JUDGMENT
V.A. Mohta, J.
1. BY this petition M/s, Vidarbha Coal Supply Company, 3 trasporter had challenged the validity of the transit fee charges imposed by respondent Noi. 2 Cantonment Board Kamptee unde its Octroi Bye-laws 1986 framed by virtue of authority conferred under S./ 284 (1) of the Cantonments Act, 1924 (Act NO. 2 of 19240).
2. Relevant facts are few. The petitioner has taken the contract of transporting coalformKamptee Inder Colliery of the Western Coalfields near Kanhan to the Loradi State Electricity Board. It had to transport approximately 150 trucks of coal every day formKamptee Colliery To Koradi Power Station. The road on whichthese trucks ply passes through thearea Kampttee Cantomnet Board as wellas Kamptee Municipla Council. It is a part of Nagpur Jabalpur National Highway. Neither is contonment area destination of those goods nor are they brought in the area of consumption use or sald Relevant Octor bye-law 10 reads thus;
“Procedure for goods imported which are intended for immediate exportation.
Goods imported by rail air or road and intended for immediate export shallbe dealt with as follows.
The person in charger of the goods imported within the octrok limits whichare intended for immediate export shallontheir arrival at the Entrance Octroi Post,apply in Form IV to the Octroi Officer for a written permission cum-transit pass fro conveying the goods without escort via that route from the Entrance Octroi Post of the Exit Octroi Post specified in Schedule. Ii He shallat the samd time make at the entrance Octroi Post deposit calculatedbythe Officer in accordance with thescale of octorl chargeable of such goods plus a transit pass Rs. 5/- Onpayment of the deposit and the fees for thewritten permission cum-transit pas and if considered necessary by the Officer. On presentation of a declaration cum-application in Form IV, the officer shall issuue of written permission cum-transit pass in Form V of the said persontoproceed with thegood without escort.
On arrival of the goods at the Exit Octroi Post and on surrender of the written permission-cum-transit pass, the octori officer shall verify the entrires therin with the goods, and refund to such person the deposit and entered in the said pass, if theparticulars of the goods as specified in the said pass tally with the goods which arrive at the Exit Octroi Post.
The person receiving refund of deposit shall sign on receiving the refund in the space reserved for the purpose on the writtne permisison-cum-transit pass. The counterfoils of all such passes issued and the original shal be sent of the Central Octroi post at the time fixed by the Executive Officer. The Octroi Superintendent shall compare the counterfoil with the originals and theregister and satisfy himself that they tally and shal thenpass on order to recoup the advance every day. Any irregularities discovered shallbe reported immediately to the Executive officer or the Board.
In case the person in charge of the goods agrees to carry goods under escort without paying the deposit andtransit fee, viz., the course route form the Entrance Octroi Post of the Exit Octroi Post specified by the Executive officer from time to time, he shall onanapplication made intheat behalf in Form VI and on Payment of fee fo Rs. 6/- be granted a written permission in Foem VII to carrry suchgoods under escort provided by the Octroi Officer. Insuch cases the Octroi Officer at the Exit Post shall onsurrentder of the written permision allow that said person to pass through the post with thegoods and the escort shall specify satisfy himself and the goods have actually been carried outside tohe octirok limiteswihtout having broken bulk on the jouney. The counterfoils be sent by the Exit post Office once a day tot herespectivley entrance Post for passing with the counterfoil.”
Thus it permits charge of Rs. 5/- pertrip of trcuk as teancsit pas feewhen the amount equivalent to octrio duty is deposited at entrance naka for being refunded at theexist naka and a sum Rs. 6/- in case facility of escort is provided in which event the exercise of deposit and refund can be avoided.
3. The petitioners challenged to the lecy is twofold. One is that thevery levy is illegal and the other is tha it does not answer the test to quib pro quo. We take up point NO. one for consideration first. Now, S. 60 of the Cantomernts Act empowers the Board to impose withprevious sanction of the central Government inany cantonment any taxwhich under any enactment for the time being an force may be imposed in any Municipalities Act, 1965 empowers the imposition of compulsory taxes. Octroi is one of them. The Toll or Terminal tax are not included in the list of imposable taxes under S.105 or any other provisions in the Sair act.
4. Authority to levy Octroi, Terminal to and Toll in the State Legislature is derived form entries Nos, 52 56 and 59 respectively in the State List of Seventh Schedule of the Constitution of India which read thus,
“52. Taxes on theentry of goods intoa local area for consumption use or sale there in.
