Sunday 4 July 2021

Whether the Municipal Corporation can impose a penalty for non-payment of toll or octroi without prosecution resulting in a conviction?

 The Division Bench of this Court, while dealing with the provisions of Section 398 of the Bombay Provincial Municipal Corporation Act, 1949 in the case of Dhoot Agencies Pvt. Ltd. v. Aurangabad Municipal Corporation and Ors. , held as under:

3. The point of law that is raised for the consideration of this Court in the instant petition is in very narrow compass and that is, whether the Municipal Corporation can impose penalty without prosecution resulting into a conviction.

4. The Corporation has filed its affidavit in reply and relied upon the provisions of Section 398 of the Bombay Provincial Municipal Corporation Act, 1949. It would be relevant to reproduce the provisions of Section 398 of the said Act.

398. Where any vehicle, animal or goods imported into the limits of the city are liable to the payment of toll or octroi any person, who, with the intention of defrauding the Corporation, causes or abets the introduction of or himself introduces or attempts to introduce within the limits of the city any such vehicle, animal or goods upon which payment of the toll or octroi due on such introduction has neither been made not entered, shall, on conviction, be punished with fine which may extend to ten times the amount of such toll or octroi or to two hundred and fifty rupees, whichever may be greater".

5. It is clear that though the Municipal Corporation has the power to impose penalty, the condition precedent for such penalty being imposed is conviction in a criminal prosecution and without there being a conviction there is no scope for levying the penalty for evading octroi. Admittedly, no criminal prosecution was initiated against the petitioner and the learned Counsel for the Corporation submitted that this was not done solely at the request of the petitioner's proprietor/partner. When a statute provides certain pre-condition for imposing penalty on account of evasion of octroi payment, it is mandatory that those conditions are followed before the penalty is levied and consequently if the Corporation failed to initiate criminal prosecution it had no authority in law to levy the penalty for evasion of octroi payment. There cannot be an agreement contrary to the provisions of law and it is high time that the Municipal Administration is awakened to follow the provisions of law meticulously.

6. From the affidavit in reply we have also noticed that the petitioner has been issued notice in Form No. V under Rule 24 of the Octroi Rules for recovery of octroi in respect of 29 vehicles. There is no denial to this demand till this date and, prima facie, it has to be accepted that there are some outstanding payments on account of octroi due to the Corporation from the petitioner. {Para 9}

10. Plain reading of the aforestated relevant provisions it is clear that the provisions of Sections 478 and 478-1A are definite in expression and unambiguous and do not refer to the Municipal Corporation any where. Furthermore, even for the sake of argument, it is assumed that the Municipal Corporation has any jurisdiction to impose fine/penalty in terms of Section 478-1A, even then the condition precedent of such person having been convicted has to be satisfied. Without this condition being satisfied the Corporation will have no jurisdiction to impose the penalty. The issuance of the notice nowhere states that the petitioner has been convicted by the Court or any other forum competent to do so and thus the Corporation wishes to impose the said penalty. In fact the impugned order is without jurisdiction and ex-facie without authority of law. Once the order does not conform to the statutory provisions then it would be liable to be quashed. The authorities have thus apparently exceeded their jurisdiction or may have exercised the jurisdiction not vested in them. The matter involves question of lack of jurisdiction for non-compliance of statutory provisions and as such the order cannot stand scrutiny of law.

11. In this scheme under the statute one question required to be considered is whether the Corporation has any power to impose punishment or fine as contemplated under Section 478-1A of the Act. The provisions of Section 478 to 478-IB nowhere refers to the Corporation or any other authority of the Corporation. Section 478 specifically talks of a Court while the other two provisions require that on conviction the fine or punishment would follow. Normally under these provisions the Court would have power to hold a person guilty of the offence stated therein and convicted for such offence and then award requisite punishment as stated under these three provisions. The underlying feature of the provisions Section 478 is that whoever brings any article within the limits of Brihan Mumbai liable to octroi, without payment of such tax or octroi, is liable to action while under Section 478-1A such persons who evades payment of octroi or even attempts to introduce or causes or abets the introduction of any such articles and brings such articles into Brihan Mumbai, where payment of octroi has neither been paid nor tendered is liable for penalty. Despite such a fine distinguishing line between these provisions, it is necessary that a person has to be convicted as contemplated under these provisions before the penalty contemplated under Section 478-1A could be imposed. The concept of 'conviction' as known to the criminal jurisprudence, is conviction by a Court of competent jurisdiction and would hardly fall within the domain of the administrative authority, particularly when the provision itself refers to the discretion of the Court. The language of Section 478 or 478-1A is quite in contradistinction to the language of Section 398 of the Bombay Provincial Municipal Corporation Act, 1949, where the section dealing with the penalty for evasion of octroi or toll, does not refer to the Court but mentions the word 'Corporation'. Even there the person who evades or does not pay the octroi or defrauds the Corporation of such octroi which duty has neither been tendered nor paid, on conviction is liable to fine, which may extent 10 times the amount of such octroi. Even there the Courts have taken a view that the Corporation can impose such fine only when the person has been convicted. In other words conviction shall be a condition precedent to the imposition of fine under that provision.

Bombay High Court
Sushmita Sen vs Municipal Corporation Of Gr. ... on 11 October, 2007
Equivalent citations: 2008 (2) MhLj 42
Author: S Kumar
Bench: S Kumar, D Chandrachud

Read full Judgment here: Click here

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