The plaintiffs, Messrs Novatex Limited through this suit have claimed refund of Rs. 17,51,830 being the differential of the octroi duty paid by them in excess to defendant No.1, the Octroi Contractor or, K.M.C., the defendant No.2.
2. The case of plaintiffs is that they run a factory for the manufacture of polyester chips situated in Shah Latif Township, District Malir. They used to get the raw material "P.T.A. (Pure Telephthalic Acid)" from Messrs ICI Pakistan Limited situated at Bin Qasim. Since the raw material passed through the Octroi Post of K.M.C. set up at National High Way, the octroi was charged by the defendant No.1, who was the Octroi Contractor of K.M.C., defendant No.2. He collected octroi at the rate of Rs.350 per ton classifying the said material under the head "Plastic". The plaintiffs made payment under protest, as according to them the material was to be treated as Commercial Acid chargeable at the rate of Rs.90 per ton. The plaintiffs made a complaint to the Director Octroi against the exorbitant charge of octroi duty who, after issuing notices to the plaintiffs and defendant No.1 and hearing the matter, decided the controversy and issued a directive to the defendant No.1 on 26-10-1998 asking him to recover octroi on P.T.A. at the rate of Rs.135 per ton treating it as 'Chemical' under. Class-V item 6(b) of Octroi Schedule-B. From 27th October, 1998 onwards the defendant No.1 started collecting octroi at the rate of Rs.135 per ton. For the differential amount of the octroi recovered earlier at the rate of Rs.350 per ton, the plaintiffs approached the defendant No.1 for refund of Rs.17,51,830 received upto 26-10-1998, but the defendant No.1 declined to make payment on the ground that there was no directive for the refund of the amount overcharged. The plaintiffs, therefore, filed this suit.
3. The defendant No.1 resisted the suit and took a preliminary objection that the claim was barred under rule 218 of Municipal Committee Octroi Rules, 1964. Further he denied the allegation of illegal and unauthorized charge of octroi duty and stated that the goods were charged in accordance with Octroi Rules and the Schedule,-including rule 44 the said Rules. He maintained that the goods were actually plastic and were accordingly charged under the said class, while the plaintiffs under the cover of P.T.A. wanted to clear the plastic just to avoid the octroi. According to him, there was no question of refund of any amount.
4. On these pleadings the following issues were settled by the Court:--
(1) Whether the suit is barred under rule 218 of the Municipal Committees Act, 1984 and what is the effect of the order passed by the Director Octroi, K.M.C. in that regard?
(2) Whether the defendant No.1 has illegally charged the octroi at the rate of Rs.350 per ton while the octroi chargeable was at the rate of Rs.135 per ton?
(3) Whether the defendant No.1 has charged an amount of Rs.1,751,830 in excess and is liable to refund the said amount to the plaintiffs?
(4) What should the decree be?
5. The plaintiffs and defendant No.1 examined one witness each. The plaintiffs witness produced the relevant documents.
6. I have. heard learned counsel for the parties and perused the pleadings and evidence on record.
7. The outstanding legal plea taken against maintainability of the suit was that it was barred under rule 218 of the West Pakistan Municipal Committees Octroi Rules, 1964 (hereinbelow to be referred to as the Octroi Rules). It was also pleaded that the plaintiffs had filed an appeal before the Director Octroi, therefore, he could not resort to filing of a' suit. No issue has been framed on the last mentioned plea, therefore, bar of suit is to be examined from the point of view of rule 218 of the Octroi Rules.
8. Learned counsel for plaintiffs explained that the excess amount was collected intentionally and not as a mistake and in essence it was effected under compulsion as a result, rule 218 of the Octroi Rules was not applicable and the plaintiffs claim of refund was covered by general law such as section 72 of the Contract Act. He pointed out that the payments were made by the plaintiffs under protest. Learned counsel for defendant, controverting these contentions, argued that under rule 44 of the Octroi Rules, if any goods fell under more than one item of the Octroi Schedule the octroi was to be charged under the item carrying the highest rate, therefore, the defendant No.1 was justified in charging octroi' for plastic under Octroi Schedule 'B' and the plaintiffs had no valid claim. He further submitted that the protest was not made before Taxation Officer under the Rules and that the claim for refund within the meaning of rule 218 of the Octroi Rules could only be filed for an amount-collected within 30 days of such payment, consequently, the belated claim was not tenable under the law.
9. The documentary evidence placed on record shows that the plaintiffs had approached the Director Octroi through his letter, dated 3-10-1998 (Exh. P-5/12) for intervening in the matter and had also reminded him through another letter (Exh. P-5/14) whereafter the Additional Director Octroi issued notice to the parties vide Exh.. P-5/16 and then decided the matter and conveyed his decision to the defendant No.1 through his letter, dated 26-10-1998 (Exh.P-5/18) endorsing a copy to the plaintiffs. The text of the communication runs as under:--- "SUB:- RECOVERY OF OCTROI ON P.T.A.
Ref:- Your Letter No. ADB/RC-10/98- 132, dated 13-10-1998.
