchaser at one end and the same duty from the State on the ground that it had been collected from him contrary to law.
The Court stated that petitioner had neither pleaded nor established that it had not passed on the burden of the alleged excess octroi collected by the BMC to its consumers. Thus, allowing any refund to petitioner would only unjustly enrich petitioner even though it was not established that petitioner had suffered any real loss or prejudice. The Court further stated this was a valid consideration for not ordering any refund even if it was concluded that any excess octroi was collected from petitioner based upon any alleged misapplication or misinterpretation of the legal provision.
The Court dismissed the petition and stated that it did not go into the issue of whether the value of articles in the present case ought to have been determined under clauses (a) or (b) of Rule 2(7) of the 1965 Octroi Rules. Thus, this question was kept open for Respondent 2’s decision on a case-to-case basis and if the determination of Respondent 2 aggrieved petitioner, then petitioner had the statutory right to appeal such decisions. The Court noted that in the past, i.e., from 2001 onwards, petitioner not only appealed but also succeeded in the appeals before the Small Causes Court against the determination by Respondent 2.
[Colgate Palmolive (India) Ltd. v. Mumbai Mahanagar Palika, 2024 SCC OnLine Bom 2391, decided on 26-07-2024]
*Judgment authored by: Justice M.S. Sonak
Advocates who appeared in this case :
For the Petitioner: Jitendra Motwani, a/w Anusha Shah, Ansh Agal, i/b Economic Laws Practices
For the Respondents: Drupad Patil, a/w R. M. Hajare, i/b Sunil Sonawane
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