Vrajlal Manilal and Company vs Corporation of City of Nagpur

M.N. Chandurkar, J.—The question which arises in this appeal is whether the plaintiff, which is a bidi manufacturing firm, is liable to pay octroi duty in respect of tissue paper which is brought by it within the limits of the Municipal Corporation of the City of Nagpur for getting its mark printed at the Shivraj Fine Art Litho Works, Nagpur. The facts which are not disputed in this appeal are that the plaintiff sent 20 bales of tissue paper by truck from its Head Office at Sagar in Madhya Pradesh to the Shivraj Fine Art Litho Works, Nagpur, for getting the tissue paper printed with markings of the plaintiff''s Firm. At the octroi Naka octroi duty was demanded which the plaintiff paid in respect of 19 bales on or about 24th February 1962. Since the plaintiff did not pay octroi duty in respect of one more bale it was detained and the rest were released. The plaintiff then brought a suit for recovery of Rs. 83/12/9 on account of octroi duty which, according to the plaintiff, was wrongfully recovered from it. The plaintiff also claimed in this suit Rs. 14 on account of the value of one ream of tissue paper detained by the Corporation. According to the plaintiff, after the printing is done, the tissue paper is taken away in the same form and shape and it cannot, therefore, be said that the paper was brought within the Corporation limits for the purpose of sale, consumption or use therein. According to the defendant Corporation, what is sent out after printing is not tissue paper but labels and, therefore the goods exported out of the limits of the city are different from the goods which were imported and the plaintiff uses the tissue paper for the purpose of preparing labels which it uses for its bidis. Before the trial Court a solitary witness was examined by the plaintiff. He was a person employed with the Litho Works and explained the process of printing. He deposed that the tissue paper was printed and returned in the same form.

The trial Court held that the Corporation is entitled to levy octroi duty on tissue paper when it was imported within the limits of the city for the purpose of printing the trade mark and it amounted to consumption within the city of Nagpur. The plaintiff was, therefore, held not entitled to any refund of octroi duty. It was also held that no paper was unlawfully detained by the Corporation, An appeal filed challenging the dismissal of the plaintiff''s suit also came to be dismissed. The lower appellate Court held that there was consumption of paper in the sense that there was conversion of the commodity into a different commercial commodity and that the paper underwent changes when it was printed upon and therefore, was liable to duty u/s 114 (1) (e) of the City of Nagpur Corporation Act, 1948. The appeal filed by the plaintiff came to be Dismissed. This second appeal has been filed now by the plaintiff challenging the dismissal of its suit.

It is contended by Mr. Bobde on behalf of the appellant that in spite of the printing work done on the tissue paper which is used for wrapping the paper continues to be tissue paper to be used for the purpose of wrapping, that the description of the article remains the same and that, therefore, the appellant was not liable to pay any octroi duty on the footing that there was consumption or use within the limits of the city of Nagpur. Reliance is placed on a decision of the Supreme Court in Kailash Nath and Another Vs. State of U.P. and Others, . Now, section 114 (1) (e) of the Corporation Act empowers the Corporation to impose access on goods brought within the City of Nagpur for sale, consumption or use therein. The only question which has to be determined in this case is whether the tissue paper can be said to have been brought within the limits of the city for consumption or use when it is brought for the purpose of getting the trade mark of the plaintiff printed on it. The plaintiff''s witness who was an employee of the Shivraj Fine Art Litho Works has produced a sample printed wrapping paper which shows that the tissue paper is printed all over with the mark of the plaintiff. This paper, it is not disputed, is then utilised by cutting into pieces for the purpose of wrapping the bundles of bidis. A bare look at the paper is sufficient, to show that the original plain and blank tissue paper is converted into a printed wrapper. It is difficult to see how it is open to the plaintiff to say that the article remains the same even after it was subjected to printing of the trade mark all over the paper. It may be that originally it was a wrapping paper and even after printing it continues to be a wrapping paper but the nature of the commodity is now entirely different. On account of the printing of the mark of the plaintiff a new article has been brought into being and the commodity which will now be taken away by the plaintiff from the press is an entirely different commodity as a result of an increase in its utility being brought about by the wrapper being made specifically for use by the plaintiff alone because his trade mark is there. A new utility has been created and the wrapping paper which was originally blank has now bees consumed and even used in the creating of this new utility or article. Though the article before printing and after printing is generally described as paper, it is obvious that it is not the same commodity and the nature of the article has now charged and it will not be correct to say that it is the same article or the same wrapping paper which will be taken back by the plaintiff after its trade mark is printed all over it.