Your contention contained in letter referred above has been examined and it is to inform you that the item P.T.A. is chargeable under Class-V item-6(b) of Octroi Schedule ' B' @ Rs.135 per ton.
Accordingly you are hereby directed to recover octroi on P.T.A. @ Rs.135 per ton treating the same as chemical."
10. In pursuance of the aforesaid decision/directive further octroi on the goods in question was charged as chemical at the rate of Rs.135 per ton as evidenced by the receipts Exh. P-5/19 to Exh. P- 5/23. He argued that after the above decision/directive the plaintiffs lodged 'their claim on 2-11- 1998 with defendant No.1 demanding refund of an amount of Rs.17,51,830 being the excess charge of octroi duty, therefore, their claim was well within time even if rule 218 of the Octroi Rules was applied. He emphasized that right from the beginning the plaintiffs were making the exorbitant payment under protest and such letters were duly written to the defendant No .1 on 3-9-1998 and 16-10-1998 vide Exh. P-5/10 and Exh. P-5/11, therefore, it cannot be said that the claim for refund was barred by time.
11. In order to assess the applicability of rule 218 of the Octroi Rules the test of rules 218, 219 and 226(d)(iv) of the Octroi Rules are reproduced below:--- "218. If due to any miscalculation or error any amount under those rules has been charged in excess from any person, such person may, within thirty days of such payment, apply to the Taxation Officer for the refund of the amount charged in excess.
219. Every application made under rule 218 shall be investigated and if on investigation the claim is found to be correct the amount charged in excess shall be refunded to the person concerned."
226 Where the collection of Octroi in any municipality is leased under this Chapter:---
(d) in respect of such municipality:
(iv) the refund of any amount (required to be made, under rule 219) charged in excess by the lessee shall be made by the lessee; and
12. Rule 218 essentially applies to cases of refund of the amount charged in excess if such charge has been made in consequence of any miscalculation or error. Instantly, the case of excess charging has resulted from wrong classification of the goods chargeable for octroi duty accompanied by compulsion. The plaintiffs had initially taken the stand that the P.T.A. (Pure Terephthalic Acid) was a chemical acid and should be chargeable at the rate of Rs.90 per ton under Class-V item 6(a) of the Octroi Rules and not as 'Plastic' chargeable at the rate of Rs.350 per ton under Class-IX. item 3(a) of Octroi Rules. Ultimately, the matter was investigated by the Director Octroi of K.M.C., defendant No.2 and it was found that the P.T.A. was a chemical chargeable at the rate of Rs.135 per ton. For this purpose, the letters of I.C.I. have also been placed on record (Exh. P- 5/9 and Exh. P.5/17). Under the last mentioned letter the I.C.I. Pakistan Limited has informed the Director Octroi, K.M.C. that P.T.A. is a pure acid and may be treated as a commercial acid and not plastic. It is clearly stated in the letter that P.T.A. was being supplied by them to Messrs Novatex Limited, the plaintiffs.
13. Further, the report of PCSIR (Exh. P-5/15) also maintains that the chemical substance Terephthalic Acid is not a plastic material. In this way, it was manifestly established that Terephthalic Acid was not plastic and the Additional Director Octroi rightly directed the defendant No.1 not to classify the same as plastic and collect Octroi duty as such. However, the Additional Director Octroi was of the view that it was a chemical chargeable at the rate of Rs.135 per ton. This decision was practically followed and the receipts (Exh.P-5/19 to Exh.P-5/23) show that further collection was made at this rate. Although, these receipts were questioned on the ground that the same were photostat copies and not signed by the concerned Octroi Clerk, but then the defendant No. 1 did not produce any document at his own level to show that he did not accept this decision and continued charging octroi duty on P,T.A. at the earlier rate of Rs.350 Per ton. On the contrary, the witness of defendant No.1 namely Humayoon Qureshi admitted in cross-examination that Director Octroi had issued notice to them on the complaint made by plaintiffs fixing the date of hearing as 26-10-1998 and on that day he decided the matter to the effect that the octroi should be charged at the rate of Rs.135 per ton. He also admitted that copy of the decision was endorsed by the defendant No.1 to the Octroi Post for compliance. He further admitted that on 3-12-1998 the plaintiffs wrote a letter asking the defendant No.1 to refund the amount paid to them in excess at the rate of Rs.135 per ton. These admissions support the case of plaintiffs. Collectively, all these facts lead to a definite conclusion that the decision of Additional Director Octroi as to the classification of the goods in question was correct and accepted by the defendant No.1.
14. Now, the circumstances enumerated above essentially spell out a situation that under an uncalled for construction of Schedule 'B' to the Octroi Rules the goods were wrongly and arbitrarily classified as plastic and the plaintiffs had no way out at that point of time but to surrender to the unlawful demand of defendant No.1, who being Octroi Contractor of K.M.C. at the relevant time, was the person in authority. Initially, the wrong classification may give an impression of error but actually in effect and consequence it was manifestly a compulsion attracting the expression 'coercion' appearing in section 72 of the Contract Act. It was not a case of miscalculation or error within the meaning of rule 218 of the Octroi Rules.