XX XX XX XX
56. Taxes on goods and passengers carried by road or on inland waterways.
Xx xx xx xx
59. Tolls.”
Residuary entry NO. 66 in the said list reads thus;
“Fees inrespect of any of thematters inthis list, but not including fees takn in any Court.” ir must fall under nay or the above three subtantial entries or theresifuary entry. A thin but fine differenct exists between Octroi, terminal tax and toll, Very broadly speaking whereas Octroi dutyis imposable in entry of goods intoa local area only for consumption use or sale therein Terminal tax is imposable whenthe terminaus of the goods is in the general and’or special services rendered or privillage enjoyed act ualand/or presumed. In the case of man Mohan tuli v, Delhi Muncicipality, the different between the Octroi and Terminal tax is summed upthus;
“(1) Terminal tax and octroi aresimiar kinds of levies whichare closel interlinked with (1) destination of the goods (2) the use in the localarea onarrival of thegoods. Where the goods merely pass through a local areas without being consumed therein themere fact that the transport carrying the goods halt within the local area for transhipment or allied purpose would not justify the levy of either the terminal tax or octroi duty. This is because the halting of the goods is only for an incidentalpurpose of effectuate thejourney of the goods to the in destination by unloading sorting and reloading them at a particular place.
(2) There is very thin margin of difference between a terminal tax and octroi In the case of the foremer )terminal tax) the goods reach their finaldestination and their entry intothearea fo destination immediately attracts payments of terminal tax irrespective of their use. Inth ecase of octroi however the tax is levied ongoods for their use and consumption.
(3) But the at same time the goods while halting at a localarea should leave for their destination within a reasonsbhle time which maydepend on circumstances of each case and if and goods are kept within thearea for such a long and indefinite period that thepurpose of reaching the final destination laying ina different area is frustrated or defeated they may be exigible to termial tax.
(4) Where the goods enter into local area which is alsothe destination of thegoods ………. For instance it A consigns goods from Parna in Bihar to Delhi in the name of X and X after having recerived the goods at delhi rebokks or reloads the same ona transport for Chandigarthe in the name of Y terminal tax would be leviable bythe Corporation at Delhi because the detination of the goods in the first instance was Delhi and that by itself would attract the rebooks them toChandigrah would not make by X and Delhi would contstitute a fresh transaction by which thegoods afte having been carried into Delhi are furtherexporte to Chandigarh. ON the other hadn whern there is one continuous juroney of the goods from patna to Chandigarh without any break the final destinatin would be chandigrah even thoug the goods may have tobe halted in Delhi for the purpose of unloding sorting andrelodingand may have tobe kept in Delhi for a reasonable time. In such a case termined tax would not be exigible.
Tolls can be of may kinds. For example market tollfair toll ferry too canaltoll tolls relating topassage over land or water, The last vaiety of tollis of two types (a) toll through whichwas no neus witht eh owership but has nexus with the actual sevices renderd and(b) toll traverse which had nexus with the onwership and is chargeable for the use of the property froma peson using the same.
5. with the essential broad differnces between the three types of levies in vies Let us examine various authorities placed before us for consideration by Shi Kukdey the learned counsel fort he petitioner, first in order of time is the case of the Central India Spining and Weaving and Mfg Co. Ltd v. Empress Mills, Nagpur, . It interpreted s. 66 (1) (o) of the C. P. & Berar Municipalities Act. 1922 and R. 1 of the Teminal Tax Rules (Wardha) framed under the sair Act Contextual meaning to the words “import , “export and “terminal” used in the Rules was given and it was held that the goods in trassit without their loading or unloading within the muncipla limits of Wardha towndid not attract terminal tax as theentry of the goods merely for thepurpose of onward movement out side the municple limits did not amount to “import” The follwing obsercations are to the point.
“Therefore terminal tax on goods imported or exported is similar in its incidence and in payable ongoods ontheir journed ending within the muncipla limts or commencing there fore andnot where the goods werw merely intransit through the municipal limits and had their terminus else where.
………………………………..
Keeping inview the terms and language and the legislative history of the Section 66(1) we are unable to enlarge the terms of the section by were construction so as to include within its operation goods which are in transit and are being transported across the jurisdictional limits of the Municipality.”
Levy of terminal tax on such goods intransit was quashed by the Supreme Court . question of validity of Terminal tax ongoods meant for destination outside the octrio limits in terms of S. 178 of the Delhi Municipal Corporation Act, 1957 fellfor consideration once again before the Supreme Court in the case of Man Mohan Tuli (Supra) Concurring with the vies inCentral India Co.Ltd. (supra) and referring to few more judgment onsome other shades the Supreme Court had held that even if there is change of mode of transport within the municipla areasbut definite detination is outsiet and the whole transaction forms part of one and the same transaction the terminal tax would not be attracted.
