MAN MOHAN TULI versus MUNICIPAL CORPORATION OF DELHI & ORS.

MAN MOHAN TULi

MUNICIPAL CORPORATION OF DELHI & ORS.

February 18, 1981

lJ [S. MURTAZA FAZAL ALI, A. D. KosHAL AND A. VARADARAJAN, JJ.I

Delhi Municipal Corporation Act, 1957, section 158 and rule 26 of the Terminal Tax Rule frarned under the Act, interpretation of-Exigibility of Terminal Tax, explained.

Man Mohan Tuli, appellant in C.A. 2004/80, is the owner of piece of land situate on the Grand Trunk Road near the sixth n1ilestone as one goes from Delhi to Ghaziabad. Appellant Tuli has constructed various bui1dings on his land for use as godowns and has rented them out to various transport companies engaged in bringing goods from other States and storing them before their transhipment to Delhi and other States beyond Delhi. The trucks carrying the goods for various destinations pass along the .T. Road and move into Tuli's land. After the trucks enter the ln,nd, the goods are unloaded into the godowns, sorted out and reloaded into the respective trucks meant for various destinations. Thereafter, the trucks move out of the land and, passing through the Union Territory of Delhi after crossing the border line, proceed to their destinations. The Municipal Corporation of Delhi by i~s Orders dated May 23, 1975 and July 7, 1975 directed that Terminal Tax post be set up at the entrance to Tuli's land in order to collect terminal tax on goods carried into that land. writ was filed before the High Court by the owners of transport companies as also by Tuli for quashing the orders of the Corporation seeking to levy Terminal Tax on the goods which were not meant for Delhi but for places beyond Delhi. The High Court held that the Corporation was legally entitled to levy Terminal Tax at the point of territory of the Union Territory of Delhi even though the goods were sorted out in the godown of Tuli, resorted out and re-loaded since as they while passing through tlle territory of Delhi undoubtedly entered the said territory. Hence the appeal'\ by special leave by appellant Tuli and others,

Allowing the appeal in part, the Court

HELD : 1. It is well settled that taxing statutes must be strictly interpreted giving every benefit of doubt to the tax-payer. Terminal Tax could be levied only by the Corporation or the State which is the final destination of the goods sent from any other area. Terminal Tax signifies that there must be terminus for the journey of the goods. Terminus means the point to which main action tends, goal, end, finishing point, the point at which some thing comes to an end. [899 D, 901 B-D]

2.1. From consideration of the decided cases of the Supreme Court, the following propositions emerge :--H

(i) Terminal tax and octroi are similar kinds of levies which are closely interlinked with (a) destination of the goods (b) the user in the local area

-on arrival of the goods. Where the goods merely pass through local area without being consumed therein the mere fact that the transport carrying the .goods halt within the local area for transhipment or allied purposes would not justify the levy of either the terminal tax or octroi duty. This is because tho halting of the goods is only for an incidental purpose to effectuate tho journey .of the goods to the final destination by unloading, sorting and reloading them at particular place. [803 A-Cl

(ii) There is very thin margin of difference between terminal tax. and octroi. In the case of the former (terminal tax) the goods reach their final destination and their entry into the area of destination immediately, attracts, payment of terminal tax irrespective of their user. In the case of octroi, however, the tax is levied on goods for their use and consumption. [903 D-El

(iii) But at the same time, the goods while halting at local area 1 should leave for their destination within reasonable time which may depend on circumstances of each case and if the goods are kept within the area for such long and indefinite period that the purpose of reaching the final destination lying in dicerent area is frustrated or defeated, they may be exigible to termi-nal tax. [903 E-FJ

(iv) \\'here the goods enter into local area which is also the destination -Of the goods either temporarily or otherwise, the terminal tax would be leviable. For instance, if consigns goods from Patna in Bihar to Delhi in the name of X and X after having received the goods at Delhi rebooks or reloads the same on transport for Chandigarh in the name· of Y, terminal tax would be Ieviablt~ by the Corporation at Delhi because the destination of the goods in the first instance was Delhi and that by itself would attract the imposition of terminal tax. The fact that X rebooks them to Chandigarh Would not make any difference because the act of rebooking by X at Delhi would consti-tute fresh transaction by which the goods after having been carried into Delhi are further exported to Chandigarh. On the other hand, when there is one continuous journey of the goods from Patna to Chandigarh without any break, the final destination would be Chandigarh even though the goods may have to be halted in Delhi for the purpose of unloading, sorting and ! reloading and may have to be kept in Delhi for reasonable time. In such ~~-a case terminal tax would not be exigible. [903 G-H, 904 A-CJ