The Supreme Court had occasion to consider the content of the words "sale, consumption and use" in S. N. Ram Lal & Co. v. Secretary to Government of Punjab (1969) 77 U. J. S. C. 373. The facts of that case were that wool was purchased by the appellant-firm in Delhi and sent for dyeing to their factory in Faridabad. The Notified Area Committee of Faridabad claimed to levy octroi on the wool imported within its limits on the ground that the wool was brought for use within its limits. When demand notices were issued they were challenged under Article 226 of the Constitution of India and the High Court of Punjab rejected the petition holding that the wool was brought within the limits of the Notified Area Committee for "use" and octroi was on that account properly leviable. The appellant filed an appeal before the Supreme Court and the question before the Supreme Court was whether when wool was sent to the factory for the purpose of dyeing, it was sent there for use. The Supreme Court referred to the decision of the High Court which had taken the view that goods which were being imported must be put to or employed for some purpose and it was only then that it could be said that they were brought is for "use", and since wool was being imported for some specific purpose, i. e. for dyeing, it was clear that it was being brought in for "use". The High Court had held that after undergoing the process of dyeing its colour was changed and it Became a different commodity from a commercial point of view and fetched more price in the market. The Supreme Court, however, pointed out that in support of this view there was no evidence before the High Court and the appellant Company had denied that wool was being imported for use. The Supreme Court found that there was no evidence to prove that as a result of merely dyeing the wool became a different commercial commodity, and the onus of proving this was on the Notified Area Committee. Since the Supreme Court took the view that unless it was shown that wool was brought within the limits of the Notified Area Committee with the object of converting it into a, different commercial commodity it was not liable to octroi and as the trial before the High Court on the issue was not satisfactory the matter was remanded to the High Court. However, there are observations in this judgment which are useful to find out as to when it can be said that an article has been brought for consumption or use for the purpose of octroi duty. It was observed in paragraph 3 :

"In its ordinary meaning the word "Use" as a noun is the act of employing a thing; putting into action or service, employing for or applying to a given purpose. But the word ''use'' occurs in Entry 52 List II of the Seventh Schedule to the Constitution sandwiched between "consumption" and "sale", and it must take colour from the context in which it occurs. It is a settled rule of interpretation that when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take, as it were, their colour from each other, that is, the more general is restricted to a sense analogous to the less general; Maxwell on Interpretation of Statutes, 11th Edition, p. 321. The coupling of three words ''''consumption", "use" and "sale" connotes that the underlying common idea was that either the title of the owner is transferred to another, or the thing or commodity ceases to exist in its original form."

Thus, it is clear from these observations of the Supreme Court that in a case where the commodity ceases to exist in its original form, for the purposes of attracting the liability to pay octroi there can be said to be consumption or use of the commodity. The present case, in my view, is clearly covered by these observations of the Supreme Court.

It is contended that just as in the Punjab case there was no evidence before the High Court, in the instant case also there was no evidence given by the Corporation to show that the tissue paper after printing was a different commercial commodity and, therefore, the suit should have been decreed. How, the plaintiff itself has produced on record a sample printed tissue paper which has been exhibited as Ex. 16/1. The process by which it comes into being is also explained by its own witness Deshraj (P.W. 1). The question whether there is "consumption" or "use" has to be decide 1 on the nature of the article into which the original article is changed after it was subjected to the process of printing. The word ''consume'' means ''to use up''. As I have pointed out, a look at the article clearly shows that the tissue paper has been used by the plaintiff for the purposes of making out printed wrapping papers usable by the plaintiff alone. The tissue paper has thus clearly been "used" and in the process of printing, has been "consumed", with the object of making a wrapping paper usable by the plaintiff alone.

The decision in Kailash Nath v. State of U. P. {cit. sup.) is clearly distinguishable on facts. The Supreme Court in that case was concerned with the question whether printed cloth was entitled to be exempted from sales in terms of a notification issued by the Uttar Pradesh Government. The notification provided that with effect from 1-12-1949 the provisions of section 3 of the, U.P. Sales Tax Act, 1948, relating to the levy of sales tax shall not apply to the sales of cotton cloth or yarn manufactured in Uttar Pradesh, made on or after 1-12-1949, with a view to export such cloth or yarn outside the territories of India on the condition that the cloth or yarn is actually exported and proof of such actual export is furnished. The petitioners in that case had sold various quantities of cotton cloth to their constituents who thereafter printed such cloth with hand-made apparatus and exported them overseas as hand printed cloth. These customers had placed orders with the petitioners for the manufacture of cloth. These sales were subjected to sales tax and the contention of the petitioners was that the sales were exempted under the notification. The Supreme Court took the view that the words "such cloth or yarn" would mean the cloth or yarn manufactured in U. P. and sold and it had nothing to do with the transformation by printing and designs on the cloth. It was observed that the cloth exported was the same as the cloth sold with this variation or difference that the colour has changed by printing and processing. Relying on these observations Mr. Bobde wanted to urge that just as printed cloth was held to be the same as the original cloth sold by the petitioners, the fact that tissue paper had been printed upon would not affect the commodity which continued to be tissue paper. The argument must be rejected because the analogy is inapplicable in the instant case. The Supreme Court was construing a notification of exemption and the meaning of the words "such cloth or yarn". . In the instant case, the question is whether for the purposes of octroi there is any "use" or "consumption" of the tissue paper. The liability to pay sales tax is founded on a different taxable event than the liability to pay octroi duty. I am, therefore, satisfied that the plaintiff was rightly held liable to pay octroi duty and it had, therefore, no right to claim any refund. The plaintiff''s suit was, therefore, rightly dismissed. This appeal, therefore, fails and is dismissed with costs.