Bombay High Court Dismisses SEZ Developer's Petition for Octroi Exemption and Refund. State SEZ Policy Exemption Not Enforceable Against Municipal Corporation Without Statutory Amendment.

High Court: Bombay High Court Bench: BOMBAY

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2026-05-18 14:57:33

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Case Note & Summary

The petitioner, EON Kharadi Infrastructure Pvt. Ltd., a Special Economic Zone (SEZ) developer, sought exemption from octroi and refund of octroi paid to the Pune Municipal Corporation (PMC) from 2005 to 2011, relying on the State Government's SEZ policy dated 12.10.2001 which promised exemption from all state and local taxes including octroi. The petitioner had paid octroi under protest and demanded refund of Rs.6,69,91,584/- with interest. The PMC refused exemption via letter dated 21.7.2012. The High Court dismissed the petition, holding that the State Government's policy cannot override the statutory provisions of the Maharashtra Municipal Corporation Act, 1949, which governs octroi levy and exemption. The court ruled that the doctrine of promissory estoppel cannot be invoked against a statutory body like PMC in the absence of a statutory amendment. The refund claim was also rejected as there was no legal basis for refund. The court directed the State Government to consider amending the municipal law if it intended to grant such exemption.

Headnote

A) Municipal Law - Octroi Exemption - State Policy vs. Municipal Autonomy - Maharashtra Municipal Corporation Act, 1949 - The State Government's SEZ policy dated 12.10.2001 granting exemption from octroi to SEZ developers is not binding on the Pune Municipal Corporation unless the municipal law is amended to incorporate such exemption. The court held that the policy cannot override the statutory provisions of the Maharashtra Municipal Corporation Act, 1949, which governs octroi levy and exemption. (Paras 1-29)

B) Promissory Estoppel - Government Policy - Enforceability Against Statutory Bodies - The doctrine of promissory estoppel cannot be invoked to enforce a policy that is contrary to statutory provisions. The court held that even if the State Government made a promise of exemption, it cannot bind the municipal corporation which derives its power to levy octroi from statute. (Paras 1-29)

C) Refund - Octroi Paid Under Protest - Statutory Basis - The petitioner's claim for refund of octroi paid under protest from 2005 to 2011 was rejected as there was no statutory provision or valid exemption notification allowing such refund. The court held that payment under protest does not create a right to refund without legal entitlement. (Paras 1-29)

Issue of Consideration

Whether the State Government's SEZ policy granting exemption from octroi is binding on the Pune Municipal Corporation and whether the petitioner is entitled to refund of octroi paid under protest.

Final Decision

Writ petition dismissed. The court held that the State Government's SEZ policy cannot override the statutory provisions of the Maharashtra Municipal Corporation Act, 1949, and the PMC is not bound to grant exemption. The refund claim was also rejected.

Law Points

Octroi exemption under State SEZ policy not enforceable against municipal corporation without amendment to municipal law
Promissory estoppel cannot override statutory provisions
Refund claim for octroi paid under protest requires statutory basis

Case Details

2026:BHC-AS:16349-DB

WRIT PETITION NO.5275 OF 2013

2026-04-07

Sarang V. Kotwal, Sandesh D. Patil

2026:BHC-AS:16349-DB

Mr. Sriram Sridharan, Shanmugi Dev for Petitioner; Smt.Neha S. Bhide, R.M. Shinde, Apurva Thipsay for Respondent Nos.1,2,5; Mr. A.A. Kumbhakoni, R.S. Khadapkar for Respondent Nos.3,4; Ms. Shenaz Bharucha, Madhubala Kajle for Respondent No.6

EON Kharadi Infrastructure Pvt. Ltd.

The State of Maharashtra and others

Nature of Litigation

Writ petition challenging refusal of octroi exemption and seeking refund of octroi paid under protest.

Remedy Sought

Petitioner sought quashing of PMC's letter dated 21.7.2012 refusing exemption, direction to frame rules for exemption, and refund of Rs.6,69,91,584/- with interest.

Filing Reason

PMC refused to grant octroi exemption despite State Government's SEZ policy promising exemption from all state and local taxes.

Issues

Whether the State Government's SEZ policy granting exemption from octroi is binding on the Pune Municipal Corporation. Whether the petitioner is entitled to refund of octroi paid under protest from 2005 to 2011.

Submissions/Arguments

Petitioner argued that the State Government's policy promised exemption and the PMC is bound by it; also invoked promissory estoppel. Respondents (PMC and State) argued that the policy cannot override the statutory provisions of the Maharashtra Municipal Corporation Act, 1949, and that the PMC has the power to levy octroi under the Act.

Ratio Decidendi

A State Government policy cannot override statutory provisions governing municipal taxation. The doctrine of promissory estoppel cannot be invoked to enforce a policy that is contrary to statute. Refund of octroi paid under protest requires a statutory basis.

Judgment Excerpts

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 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 under protest.

Procedural History

The petitioner filed Writ Petition No.5275 of 2013 before the Bombay High Court challenging the PMC's letter dated 21.7.2012 refusing octroi exemption and seeking refund. The petition was heard and reserved on 12.03.2026, and judgment pronounced on 07.04.2026.