Pun;ab Flour & General Mills v. Lahore CorpOraJion, A.I.R. 1947 F.C. 14; The Central India Spinning & Weaving & Manufacturing Co. Ltd., The Empress Mills, Nagpur v. The Municipal Committee, Wardha, [1958] SCR 1102; Bangalore Woollen, Cotton & Silk Mills Co. Ltd, Bangalore v. Corporation of the City of Bangalore, [1961] 3 SCR 707; Diamond Sugar Mills Ltd. & Anr-v. The State of Uttar Pradesh, [1961] 3 S.C.R. 242; Burmah Shell Oil Storage & Distributing Co. India Ltd. v. The Belgaum Borough Municipality, [1963] Supp. 2 SCR 216; Khyerbari Tea Co. Ltd. & Anr. v. The State of Assam, [1964] 5 SCR 975, followed.

Champlain Realty Co. v. Town of Brattleboro, 67 L Ed. U.S. 309, quoted with approval.

2.2. What would be reasonable time for interpretation of the goods or halting, in the instant case, at the godown of Tuli, will naturally depend upon the special features or circumstances of each case, namely, the nature of the goods, the tin1e taken in loading, sorting and unloading, the obstacles or diffi .. culties which may be fa~ed by the transporters and similar other factors. Nor-,mally, time of two to three days or even week should be sufficient to clear the goods for its journey to the ultimate destination. It may sometimes happen that goods may have to be kept in the godowns 1n the territory of Delhi for circumstances beyond the control of the consignee or the consignor, for exam-ple, garnishee order. In considering what is reasona.ble time these circums-tances would have to be taken into consideration. [906 H, 907 A-C]

2.3. Rule 26 of the Terminal Tax Rules will have to be interpreted on tho footing that seclion 178 of the Delhi Municipal Corporation Act, 1957 does not contemplate levy of terminal tax for goods meant for destinations other thain. De1hi. The v,rord "imn1ediately" appearing in Rule 26 has to be liberally construed so as to imply reasonable period and if the export is delayed the, rules may apply if reasonable explanation has been given. So far as niles regarding taking of passes, etc., a•t the barrier are concerned they would, of course, apply but subject to the conditions under which terminal tax can be imposed under section 178 of the Act \vhich is the main charging section. {907 C-EJ

Amtit Banaspati Co. Ltd. v. The. Union of India I.L.R. 1973(1) Delhi 237, distinguished.

3.1. Section 178 of the Dehli Municipal Corporation Act, cannot be inter-preted so as to justify imposition of ternllnal tax even on goods which merely passed through the territory of Delhi, although their destination is not Delbi but places beyond Delhi. [908 F-G]

3.2. I\iferely because the goods after having been unloaded in the gOOown of appellant Tuli are sorted, reloaded in different trucks and thereafter pass through the territory of Delhi, they do not become exigible to terminal tax. [908 G-H]

3.3. Rule 26 of the Terminal Tax cannot be interpreted so that exemption could be granted only if the goods are exported immediately which means within very short time irrespective of any other consideration. Terminal tax can br. leviable only if it is proved that the goods remained at the godown for an indefinite and unexplained period which could not be said to be reasonable · ~ 1--. in the circumstances. [908 H, 909 A-Bl

3.4. Whete the goods arc Ca-rried by trucks into the territory of Delhi and unloaded there and are ah.o 1ncant for Delhi and soon thereafter may be re-booked by the receiver of the gocxls to some other place, terminal tax wou1d be levirble because in this case there are two separate transa-ctions-(i) by which the goods are meant for Delhi and (ii) by which after having reached and having been unloaded at Delhi they are rebooked and reloaded for some other p1ace and which therefore is fresh and different transaction. In such case, terminal tax would be leviable at the entry point in the·territory of Delhi. [909 B-Cl

3.5. The direction given by the High Court to the Terminal Tax Officer to fix reasonable time for unloading, sorting and reloading the goods which are

meant for dif~ercnt destinations takin£ into consideration the quantity of the goods. the ti1ne for unloading, sorting etc. aud for further reloading and tran-shipment r;hould be done within tin1e to be fixed by Tern1inal Tax. Officer is correct. [909 E-FJ

CIVIL APPELLATE JURISDICTION : Civi,J Appeal Nos. 2004-2005 of 1980.