6. IN the case of Kamaljeet Singh v. Municipal Board. Pilkhwa, (vii) of the U. P. Municipalities Act which imposes toll inaddition to octroi, fell for consderation. Point was whether toll could belevied ongoods which merely passthrough municipal limits. Answering the point in the negative it is observed.
” The toll tax in question however cannot be treated tobe a compensatory tax for the use of trading facilities. The Municipal Board provides no facilities whatever to the owners of vehicles like stages carriages making use of National High wasy No. 24 The township of Pilkhwa is off the National High wayand is quite at some distance. It is connected by a road and apart of the National Highway has been included within the muncipal limts. Mereby because stage carriage operators like the appellant ply their stage carriage on permits issuesd on the inter stattalroute Delhi Garhmukteshwar which falls on the National High way stop their buses for the facility of passengers going to and coming from Pilkwa, or theat the Municipal Board has set up two electric poles at the tollbarriers for facility or collection of the toll tax, does not justify the imposition of a toll tax. Usually the consideration for a tol is some amential service benefit or advantage which the personentitled to the tol undertakes to provide for thepublic in general or the persons liable to pay the toll. The National High wasy is being maintained by the Governement and the approach road built by the Public Works Department. There is a nallah constructed by the Municipal Board fof flow of th eseqage water from the town of Pinkhwa, but the does not entitled the Board to levy a toll tax on stage carriage operators like theappellants as a compensatory tax. Even assumming that the Municipla Board had toincur exependiture of Maintenance of the connecting road and the nallah but they are facilities provided for the residerts of the town for which it recovers vaaaaaarious taxes. Futhermore maintenance of roads,. Bridgesm etc. are statutory duties of the Municipal Board under S. 17 of the Act, The levy of the toll tax bythe Municipal Board must there fore be struck down as ultra vies.”
Thus there seems ot be settled view that goods merely passing through local area do no t attract either terminal tax or toll.
7. We now turn to a decision on the question of validity of transit pass fees. The case of Town Municipal Councilk v. Urmilla Kothari a leading case on the point. Section 124 of Karnataka Municipalities Act, 1964 and r. 26 of the Karnataka Municipalities taxation Rules, 1965 fell for consideration in that case Section 124 reads thus.;
“124 Non-liability for octroi andrefuned of octrio on grounds in transit.;–
Any article or animal brought intothe municipal limits for the purpose of immediate exportation may at the option of the importer not be subjceted to lect of octroi if such article or animla be conveyed direct form the place of import to theplace of export by such routes within such time and under such supervision ast hemuniciple council may be resolution determine. For purposes of this sub-section the municipal council shal on payment of the presecribed fees issur promply the necessary transport permits.
when any article in respect ofwhich octroi had been paid is exported from the municipallimits in the same condition in which it was brough into recerived from beyond themunicipal limits theamount of octroi paid shall subject to such rules as may be prescribed be refuneded.”
Rule 26 reads thus’
“26 ……… Incase theperson bringing the goods wishes to transport thegoods at once beyond thelimits of the municipality he shall so onlyafter obtaining a trasport permit in Form IV on payment of a feee of rupees two for each lorry and rupee one in other cases in the case of a city municipal council and rupee one for each lorry and fifty paise in other cases in the case of a town municipalcouncil.’
We have quoted thesection and the Rule in extenso with a view todemonstrate that though there is a slight difference in the terminogy used inthesame and the provisions which rall for consideration in the present case, the crux of the matter is the same. Interpreting the tru meaning of the words “brought into” and “immediate exportation” it is held that they donot comprehend within their sweep the continuous process of transit ofgoods by vehicles which merely use the State Highways passing through the areas whichlew within themunicipal limits. The Supreme Court held that important element of repose andrest which the words “brough intothemunicipal limits for the purpose of immediate exportation imply was absent in that case, Inconclusion it is said.
“Bearing inmind the above authoritative enauciation of law we are of opinion that was the contnuity or continuous process of the carriage of irron ore is not inany way infact broken within the municipal limits are Kalghatgi the respondent cannot be said either tobring in or export the iron ore as contemplated by S. 124 of the Act read with R. 26 the Rules and as such is not liable topay the octroi or what is stayled as suprevision fee. A contrary interpretation would make rail borne goods passing through the Railway Stations within the limits of the municipality liable tot he imposition of the fee on their arrival at the Railway Stations and departune there fore which could not be the intention of the Legislature.
