Allowed

M/S.Elder Pharmaceuticals Ltd.and Anr. v. Municipal Corpn.of Greater Mumbai and Ors.

Bombay HC4 Apr 2006WP/2945/2002

Case brief

AI extract

What is this about?

Petitioners challenged the levy of Octroi Duty on 'Tantum oral rinse' goods, classifying them as taxable medicines instead of exempted drugs. The court held that the burden of proof lies on the corporation to classify goods under a taxable schedule. As no material existed for the corporation to do so legally, the levy was illegal.

What did the court decide?

The writ petition was made absolute to set aside the order levying Octroi Duty and to claim refund of the amount paid.

M/S.Elder Pharmaceuticals Ltd.and Anr. Vs Municipal… — Writ and Judicial Review | Bombay HC (2006)

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 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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 ORDINARY ORIGINAL CIVIL JURISDICTION

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 WRIT PETITION NO.2945 OF 2002

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 Elder Pharmaceuticals Ltd.& Anr. ..Petitioners
 Vs.

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 Municipal Corporation of
 Greater Mumbai & Ors. ..Respondents

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 Mr.Jimy Pochakhanwala a/w Mr.Anand Kumar for the
 petitioners

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 Mr.A.Y.Sakhare a/w Mr.Vinod Mahadik for the
 respondents

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 CORAM : S.U.KAMDAR, J
DATED : 4TH APRIL, 2006

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 ORAL JUDGMENT:

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 1. The present petition is filed interalia

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 seeking a Writ of Certiorari for setting aside an
 order dt.26.9.02. By the said order, the
 respondent corporation has sought to levy Octroi
 Duty on an item known as ’Tantum oral rinse’ under
 item 59 of Schedule H of the Octroi Rules. The
 petitioners are also seeking a refund of Octroi
 collected by the respondent corporation in respect

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 of the consignment of the said goods. Some of the

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 material facts of the present case are as under:

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 2. The petitioner is a pharmaceutical company
 interalia manufacturing medicines and medicinal
 preparations. The respondents is a Municipal
 Corporation which has framed Octroi Rules for levy
 of an Octroi in respect of items which are entering
 within the territorial limit of City of Bombay
 under the provisions of Bombay Municipal
 Corporation Act, 1988. It is the case of the

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 petitioners that the petitioners prepared medicinal
 preparation under the trade mark ’Tantum’. One of
 the drugs manufactured is ’Tantum oral rinse. It
 is the case of the petitioners that the product
 which is manufactured by the petitioners is a
 medicine and is sold in the market only on the
 prescription of the registered medicinal practioner
 only. It is also the case of the petitioners that
 while manufacturing the said drug the generic drug
 known as ’Benzydamine HCI 0.1%’ is used for
 inflammation therapy in the oral form. The drug
 which is manufactured by the petitioners is used
 mostly for mouth inflammation following dental
 surgery.

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 3. It is the case of the petitioners that on

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 26.9.02 one of the consignment of drug of the
 petitioners on its entry in Bombay was stopped at
 Vashi and the respondent sought to levy Octroi @

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 5.5% under item 59 of schedule H of the Octroi
 Rules. The consignment which was detained by the
 respondent was a consignment of 402 packs of
 ’Tantum’ oral rinse. It is the case of the
 petitioners that after the said consignment was
 detained, the petitioners were made to pay Octroi
 of Rs.23,172/- on the said consignment and the
 petitioners paid the said amount under protest and
 were issued Receipt indicating the payment of the
 said amount under protest by the corporation.

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 4. Under the provisions of Octroi Rules the
 items which falls under schedule H are levied with
 the Octroi duty and are thus, liable to payment
 thereof whereas item which are falling under
 Schedule H-1 are free from the payment of Octroi
 Duty. It is the case of the petitioners that the
 medicines are falling under item 36 of schedule
 H-1. The said item 36 interalia reads as under:

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 "Live saving drugs as notified by the
 Commissioner from time to time and
 medicines, excluding toothpowder,
 toothpaste, cosmetics, toilet requisites,
 soaps and confectionery used as medicines
 or otherwise."

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 . However, the respondent corporation has assessed

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 the said goods under the residuary entry as was
 then existing under item 59 of schedule H. The
 said residuary entry has since been deleted. On
 the basis of the aforesaid amount of Octroi which
 has been assessed @ 5.5%

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 5. The learned counsel for the petitioners has

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 contended that there is no dispute in the present
 case that the petitioners are manufacturing the
 said product as a medicine and it is sold in the
 market as a medicine. The said goods are sold only
 on the doctors prescription and cannot be sold by
 the chemist. The carton which has been produced
 also carries a statutory warning under the drugs
 Act that it should be sold only against the

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 prescription of the doctor.

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 6. Apart from the aforesaid, there is no
 dispute before me that the petitioners are holding
 manufacturing licence under Foods and Drugs Act and
 thus, the said item which is manufactured by
 petitioners is a item specified as a medicine under
 Food and Drugs Act. It is also not in dispute that
 the goods which are produced by the petitioners
 under the said licence are sold in the market as a

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 medicine. The learned counsel has further
 contended that the corporation knowing fully well
 that the same are medicines and are sold in the
 market as medicines still has sought to classify
 the said item illegally as residuary item under
 item 59 of schedule H.