Appeals by Special Leave from the Judgment and Order dated 13-10-1978 of the Delhi High Court in LPA Nos. 73/77 and 103177.

Madan Bhatia and Sushi/ Kumar for the Appellant in both the appeals.

R. B. Datar, Lalit Bhardwaj and Miss Madhu Mulchandani for Res-pondent Nos. 1-3.

P. R. Rao, S. R. Venkataraman, P. C. Kapur, R. C. Bhatia and S. L. Sharma for Respondent ND. 5 in Civil Appeal No. 2004/80.

N. B. Si"ha and S. K. Sinha for Respondent No. 4.

The Judgment of the Court was delivered by

FAzAL Au, J. These appeals by special leave are directed against Division-Bench common judgment dated October 13, 1978 of the High Court of Delhi by which the Letters Patent Appeals were allowed and the impugned Orders dated May 23, 1975 and July 7, 1975 passed by the Terminal Tax Officer, Municipal Corporation of Delhi were quashed.

The facts of the case lie within very narrow compass and may be summarised as follows. Manmohan Tuli, appellant in C.A. No. 2004/80, is the owner of piece of land situate on the Grand Trunk Road near the sixth milestone as one goes from Delhi to Ghaziabad. Appellant Tuli has constructed various buildings on his land for use as godowns and has rented them out to various transport companies ._l_ ~.,ngagcd in bringing good from other States and storing them before their transhipment to Delhi and other States beyond Delhi. The trucks carrying the goods for various destinations pass along the G.T. Road and move into Tuli's land. It is not disputed that after the trucks enter the land, the goods arc unloaded into the godowns, sorted out and re-loaded into the respective trucks meant for various destinations. There-after the trucks move out of the land and passing through the Union • Territory of Delhi after crossing the border line, proceed to their destina-' tions. The Municipal Corporation of Delhi (hereinafter referred to as the 'Corporation') by its Orders dated May 23, 1975 and July 7, 1975 (hereinafter referred to as the 'inpugned orders') directed that Termi-• • nal Tax post be set up at the entrance to Tuli's land in order to collect I0-214SCI/81

terminal tax on goods carried into that land The Ghaziabad Nagar Palika also purported to levy terminal tax on such goods but this levy was neither assailed before the High Court nor has been challenged before us and is therefore left out of con~ideration. writ was filed before the High Court by the owners of transport compiinies as a.lso by Tull for quashing the orders of the Corporation seeking kl levy termi-nal tax on the goods which were not meant for Delhi tut for places beyond Delhi. Further details are not necessary for the decision of these appeals and both the appeals (C.A. Nos. 2004 and 2005 of 1980) will be disposed of by common judgment.

The High Court vide the impugned judgment was of the opinion that even though the goods were stored in the godown of Tuli, sorted out and reloaded but as they while passing through the territory of Delhi undoubtedly entered the said territory, the Corporation was legally entitled to levy terminal tax at the point of entry into the Union Terri-tory of Delhi. The case of the appellant was that the goods were not meant either to be used or consumed in Delhi nor was Delhi the final destination of the goods. It was different matter that as the goods were to be sent to destination beyond Delhi the transport carrying the goods had perforce to pass through the territory of Delhi. It was thus contended that the goods were not carried into the territory of Delhi but were merely carried through the territory of Delhi to other destina-E tions which were beyond Delhi. It was argued that s. 178 of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as the 'Act') had in terms no application to the case and that therefore the terminal tax imposed by the impugned orders was legally invalid.

The counsel for the respondent, however, submitted that even though the goods may have been meant for other destinations but as they were unloaded in the godown and reloaded in various trucks and actually entered into the territory of Delhi, they were factually carried into the Delhi territory and that was sufficient to empower the Corporation to.~.l. levy the terminal tax. According to the argument of the counsel for · the Corporation, the question of destination was not at all germane for the purpose of adjudicating the competency of the Corporation to levy terminal tax at the point of entry into Delhi.

Thus, the entire question turns upon the interpretation of s. 178 of the Act and some Rules framed under the Act. Relevant portion of section 178 runs thus :

"178 (1). On and from the date of the establishment of the Corporation under section 3, there shall be levied on a11 goods carried by railway or road into the Union ·Territory of Delhi

from any place outside thereof, terminal tax at the rates specified in the Tenth Schedule."

