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1956 (12) TMI 34
Issues Involved:
1. Jurisdiction of the Sales Tax Officer to assess the petitioner.
2. Validity of the transfer order issued by the Commissioner, Sales Tax.
3. Pecuniary jurisdiction based on taxable turnover.
4. Petitioner's conduct and estoppel.
5. Availability of an alternative remedy.
Detailed Analysis:
1. Jurisdiction of the Sales Tax Officer to Assess the Petitioner:
The petitioner contended that the Sales Tax Officer, Shri Kolhe, lacked jurisdiction to assess him for the years 1952-53 and 1953-54. The argument was based on the assertion that the Commissioner, Sales Tax, had determined the jurisdiction of the Sales Tax Officers at Indore, empowering only Shri Pancholia to make the assessment in the petitioner's case. However, it was established that the Commissioner had the authority under Rule 46 of the Madhya Bharat Sales Tax Rules, 1950, to transfer any case or class of cases from one Sales Tax Officer to another. The Commissioner exercised this power and transferred the petitioner's case to Shri Kolhe, who then had the jurisdiction to assess the petitioner.
2. Validity of the Transfer Order Issued by the Commissioner, Sales Tax:
The petitioner argued that the transfer order was illegal and beyond the Commissioner's powers, as it transferred not only the pending case for the year 1951-52 but also future cases. The court examined Rule 46, which allows the Commissioner to transfer any case or class of cases pending before one Sales Tax Officer to another. The court found that while the order was general, it was intended to benefit the petitioner, who had himself requested the transfer due to perceived bias from Shri Pancholia. The court concluded that the transfer order was valid and within the Commissioner's powers, as it aimed to prevent prejudice against the petitioner.
3. Pecuniary Jurisdiction Based on Taxable Turnover:
The petitioner contended that the pecuniary jurisdiction should be determined based on the taxable turnover disclosed in the return. The court rejected this argument, stating that the jurisdiction of the Sales Tax Officer is determined by the actual taxable turnover found during the assessment, not by the figures disclosed in the return. The Commissioner's order under Rule 3(2) specified that cases with a taxable turnover exceeding Rs. 25,000 should be assessed by Shri Kolhe. As the taxable turnover for the years 1952-53 and 1953-54 was found to be Rs. 44,000 and Rs. 52,000 respectively, Shri Kolhe had the jurisdiction to assess the petitioner.
4. Petitioner's Conduct and Estoppel:
The court noted that the petitioner initially requested the transfer to avoid perceived bias from Shri Pancholia and benefited from the transfer order. The petitioner requested Shri Kolhe to reopen the assessment for the year 1951-52 and did not challenge his jurisdiction until after the assessments for 1952-53 and 1953-54 were completed. The court held that the petitioner was estopped from challenging Shri Kolhe's jurisdiction after having accepted and benefited from the transfer order. The petitioner's conduct indicated mala fides, and he was not entitled to relief under Article 226 of the Constitution.
5. Availability of an Alternative Remedy:
Although the court did not delve deeply into this issue, it was noted that the petitioner had an alternative and equally effective remedy of appeal and revision under the Sales Tax Act. The court suggested that the petitioner should have pursued these remedies instead of filing a writ petition.
Conclusion:
The petitions were dismissed on merits, with the court affirming the jurisdiction of Shri Kolhe to assess the petitioner and the validity of the transfer order issued by the Commissioner. The petitioner's conduct and the availability of alternative remedies further supported the dismissal. The petitions were dismissed with costs, and the advocate's fees were taxed at Rs. 100.
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1956 (12) TMI 33
Issues Involved:
1. Constitutionality of the second proviso to section 2(12) of the Assam Sales Tax Act, 1947.
2. Legality of the tax assessments made under the impugned proviso.
3. Availability and exhaustion of alternative remedies by the petitioner.
4. Jurisdiction of taxing officers to assess tax on specific goods.
Detailed Analysis:
1. Constitutionality of the Second Proviso to Section 2(12) of the Assam Sales Tax Act, 1947:
The primary issue was whether the second proviso to section 2(12) of the Assam Sales Tax Act, 1947, which deemed the use of goods by a dealer from his stock to be a sale, was ultra vires the Government of India Act, 1935, and the Constitution of India. The proviso was challenged on the grounds that it exceeded the legislative powers conferred by Entry 48 of List II of the Government of India Act, 1935, and Entry 54 of List II of the Seventh Schedule to the Constitution, which authorized the State Governments to impose tax only on sales and not on the use of goods.