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 7. The learned counsel for the petitioners has
 relied upon the judgment of the learned single
 Judge of this court in the case of Proctor and
 Gamble India Ltd. Vs. The Municipal Corporation
 of Greater Bombay and Ors. reported in 2004(1) ALL
 MR 425 and has submitted that the burden of proving
 that the said goods falls under any of the entry of

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 Schedule ’H’ to the Octroi Rules and thus, the
 liability to an assessment for payment of Octroi
 duty is on the Corporation.

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 8. In the present case, there is no material
 produced of any nature whatsoever nor even it is
 the case of the Corporation that this particular
 product falls within a particular item because the
 Corporation itself is seeking to assess the said
 item under the residuary heading of item 59 of
 schedule H.

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 9. The learned counsel for the petitioners has
 thereafter relied on para 4 and 5 of the said
 judgment and contended that once goods are produced
 as a drug under the licence issued by the Foods and
 Drugs Authorities then it is not open for the
 Corporation to contend that the said goods are not
 medicines and are liable to be assessed as
 residuary article under item 59 of the schedule H.

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 10. The learned counsel for the petitioners has
 also drawn my attention to the judgment of the
 Division Bench in Appeal no.916 of 1993 decided on

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 9.8.94 in which it has been interalia held once

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 again held that the burden of proving that the item
 falls under particular heading of Schedule ’H’ of
 the Octroi rules is that of the department because
 tax statute has to be strictly construed and in
 absence of discharge of the said burden, it is not
 open for the department to levy any tax and/or any
 octroi on any of the items which are brought in
 within the territorial limit of Bombay by the
 petitioners.

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 11. The learned counsel for the petitioners has
 also relied upon the Division Bench judgment to the
 effect that once the goods are manufactured under
 the Drug Licence then all such drug preparations
 are to be treated as medicines and thus, they are
 entitled to benefit of exemption under item 36 of
 schedule H-1 of Octroi Rules. It is therefore
 submitted that the impugned order passed by the
 authorities dt.27.9.93 is illegal, unlawful and is
 liable to be quashed and set aside. The plaintiffs
 are entitled to refund of amount wrongfully
 collected by the respondents towards the Octroi
 duty.

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 12. On the other hand, the learned counsel for
 the Corporation has pressed reliance on the
 averments made in affidavit in reply to the said
 petition and has contended that it is for the
 petitioners to prove that the said item falls under
 the category of medicine and that the petitioners
 have failed to discharge the said burden. It has
 been further submitted that in any event there is
 an alternate remedy available under the Octroi
 Rules and therefore the present petition ought not
 to be accepted.

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 13. The learned counsel for the respondents
 however has not been able to indicate under which
 entry of Schedule ’H’ the said goods can be
 classified for the purpose of levy of Octroi Duty.
 The learned counsel for the respondents has fairly
 conceded that there is no material on record to
 establish that item falls under any particular
 heading of schedule H. He has submitted that it is
 because of the same that the Corporation has relied
 upon item 59 of schedule H.

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 14. I have considered the rival contentions and

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 I am of the opinion that there is no substance in
 the contention of the learned counsel for the
 respondents.

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 15. Dealing with the first contention that
 there is an alternate remedy available of an appeal
 under the rules. It is now well settled that the
 appeal cannot be a fetter on the power of the writ
 court to exercise writ jurisdiction. It is only a
 matter of discretion. It is also well settled that
 the court normally at the final hearing of the writ
 petition, once it is admitted, would not dismiss
 the petition only on the ground of alternate remedy
 unless in the view of the court it is necessary
 that the party must be relegated to appeal to
 determine any aspect of fact. There is no such
 case is made out in the present case. In that view
 of the matter, I do not entertain the contention
 that the petition should be dismissed on the ground
 of alternate remedy.

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 16. Now turning to the second contention that
 the petitioner has failed to prove that the said

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 item is a medicine. I am of the view that the

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 contention runs counter to the two judgments of
 this court ie. judgment of the learned single
 judge in the case of Procter and Gamble India Ltd.
 Vs. The Municipal Corporation of Greater Bombay
 (Supra) and the judgment of the Division Bench in
 the case of the Municipal Corporation of Greater
 Bombay and Ors. Vs. 1. Procter & Gamble India
 Ltd. and Anr. (supra) in which it has been held
 that it is for the authority who is seeking to levy
 the tax must discharged the burden to establish
 that the gods falls under any particular heading
 and thus liable to assessed for payment of Octroi.
 In that view of the matter, the submission made by
 the learned counsel for the respondents is required
 to be rejected.

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 17. On the aforesaid facts of the present case,
 it is clear that there is no material of any nature
 whatsoever for the respondent corporation to arrive
 at a conclusion that the said item is not a
 medicine. In my opinion, the petitioners have been
 able to demonstrate that the said goods are
 medicine not only by virtue of the fact that under

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 the licence issued by the Food and Drugs
 Authorities which has been produced in an affidavit
 dt.8.6.05 but also because there is a sufficient
 material indicating that the said goods are sold in
 the marked as a medicine.

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 18. In the light of the aforesaid, I am of the
 opinion, that the present petition must succeed. I
 therefore, make the present petition absolute in
 terms of prayer clause (a) and (e).

M/S.Elder Pharmaceuticals Ltd.and Anr. v. Municipal Corpn.of Greater Mumbai and Ors.

Case brief

What is this about?

What did the court decide?

M/S.Elder Pharmaceuticals Ltd.and Anr. v. Municipal Corpn.of Greater Mumbai and Ors.

Case brief

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What did the court decide?

What the court decided

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