(Emphasis supplied)

The crucial words which have to be interpreted are : 'goods car-ried by railway or road into the Union Territory of Delhi from any place outside Delhi'. The contention of the appellant is than.the words 'goods carried into the Union Territory' clearly indicate that: the final destination of the goods must be Delhi and by virtue of this fact, the natural consequence would be that the goods should be carried from other places either by rail or by road into the territory of Delhi. This argument was reinforced by the words 'terminal tax' used in s. 178 which imply that the terminus of the journey of the goods must be Delhi and only in that event the Corporation would be competent to levy terminal tax. This argument was sought to be rebutted by the respoo.dents on the ground that the words 'carried into the Union Territory of Delhi' should be interpreted independently and literally so as to indicate that even if the goods passed through Delhi, the moment they entered into the territory of Delhi terminal tax became exigible. So far as. this aspect of the argument is concerned, we ar(1 unable to accept the same because it is well setlled that taxing statu-tes must be strictly interpreted giving every benefit of doubt to the tax . payer.

Before, however, examining the respective contentions of the parties it may be necessary to refer to the authorities dealing with the history of terminal tax or octroi duty. To begin with, it is not disputed that the pcwer to subject the goods either to octroi or to terminal tax squarely falls within entries numbers 52 and 56 of List II to the Seventh Schedule of the Constitution. In Punjab Flour & General Mills v. Lahore Corporation(') the Court while drawing distinction between the type of taxes referred to as terminal taxes in Entry No. 58 _.~of List I of Schedule 7 to the Government of India Act, and those described as cesses in Entry No. 49 of List II thereof observed as follows :

"There appears to us definite distinction between the type of taxes referred to as terminal truces in Enlry No. 58 of List I of Sch. 7 and the type of taxes referred to as cesses on the entry of goods into local area in Entry No. 49 of List IL The former taxes must be (a) terminal (b) con-fined to goods and passengers carried by railway or air. They must be chargeable at rail or air terminus and be (!)_AIR 1947 F.C. 14.

referable to services (whether of carriage or otherwise) rendered or to be rendered by some rail or air transport organisation. The essential features of the cesses referred to in Entry No. 49 of List II are on the other hand simply (a) the entry of goods into ddinite local area and (b) the requirement that the goods should enler for the purpose of consumption, use or sale therein. . . . The grounds of taxation under the two entries are, as indicated above, radi-cally differenl, and there is no case for suggesting that taxa-tion under the one entry limits or interferes in any way with taxation under the other."

In The Central India Spinning & Weaving & Manufacturing Co. Ltd., The Empress Mills, Nagpur v. The Municipal Committee, Wardha(') this Coort examined the entire matter exhaustively and after giving the history of terminal tax or oclroi observed as follows : "ll 'terminal' besides the above meaning has an addi-D tional meaning also and that meaning signifies the termini or the jurisdictional limits of the municipal area even then the construction to be placed on the term should be the one that favours the tax-payer, in accordance with the principle of construction of taxing statutes, which must be strictly construed and in case, of doubt must be construed against the taxing authorities and doubt resolved in favour of the tax-payer."

"The legislative history of this tax thus shows that octroi was Jeviable on the entry of goods in local area when the goods were for consumption, use or sale therein. The substituted tax was terminal tax on goods imported into or exported from local area and by rules this tax in the case of Wardha Municipal Committee was imposed on certain class of goods imported and on others exported by railway or road."

"That by the substitution of tcrn1inal tax on gocxls im-ported into local area the nature of the tax had not been altered from what it was when octroi was in force or when instead of "terminal tax" octroi (\vithout refund) was substi~ tuted . . . . . . . Therefore terminal \ax on goods imported or exported is similar in its incidence and is payable on (t) [1958] S.C.R. 112

goods 011 their journey e11<ling within the rnunicipal limits or comn1cncing thcreiron1 and not V\i'here the goods v.[1]ere 1nerely in transit through the municipal limits and had their termi-nLIS eiscwhere."

