As per case facts, the Petitioner company, an approved SEZ developer, was promised exemption from local taxes including octroi by the State Government's policy. Despite this, the Pune Municipal Corporation ...
No Acts & Articles mentioned in this case
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.5275 OF 2013
EON Kharadi Infrastructure Pvt. Ltd. ...Petitioner
Versus
The State of Maharashtra
and others …Respondents
-----
Mr. Sriram Sridharan, Advocate a/w. Shanmugi Dev for the Petitioner.
Smt.Neha S. Bhide, Government Pleader a/w. R.M. Shinde, AGP and Apurva Thipsay,
‘B’ Panel Advocate for the Respondent Nos.1, 2 and 5.
Mr. A.A. Kumbhakoni, Senior Advocate a/w. R.S. Khadapkar for the Respondent
Nos.3 and 4.
Ms. Shenaz Bharucha, Advocate a/w Madhubala Kajle for the Respondent No.6.
-----
CORAM : SARANG V. KOTWAL &
SANDESH D. PATIL, JJ.
RESERVED ON : 12
th
MARCH, 2026
PRONOUNCED ON : 07
th
APRIL, 2026
JUDGMENT: [Per Sarang V. Kotwal, J.]
1. We have heard Mr. Sriram Sridharan, learned counsel
for the Petitioner, Smt.Neha Bhide, learned Government Pleader for
the Respondent Nos.1, 2 & 5, Mr. A.A. Kumbhakoni, learned Senior
Counsel for the Respondent Nos.3 & 4 and Ms. Shenaz Bharucha,
learned counsel for the Respondent No.6.
2. Rule. Rule is made returnable forthwith.
3. The Petitioner Company was granted approval by the
Central Government for setting up of an IT & ITES Sector Specific
Special Economic Zone [SEZ] at Kharadi, Pune. The Government
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of Maharashtra had also recommended that such approval be
granted to the Petitioner Company. The State Government’s policy
regarding setting up of Special Economic Zones in Maharashtra
issued on 12.10.2001 specifically provided that the developers of
the SEZs and Industrial Units and other establishments within the
SEZ would be exempted from all States and local taxes and levies
including Octroi. The Petitioner Company had paid octroi between
2005-2011 to the Pune Municipal Corporation [hereinafter referred
to ‘PMC’] under protest. They demanded refund of the octroi as per
the policy of the State Government. The Petitioner pursued the
issue of exemption of octroi with the PMC, but, vide letter dated
21.7.2012, the Petitioner Company was informed that the PMC was
not giving any exemption from paying octroi. The Petitioner
company was directed to import the goods only after paying the
octroi.
4. The Petitioner has challenged this communication.
There are other prayers in the Petition for directions to frame
appropriate rules and for granting exemption from payment of
octroi. One of the prayers is for directions to grant refund of octroi
duty amounting to Rs.6,69,91,584/- along with interest @ 18% per
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annum in view of the State SEZ Policy dated 12.10.2001 for the
period from 2005 to 2011.
5.The brief facts leading to filing of the Petition are as follows :
6. The Petitioner was a company duly registered under
the Companies Act, 1956. Earlier the company was registered in
the name of Panchshil Premises Private Limited. The Registrar of
Companies issued a fresh incorporation certificate to the Petitioner
vide certificate dated 15.9.2005 sanctioning the change in the
name of the Petitioner from Panchshil Premises Private Limited to
the present name i.e. EON Kharadi Infrastructure Private Limited.
The Petitioner Company has its registered address at Dr. Gopal Rao
Deshmukh Marg and has its administrative office at Bund Garden
Road, Pune.
7. The Respondent No.1 is the State of Maharashtra, the
Respondent No.2 is the Principal Secretary, Urban Development
Department, State of Maharashtra, the Respondent No.3 is the
Pune Municipal Corporation, the Respondent No.4 is the Municipal
Commissioner of Pune Municipal Corporation, the Respondent
No.5 is the Secretary, Industries, Energy & Labour Department,
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State of Maharashtra and the Respondent No.6 is the Union of
India.
