M/S. Elder Pharmaceuticals Ltd. and Anr. Vs Municipal Corpn. of Gr. Mumbai and Ors.

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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. 2651 OF 2004

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 M/s.Elder Pharmaceuticals Ltd.
 and another. ... Petitioners

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Vs.

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 Municipal Corporation of
 Greater Mumbai & Ors. ... Respondents

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 Jimmy Pochakhanwala with Mr.Anand Kumar
 for the petitioners

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 A.N.Shaikh for the respondents

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 CORAM : V.C. DAGA, J.

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DATED : 6th February 2007.

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JUDGMENT:

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 1. The present petition is filed by the

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 petitioner, inter alia; seeking a writ of certiorari
 for setting aside an order 12th March, 2004. By the
 said order, the respondent corporation has sought to
 levy octroi duty on an item known as "A.M.P.M. Dental
 Rinse" under Item 10 of Schedule H of the Mumbai
 Municipal Corporation Act, 1988 ("Act" for short) The
 petitioners are also seeking a refund of octroi
 collected by the respondent corporation in respect 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,

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inter alia; manufacturing medicines and medicinal

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 preparations. The respondent No.1 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 Mumbai under
 the provisions of the Act. It is the case of the
 petitioners that the petitioners prepared medicinal
 preparation under the trade mark "A.M.P.M." One of the
 drugs manufactured is "A.M.P.M. Dental 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 as medicine only as an oral rinse
 recommended by dentists for protection of teeth from
 cavities and for removal of plaque. It is also the
 case of the petitioners that the said medicine
 "A.M.P.M. Dental Rinse" is a formulation of Triclosan
 and Thymol with Sodium Flouride, Sodium Benzoate and
 Eucalyptus oil for dental problems.

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 3. It is the case of the petitioners that without
 any prior notice, the respondents have levied octroi
 duty on the said A.M.P.M. Dental Rinse @ 5.5.% under
 Item 10 of H of the Act and the petitioners were
 compelled to make payment of octroi amounting to
 Rs.2,820/-, which the petitioners paid under protest.

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 4. Under the provisions of Act the items which

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 fall under schedule H are levied with the octroi duty
 and are thus, liable to payment thereof whereas items
 which are falling under Schedule H-1 are free from the
 payment of octroi duty. It is the case of the
 petitioners that the subject medicine being an
 anti-plaque and anti-cavity medicinal formulation is
 exempt from octroi as per Schedule H-1.

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 5. However, the respondent corporation has assessed
 the said goods under the residuary entry under Item 10
 of Schedule H of the Act. On the basis of the
 aforesaid octroi duty has been assessed @ 5.5%

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 6. The learned counsel for the petitioners has
 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 as medicine only
 as oral rinse recommended by dentists for protection
 of teeth from cavities and for removal of plaque. The
 carton which has been produced also mentions the
 dosage or as directed by the Physician.

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 7. Apart from the aforesaid, there is no dispute
 that the petitioners are holding manufacturing licence

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 under Foods and Drugs Act and thus, the said item

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 which is manufactured by petitioners is an 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 medicine. The learned counsel
 has further contended that the respondent- 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 10 of schedule H.

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 8. 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

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Ltd. Vs. The Municipal Corporation of Greater Bombay
and Ors., 2004(1) ALL MR 425 and submitted that the
 burden of proving that the said goods fall under any
 of the entry of Schedule- H of the Act and, as such,
 liable to an assessment for payment of octroi duty is
 on the Corporation.

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 9. 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

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 falls within a particular item because the Corporation
 itself is seeking to assess the said item under the
 residuary heading of item 10 of schedule H.

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 10. The learned counsel for the petitioners has
 thereafter relied on paras-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
 10 of the schedule H.

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 11. The learned counsel for the petitioners drew
 my attention to the judgment of the Division Bench in
 Appeal No.916 of 1993, decided on 9th August 1994 in
 which it has been, inter alia; held once again that
 the burden of proving that a particular item falls
 under particular heading of Schedule- H of the Act 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 octroi duty on any of the items which
 are brought in within the territorial limits of Mumbai
 by the petitioners.

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 12. 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
 the Act. It is therefore submitted that the impugned
 order passed by the authorities dated 12th March, 2004
 is illegal, unlawful and liable to be quashed and set
 aside. The petitioners are entitled to refund of
 amount wrongfully collected by the respondents towards
 the octroi duty.

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 13. On the other hand, the learned counsel for the
 Corporation has placed reliance on the averments made
 in affidavit in reply to the said petition. He has
 raised a preliminary objection to the tenability of
 the petition in view of the availability of alternate
 remedy of appeal and went on to contend on merits 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

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 is an alternate remedy available under the Act and
 therefore the present petition should not be allowed.

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 14. The learned counsel for the respondents,
 however, could not indicate under which particular
 entry of Schedule- H the said goods can be classified
 for the purpose of levy of octroi duty. He has fairly
 conceded that there is no material on record to
 establish that the subject 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 residual entry, viz., item 10 of
 schedule H.

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 15. I have considered the rival contentions. I am
 of the opinion that there is no substance in the
 contention of the learned counsel for the respondents.

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 16. 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

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 normally at the final hearing of the writ petition,
 once it is admitted, would not dismiss the petition
 only on the ground of availability 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 made out in the
 present case. In that view of the matter, I do not
 propose to accept the contention that the petition
 should be dismissed on the ground of alternate remedy.

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 17. Now turning to the second contention of the
 respondents that the petitioners have failed to prove
 that the said item is a medicine, I am of the view
 that the 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 tax, to
 discharge its burden to establish that the goods fall
 under any particular heading and, thus, liable to be
 assessed for payment of octroi duty. In that view of

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 the matter, the submission made by the learned counsel

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 for the respondents is required to be rejected.

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 18. On the aforesaid facts of the present case, it
 is clear that no material of any nature whatsoever is
 produced by the respondent corporation to arrive at a
 conclusion that the said item is not a medicine.

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 19. In the light of the aforesaid, I am of the
 opinion, that the present petition must succeed on the
 basis of the available material. However, it is made
 clear that this judgment shall not come in the way of
 the respondent- corporation to take proper view of the
 matter for future entry or import of goods in the
 Corporation limit on fresh material subject to
 following principles of natural justice.

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 20. Petition is allowed. Rule is made absolute in
 terms of prayer clauses (a) to (c) with no order as to
 costs.

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(V.C.DAGA, J.)

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

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

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