Case Note & Summary
These three connected writ petitions filed by pharmaceutical and polyester manufacturing companies challenged the orders of the Aurangabad Municipal Corporation rejecting their claims for exemption from payment of Local Body Tax (LBT) under Sub-Rule 6 of Rule 28 of the Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010. The petitioners, Wockhardt Limited, Lupin Limited, and Garware Polyester Limited, operated units in the MIDC area of Chikalthana, Aurangabad, and were engaged in manufacturing products for export and domestic consumption. They imported raw materials and after processing exported finished goods to foreign buyers. The exemption under Rule 28(6) provides that a registered dealer exporting goods outside India is exempt from LBT in respect of the value of goods used for such export. The respondent Corporation repeatedly rejected the exemption claims, interpreting the rule to require that the goods be imported for processing and exported in identical form, and that the unit be located in a Special Economic Zone. Additionally, the respondent contended that the writ petitions were not maintainable because an alternative statutory remedy by way of appeal under Section 406 of the Bombay Provincial Municipal Corporations Act, 1949 was available. Earlier, Wockhardt Ltd. had secured orders from the High Court in two previous writ petitions directing the Commissioner to consider the representation under Rule 28(6), but the Commissioner again rejected it by order dated 17 November 2012. Similarly, Garware's representation was rejected on 3 November 2012, and Lupin's objection to demand notices was rejected by the Deputy Commissioner. The court framed two issues: whether the petitioners were entitled to exemption under Rule 28(6) and whether the writ petitions were maintainable. After hearing arguments, the court noted that the language of Rule 28(6) is plain: it exempts the value of goods used for the purpose of export. The expression 'goods used' includes all inputs such as raw materials that go into the manufacture of the finished exported product. The rule does not require that the identity of the goods remain unchanged or that the processing must take place within the limits of the Corporation. The court rejected the respondent's narrow interpretation and held that the exemption was available to all registered dealers exporting goods, irrespective of the location of their registered office or whether the unit was in a Special Economic Zone. On the question of maintainability, the court held that where the matter involves a pure question of law and interpretation of statutory provisions, a writ petition under Article 226 is maintainable despite the existence of an alternative remedy. Accordingly, the court quashed the impugned orders and demand notices and directed the respondent authority to grant the exemption by considering the claims of the petitioners in accordance with Rule 28(6). The court allowed the writ petitions with costs.
Headnote
A) Tax Law - Local Body Tax Exemption - Scope of Rule 28(6) - Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010 - The petitioners, manufacturers exporting finished goods, claimed exemption on the value of raw materials used for export. The court held that Rule 28(6) exempts levy of LBT on the value of goods used for export; it does not require that goods be imported and exported in identical form or processed within the same territory. (Paras 2,9,10)
B) Constitutional Law - Alternative Remedy - Maintainability of Writ Petition - Bombay Provincial Municipal Corporations Act, 1949, Section 406 - The respondent argued that writ petitions should be dismissed due to availability of appeal under Section 406. Held that when the issue is purely a question of law regarding interpretation of statutory provisions, the existence of an alternative remedy does not bar writ jurisdiction under Article 226. (Para 2)
Issue of Consideration
Whether the petitioners, who are manufacturers and exporters of goods, are entitled to exemption from payment of Local Body Tax under Sub-Rule 6 of Rule 28 of the Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010, in respect of the value of goods used for export, and whether the writ petitions are maintainable in view of an alternative statutory remedy under Section 406 of the Bombay Provincial Municipal Corporations Act, 1949.
Final Decision
The court allowed the writ petitions, holding that the petitioners are entitled to exemption from levy of Local Body Tax under Sub-Rule 6 of Rule 28 of the Rules in respect of the value of goods used for the purpose of export. The impugned orders rejecting the representations and the demand notices were quashed. The respondent authorities were directed to grant the exemption by considering the claims of the petitioners in accordance with Sub-Rule 6. The court rejected the objection regarding alternative remedy, holding that the question being purely a legal interpretation of the rule, writ jurisdiction was maintainable. The court directed the Commissioner to decide the claims within a specified period.