8. In April, 2000, the Government of India announced
Special Economic Zones Scheme. On 12.10.2001, the Government
of Maharashtra vide Resolution No.SEZ2001/(152)/IND-2 of
Industries, Energy & Labour Department issued the State
Government’s policy regarding setting up of Special Economic
Zones in Maharashtra. There was reference to exemption of State
and Local taxes and there was specific reference to exemption from
octroi. On 23.6.2005, the Special Economic Zones Act, 2005 (for
short, ‘SEZ Act’) was brought into force after it was enacted by the
Parliament with a view to provide an internationally competitive
environment for exports. The objectives of Special Economic
Zones included making available goods and services free of taxes
and duties supported by integrated infrastructure for export
production, expeditious and single window approval mechanism
and a package of incentives to attract foreign and domestic
investments for promoting export-led growth. Section 3 of the SEZ
Act provided for procedure for making proposal to establish
Special Economic Zones. Section 4 provided for establishment of
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Special Economic Zones and granting approval and authorisation
to operate it to the developers. Section 50 provided for the powers
of the State Government to grant exemption. It was brought into
force w.e.f. 10.2.2006. Section 51 gave over-riding effect of this
Act to any other law for the time being in force.
9. On 10.2.2006, the Special Economic Zones Rules, 2006
(hereinafter referred to as ‘the SEZ Rules’) were brought into force.
Rule 5 thereof provided for the requirements for establishment of
SEZ and sub-rule (5) thereof referred to exemption from the State
and Local taxes which the State Government was expected to make
available in the State to the proposed SEZ Units and developers.
10. The Petitioner Company sent a proposal for setting up
of SEZ in the Private Sector a product specific IT & ITES at Kharadi
MIDC Knowledge Park, Pune. The proposal was for over forty-five
acres of land. Vide letter dated 29.9.2005 issued by the Joint
Secretary to the Government of Maharashtra, Industries, Energy &
Labour Department and addressed to the Additional Secretary,
Department of Commerce, Ministry of Commerce and Industry,
Government of India, the State Government gave no objection for
approval of the Petitioner’s proposal in principle.
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11. Exhibit-D annexed to the Petition indicates that the
Petitioner Company was granted approval for setting up an IT/ITES
Sector specific SEZ at Kharadi, Pune vide letter dated 27.1.2006.
During this process, the name of the Petitioner Company was
changed from Panchshil Premises Private Limited to the present
name and noting this development, the Government of
Maharashtra vide letter dated 9.6.2006 addressed to the Deputy
Secretary of Commerce, Ministry of Commerce and Industries,
Government of India, reiterated the State’s no objection in favour
of the Petitioner Company for setting up the SEZ.
12. Vide letter dated 17.7.2006, the Government of India,
Ministry of Commerce and Industries, Department of Commerce
(SEZ Section) granted formal approval to the Petitioner’s proposal
for development, operation of the sector specific Special Economic
Zone, IT/ITES Sector at MIDC Knowledge Park, Kharadi, Pune,
Maharashtra over an area of 18.21 hectares under the conditions
mentioned in that approval. The said letter is annexed at Exhibit-G
to the Petition. A notification to that effect was issued by the
Central Government on 28.9.2006 which is at Exhibit-I to the
Petition.
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13. Vide letter dated 26.10.2006 issued under the signature
of Deputy Development Commissioner, SEEPZ, SEZ issued from
the office of the Development Commissioner, Government of India,
Ministry of Commerce and Industries, it was mentioned that the
Petitioner Company was eligible for exemption from payment of
Customs and Central Excise duties, Service Tax, Central Sales Tax
and various exemptions offered by the State Government and Local
bodies from time to time in connection with the authorized
operations in the Special Economic Zones. A copy of the said letter
is annexed at Exhibit-L to the Petition.
14. The Petitioner then pursued this matter of exemption
with the State Government and entered into correspondence with
the Principal Secretary, Urban Development Department,
Government of Maharashtra through the letters dated 31.5.2007
and 22.12.2007. The Petitioner had also entered into
correspondence with the PMC for such exemption from payment of
octroi.
15. The Desk Officer, Urban Development Department,
Government of Maharashtra, addressed a letter dated 18.7.2007 to
the Municipal Commissioner, PMC asking them to send a proposal
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for amendment in the Rules for levying octroi under the
Maharashtra Municipal Corporation Act, 1949 (old Bombay
Provincial Municipal Corporation Act, 1949) (hereinafter referred
to as ‘the MMC Act’).
16. However, there was no amendment to the Octroi Rules
under the MMC Act. No steps were taken either by the PMC or the
State Government in that behalf; and finally, vide the impugned
communication dated 21.7.2012 the Petitioner was informed by the
Pune Municipal Corporation that the Petitioner was not given any
exemption from octroi and that he had to pay octroi for bringing
the goods. In this background, the Petitioner has approached this
Court for the reliefs mentioned hereinabove.
