P L D 1989 Supreme Court 444 (PLP)

MUHAMMAD AFZAL ZULLAH, J.‑‑Leave to appeal has been sought by the Octroi agent/lessee of a Municipal Committee, against the acceptance by the High Court, of the respondent's writ petition (as also the dismissal of petitioner's Intra‑Court Appeal) with the result that the demand made by the petitioner for penalty/ composition fee at 10 times the Octroi duty recoverable from the respondent, stands annulled. As stated at the Bar, the petitioner became lessee with effect from 1‑7‑1984. Prior thereto there was arrangement between Municipal Committee and the respondent company for lump sum deposit to be adjusted periodically against Octroi duty becoming due from time to time. This arrangement was made under clause 59‑A of the Octroi Rules, 1964. It is further stated that the petitioner did not want to continue that arrangement. Accordingly unilaterally it was sought to be discontinued and the respondent was accordingly informed on 1‑7‑1984. Thus the previous arrangement was sought to be discontinued and the payment of Octroi duty was required to be made on individual consignment passing the Octroi Posts. The respondent did not readily agree to this unilateral action and sought discussion. The matter was brought to the notice of the Municipal Committee by the petitioner; on which they issued notices to the respondent for payment of Octroi as demanded by the petitioner. On respondent's failure to do so within a month or so the Municipal Committee imposed the disputed 10 times composition fee. The respondent's appeal before the Chairman succeeded. The composition fee (in the nature of penalty) was set aside; only a penalty of Rs.15,000 was added. The petitioner filed a Writ Petition in the High Court which having been allowed mainly on the ground that the Chairman was not competent to grant relief in "appeal", the respondent filed a petition for leave to appeal (CP‑380 of 1985) which is pending in this Court. . The petitioner again made demand on 24‑7‑1985 with reference to the previous demands, of not only the Octroi duty but also the composition fee (as a penalty). The respondent brought the matter again before the High Court in its constitutional jurisdiction, this time seeking a verdict on the validity of the demand for the recovery of the composition fee, itself. The High Court allowed the writ petition with the finding that the amount in dispute could be recovered only as a composition fee under rule 192 which was not attracted in the present case; because, the respondent never made an application under that Rule. Therefore, it was not recoverable. Petitioner's Intra Court appeal having beer, dismissed, leave to appeal has now been sought. The relevant Rules read by the learned counsel are reproduced below:

"59‑A.‑‑ (1) The Municipal Committee may, on the application of a party, instead of requiring payment of Octroi dues to be made at the time when the articles in respect of which it is leviable, agree that a standing deposit be received from such party and an account current be opened on behalf of the Municipal Committee of the Octroi so due from any such party. (2) Every such account shall be settled at intervals not exceeding one month and such party shall make deposit of such amounts as the Municipal Committee may consider sufficient to cover the amount which may at any time be due from such party in respect of such dues. Every amount so due at the expiry of any such intervals, if not paid, shall be adjusted from such deposit. Investigations.‑

184. The Chairman or the Taxation Officer may suo motu or on the complaint or representation of any person order an investigation in any case covered by the provisions of these rules.

185. Where a case is required to be investigated under any of the provisions of these rules, an Investigation Report shall be drawn up and forwarded to the Octroi Office.

186. Where an investigation is likely to take some time, a First Information Report shall be drawn up and forwarded to the Octroi Office in the first instance, and the Investigation Report shall be forwarded as soon as it is completed.

187. Every case of investigation shall be registered at the Octroi Office in the Investigation Register. ,

188. The Taxation Officer shall check the Investigation Register at least once a month, and take such steps as may be necessary to ensure that no case of investigation is held up, and that adequate action is taken on every case investigated under these rules. Evasion of Octroi

189. Where a case of an evasion of Octroi is required to be registered against any person under any of the provisions of these rules. an Investigation Report shall be forwarded to Octroi Office, and such case shall be deemed to be registered as soon as an Investigation Report has been forwarded under this rule.

190. An Octroi Evasion Register shall be maintained at the Octroi Office, in which all cases of the evasion of Octroi shall be registered.

191. An Investigation Report received tinder Rule 189 shall be registered in the Investigation Register and the Octroi Evasion Register.

192. When a case of the evasion of Octrio has been registered against a person, such person may apply for the composition of the offence, and if he pays the octroi due and an amount by way of composition equivalent to ten the Inspecting Officer may compound the offence and issue an Extraordinary Pass. 193. (1) The Extraordinary Pass under Rule 192 shall comprise three foils. of which the third foil shall be handed over to the person concerned, and the second foil shall be forwarded to the Octroi Office. When the second foil is received at the Octroi Office, necessary entries shall be made in the Octroi Evasion Register.

