1984 PLP 80 (SCMR)

ZAFFAR HUSSAIN MIRZA, J.‑This appeal by special leave arises out of the judgment and order dated 27‑9‑1976 of the Lahore High Court in Writ Petition No. 207 of 1966 whereby the notice of demand issued by the Municipal Committee, Lyallpur, claiming a sum of Rs.44,655.44 as octroi charges was declared to be without lawful authority and of no legal effect. Leave was granted to consider whether on the facts and in the circumstances of the case and the law relevant, it can be held, that the goods imported within the territorial limits of Lyallur Municipal Committee were imported for sale therein, particularly, when it is alleged that those goods were first unloaded and stored in that area, and thereafter re‑loaded and delivered in different trucks and tankers to the importers' agents at places outside those limits for being taken to their further destination.

2. The facts of the case are that Burmah Shell Oil Storage Distribut ing Company Limited, the respondent herein, is a Company dealing in petroleum products. It is the cease of the respondent‑Company that it maintains Regional Depots located in various cities and towns in Pakistan. These Regional Depots which claimed to cater to the local requirements of the cities and towns administered by the Municipalities as well as to the needs of other consumers, individuals and firms outside the municipal limits of those townships and cities. The present controversy relates to the respondent's depot located at Lyallpur. The respondent has its divisional offices at Lahore, Rawalpindi and Karachi where according to the respondent, transactions for the sale of petroleum products are finalized and payments received. The Lyallpur Depot is situated within Lyallpur Municipal Limits, where oil is brought by railway from Karachi and decanted into storage tanks. The primary contention of the respondent in the present controversy is that in accordance with the instructions received from the Lahore Regional Office, the oil is dispatched through respondent's own tank lorries to various destinations both within and without the municipal limits.

3. There is no dispute on the levy of octroi duty on the products imported by the respondent into Lyallpur Municipal limits which are meant for consumption, use or sale within the municipal area. The dispute has arisen in respect of the good which are brought within the municipal limits and are re‑exported from the depot to destinations outside the municipal limits. It seems that the re‑export pass system was in vogue in the Lyallpur Municipality since 1952 and during the period in dispute i.e. 1960‑61, and 1961‑62, the .respondent had brought stocks of petroleum products for storage in their depot within the municipal limits under the re‑export pass system:. However, according to the appellant, in the year 1963 it came to light that the respondent‑Company "had been supplying the lubricants imported under re‑export pass system to non‑company premises and as such they violated the conditions of the passes." This led to the appellant's refusing to renew the re‑export pass system facility enjoyed by the respondent‑Company and the respondent was asked to supply the details of the previous supplies imported within the municipal area. The respondent Company complied and furnished the details about the supply of their products for the period from 30‑5‑1960 to 30‑5‑1962. The case of the appellant is that since the supplies were made to the premises. outside the municipal limits which premises did not belong to the respondent‑Company, the respondent was guilty of the violation of the conditions of the passes issued under the, re‑export pass system. Con sequently, a demand notice for octroi duty in the sum of Rs. 44,655.44 was issued to the respondent‑Company. The latter challenged the legality of the demand by means of an appeal before the Commissioner, Sargodha Division Sargodha, but the same was dismissed on 10‑8‑1965. Thereupon, the respondent filed Writ Petition No. 207 of 1966 challenging the orders of the Commissioner, which was disposed of by the impugned judgment in this appeal.