17. The Respondent No.3 referred to the correspondence
made by them with the State Government and referred to the
communication sent by the State Government asking to send
proposal for amendment in the MMC Act. In response, the General
Body of PMC on 23.4.2008 resolved to direct to place the
submission before it through the Law Committee the independent
proposal for modification of Octroi Rules. The Chief of Octroi, PMC
by his submission recommended the modification of the Octroi
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Rules. The Municipal Commissioner submitted the docket dated
10.7.2008 to the Municipal Corporation soliciting approval of the
General Body through the Law Committee.
18. The Law Committee by its resolution dated 13.8.2008
recommended to the General Body for the suitable
amendment/modification of the Octroi Rules. The said subject was
listed before the General Body on 20.11.2008, on 20.1.2009 and
then in April, 2009. The General Body ultimately in the meeting
dated 23.6.2009 deleted that subject and hence there was no
amendment to the Rules. The State Government was informed
vide letter dated 14.3.2017 that the PMC was not agreeable to
grant exemption in respect of the State SEZ Policy dated
12.10.2001.
19. In the present Petition, the Petitioner had relied on
various provisions under the MMC Act and contended that the
State Government ought to have taken steps to amend the Rules for
Octroi under the MMC Act and ought to have ensured that the
Petitioner could avail all the exemptions from paying octroi.
20. The Respondent Nos.3 & 4 opposed grant of relief in
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this Petition by filing their affidavit-in-reply.
21. The affidavit of PMC further pointed out that w.e.f.
1.4.2013 levying of the octroi was stopped and the local body tax
was being levied after that.
22. The Respondent Nos.1 & 2 filed their own affidavits-in-
reply. They filed two affidavits – first is dated 6.4.2017 and the
second is dated 27.11.2017. In the first affidavit, the stand taken
by the Respondent Nos.1 & 2 was that, at present the Octroi
Regulations did not exist. Therefore, it was not possible to make
amendment in the Octroi Regulations with retrospective effect. It
will cause huge financial losses to the PMC and, therefore, it was
not appropriate to give directions for exemption from the point of
view of comprehensive public interest and if directions of
exemption of octroi is given in the present matter then requests for
giving such exemptions may be made in other matters as well. The
affidavit categorically stated that it was not possible for the State
Government to give any fund or financial help in this matter to the
PMC. In other words, the octroi levied by the PMC could not be
refunded through the aid of the State Government.
23. The State Government filed the second affidavit dated
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27.11.2017. In that affidavit, it was specifically admitted that as
per the provisions made in the State Policy dated 12.10.2001 the
Petitioner Company was entitled to octroi exemption. However, the
octroi exemption came under the Urban Development Department
and in the present case the PMC would be the implementing
agency for the same.
24. During the course of arguments, the Respondent Nos.1
& 2 filed one more affidavit-in-reply dated 9.3.2026. The stand
taken in this affidavit was that the amount which the Petitioner was
claiming to be reimbursed was collected by the PMC and it was
utilized by the PMC. They were the PMC’s independent funds and,
therefore, the State Government was not liable to reimburse the
same to the Petitioner. The octroi payment by the Petitioner was
never remitted or transferred to the State Government by the PMC
and, therefore, the State Government was not liable to reimburse
the same to the Petitioner. The PMC never informed the State
Government about the non-approval of the proposed amendment
in the Octroi Rules in the present case and, therefore, in the
absence of any resolution, the State Government could not have
exercised its power under Section 451 of the MMC Act. As of today,
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the octroi is discontinued in the State of Maharashtra. The local
body tax was made applicable subsequently and, therefore, it
would be futile to seek amendment to the Octroi Rules with
retrospective effect. The State Government was not in receipt of
any correspondence from the PMC seeking financial assistance for
refund of octroi to the Petitioner.
25. Learned counsel for the Petitioner made the following
submissions :
i.The State Government had promised exemption from local
taxes and in particular exemption of octroi. Once that
promise was made it was the duty of the State Government to
have fulfilled the same. The Petitioner acted on the promise
made by the State Government in the policy dated
12.10.2001 and invested huge amount. The principle of
promissory estoppel would squarely apply in this case and the
State Government cannot be allowed to resile from their
promise to grant exemption from levying of the octroi.