'T!Jcrefore, according to the Federal Court '·terminal" ll has r~ferencc to the terminus of the railway or air, i.e., the end of journey." close «nalysis of this decision, therefore clearly discloses that tern-iinal tax signified that there must be n tcrn1inus for the journey of the goods. Th·c word 'terminus' according lo Oxford Dictionary means-a point ~ituatcd at or forrning the end or extrcrnity of son1e~ thing. situated at the end of line of railway. In other words, tenni-nus 111eans- the point to \Vhich main action tends, goali end, finishing point, the point at which something comes to an end. In Corpus Juris Vol. 62 at p. 729 the word 'terminal' in connection with trans-portation means the fixed beginning or ending point of given run. It would thus appear that terminal tax could be levied only by the Cor-poration or the State which is the final destination of the goads sent from any other area.

similar view was taken by later decisiou of this Court in Bangalore Woollen, Cotton & Silk Mill.1 Cu. Ltd. Bangalore v. Corpo-E rafio11 oi the Ci1y of Bangalore(') where Kapur, J., speaking for the Court observed as follows :

"The history of these taxes therefore shows that in the Devolut;on Rules under the Government oi India Act, 1915 octroi, terminal tax and taxes on professions and callings were three distinct heads of taxation. . . Therefore, when s. 142-A was added in the Government of India Act, 1935, its operation was limited to entry 46 of List II and had no reference to entry 49 which deals with cesses on entry of goods. The position under the Constitution is exactly the samt and therefore neither s. 142-A of the Government of India Act, 1935 nor Art. 276 has any effect on entry 49 in the Government of India Act, 1935 or entry 52 in the Constitution."

In this case also distinction between terminal tax and octroi was clcaily brought out. In Diamond Sugar Mills Ltd. & Anr. v. The State oi Utwr Pradesh & Am'.(2) while defining local area within

(!) [1961] 3 .>.C.R. 707. (2) [1961] J S.C.R. 242.

[1981) 2 S.C.R.

the meaning of Entry 52 of List II of Seventh Schedule to the Consti-tution, the Court observed as follows :

"We are of opinion that the proper meaning to be attached to the words 'local area' in Entry 52 of the Constitu-tion, (when the area is part of the State imposing the law) is an area administered by local body like muni-cipality, district board, local board, union board, Panchayat or the like."

In Burmah Shell Oil Storage & Distributing Co. India Ltd. v. The Belgaum Borough Municipality(') this Court again fully discussed the matter and Hidayatullah, J., speaking for the Court stressed the essen-C tial distinction between octroi and terminal tax in the following words:

"Octrois and terminal taxes were different taxes though they resembled in one respect, namely, that they were leviable in respect of goods brought into local area. While terminal mxes were leviable on goods 'imported or exported' from the Municipal limits denoting thereby that they were connected with the traffic of goods, octrois, according to the legislative practice then obtaining were, Jeviable in respect of goods brought into Municipal area for consumption or use or sale. ~·~·· ...

~·~·· ... The history of these two taxes clearly shows that while terminal taxes were kind of octroi which were con-cerned only with the entry of goods in local area irrespective of whether they would be used there or not; octrois were ta.xes on goods brought into the area for consumption, use or sale. They were leviable in respect of goods put to some use or other in the area but only if they were meant for such user."

...,. l ·

In Khyerbari Tea Co. Ltd. & Anr. v. The State of Assam(') Gujendragadkar, J. speaking for the Court drew very apt distinction regarding the concept of import and observed as follows :-G "In that connection, the legislative history of the octroi duty was examined and it was held that the concept of im-port requires that the goods which are brought into must mix up with the mass of the property in the local area where the . ·goods are alleged to have been imported. If the goods are just carried and not mixed with the mass of the property in the area through which they are carried, they cannot b~ said (1) [1963] Supp. 2 S.C.R. 216. (2) [1964] 5 S.C.R. 975.

to have been imported into that area . . . . . . . . . . The word "carried" is of much wider denotation, and it would be un-reasonable to limit its scope by introducing considerations which are relevant in dealing with the question of import." Thus, from consideration of the cases cited above, the following prqpositions emerge :-

(1) Terminal tax and octroi are similar kinds of levies which are closely interlinked with ( 1) destination of the goods, (2) the user in the local area on arrival of the goods. Where the goods merely pass through local area without being consumed therein the mere fact that the transport carrying the goods halt within the local area for tranship-c ment or >allied purposes would not justify the levy of either the terminal tax or octroi duty. This is because the halt-ing of the goods is only for an incidental purpose to effectuate the journey of the goods to the final destination by unloading, sorting and reloading them at particular place.

(2) There is very thin margin of difference between termi-nal _tax and octroi. In the case of the former (terminal tax) the goods reach their final destination and their entry into the area of destination immediately attracts payment of terminal tax irrespective of their user. In the case of octroi, however the fax is levied on goods for their nse and consum1Ption.