194. Where a person against whom a case of an evasion of Octroi has been registered applies for the composition of the offence, but in view of the circumstances of the case, the composition of the offence for an amount ten times the Octroi due would involve hardship, the case shall be forwarded to the Octroi office, where the offence may be compounded for such amount as may be approved by the Taxation Officer.

195. Where a case of an evasion of Octroi has been registered against a person but such person does not apply for composition, the case shall be reported to Octroi Office for such action as may be necessary.

196. Where a case of an evasion of Octroi is not compounded, the person concerned shall be prosecuted. All cases of prosecution shall be registered in the Octroi Evasion Register.

197. Where any case of the evasion of Octroi is required to be forwarded to Octroi Office under Rule 195 or 196, the Inspecting Officer shall make such arrangements as may be necessary for the escorting of the goods to the Octroi Office.

198. If a person is not prepared to take the goods to Octroi Office under Rule 195 or 196, the Inspecting Officer shall pass an order for the seizure of goods under the provisions of Chapter XXV and cause them to be taken to the Octroi Office. Although in such like cases a very serious question arises; whether, after an arrangement under Rule 59‑A, a lessee or for that matter a Municipal Committee or both, could unilaterally discontinue the arrangement made under Rule 59‑A . However, it not having been raised from the respondents' side, in the peculiar circumstances of this case, we would not make any further comment. In the impugned judgment (of the Single Bench only) it has been assumed by the High Court that it was a case of "evasion" of the Octroi duty. After hearing the learned counsel for the petitioner we feel that there could be two views on this aspect of the matter: Non‑payment/failure to pay Octroi duty may not amount to "evasion". It would depend upon the circumstances of each case; whether al particular set of circumstances constitute "evasion" or not. In this case also if examined in depth it is not certain that this Court will agree with the High Court that it was, in fact, a case of "evasion". However, this aspect also does not need any further discussion in the present case as, in our view, the reason on which the High Court proceeded to allow the respondents' writ petition, is un‑exceptionable. Assuming that it was a case of "evasion" of duty, the penal action could be taken against the respondent either through, "prosecution" or through imposition of "composition fee"; which, in; our view, having been fixed at a very high rate, is in the nature of; penalty. Obviously the law having provided a choice in case ofi "evasion", to the respondent it did not opt for composition under Rule

192. The prosecution, no doubt, could thus be launched as the other alternative. But the imposition of the composition fee could not be levied unless the case was fully covered by Rule

192. Its provisions,: shall have to be read and construed very strictly as it provides an i action which is penal in nature. Accordingly it is a must that the following amongst other conditions should be satisfied before invoking this rule:‑ (a) There should be a "case" of failure or non‑payment of Octroi; (b) It should amount to "evasion" of "Octroi"; (c) It should have been registered against a person; (d) Such person should "apply" for "composition" of the "offence"; (e) Such person must pay the Octroi due; (f) In addition to the Octroi due, such person will have also to pay composition fee "equivalent to ten times of Octroi due"; (g) All the above and other requirements under various other rules having been complied with the Inspecting Officer would only then compound the "offence" in token whereof an Extraordinary Pass would be issued. The above analysis of Rule 192 makes it obvious that practically nothing was done thereunder so as to invoke the same. As already observed this rule has to be construed strictly and its requirements are mandatory, each one of them. That being so the composition fee could not be levied under the said rule. Learned counsel for the petitioner also contended before us that the same recovery could be made under the residuary rule‑‑195, by virtue of the power and expression‑‑ "such action", as "may be necessary". It is not necessary to spell out all possible actions which could be taken under the law/rules but in no case the "composition fee" provided by rule 192 could be recovered under rule

195. As already held it is a penal action and is also in lieu of the prosecution; because, once action under rule 192 is completed by its own very words the "offence" would stand "compounded" with all the necessary consequences‑‑one being that the rule of bar against double jeopardy, would also be attracted. The composition of offence having been made subject to such strict conditions as are already enumerated, the same penalty could not be imposed under the general residuary power granted to the "Octroi Office" under rule

195. In addition we may observe that the notices of demand dated 24‑7‑1985 wherein the earlier notice of demand dated 27‑11‑1984 (both not produced by the petitioner but showed to us by the learned counsel for the respondents from his brief) clearly show that the recovery impugned before the High Court was being made as if it was "composition fee". Looked at from whatever angle we find no justification for grant of leave to appeal. The same, accordingly, is refused. M.B.A./K‑97/S Leave refused.