Learned Counsel relied on the observations of the Hon’ble
Supreme Court in the case of Manuelsons Hotels Private
Limited Vs. State of Kerala and others
1
.
1 (2016) 6 SCC 766
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ii.The PMC was bound to give effect to the State Policy of
granting exemption from levying the octroi and if PMC did
not take steps to amend the Rules in that behalf, the State
Government always possessed legislative authority to frame
the Rules for granting exemptions from levying of the octroi
duty. Learned counsel for the Petitioner referred to various
provisions of MMC Act and in particular referred to Section
450A of the MMC Act which authorized the State
Government to issue directions to the Municipal Corporation
on matters of policy. This amended Section came into force
w.e.f. 2011 and issuance of such directions by the State was
mandatory for the Corporation to give effect to them.
Section 456 of the MMC Act also empowers the State to
exercise its authority in directing the Corporation to frame
the Rules concerning octroi exemptions. He also referred to
Section 456A which gives special power to the State
Government to make the Rules. Learned counsel referred to
the objects and reasons of the SEZ Act and the preamble of
the State Policy.
iii.He submitted that the Pimpri Chinchwad Municipal
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Corporation has granted exemption from payment of octroi
duty to the developers of SEZs and there was no reason for
the PMC not to follow the same process. He submitted that
the Petitioner did not have any other efficacious remedy. The
Petition is pending since 2013 and it would not be proper to
relegate the Petitioner to other remedies.
26. Learned Government Pleader reiterated the stand taken
by them in their three affidavits. She submitted that since the
octroi is levied and used by the PMC, only the PMC was liable to
pay the refund. On their part, the State had asked the PMC to send
a proposal for amendment of the Rules. It was for the PMC to have
amended the Rules. Failure on the part of the PMC cannot act to
the detriment of the State Government.
27. Shri Kumbhakoni, learned Senior Counsel on behalf of
the PMC on the other hand submitted that the levy of any tax is
permissible under the statute and, therefore, it can be lifted,
suspended or withdrawn only by the statute and only in the
manner prescribed by the statute. In the present case, there was no
amendment to the statute or to the Rules for granting exemption of
octroi which was paid by the Petitioner and, therefore, in the
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absence of any provision granting exemption of octroi specifically
mentioned in the statute it was not possible to direct the PMC to
refund the octroi paid by the Petitioner. He submitted that where
the power is given to do a certain thing in a certain way, the thing
must be done in that way or not at all and that other modes of
performance are necessarily prohibited. In the absence of any
specific statutory provisions granting exemption of octroi, only on
the basis of the State Policy, the exemption claimed by the
Petitioner cannot be granted. It would cause financial burden on
the PMC which the State Government specifically refused to
compensate. The SEZ Act came into force in 2005. The Rules
came in force in 2006 and the Octroi Rules for PMC were framed
on 6.5.2008 which were made effective from 5.6.2008 but they did
not contain any provision for grant of exemption envisaged by the
State Policy. Rules 25 & 26 of the Octroi Rules applicable to PMC
contain provisions for grant of exemption from payment of octroi to
certain categories and certain matters. However, the SEZ was not
included in those entities. The SEZ Act itself did not contain any
specific provision for grant of exemption from payment of octroi.
Section 50 of the SEZ Act is only the enabling provision to take
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suitable steps but in the present case the State Government has not
taken any steps in that behalf.
28. Shri Kumbhakoni further submitted that except for
sending letter asking for proposal for amendment of the Rules for
exemption from payment of octroi in the Petitioner’s case, the State
Government did not take this matter any further. The PMC has not
modified those Rules in that behalf. The principles of promissory
estoppel did not apply if there were contrary statutory provisions.
Where the field is occupied by an enactment, the executive has to
act in accordance with law and, therefore, granting exemption to
the Petitioner from payment of octroi would be against the
statutory provisions of Maharashtra Municipal Corporations Act. In
any case the PMC itself has not made any promise to the Petitioner
relating to the exemption from payment of the octroi. Therefore the
principles of promissory estoppel will not operate against the PMC
as far as the Petitioner is concerned. The Petitioner has not
pleaded with adequate details as to how it altered its position to its
detriment in view of the promise. He further submitted that the
Petitioner has approached this Court belatedly. Shri Kumbhakoni
submitted that the Hon’ble Supreme Court in the case of Municipal
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Corporation of Greater Bombay Vs. Bombay Tyres International Ltd and
others
2
has observed that in ascertaining what is the reasonable
time for claiming refund, the Courts have often taken note of the
period of limitation prescribed under the general Law of Limitation
for filing suit for recovery of amount due to them.