8. In our vies the above case a direct authority on the point,. Several High Courts have as they were duty bound followed the above decision. It is pertinent to notice that trasit passs fee which is described as suprevision fee under R. 26 in the above case has been treated to be part of the octoi duty by the Supreme Court. Petition with ralation to the relevant bye-law is in no way different. The bye-laws are basically styled as Kamptee Cantonment Octroi Bye Laws, 1986 and their stated obejct is;
“Whereas a draft of bye laws for regulating the collection and recovery of octoi the Kamptt Cantonment was published withCantonment Board Notice No. CK/ B27/R-O/D-1059A/P. dated the 23rd December 1985, as required by sub-section (1) of Section 284 of the Cantonments Act, 1942 (2 of 1942) for inviting objection andsuggestions from all persons likely to be affected thery tillthe expiry of period of 30 days from the date of publication of the said notice.’
9. Shri. A. S. Bodde the learned Advocate General appering for the respondent No. Board veryfairly stated before us that levy cannot be justified either as a toll or as terminal tax or as ton octroi, According tohim impossition of this levy as fees is incidential to the powers to impose octroi and is permissible of the basis of the general priniciples relating to the incidental powers as well as Entry 66 of the State List. Our attention was invited by him to various decisionnsdealing with the subject of incidental power. the case of Commr, of Commercial taxes v. Ramkishan Sharkishan Jhaver, deals with s. 41 (2) of the Madras General Sales Tax Act, which empowers the officers toinspect theaccount books question arose whether the power includes the power of search,Answer was in the affirmative. Reasons can be best quoted in thewords used bythe Supreme Court.
“It is also not indoubt that while making law unde any entry in the Schedule it is competent to the legislature to make all such incidental and ancillary provisions as may be necessary to effectuate the law particularly it cannot be disputed that in thecase of a taxing statue it is open to the legislature toenact provisions which would check evasion of tax. It is unde this power tocheck evasion that provision for serach and seizure is made inmany taxming statutes. It must there fore be held that the legislature had power to provide for serach an seizure inconnection with taxation laws in orde that evasion may be checked.
10. We are unable to see how the ratio of said decision wil apply to the instant matter The point is not whether the Constonmetn Board ahas authority to make incidental provision for cheking evasion of the octrok duty and to supervise activities which may possibly lead toevasion. The point is is it authorised to levy toevasion. The point is is it authorised to levy compensatory fees on a transport like the present petitioner with a view tomeet the expencses incurred insuch supresivision the petitioner is in no way concerned. No services general or special are rendered tohim. The Cantonment Board way detain a truck at the erntry barrier recover amount equivalen to octroi for being refunded at theexit barrier and may not allow the truck toapss without anyescort. The Board is no doubt required tospent someamount over this exercixe without which evasion of octrni maynot be possible. Board no doubt needs tobe compensated bur not fromperson like the petitioner. This checking is for the purposes of the Board toprotect its own interest and if at all it charges can be recovered formthose onwhom the burden of paying octroi falls. The difference between tax abd’fee’ is too well-known to be elaborately noticed, Without anelement of quid pro;quo no fees can be levied. Services may by rendered be indirect. They may rendered may but have tobe made available. In view the factor is totally abosent in transit pass fee.
11. Inthis connection we may make useful reference to the case of India Mica and Micanite Industries v. State Of Bihar , Question arose whether levymade under R. 111 of the Rules under S,. 90 of the Bihar and Orissa Excise Act for a license to possess denatured spirit used by a manufacturer in this procee is legal. It was heldthat charging licence fee toa consumer with a view tosee that the rules are not of quitb pro quo. In this connection the following observations are extremely significant;
“According to the finding of the High Court the only services rendered by the Government to the appellant and to other similar licenses is that the Excise Department have tomaintain an elaboratestaff not only for the purposes of ensuring that enaturing that denaturing is donepropertly byt hemanufaturer byut also forth ;purpose of seeling that the subsequent possession of denatrued spirit in the hands either of a wholesale dealer of retail seller or any other licansee or permit holder is not misused by converting the denatured sprit into alchol fit for human consumption andthere by evade payment of heavy duty. Ao far as the manufacturing process is concerned the appellant or othe similar licanses have nothing to do with it. They are only the purchasers of manufactureser cannot by recovered form theconsumers like the appellant. Further under S. 9 of the Board’s Rules the actual cost of supervision of the manufacturing procees by the Exise Departments is required to be borned by the Manufaturer. There cannot be a double very in that regard. In the opinion of the High Court the subsequent transfer of denatured spirit and possesion such of the same in the hands of various persons such as wholesale dealer reatail dealer or other manufactures also requires close and effective supervision because of the risk of the denatured sprit being converted into potable liquor and thus evading heavy duty. Assuming this conclusion tobe correct, by doing so the State is rendering soservice to the consumer. It is merely protecting its own rights.