4. Before dealing with the contentions raised by the learned counsel before us, it will be useful to refer to the relevant provisions of law which regulated the levy and collection of octroi duty by the appellant municipal committee. At the relevant time, the appellant municipality was governed by the Municipal Administration Ordinance, 1960 which came into force with effect from 1‑5‑1960. Under section 33 of the said Ordinance, a Municipal Committee, with the previous sanction of the Government, was authorised to levy any of the taxes, rates, tolls and fees mentioned in the third Schedule to the said Ordinance which includes a tax on import of goods for consumption use or sale in the municipality. Rule making power was conferred on the Government under section 121 of the said Ordinance generally and in particular such rules could be framed speci fically, inter alia, with regard to the manner in which taxes etc. under the Ordinance may be imposed, levied collected, leased, compounded, administered and regulated. Rules can also be made in regard to the pinned of assessment and collection of octroi on goods ox animals, not intended for consumption, use or sale within the municipality. It is not disputed that immediately before the coming into force of the said Ordinance, the levy and collection of octroi in respect of Lyallpur Municipal Committee was regulated by the provisions of the Municipal Account Code, 1930, Chapter V of this Code specifically deals with octroi. It is also conceded that no rules were framed immediately after the coming into force of the Municipal Administration Ordinance and the octroi duty was being collected under the Municipal Account Code 1930, until the issue of West Pakistan Municipal Committees Octroi Rules, 1964 which came into force with effect from 1‑8‑1964. The questions that arise for determination in this case are to be decided with reference to the provisions of Chapter V of the Municipal Account Code of 1930, and according to rule V.13, when goods liable to octroi are brought to a barrier for import, the officer‑in‑charge of the barrier is required to call upon the person in charge of such goods to declare and such person is required to declare whether such goods are intended‑ ' (a) For immediate export or (b) For consumption, use or sale within the octroi limits ; or (c) ... ... ... ... ... ... ... ... ... ... ... ... ... ... (d) Where there is no trade warehouse, for temporary retention within the octroi limits and re‑export under the Re‑export Pass System prescribed in Rule V.32‑A. The last mentioned rule which is crucial for decision in this case reads as under "V. 32‑A. (1) In a Municipality in which no trade warehouse is. maintained and in which octroi (without refunds) is in force a person importing goods intended for temporary retention within octroi limits eventual re‑export may avail himself of the re‑export pass system. (2) No person shall be permitted to make use of the Re‑export Pass System unless he has made a security deposit of Rs.1,000 in cash or in the form of a Post Office Saving Bank Account, as security for the compliance with the provisions of these Rules. This security shall be liable to confiscation in the event of any infringement of these rules. (3) The cash tendered under the foregoing sub‑rule or the pass book presented in proof of the deposit in the Post Office Saving Bank shall be acknowledged in form 6.8 or by means of a letter issued over the signature of the Octroi Superintendent who shall maintain a list of all such persons who have thus acquired the title to avail themselves of the Re‑export Pass System. The list shall be kept corrected up to date and copy thereof duly attested by the Octroi Superintendent supplied to and pasted at such barrier. (4) When a person wishes to import any goods at an outpost barrier on a Re‑export Pass, he shall apply for into the official in charge of the barrier and make a true declaration according to rule V.13 that the goods to be imported are not intended for consumption, use or sale, within the limits of the Municipality but for temporary retention and re‑export under the Re‑export Pass System. The official in charge after satisfying himself that the applicant's name is borne on his list and after referring to the receipt of letter, produced by the applicant in proof of his having made the necessary deposit, shall admit the goods, and after preparing a pass in duplicate in Form O‑24 by the carbon process shall hand over the original to the importer and forward the duplicate to the Head Octroi Office. (5) The passes to be issued in Form O‑24 shall be bound in book Worm each book containing a uniform number of leaves and each leaf bearing printed book number and serial number. A stock account of the pass books shall be maintained at the Head Octroi Office in Form O‑29 and no new book shall be issued unless the previous one has been completely used and returned. (6) The pass issued under sub rule (4) shall be ward for a ‑period of one month, and may be renewed from time to time at the discretion of the Committee, on receipt of an application from the person con corned at least 4 days before the expiry of the previous term, provided that the total period of the validity of such a pass shall not exceed one year. (7) When the person concernedi~2esrres for re‑export the goods in question, or a portion of them, lie shall send an intimation to the Head Octroi Office stating the date and time at which and the barrier through which he proposes to re‑export them. He shall then fill up the 2nd foil of the pass in his possession stating the number weight and description of the goods to be re‑exported and submit the pass to the Head Octroi Office. The Officer‑in charge of the Head Office shall then sign and return the pass and send intimation to the barrier in question of the date and time stated. The officer in charge of the barrier shall receive from the person concerned the pass in Form 0‑24, compare the details thereon with the goods exported and record the result of his verification in the 3rd foil. He shall then send the pass to the Head Octroi Office, where the details of the 2nd and 3rd foils shall be copied into the corresponding foils of the duplicate passes kept at the Head Octroi Office and attested by the Officer‑in charge. The original pass shall then be returned to the person concerned to enable him to re‑export the rest of the con signment. (8) For every person permitted to take advantage of the Re‑export Pass System, a ledger account shall be opened in a register to be maintained in Form 0‑25 in which all imports and re‑exports shall be entered as soon as intimation thereof is received at the Head Octroi Office under sub‑rules (4) and (7) above. The entries of re exports, in case the goods are removed from the octroi limits I more than one installments, shall be so recorded as to appear against the imports made on the same pass. For this purpose Sufficient space shall be left under each pass to provide for the entry of all re‑exports made on it subsequent to the first. (9) On the expiry of the period of one month from the date of the issue of the subsequent extended period, a balance shall be struck in the register to ascertain the quantity of the un exported goods, if any, 1ymg with the pass‑holder in respect of that particular pass. The duty on such goods shall then be calculated so that action may be taken to recover the amount due and to invoke the penal provisions of the rules in case they have been infringed. (10) On the application of a depositor for refund of his security, or on the coming to light of circumstances disclosing any abuse of the pass, the account shall be closed, the total re‑export shall be set off against the total imports on all the passes issued from lime to time and the balance of un‑exported goods with the pass‑holders, if any, worked out. In the case of a depositor who has applied for a refund, if no amount is found due from him and the rules have not been infringed, the deposit shall be refunded to him. In all other cases, action shall be taken as laid down in the last sentence of the preceding sub rule."