Reasons and conclusions:
29. We have considered the submissions made before us by
all the learned Counsel. The most important document in this case
is the State Government’s Policy regarding setting up of the Special
Economic Zones in Maharashtra. The policy was issued on
12.10.2001 by the State Government vide Resolution
No.SEZ2001/(152)/IND-2. The preamble of the said Policy refers
to the concept of Special Economic Zones introduced by the
Government of India in the year 2000 through a revision in the
Export-Import policy 1997-2002. The preamble of the Policy
mentions that the SEZs were specifically delineated duty-free
enclaves treated as a foreign territory for the purpose of industrial,
service and trade operations, with exemption from customs duties
and a more liberal regime in respect of other levies, foreign
investment and other transactions. The domestic regulations
2 (1998) 4 SCC 100
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restrictions and infrastructure inadequacies are sought to be
eliminated in the SEZs for creating a hassle-free environment. The
scheme sought to create a simple and transparent system and
procedures for enhancing productivity and the ease of doing
business in Maharashtra. It was expected that exploiting the full
potential of the concept of SEZs would bring large dividends to
Maharashtra in terms of economic and industrial development and
the generation of new employment opportunities. It was decided
that the said policy would apply to the specific places mentioned in
the policy and also to any other SEZ in Maharashtra subject to the
framework for SEZs determined by the Government of India from
time to time.
Thus, the object was to create a system which would
bring economic and industrial development and also would
generate new employment opportunities. The policy thereafter
elaborated how this objective was to be achieved by simplifying the
procedure and giving incentives to the developers of the SEZs.
Various incentives were promised. Clause (6) of the Policy is the
crux of the matter in this Petition which reads thus :
“6) Developers of SEZs, and industrial units and other
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establishments within the SEZs will be exempted
from all State and local taxes and levies, including
Sales Tax, Purchase Tax, Octroi . Cess, etc. in respect
of all transactions made between units/establishments
within the SEZs, and in respect of the supply of goods
and services from the Domestic Tariff Area to
units/establishments. If due to tax system constraints,
it is not advisable to grant direct exemption to the
transactions, the State taxes paid would be fully
reimbursed.” (Emphasis supplied)
. Thus, the State Government had clearly mentioned in
the policy that the developers of the SEZs will be exempted from all
State and local taxes including octroi in respect of all transactions
made between the Units within the SEZs and in respect of supply of
goods and services from the domestic tariff area. It was further
mentioned that if due to tax system constrains it was not advisable
to grant direct exemption to the transactions, those taxes paid
would be fully reimbursed. Learned Government Pleader tried to
argue that this particular clause specifically refers to the refund of
only the State taxes which were paid. Since in that context, the
octroi was not mentioned, in the present case the octroi could not
be refunded to the Petitioner. We are unable to agree with this
submission. Reference to the refund of state taxes was made when
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it was not advisable to grant direct exemption because of tax
system constrains. There was no such tax system constrains as far
as octroi was concerned and the rules and regulations in that
behalf provided under the Maharashtra Municipal Corporations Act
could have been easily amended to bring them in consonance with
clause (6) of this policy. This particular clause makes a definite
promise that the developers will be exempted from octroi. This
clause is in furtherance with the objective of this policy mentioned
in the preamble and, therefore, it was the duty of the State
Government to ensure that the Petitioner, who was an approved
developer of the SEZ got benefit of exemption from levying the
octroi. We are informed that as of today, the same policy is in
existence in relation to all the SEZs in Maharashtra.
30. The Special Economic Zones Act, 2005 was brought
into force from 10.02.2006. The Statement of Objects and Reasons
of the said Act referred to the then prevailing system which did not
lend enough confidence for the investors to commit substantial
funds for creation of infrastructure for exports of goods and
services. In order to give a stable and predictable policy regime and
to provide an expeditious and single window clearance mechanism,
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enactment of the SEZ Act, 2005 was found to be necessary.