( 3) But at the same time, the goods while halting at local area should leave for their destination within reasonable time which niay depend on circumstances of each case and if the goods are kept within the area for such long and indefinite period that the purpose of reaching the final destination lying in oa different area is frustrated or de-feated, they may be exigible to terminal tax.

( 4) Where the goods enter into local area which is also the destination of the goods either temporarily or otherwise, the terminal tax would be leviable. For instance, if consigns goods from P.afna in Bihar to Delhi in the name of X and X after having received the goods at Delhi re-books or reloads the same on transport for Chandigarh in the name of Y, terminal tax would be leviable by the Corporation at Delhi beC'ause the destination of the goods in the first instance was Delhi and that by itself would attract the imposition of terminal tax. The fact that X

[J 981] 2 S.C.R.

rebooks them to Chandigarh \VOuid not n1akc any diffe-rence because the act of rebooking by X at Delhi would constitute fresh transaction by \vhich the goods after having been carried into Delhi are further exported to Chandigarh. On the other hand, when there is one conti-nuou~ journey of 1hc good~ fro1n Patna to Ch',-tndigarh \Vithout any break. the final dc~tination v.could be Chandi-garh even though the gocids lll<t:.r haYe to be halted in Delhi for the purpose o'.' unloading. sorting a!1d reloading and may have to he ke:pt in [)clhi for reasonable time. In such case tcn11i11al tax \vould not he cxigiblc.

These principles arc also spelt out by the American law on the subject \Vhich deals \l\·ith intcr-'.--1~1tc tran~pllrt of goods. In A1n.eri-can Jmispruclence (2d. Vol. 15. p. 689, para 49) the following state-m•.:nt is niadc, which is spelt out fron1 various American decisions including those of the U.S. Supreme Court : "In the determination of whether transportation of persons or property constitutes interstate or intrastate con1-merce, the essc"ntial character or unity of the movement is the decisive factor. While the intention of the shipper or passenger is probab'.y the most important single factor in determining whether transportation is interstate or intra-E state intention alone ha-s b;;:cn ~aid not to he controlling factor in making such determination. Inter-state journeys are to be measured by the commonly awcpted sense of the 1ransport.ati0n concept ...... l"he parties cannot, by dcscriptiY2 tern1s of co'ntract, convert local business, serving as an agency of transp~1rt~1tion con1pany. into· an interstate con1mercc husiness, nor. conversely, may through shipment be transformed into intrastate cornnu~rce by separating the rate into its co1npone;it parts, charging 1ocal rates, and issuing Jocal \Vaybills''.

Similar observation:; are to be found in th.:: ~atnc volume of Anieri-G can Jurisprudence (p. 697, para 56) which re:atc to the continuity of t:ansit of goods and may be extracted !hus :

''The cruci;I question to be sctt!eu in determining \Vhcther ;_;ersonal property n1oving 111 intcr~tatc co1nmcrce is ' suhjcct to local taxation l~ that of its continuity of trar.si t and this question IS to be dL'tc:rmin.:J by vanous • L1ctors, an1ong which arc the intention nf the owner, the co11trol he retains In change cl i:~ ti 11 tio ii. the ugei:cy by

which the transit is eflcckd. and th•c occasion or purpose of tht? interruption during v.-hich th·~ ~ax is sought to be levied. fntcnt, \\·hile not alone conclusive, is probably the most l1nportant single dct~rn1inant of contir:uous carri-agl..'.

break in the interstate journey is caused by the' ,:xi~c,1cies or convcnie11c~s of the c:hos~11 n1cans of tran~ port:ition. consideration of the safety of the goous during transit. or natural causes over which the taxpayer has no con1rc'1. the continuity of the transit rcn1ains uni111µair-cd".

The tol:owing state-1ncnt of l~nv occurs 1n the s;1n1:.· \'olun1l' ( p::ra 57, p. 698) :-

"Ii during transit. property is stored f,,, an indefinite link lor other than natural causes or for lack of facilities for immediate transportation, it is subject to state or lecal laws, including inspection laws ...... On the other hand, if the entry of goods into warehouse is convenient in-k:rmediate step in the process of getti·ng them to their final destination, they remain in interstate or foreign comn1ercc until they reach those points".