The judgment emphasized that the term "sale" had a well-defined meaning involving a transfer of property in goods from a seller to a buyer for a pecuniary consideration. The court cited precedents, including Sales Tax Officer v. Budh Prakash Jai Prakash and Gannon Dunkerley and Co. (Madras) Ltd. v. State of Madras, to support the interpretation that mere use does not constitute a sale. The court concluded that the State Legislature could not enlarge the scope of "sale" to include use, as this would exceed the powers conferred by the Constitution.
2. Legality of the Tax Assessments Made Under the Impugned Proviso:
The court found that the assessments made under the second proviso to section 2(12) were illegal and void. The proviso was deemed constitutionally invalid and unenforceable because it involved an excessive use of legislative power by the State Legislature. The court held that the assessments lacked legal sanction and were therefore illegal. Consequently, the assessment orders for the three periods in question were quashed.
3. Availability and Exhaustion of Alternative Remedies by the Petitioner:
The petitioner had argued that all remedies under the Sales Tax Act had been exhausted, leaving no other remedy available except invoking the extraordinary jurisdiction of the court under Article 226. The court noted that the appeals filed by the petitioner were dismissed as time-barred, and the Commissioner of Taxes had upheld the dismissal. The court observed that the petitioner had not fully utilized the available remedies, such as seeking a reference to the court. However, given that the assessments were found to be illegal, the court exercised its discretion to issue a writ of mandamus to prevent a miscarriage of justice.
4. Jurisdiction of Taxing Officers to Assess Tax on Specific Goods:
The petitioner contended that the tea chests and machinery parts taxed did not form part of his stock as a dealer under the Act. The court did not find it necessary to examine this contention in detail, as the proviso itself was found to be void. However, the court acknowledged that the taxing officers lacked jurisdiction to assess tax on goods not mentioned in the dealer's registration certificate, as the dealer was not dealing in machinery parts or tea chests.
Conclusion:
The court concluded that the second proviso to section 2(12) of the Assam Sales Tax Act, 1947, was ultra vires and unconstitutional. The assessments made under the proviso were illegal and without legal sanction. The court issued writs of mandamus directing that the assessment orders should not be enforced against the petitioner. The application was allowed, and the assessment orders were quashed.
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1956 (12) TMI 32
Issues:
Validity of an order under section 11(2) of the Travancore-Cochin Sales Tax Act questioned by Brilliant Traders Ltd., Quilon.
Analysis:
1. The petitioners disputed their liability to pay the collected sales tax under section 11(2) of the Act, arguing that it should only apply to legally collectible amounts. They also contended that the tax should have been collected under the Travancore-Cochin Sales Tax Act, not the Madras Act. The court examined the scope of section 11(2) and referred to previous judgments to determine the dealer's obligation to pay the tax collected, even if it was deemed illegal.
2. The court considered the interpretation of section 11(2) and discussed the obligation of a registered dealer to pay the State all amounts collected by way of tax, regardless of the legality of the levy. The court compared conflicting judgments from different High Courts and analyzed the reasoning behind the obligation imposed on dealers to pay over even illegal collections. The court held that the dealer is bound to account for all collections made during the exercise of their power, even if they were deemed illegal.
3. The court addressed the argument that the tax collections were not made under the Travancore-Cochin Act XI of 1125 but were considered as deposits. The court clarified that the authority to collect sales tax was derived from the registration under the Act, and the collections were made at rates provided by the Act. The court dismissed this ground, emphasizing that the collections were indeed made under the relevant Act.