31. The SEZ Act itself provides for procedure for making
proposal to establish Special Economic Zone and the guidelines for
notifying the SEZ. Section 50 of the SEZ Act gives power to the
State Government to grant exemption for the purpose of giving
effect to the provisions of the SEZ Act, 2005 and said section
enabled the State Government to take suitable steps for granting
exemption from levies and duties. Section 51 provides that SEZ
Act, 2005 had over-riding effect to any other law which was
inconsistent with the SEZ Act, 2005. Section 55 empowers the
Central Government to make Rules for carrying out the provisions
of this Act. Accordingly the Special Economic Zones Rules, 2006
were notified. Rule 5(5)(a) was important which reads thus :
“5. Requirements for establishment of a Special
Economic Zone.--
xxxxx
xxxxx
xxxxx
(5) Before recommending any proposal for setting up of
a Special Economic Zone, the State Government shall
endeavor that the following are made available in the
State to the proposed Special Economic Zone Units and
Developer, namely: -
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(a) exemption from the State and local taxes, [State
Goods and Services Tax] levies and duties, including
stamp duty, and taxes levied by local bodies on goods
required for authorized operations by a Unit or
Developer, and the goods sold by a Unit in the Domestic
Tariff Area except the goods procured from domestic
tariff area and sold as it is;” (Emphasis supplied)
This Rule enjoins duty on the State Government to
make endeavour that the exemption from the local tax and the tax
levied by the local bodies on goods required for authorized
operations by a developer were exempted.
32. Thus, in all these provisions under the SEZ Act, 2005
and under the Policy, the duty of the State Government was
specifically highlighted to ensure that exemption from octroi was
made available to the developers; which in this case is the
Petitioner. As can be seen from the Petition, the State Government
has not complied with this requirement. Its inaction in fact is
contrary to the object not only of the SEZ Act, 2005; but of the
object mentioned in the preamble of the State Government policy
itself. Therefore, it was the duty of the State Government to ensure
that the Petitioner got such exemption regarding payment of octroi.
33. Interestingly the affidavit dated 27.11.2017 affirmed by
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the Deputy Director (Industries), the Directorate of Industries
categorically admits in paragraph-4 as follows :
“4. I state that as per the above provision made in the State Policy
dtd. 12.10.2001, the Applicant EON Kharadi Infrastructure
Pvt.Ltd., is entitled to Octroi exemption.”
(Emphasis supplied)
This averment, in turn, accepts that the Petitioner is
entitled for such exemption and thus meaning thereby the
Petitioner is entitled to get relief in this behalf in this Petition. The
question is who shall pay the amount claimed by the Petitioner
which was paid as octroi duties.
34. Shri Kumbhakoni, learned Senior Counsel appearing for
the Pune Municipal Corporation vehemently argued that in the
absence of modification to the MMC Act and to the Rules made
thereunder, there was no provision under which the octroi paid by
the Petitioner could be refunded. We find merit in this submission
because there is no such amendment made under that Act. Unless
there are specific Rules granting exemption from payment of octroi
with reference to the Petitioner’s SEZ, it is not possible to direct the
PMC to refund the octroi paid by the Petitioner.
35. However, the same concession cannot be given to the
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State of Maharashtra. The Petitioner has brought to their notice
that the exemption was necessary and all that was done by the
State of Maharashtra, was sending the letter dated 18.7.2007
addressed to the Commissioner of Pune Municipal Corporation
under the signature of the Desk Officer, Maharashtra State asking
them to send proposal for amendment in the Maharashtra
Municipal Corporations Act with reference to the octroi rules. We
have already narrated as to what happened after this letter was
received by the Pune Municipal Corporation. In short, no such
amendments to the provisions of the Act or to the Rules under the
said Act were made and the State Government did not take any
further steps. No follow up action was taken and from 2007
onwards no steps were taken.
36. Learned counsel for the Petitioner referred to various
provisions of the Maharashtra Municipal Corporations Act. The
relevant provisions can be summarized briefly as follows :
. Section 127 (2) of the MMC Act as it stood at the
relevant time enabled the Municipal Corporation to impose octroi.
Section 149(1) gave power to the Municipal Corporation to modify
the Rules and procedure in respect of levying of tax and exemption
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therefrom. It referred to Section 127(2) which in turn referred to
the octroi as it then existed. The proviso mentions that it was
necessary that the State Government had first given the provisional
approval for modification of such tax. Section 450A gave power to
State Government to issue instructions or directions as to matters
of policy to be followed by the Corporation in respect of its duties
and functions in the larger public interest or for implementation of
the policy of the Central Government or the State Government. As
per the proviso to that Section, the State Government was required
to give an opportunity to the Corporation to make representation.
. This power could have been exercised by the State
Government for implementation of its policy in the public interest.