15.Even otherwise, rule 218 of the Octroi Rules lays down a procedural phenomenon calling upon the aggrieved person to ask for refund of the excess payment of octroi duty within a period of 30 days. Embargo of this sort, though appears in the form of limitation for instituting departmental proceedings for refund of excess collection, but it does not extinguish a right accruing to a person under substantive law. An aggrieved person, 'therefore, cannot be deprived of his right of refund of money if otherwise under the general law, for instance under section 72 of the Contract Act, he is entitled to the same. Bar under this rule, as claimed by the defendant, is thus misconceived and untenable.
16.The view taken by a Division Bench of this Court in JAMEA Industries Limited v. K.M.C. (PLJ 1982 Kar. 265) more or less enunciates the same principle. Reliance in the cited case was placed on AIR 1949 Nagpur 215 wherein it was held that even if the tax is paid without protest it is an involuntary payment and must be presumed to have been paid under .coercion because of the unpleasant consequences that would follow if it is not paid. In the instant case, the excess amount was paid under protest and on that point documents have been placed on record, as already discussed. It may also be advantageous to refer to the view taken in AIR 1941 Madras 439 wherein the payments made on higher rate were treated as payments made under protest and not voluntary payments and such overcharges were found to ' be recoverable as money had and received within the meaning of section 72 of, the Contract Act. In this contest the view taken in Koh-e-Noor Industries Limited v. Government of Pakistan (1994 CLC 994) is also beneficial. In view of the above discussion of legal and factual aspects it may be concluded that the suit is not barred under rule 218 of the Octroi Rules as pleaded by the defendant No.1.
17. Issues Nos.2 and 3 are taken up together. The controversy covered by issue No.2 is whether the defendant No.1 illegally charged the octroi at the rate of Rs.350 per ton while the octroi was chargeable at the rate of Rs.135 per ton. The evidence relating to this question has substantially been discussed above in the light of documents placed on record by the plaintiffs and admissions made by the witness of defendant No.1. The matter was decided by the Director Octroi who issued his decision through directive, dated 26-10-1998 (Exh. P-5/18) and as admitted by the witness of defendant No.1 this decision was received by them and was endorsed by the defendant No.1 to the octroi clerk posted at the relevant octroi post. In substance, the . decision was actually accepted and implemented in aforementioned manner. It would not be out of place to mention that the witness of defendant No.1 in precise terms admitted that they were treating all the goods of plaintiffs as plastic and the assessme nt clerk at the check post had treated the goods declared by plaintiffs to be P.T.A. as plastic. Thus, the charging of octroi duty was manifestly illegal. The plaintiffs plea that it was a chemical acid, however, could not succeed and he has, in turn, accepted the decision of Director Octroi that the goods should be charged as chemicals and the octroi be collected at the rate of Rs.135 per ton. In consequence of the evidence placed on record and the discussion made earlier the true position that emerges is that the P.T.A. was wrongly 'classified as plastic under Class-IX item No.3(a) of Schedule 'B' and the octroi was illegally charged at the rate of Rs.350 per ton treating the P.T.A. as plastic.
18. As regards the proof -of payment at the rate of Rs.350 per ton the plaintiffs witness has produced original receipts (Exh.P-5/2B to Exh. P-5/47), Genuineness of these receipts has not been questioned by the defendant No.1 by putting any direct question that such payments have not been made. Even the witness of defendant No.1 has in clear terms, deposed that they considered those goods as plastic which the plaintiffs wanted to clear as P.T.A. and charged the octroi accordingly. In cross-examination a suggestion was given to him pointedly, which he admitted in following terms:--- "It is correct that we charged Rs.350 per ton on all the goods of plaintiff 'treating it as plastic."
19. The witness of defendant has also admitted that the plaintiffs wrote a letter, dated 5-12-1998 asking for refund of the amount. The witness of defendant No.1 did not, however, dispute the genuineness of these receipts. Consequently, the aforesaid documents namely the receipts stand uncontroverted and within the meaning of rules of evidence are accepted. as payments received.
Each receipt shows collection of octroi duty at the rate of Rs.350 per ton, therefore, the plaintiffs are entitled to refund of the amount under section 72 of the Contract Act which under compulsion he paid in excess of the legal and accepted rate of Rs.135 per ton. The total differential has been worked out in Exh. P-5/25 which has also not been challenged he could not do it either. The claim of plaintiffs for refund of amount of Rs.17,51,830 is, therefore, just and legal.
20. In view of the above discussion and findings on all the issues the claim of plaintiffs is accepted.
The defendant No.1 was the Octroi Contractor of K.M.C., the defendant No.1 and was not an agent but a lessee within the meaning of Chapter XXX of the Octroi Rules. Under sub-clause (iv) of clause
(d) to rule. 226 of the Octroi Rules he being the lessee having charged the excess octroi duty is liable to refund the amount to the plaintiffs. Consequently, suit is decreed with costs and the defendant No.1 is directed to refund and make payment of Rs. 17,51,830 to the plaintiffs with mark- up at the rate of 9% until payment.