4. The petitioners also raised a point regarding refunds already made, which was not pursued during the arguments. The court clarified that if refunds were made, the claimant would have a right against the Government, and any payment made by the dealer to the rightful claimant would be permissible. Ultimately, the court found no merit in the petition and rejected it with costs.
In conclusion, the court upheld the validity of the order under section 11(2) of the Travancore-Cochin Sales Tax Act and dismissed the petition filed by Brilliant Traders Ltd., Quilon, with costs.
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1956 (12) TMI 31
Issues:
1. Validity of payments made by the plaintiff.
2. Authority of the Proverthicar to receive payment.
3. Liability of the State for the fraudulent act of its servant.
Analysis:
Issue 1: Validity of payments made by the plaintiff
The plaintiff, a merchant, was assessed sales tax and issued a notice of demand for the outstanding amount. The plaintiff made payments, but the State contended that the receipts were not in the prescribed form and the payments were not valid. The court found that the payments were true but questioned their validity. The court below dismissed the suit based on the form of receipts and lack of entry in accounts. However, the High Court held that the payments were valid as they were made to the Proverthicar as authorized under the Revenue Recovery Act. The court emphasized that the plaintiff was entitled to a receipt signed by the officer concerned, and the form of receipt was not specified under the Act. Therefore, the payments made by the plaintiff were deemed valid under the Act.
Issue 2: Authority of the Proverthicar to receive payment
The State argued that the Proverthicar was not authorized to receive payment, and the receipts were not in the prescribed form. However, the court clarified that the Revenue Recovery Act allowed payments to be made to the Proverthicar, and the person making the payment was entitled to a receipt signed by the officer. The court highlighted that the plaintiff was entitled to make payments to the Proverthicar as proceedings under the Revenue Recovery Act had been initiated for tax recovery. The court emphasized that the form prescribed for the notice of assessment did not impact the validity of payments made under the Act.
Issue 3: Liability of the State for the fraudulent act of its servant
The court addressed the State's argument that it could not be held liable for the fraudulent act of the Proverthicar. The court disagreed, stating that the Proverthicar was acting within his authority when receiving payments. The court held that unless the plaintiff was involved in the fraud, the State could not deny the validity of the payments. The court emphasized that the plaintiff should not be held accountable for any fraudulent acts committed by the Proverthicar after receiving the payments. Consequently, the court ruled in favor of the plaintiff, deeming the payment valid and holding the State liable to credit the amount.
In conclusion, the High Court allowed the appeal, reversed the lower court's decree, and decreed the suit in favor of the plaintiff. The plaintiff was awarded costs from the respondent for both the appeal and the court below.
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1956 (12) TMI 30
Issues:
- Jurisdiction of the Board of Revenue to entertain a petition against the order of the Commissioner of Sales Tax under section 21 of the Bihar Sales Tax Act.
Analysis:
The case involved a petitioner, Messrs S.C. Coondoo & Co., who was directed by the Superintendent of Commercial Taxes, Patna, to register as a dealer under the Bihar Sales Tax Act. The petitioner contended that it had no business premises in Bihar and argued that all sales in Bihar should be considered inter-State sales under Article 286(2) of the Constitution. The Commissioner of Sales Tax rejected the petitioner's application based on previous court decisions. The petitioner then applied for revision before the Board of Revenue, which was denied on the grounds that no revision lay against the Commissioner's order under section 21 of the Act. The Board of Revenue referred the question of jurisdiction to the High Court.
The main argument put forward by the petitioner was that the Commissioner's order was subject to revision by the Board of Revenue under section 24(5) of the Bihar Sales Tax Act. The government advocate, however, contended that the Commissioner's order under section 21 was advisory and not judicial, hence not subject to revision. The High Court disagreed with the government advocate, stating that the Commissioner's power under section 21 was quasi-judicial in nature. Section 21 empowered the Commissioner to determine disputes between the assessee and the Sales Tax Department, affecting the liability of the assessee or tax quantum.