But even that was not done. Section 457 subsection (7)(c) refers to
the tax leviable under Section 127(2) of the MMC Act which, in turn,
referred to octroi. Therefore, the power of the State Government
under Section 456 is quite wide. Section 456 reads thus :
“456. Power of State Government to make rules.
(1) The State Government may at any time
require the Corporation to make rules under section 454 in
respect of any purpose or matter specified in section 457;
(2) If the Corporation fails to comply with
such requisition within such reasonable time as may be
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fixed by the State Government, the State Government may
after previous publication made such rules and the rules so
made shall, on final publication in the Official Gazette,
have effect as if enacted in this Act.”
37. Therefore, the State Government could have taken
steps under these powers to ensure that their own policy that
included exemption from paying octroi was properly implemented
by granting exemption from octroi as far as the Petitioner was
concerned. Section 456-A gives special powers to the State
Government to make Rules consistent with the provisions of the
Act.
38. In the present case, as per the policy of the State
Government, the SEZ was formed with special objective. One of
the objectives was to bring employment that indirectly would have
helped Pune Municipal Corporation as well. In any case, it was the
duty of the State Government to fulfill its promise.
39. Learned counsel for the Petitioner referred to the
judgment of the Hon’ble Supreme Court in the case of Manuelsons
Hotels Private Limited. The Hon’ble Supreme Court discussed the
doctrine of promissory estoppel. The Hon’ble Supreme Court
referred to earlier judgments with approval by observing that if the
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Government makes a promise and the promisee acts in reliance
upon it and alters his position, there is no reason why the
Government should not be compelled to make good such promise
like any other private individual. The doctrine of promissory
estoppel is an equitable doctrine. It was also observed that the said
doctrine must yield when with the equity so requires. The
Government could show that the public interest would be
prejudiced if the Government were required to carry out the
promise. The Court would have to balance the public interest and
the promise made to a citizen which induced him to alter his
situation.
40. In the present case no such situation arises. By
fulfilling the promise the public interest is not prejudiced, in fact by
not fulfilling the promise, the public interest would be harmed
because instead of encouraging the developers to develop the SEZs
it would discourage them. It is very significant that the State Policy
dated 12.10.2001 is not changed till today.
41. We also do not find that the Petitioner has approached
this Court belatedly. He has been following refund of his octroi
regularly and ultimately his request for exemption from octroi was
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rejected by the PMC vide letter dated 21.7.2012. The Petition is
pending since 2013. And, therefore, we do not consider it
appropriate to relegate the Petitioner to exhaust any other alternate
remedy.
42. As a result of the above discussion, we are of the
opinion that the State Government was bound to fulfill its own
policy and the promise made under the policy to the developers of
SEZs. There is no dispute that the Petitioner was an approved
developer of an SEZ. He was entitled for exemption as is admitted
by the State Government in its own affidavit. In the absence of
modification to the rules the Pune Municipal Corporation is not
liable to refund the octroi. But in that case the State Government
had to fulfill its promise and see to it that the Petitioner did not
suffer because of their policy. Therefore, we are satisfied that the
Petitioner is entitled to get refund of its octroi. Hence, it is held that
the Petitioner is entitled for refund of its octroi but it shall be paid
by the State Government. However, the exact amount which needs
to be refunded will have to be determined on the basis of the
record. The Petitioner will have to establish that particular figure.
Since the Octroi Rules are not in existence any more, the other
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reliefs cannot be granted which are for amendment to those Rules.
Hence, the following order :
:: O R D E R ::
i.The Petitioner can make representation before the concerned
Department of the Government of Maharashtra specifying the
exact amount which they have paid as octroi during the period
when they were appointed as developer of the said Special
Economic Zone [SEZ] at Kharadi, Pune.
ii.The State Government shall enquire into the claim only to the
extent of amount which is refundable. The amount shall be
refunded by the State Government at the rate of 6% per annum
from the date when the Petitioner has paid that amount, till
realisation.
iii.This exercise shall be completed as early as possible and not later
than six months from today.
iv.Rule is made absolute only in the aforesaid terms. The Petition is
disposed of.
(SANDESH D. PATIL, J.) (SARANG V. KOTWAL, J.)
Deshmane (PS)
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PRADIPKUMAR
PRAKASHRAO
DESHMANE
Digitally signed by
PRADIPKUMAR
PRAKASHRAO
DESHMANE
Date: 2026.04.07
11:16:38 +0530
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