12. In the case of Corporation of calcutta v. Liberty Cinema, AIR 1956 SC 1107, which related to the case of levy of licence fee under the Caluctta Municipal Act, 1951 it is observed.
“The inspeciton was not certainly a service to the licensee; tiw necessary only tomake surte thkat he carried out the conditions on which the licence had been granted to him. It was something to do done tocontrol thelicensee’s activities and to make hiom observe theconditions of the licence on pain of cancellation of the licence. This is clear form sub-sec. (3) of s. 548 which states that. “any licence ………. Granted under this Act…….. may at any time be suspended or revoked ……….if any of its restrictions or conditions is infringed or evaded by the grantee’ This non-obsecance of the conditions of the licence would expose the licencee topenalty under S. 537 of the Act. The inspection was there fore necessary also for enforcing theconditions of the license by penalising a brech of them by the licensee. We cannot imagine that an inspection byt heCorporation for such purpose can at all the said totorendering of servie to the licensee.’
Adverting to a point that there can be valid imposition of supervision feeunder incidental powers even without establishing element of quib pro quo it is observed.
“No case the been brough to our notice in which it has been theheld that a mere controlexercised on the activities of the persnos onwhom the levy is imposed so as to make these activities more onerous is service rendered to them making the levy a feee,’
In our judgment there fore the impugned transit pass fee cannot be suatained even under entry 66, of the State List.
13.Shri Bodde invited our attention to the case of Grmophone Company of India Ltd. V. Biendra Bahadure Pandy, . In the decision the word “import” within the meaning of Ss. 51 and 53 of the Copyright Act fell for consideration. The said words is not defined under the Copyright Act. In the context of the scheme of the Copyright Act it was held that mere bringing into India of certain books from out of India amounded ot imposes irrespective of whether they were to be eventually exported outside India or not. The Supreme Court considered the ratio of the Central co. Ltd. (supra) were ther word “import” under the C. P. and Berar Municipalities Act was interpreted and has held that the context of the two provisions is different and no literal meaing to the word can be assigned. After noticing the difference in the scheme of the two enactments it is observed.
“…………….Another reason given by the learned Judges to arrive at the cnclusion that the did was they the very was terminal tax’ and. Therefore the words import and export’ in the given context had something todo with the idea of a terminus and not an intermediate stage of a journedy. We are aferaid the case is really not of any guidance to us since in the contect of the terminal tax’ the words “imported and exported’ could be construced in no other manner than was done by the court.’
14. Under the circumstances it is not possible to accept the submission that the word import used in definition 2(h) of bye-laws cen be literally construed to mean mere entry of goods within the octoi limits without anything more, The word “import is defined inth relavant bye-lawd as unde;
” import means bringing or entry of may goods intothe octroi limits or Board form any place outside such limits.”
15. This judgment willnot be complete without reference to a judgment rendered by Andhra Presh High Court inthecase of Secunderabed Cantonment Board and another V. B. Anantha Reddy and others (Writ Apppeal No, 95 of 1972 decided on 27th October 1972) in which validity or transit pass feee imposed insimilar cirucmstances is upheld. No detailed discussion of the reasoning adopted in the said decision is necessary as thedecision stands overruled in view of the case of Supreme Court in Town Municipal Council v. M/s. Urmila Kothari (AIR 1977 SC 8730 (supra).
16. Under the circumstances we strike down the levy the impugned transit pass fee and restrain respondent NO. 2 Board from recovering the same infurture. We also direct its refund within 3 months toallthose formwhomits is recovered. Rule made absolute accordingly. No costs.
17. At the request of respondent No. 2 Board and respondent No. 3 contractor operation of t his Judgment is stayed ofr a period of three months toenable them to move the Supreme Court,but the following conditions;
The fees recovered by therespondent No. 3 Contractor will be immediately deposited with the Board.
The Board will be liable to refund the fees whether or not thecontractor deposits with the Board.
18. Order accordingly.