Law Points
- Local Body Tax exemption under Rule 28(6) of the BPMC (LBT) Rules
- 2010 applies to the value of goods used for export
- not requiring that goods be imported and exported in identical form
- alternative remedy under Section 406 of the BPMC Act does not bar writ jurisdiction when the issue involves pure question of law
Case Details
2014 LawText (BOM) (10) 8
Writ Petition No. 9718 of 2012 with Civil Application No. 5493 of 2013, Writ Petition No. 289 of 2014, Writ Petition No. 10110 of 2012 with Civil Application No. 6092 of 2013
Mr. P.M. Shah, Senior Advocate i/b. Mr. S.P. Shah for petitioner in W.P. 9718/2012; Mr. G.K. NaikThigle for petitioner in W.P. 10110/2012; Mr. L.D. Vakil for petitioner in W.P. 289/2014; Mr. R.N. Dhorde, Senior Advocate i/b. Mr. A.M. Karad for respondent Municipal Corporation; Mr. D.R. Kale, A.G.P. for respondent State
Wockhardt Limited, Lupin Ltd, Garware Polyester Limited
Aurangabad Municipal Corporation and others
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Nature of Litigation
Writ petition challenging orders rejecting exemption from Local Body Tax for export-oriented units under Rule 28(6) of the BPMC (LBT) Rules, 2010.
Remedy Sought
The petitioners sought quashing of orders rejecting their representation for exemption from payment of Local Body Tax under Rule 28(6) and demand notices, and a direction to grant exemption.
Filing Reason
The respondent Municipal Corporation repeatedly rejected the exemption claim on grounds that the units were not in a Special Economic Zone, some goods were sold domestically, and custom invoices were in the name of a different unit, misinterpreting Rule 28(6).
Previous Decisions
Earlier writ petitions by Wockhardt Ltd. (WP 148/2012 and WP 4239/2012) led to directions to the respondent to consider the representation under Rule 28(6), but the respondent again rejected it by order dated 17/11/2012. In the case of Lupin Ltd., two demand notices were challenged before the Deputy Commissioner, who rejected the objection, and an appeal is pending before the Commissioner. Garware Polyester Ltd.'s representation was rejected on 3/11/2012 by the Deputy Commissioner.
Issues
Whether the petitioners are entitled to exemption from payment of Local Body Tax under Sub-Rule 6 of Rule 28 of the Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010, in respect of the value of goods used for the purpose of export.
Whether the writ petitions are maintainable in view of the availability of an alternative remedy under Section 406 of the Bombay Provincial Municipal Corporations Act, 1949.
Submissions/Arguments
Petitioners argued that as registered dealers exporting goods outside India, they are exempt under Rule 28(6) for the value of goods used in such export; the rule does not require goods to be imported and exported in identical form or processed within the same territory.
Respondent argued that the exemption under Rule 28(4) (job work basis) was not applicable because goods were not exported in same form and ownership changed; also that the unit not being in a Special Economic Zone, custom invoices in name of Ankaleshwar unit, and some domestic consumption disqualified them under Rule 28(6).
Respondent contended that an alternative statutory appeal under Section 406 of the BPMC Act is available, thus writ petitions should not be entertained.
Ratio Decidendi
Rule 28(6) of the 2010 Rules grants exemption from Local Body Tax to a registered dealer who is exporting goods outside India in respect of the value of goods used for such export. The expression 'goods used for the purpose of such export' means all goods, including raw materials, that are utilized in the process of manufacturing finished products that are ultimately exported. The exemption does not require that the imported goods be exported in the same form or that the processing occur within the same territorial limits. The exemption is available on the value of goods used, irrespective of the location of the unit's registration or special economic zone status, as long as the dealer is exporting the finished product. Writ jurisdiction under Article 226 is maintainable despite an alternative statutory remedy when the issue involves a pure question of law and interpretation of statutory provisions.
Judgment Excerpts
All the present Writ Petitions raise a common question regarding the scope and applicability of exemption from payment of Local Body Tax ... as provided by Sub Rule 6 of Rule 28 of the Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010.
Rule 28 of the Rules is material to decide the present controversy. It reads as under: ...
The register dealer who is exporting the goods outside the territory of India, shall be exempt from the levy of the Local Body Tax in respect of the value of the goods used for the purpose of such export.
The representation of the said petitioner was rejected by the respondent no.3 the Commissioner by the impugned speaking order on the following counts: ...
Procedural History
Wockhardt Ltd. first sought exemption under Rule 28(4), which was rejected. Then sought exemption under Rule 28(6), which was rejected. Filed W.P. No. 148 of 2012; court set aside order and directed fresh consideration under Rule 28(6). Respondent again rejected representation. Filed W.P. No. 4239 of 2012; court again directed to decide under Rule 28(6). Respondent passed impugned order dated 17/11/2012 rejecting representation. Garware Polyester Ltd.'s representation rejected on 03/11/2012. Lupin Ltd. challenged two demand notices; objection rejected by Deputy Commissioner; appeal pending before Commissioner. All three filed present writ petitions.
Acts & Sections
- Bombay Provincial Municipal Corporations Act, 1949: Section 152(T)(2), Section 406
- Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010: Rule 28(4), Rule 28(6)
