A division bench of the Bombay high court ruled that the Municipal Corporation of Greater Mumbai (MCGM) will not take steps to recover octroi duties on two imported aircraft, valued at around Rs400 crore, belonging to the Mukesh Ambani-owned Reliance Commercial Dealers Ltd.
The MCGM, in an affidavit filed in January, 2009, had demanded Rs40 lakh as octroi charges from RCDL. A division bench of Justice FI Rebello and Justice JH Bhatia, while admitting the petition filed by RCDL, granted an interim relief till the final order.
RCDL purchased a Falcon 900EX and an Airbus 319, valued at about Rs400 crore, in November 2008, to operate non-scheduled air transport (passenger) services. These aircraft fly in and out of the city at regular intervals and are not “used” or “consumed”, nor intended to be used within the corporation’s limits, said advocate Cherag Balsara, counsel for the company.
“Use”, “consumption” or “sale” are the pre-conditions for levying such a charge, which connote their retention for using the goods and not with a view to taking them out again. Mere entry of the aircraft within the limits of the corporation do not make it liable for levy of octroi, senior counsel Janak Dwarkadas and Balsara had argued.
RCDL had challenged MCGM’s demand claiming the octroi as illegal. RCDL has argued that if the octroi is levied, it would lead to imposition of substantial financial burden, which ‘amounts to an unreasonable restriction on right to carry on trade and business.’
But the MCGM had issued two notices to the company, calling for information to compute octroi duty, as it was levi-able on their entry into the local city limits under the Municipal Corporation Act. According to the MCGM, the octroi could exceed Rs40 lakh.
In an affidavit filed in January 2009, the corporation had said that the aircraft may have been registered with the Director General of Civil Aviation (DGCA), at New Delhi, but the company’s registered address is Mumbai and the aircraft are used to fly in and out of the city.
“The aircraft are required to be registered with the DGCA, New Delhi, as per the provisions of Aircraft Act, 1934 and Aircraft Rules 1937... since the registration authority (DGCA) is stationed there,” said the affidavit filed by Vasant Pandre, deputy assessor and collector (vigilance), BMC.
“If these aircraft are bought by the Mumbai-based importer for the purpose of commerce or trade, these are imported into octroi limits of Greater Mumbai,” the affidavit states. The affidavit further stated that the company has admitted that the said aircraft imported by them constantly fly in and out of Mumbai, hence they are liable to pay octroi on the same.
The certificate of registration issued by the DGCA mentions that the Airbus purchased by the company is stationed at Mumbai, stated the affidavit.
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