The High Court held that the Commissioner's determination under section 21 constituted an order covered by section 24(5) of the Act, allowing for revision by the Board of Revenue. Even though the word "order" was not explicitly used in section 21, the formal determination by the Commissioner qualified as an order. The Court also highlighted the powers granted to the Commissioner under section 22, reinforcing the quasi-judicial nature of the Commissioner's role. Therefore, the High Court concluded that the Board of Revenue had jurisdiction to entertain a petition against the Commissioner's order under section 21 of the Act, ruling in favor of the petitioner.
In conclusion, the High Court answered the question of law in favor of the petitioner, establishing that the Board of Revenue indeed had the jurisdiction to review the Commissioner's order under section 21 of the Bihar Sales Tax Act. The hearing fee was assessed at Rs. 200, and the reference was answered accordingly.
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1956 (12) TMI 29
The judgment is about a claim based on a pronote where the debtor argues it is barred by limitation. However, as the pronote amount was advanced against a staff security deposit, the claim is not barred by limitation. The court allows the bank's claim to be set off against the debtor's staff security, with the defendant entitled to proceed for the balance after the set-off. No costs are awarded. (Case: 1956 (12) TMI 29 - HIGH COURT OF KERALA)
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1956 (12) TMI 28
Issues Involved:
1. Whether the transfer deed was duly completed.
2. Whether the directors acted mala fide in refusing to register the transfer of shares.
3. The reliefs to which the plaintiff is entitled.
Detailed Analysis:
1. Whether the transfer deed was duly completed:
The plaintiff claimed that he obtained shares from defendant Hemmad, executed the relevant transfer deed, and applied for registration, which was refused by the board of directors. The defendant company argued that the transfer deed was not duly stamped as required by law. The court emphasized that the obligation to deliver a duly stamped transfer deed lies with the transferee. Since the transfer deed was not stamped at the time of delivery, the company was justified in refusing registration. The court held that the transfer deed was not duly stamped as required by Section 34(3) of the Companies Act and the relevant provisions of the Stamp Act, thus supporting the company's refusal to register the transfer.
2. Whether the directors acted mala fide in refusing to register the transfer of shares:
The plaintiff alleged that the refusal was wrongful and not bona fide, claiming that Modi, a director, influenced the board to refuse registration to pressure the plaintiff into selling the shares to him. The court examined the resolutions passed by the board, which did not state any specific reason for the refusal. The court found no evidence of mala fides or bad faith, noting that the directors exercised their discretion as per Article 52 of the company's articles of association. The court also rejected the plaintiff's argument based on an unused draft letter suggesting Hemmad's indebtedness as a reason for refusal, as the letter was neither signed nor sent. Furthermore, the court dismissed the relevance of the transaction involving the Sahas as evidence of mala fides, stating that a single instance does not constitute a "series of similar occurrences" under Section 15 of the Evidence Act.
3. The reliefs to which the plaintiff is entitled:
The plaintiff sought rectification of the company's register and an injunction against defendant Hemmad. The court found no basis for granting an injunction, as there was no pleading that Hemmad invaded or threatened to invade the plaintiff's rights. The court affirmed the trial judge's decision to dismiss the suit with costs, as the plaintiff failed to establish mala fides or bad faith on the part of the directors.
Conclusion:
The court dismissed the appeal, upholding the company's refusal to register the transfer of shares due to the transfer deed not being duly stamped and finding no evidence of mala fides or bad faith by the directors. The appeal was certified fit for the employment of two counsel.
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1956 (12) TMI 17
Issues Involved:
1. Nature of the transaction (loan vs. adjustable accommodation)
2. Negotiation of the loan on behalf of the defendant
3. Binding nature of the loan in law
4. Competency of Sri Gulab Chand Jain to borrow money on behalf of the defendant company
5. Plea of benefit and ratification
6. Claim of interest on the loan
Detailed Analysis:
1. Nature of the Transaction (Loan vs. Adjustable Accommodation):
The plaintiff's case was that the plaintiff company had advanced a loan of Rs. 1,50,000 to the defendant company with interest 1 percent higher than the current bank rate, to be repaid within six months. The defendant denied this, claiming the amount was an adjustable accommodation due to personal expenses of Sri Ram Ratan Gupta on behalf of Sir Padampat Singhania. However, the trial court found that the amount was indeed advanced as a loan, supported by a letter and a cheque. The defendant's counsel's statement that if Sir Padampat Singhania testified on special oath, the transaction would be deemed a loan, further narrowed the dispute. Sir Padampat Singhania's testimony confirmed the loan nature, thus establishing the transaction as a loan.