In the case of Champlain Realty Co. v. Town of Brnt!/eboro(') one important aspect of the matter has ken dealt with, viz., the fact that if the goods halt in an intermediate State whilst on their journey to their destination for Jong period due to circunistanccs beyond the control of the own•er. whether or not the goods lose ',he nature of th:; interstate transaction and could be free fron1 thl? t,t~tte taxation, \\'a:-; clearly highlighted by he- following observations :-

"'Longs of puip \Vcod which have been plao2d in river to b2 floated info another state are in interstate co111-mercc, so as to be free from state taxation, although, be-cause of the high wat•er in connecting river into which they \vill ultin1atcly pass. it is unsafe to permit thcn1 to enter that river, and they are tcn1porarily he~d in boon1 'near the mouth of its tributary".

In the sa1nc case, C.J. l'aft indicat[1]2d the various a~pects of interruptions in the journey and the incidence thereof and observed as follows :-

a~pects of

''The doubt arises whon there ar.:'. int•:rruption:-. in tlil: journey, aml whe·n the property, in its transp0rtatic.11, i.:;

(1) 67 L Ed. US 309.

under the complete control of the owner during the passage If the inrerruptions are only to promote the safe or con-venient transit, then the continuity of the interstate trip is qot broken.

Chief among these are the intention of the owner, the control he Petains to change destination, the agency by which the transit is effected, the actual continuity of the transportation, and the occasio'n or purpose of the inter-ruption during which the tax is sought to be levied".

In Voume 78 L Ed at p. 13 8 the test laid down was that if the shipment was made in good faith to destination and the interrup-tion was not indefinite but reasonable the co'ntinuity of the journey cannot be said to be broken. It was also pointed out that where the interruption of the movement of commodities at an intermediate point is not incidental to the transporation, the shipment loses the charac-ter of interstate commerce so as to be exigible to local taxation. In this connection, the following observations were made :

"If the shipment has been made in good faith to destination the interruption is not indefinite, but is reason-able and solely in furtherance of the intended transporta-tion of the shipment to its ultimate destination, then the continuity of the jonrney is not broken by the delay nor by the mere power of the owner there to destroy its charac-ter as interstate commerce ....... any interruption of the movement of commodities at an inrermediate point between origin and final destination that is not incidental to the transportation or the use of the means of transportation or, being so incidental, is used or extended for purposes of the owner not incidental to the transport transportation or the mea'ns used therefor, breaks the continuity in transit and subjects the shipment to local taxation at the point of interruption".

We have laid special stress on tl1e circumstances under which the terminal tax becomes leviable if the halt or interruption of the goods at an intermediate point is for an indefinite and unexplained period. The answer to the question as to what would be reasonable n time for interruption of the goods or h~lting in the instant case at the godown of Tuli, will naturally depend on the special fea-tures or circu1nstances of each cases, .viz., the nature of the goods,

the time taken in loading, sorting and unloading, the obstacles or difficulties which may be faced by the transporters and similar other factors. Normally, time of two to three days or even week should be sufficient to clear the goods for its journey to the ultimate destination. It may sometimes happen that goods may have to be kept in th~ godowns in the territory of Delhi for circums-tances beyond the control of the consignee or the consignor, e.g., wl)ile the goods are lying in godown at Delhi dispute occurs between the concerned parties as result of which an injunction is issued by court restraining the transporters from moving the goods. In considering what is reasonable time these circumstances would have to be taken into consideration. It, was, however, argued before us that according to the Terminal tax Ru1es framed under the Act, Rule 26 exempts goods from terminal tax if the same are exported immediately ahd are declared to b~ intended for immediate export. In view of the inter-pretation we have placed on s. 178 it is obvious that the word 'immediately' appearing in Rule 26 has to be liberally construed so as to imply reasonable period and if the export is delayed the rules may apply if reasonable explanation has been given. So far as rules regarding taking of passes, etc., at the barrier are concerned they would, of course, apply but subject to the conditions under which terminal tax can be imposed under s. 178 of the Act which is the main charging section. The High Court appears to have placed some reliance on Amrit Banaspati Co. Ltd. v. The Union of l11dia(') in coming to the conclu-sion that in the instant case the Corporation was legally entitled to levy terminal tax. With dTh~ re3pect to the Judges of the High Court who decided the Appeals, we would like to point out that the case just above referred to is clearly distinguishable from the present appeals. The most crucial fact in the Delhi decision was that the goods were bei'ng carried into the Union Territe>ry of Delhi for the purpose of sale at Delhi. Thus, the case proceeded on the admitted position that the goods were carried from Ghaziabad into the Delhi territory for sale at Delhi. The final destination of the goods being Delhi, there can be no doubt that the Corporation was fully entitled to levy terminal tax on such goods. In this connection, the High Courc observed as follows :-

"Th•c Petitioner-company was i'ncorporated under the companies Act, 1956, and it had its registered office at G. T. Road, Ghaziabad, in the State of Uttar Pradesh ....

