Court: Honorable Bombay High Court
Petitioner: M/s. Colgate Palmolive (India) Ltd.
Respondent: Mumbai Mahanagar Palika (BMC) and The Deputy Assessor and Collector (Octroi).
Case Summary:
M/s. Colgate Palmolive (India) Ltd. filed a writ petition challenging the method of octroi assessment employed by the Mumbai Municipal Corporation (BMC). The dispute centred on whether the octroi duty should be calculated based on the Maximum Retail Price (MRP) of goods or the original invoice value.
Arguments by Petitioner:
- Against MRP Basis: The petitioner argued that the BMC's reliance on the MRP for octroi calculation was unlawful, especially when the original invoice was available and genuine.
- Rule 2(7)(b) Misapplication: The petitioner contended that Rule 2(7)(b) of the Octroi Rules, 1965, was wrongly applied, as this rule should only come into play when there is a doubt about the invoice's authenticity.
- Constitutional Violation: The petitioner claimed that assessing octroi on the MRP violated Article 265 of the Constitution, which mandates that taxes must be levied by the authority of law.
Court's Findings:
- Invoice Value Should Prevail: The court held that the octroi should be assessed based on the original value rather than the MRP, as the invoice was genuine and available.
- Misapplication of Rule 2(7)(b): It was determined that BMC incorrectly applied Rule 2(7)(b), which is not applicable when the invoice is not in question.
- Constitutional Compliance: The court emphasized that taxes must align with constitutional provisions, particularly Article 265, ensuring lawful levy and collection.
Conclusion
The Bombay High Court directed the BMC to reassess the octroi duty based on the original invoice value instead of the MRP. This decision underscored the importance of adhering to established rules and constitutional mandates in tax assessments.
Laws, Acts, Articles, and Cases Referred
Constitutional Articles
- Article 38: Mandates the state to promote the welfare of the people and establish a just social order.
- Article 39: Directs the state to ensure policies that provide an adequate means of livelihood and prevent wealth concentration.
- Article 226: Empowers High Courts to issue writs to enforce rights and other purposes.
- Article 265: Stipulates that no tax shall be levied or collected without the authority of law.
Laws and Acts
Bombay Municipal Corporation Act, 1888:
- Section 192: Pertains to the levy of octroi on goods entering Mumbai for consumption, use, or sale.
- Section 195-1B: Allows the Commissioner to frame rules regarding octroi, subject to state government confirmation.
Bombay Municipal Corporation (Levy) of Octroi Rules, 1965:
- Rule 2(7)(a): Defines the value of articles for octroi assessment based on the original invoice.
- Rule 2(7)(b): This applies when the original invoice is unavailable or its genuineness is doubted, using the wholesale cash price.
Schedule H, Entry No. 19(a) in Group B: Specifies the maximum octroi rate of 5.5% ad valorem (means: proportionate to the estimated value of the goods or transaction concerned).
Cases Cited
- Tupperware India Private Limited v. State of Maharashtra 2018 SCC OnLine Bom 18029: Addressed procedural aspects of contesting octroi levies.
- First Appeal No. 431 of 2002: Regarding Hindustan Lever Limited and issues around octroi duties, dismissed for non-prosecution.