2. Negotiation of the Loan on Behalf of the Defendant:
The defendant initially contested that the loan was not negotiated on behalf of the defendant. However, the statement by the defendant's counsel on 11th February 1954, and the testimony of Sir Padampat Singhania, established that Sri Gulab Chand Jain negotiated the loan on behalf of the defendant. The trial court concluded that the loan was negotiated on behalf of the defendant, narrowing the dispute to the binding nature of the loan.
3. Binding Nature of the Loan in Law:
The defendant argued that the loan was not binding as no resolution sanctioning the loan was passed by the board of directors. The burden of proof lay on the defendant to show the absence of such a resolution. The defendant failed to produce any evidence, such as the minute book or testimony from Sri Gulab Chand Jain, to support this claim. The court held that even if no resolution was passed, the plaintiff would be protected by the legal doctrine of internal management, which allows a creditor to assume the existence of necessary formalities if the transaction appears legitimate and is within the company's powers.
4. Competency of Sri Gulab Chand Jain to Borrow Money on Behalf of the Defendant Company:
The court examined the competency of Sri Gulab Chand Jain, who held multiple roles: director of the defendant company, director of the managing agents (B.R. Sons Limited), and delegate of the managing agency's powers. The court found that the articles of association and the resolution passed by B.R. Sons Limited authorized him to act on behalf of the defendant company. The plaintiff creditor acted bona fide, with no reason to suspect the transaction's propriety. The court concluded that the transaction was binding, and the plaintiff was entitled to a decree.
5. Plea of Benefit and Ratification:
The plaintiff argued that the defendant company benefited from the loan, as the money was credited to the defendant's account and shown in the balance sheet. The defendant admitted receiving the cheque and crediting the amount. The court agreed that the receipt of money itself constituted a benefit to the company, regardless of subsequent use. Additionally, the balance sheet signed by the directors and approved by shareholders indicated ratification of the transaction. The court found the plea of benefit and ratification valid, further supporting the plaintiff's claim.
6. Claim of Interest on the Loan:
The plaintiff claimed interest based on a covering letter sent with the cheque, stating the loan carried interest 1 percent higher than the current bank rate. The trial court found the plaintiff's witnesses credible and disbelieved the defendant's rebuttal witness. The reminders sent by the plaintiff demanding interest were uncontroverted by the defendant before the suit. The court upheld the plaintiff's claim for interest, agreeing with the trial court's findings.
Conclusion:
The appeal was dismissed with costs, affirming the trial court's decree in favor of the plaintiff for Rs. 1,53,665-2-0 with pendente lite and future interest at 3 percent per annum. The court found the transaction to be a binding loan, negotiated on behalf of the defendant, and supported by the doctrines of internal management, benefit, and ratification.
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1956 (12) TMI 15
Articles of association - Regulations required in case of unlimited company, company limited by guarantee or private company limited by shares, General provisions with respect to memorandum and articles - Effect of memorandum and articles and Managing director – Tenure of appointment
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1956 (12) TMI 1
Whether section 5(7A) of the Indian Income-tax Act, hereinafter called the Act, is ultra vires the Constitution as infringing the fundamental rights enshrined in article 14 and article 19(1)(g)?
Held that:- Section 5(7A) of the Act is not violative of article 14 of the Constitution and also does not impose any unreasonable restriction on the fundamental right to carry on trade or business enshrined in article 19(1)(g) of the Constitution. If there is any abuse of power it can be remedied by appropriate action either under article 226 or under article 32 of the Constitution and what can be struck down is not the provision contained in section 5(7A) of the Act but the order passed thereunder which may be mala fide or violative of these fundamental rights. This challenge of the vires of section 5(7A) of the Act, therefore, fails. Appeal dismissed.
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9911796707