5. The main contention advanced in support of the appeal by the learned counsel for the appellant is that the supplies made from the storage depot situated within the Lyallpur Municipal limits were in pursuance of sales which had taken place within the octroi limits and consequently the goods were liable to octroi duty. The argument of the learned counsel was that since the goods were stored by the respondent in bulk in their storage tank within the municipal limits, even though the transaction of sale is initiated and payments are received outside those limits, under section 23(2) of the Sale of Goods Act, the sale is completed in law when the seller delivers the goods to the buyer or a carrier or other bailee for the purpose of trans mission to the buyer. He referred to sect in 18 of the Sale of Goods Act which lays down that in a contract for sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained. In other words, the submission of the learned counsel was that lubricants and other petroleum products being admittedly stored in bulk at the depot, even if the contract of sale is complete by payment of the price for the goods at a place outside the municipal limits, until the delivery of the goods, in this case by means of appropriation of the goods and their transfer to the carriers of the Company, such transaction merely remains a contract of sale of goods and not a concluded sale within the meaning of section 4 of Sale of Goods Act. The argument appears to us to be highly technical and lacking in factual basis on record. Apparently, this was not the basis on which the impugned demand was made by the appellant Municipal Committee and there is nothing on the record to show that any inquiry was made by the Municipal authorities to ascertain as to the terms and condition of the sale transactions made at the Regional Office of the respondent at Lahore in pursuance whereof the alleged deliveries were made from the respon dent's depot at Lyallpur. The letter dated 9‑9‑1963 by which the proceeding for recovery of the disputed amount were commenced refers to the liability of the respondent on the basis of the goods supplied to "non‑company's premises." It is no doubt true that the sale of Goods Act makes a clear distinction between a contract of sale meaning thereby an executory contract of sale and an actual sale which is an executed contract and is complete in law by virtue of the transfer of goods which are the subject‑matter of such sale. The point of distinction mainly is that the sale is a contract plus a conveyance while the agreement to sell is a contract. The word `sale' in its legal sense, therefore, imports passing of property in the goods although in the popular sense. it signifies the transaction itself which results in the passing of the property. Therefore, it is not always that ownership goods passes when the agreement to sell takes place but the test for determi nation whether sale takes place at a particular place or not is whit the under the contract between the buyer and seller the property in the good does or does not pass at that place. There cannot be any generalization. made in this respect as is contended in respect of the unascertained goods, but the question as to the time and place of the transfer of the property in goods is a matter dependent on the specific terms. of the contract between the parties. This position of law is clear even from the plain reading of sections 23, 24 and 25 of the Sale of Goods Act. It is quite clear from the provisions of section 62 of the Sale of Goods Act that these' and other provisions of the said Act merely provide for certain implied terms of .a contract of sale of goods but the Act does not compel the parties to make their contracts according to the rules of law it which contains, and they may make what terms they please, provided the contract is not illegal. It is, therefore, lawful, for the parties to exclude any of the terms or condition which the law usually attaches to a contract of sale and create for themselves any special rights and obligations that they please.

6. The purpose for elucidating the legal position discussed above is to emphasise that the question raised by the learned counsel is not a pure question of law, but is a question of fact which cannot be determined without reference to the actual terms of the contracts. whereby the supplies were despatched by the respondent to their purchasers outside the municipal limits. Be that as it may, as already mentioned, the impugned action for the recovery of octroi charges was not based on the fact that the sales, involved were completed within the territorial limits of the Lyallpur Municipal Committee, but the demand notice dated 9‑9‑1963 referred to theft, following basis for the payment of dues: "Octroi is payable in respect of goods supplied to non‑company's premises." It is also clear from the order of the Commissioner, Sargodha Division, Sargodha, dated 10‑8‑1965 that the respondents were required to furnish details of the goods supplied by them to their own premises and to others and the impugned demand was made on the basis that the goods were supplied to "the firms other than its own premises." This being the basis for the demand, it is not open to the appellant 'to support the impugned action on grounds other than those which formed the foundation of the same in the departmental proceedings. There is, therefore, no substance in the first contention raised by the learned counsel in support of this appeal.

7. The further argument of the learned counsel that the respondent could take advantage of the exemption from the payment of octroi duty under the Re‑export Pass System only in regard to the particular consign ment which was brought in and taken out or re‑exported and not when the goods were mixed and formed part of the bulk in the storage tank, is also of no avail as this was not the basis on which the demand was made. Finally the contention that the High Court was not entitled to exercise writ jurisdiction as disputed questions of fact were involved in this case does not arise, in the view that we have taken, that the very basis on which the proceedings were taken by itself was not sufficient in law, to create liability for the payment of octroi duty.

8. For the foregoing reasons this appeal fails and is accordingly dismissed with costs. M.Z. M. Appeal dismissed.