(I) I.LR. 1973 (I) Delhi 237.

It has factory, intt"r oliu, at Ghaziabad for ntanufacturing the said \lanaspati products. In the course of its business, lhe company carried <111d still carries its products by railway and/or road into tlic Union -rcrrit~1ry of D[1]..":lhi from Ghazia-bad for th., purpose of sa'.c al DJhi.

The words "shall be :evied on all goods carried by rail-way or road" i"n sub-section (I) show ckarly that the section imposes terminal tax on the carriage or moven1ent of goods fro1n outside the L'nicn rrcrritory of Delhi into the said Territory. In other \Vords, the taxable event is the carriage or movcn1cnt of goods into thi: Union "fcrritory of Delhi".

The observations last •extructed must be nndcrstood m the light of the admitted facts in twit Banaspati Company's case (supra). We are u·nable to accept that case as an authority for the proposition that even if the final destination of the goods was not Delhi but as the goods were carried through the territory ol' Delhi, they would still be extgible to terminal tax. fn the impugned judgment the High Court, however, seems to have laid undue emphasis and special stress on th•e fact that the goods were carried into the Union territory of Delhi, the moment they passed through it even though the destina-tio"n of the goods may be some other area. This appeared, accord-ing to the High Court. the real purport and intention of s. 178. We are, however, unable to agree with this view which is patently wrong and does not at all now from the plain and unambiguous language of s. 178 of the Act nor docs s. 178 warrant such an i'ntcr-pretation. ~fhus, our conclu~ions are as fo:Jcnvs :-(1) The High Court was wrong in interpreting s. 178 of the Act so as to justify imposition of termiml tax even on goods which merely passed through the territory of Delhi, although their destination is i1ot Delhi but places beyond Delhi. (2) The High Court was wrong in holding that merely b2causc the goods after having been unloaded in the godown of appellant Tuli arc sorted, reloaded in different trucks and thereafter pass through the territory of Dc:hi, they become exigiblc to t•er-minal tax.

(3) The High Court \\as wron~ i"n interpreting Rule 26 literally and hr:!ding that cxcn1ption could be grant-

ed only if the goods are exported immediately which means within very short time irrespective of any other consideration. In view of our interpretation of s. 178, Rule 26 must be interpreted in the light of the object of s. 178 and terminal tax can be leviable only if it is proved that the goods remained at the godown for an indefinite and unexplained period which could not be said to be reasonable as discuss•od by us in the circumstances.

( 4) Where the goods are carried by trucks into the terri-tory of Delhi and unloaded there a'nd arc also meant for Delhi and soon thereafter may be rebooked by the receiver of the goods to some other place, terminal tax would be leviable becau~2 in this case there are two separate transactions-( 1) by which the goods arc meant for Delhi, and (2) by which after having reached and having been unloaded at Delhi they are rebooked and reloaded for some other place and which therefore is fresh and diffe-rent transaction. In such case, terminal tax would be leviable at the entry in the territory of Delhi.

We might mention that the High Court whil·o holding that terminal tax is exigible has construed the word 'immediately' in Rule 26 li!e-rally and directed the Terminal Tax Officer to fix reasonable time for unloading, sorting and reloading the goods which are mea'nt for different destinations taking into consideration the quantity of the goods, the time for unloading, sorting, etc., and has further directed that reloading or tra'nshipment should be done within time to be fixed by the Terminal Tax Officer. Though the directions given are correct but they will ha vc to be construed in the light of the various factors which we have referred to. Rule 26 will have to be int,or-preted on the footing that s. 178 of the fact does not contemplate levy of terminal tax for goods meant for destinations oth>cr than Delhi.

For the reasons given above, we allow these appeals, set aside the impugned judgment exeo:pt the pmtion quashing the impugned or-ders. That portion we uphold (though on grounds different from the ones given by the High Court) in the light of the decision given and the observations made by us regarding the interpretation of s. 178 of the Act. In the special circumstances of the case there will be no order as to costs,