TMI Blog1950 (10) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... , that the assess- ment of the Commercial Tax Officer who purported to act under rule 14(2) of the Madras General Sales Tax Rules was without jurisdiction, that the assessment was illegal and therefore they were entitled to repayment of the tax collected. The defence is that the transactions of sale were within the State, that the property in the goods passed to the buyer, that is, the plaintiffs, within the State itself, that the goods having been booked in the railway stations within the State in the name of the plaintiffs company, both as consignor and consignee, the transfer of the property in the goods was within the State, that the proper procedure prescribed by law has been followed by the defendants in imposing this assessment and that the Commer- cial Tax Officer had jurisdiction to act under rule 14 of the Madras General Sales Tax Rules and that therefore the assessment was per- fectly legal and valid. The following issues were framed: 1. Whether the transfer of property in the goods did not take place within the Province of Madras? 2. Whether the Commercial Tax Officer had no jurisdiction or power to act under rule 14(2) in assessing the alleged escaped turnover? 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or supplying the British Ministry of Food under the permits referred to, the plaintiffs entered into certain contracts for supplying groundnuts to them in order to enable them to export the same to Britain. There are 24 such contracts, the total supply under them being of the value of Rs. 30,03,650-12-6. These 24 contracts are of two different kinds. Of the contractees who are the sellers to the plaintiffs, Nos. 1 to 18 in the list of contracts Ex. P-5, are residents of Bombay City, and the rest Nos. 19 to 24 are residents outside Bombay City, some in Hyderabad and some in Royachuti and three, Nos. 19, 23 and 24, are residents of Madras State. Two different forms of contract were entered into, one form was with reference to the residents of Bombay City and the other form was with reference to those outside Bombay City. In respect of the purchase of groundnuts in the Bombay City, a contract in the form of Ex. P-19 was entered into by the plaintiffs. It is signed by the seller and addressed to the plaintiffs. It is as follows: "We have this day sold to you......tons of groundnuts......free railway station, Bombay or to be delivered at buyers' godown." There are certain terms as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference to the sellers residing outside the Bombay City is called the General Port Pass Contract in the form of Ex. P-14. It is in the form of an agreement between the sellers and the plaintiffs the buyers. It is provided there that the seller shall sell and the buyers shall purchase particular quantities of groundnuts of a defined quality at a particular rate F.O.R. Marmagoa harbour. The particulars as to quality are mentioned in detail and there is a clause stating the conditions under which the goods could be rejected. It is provided under clause 5 that should the whole or any portion of the goods to be delivered under the contract be in any respect not in accordance with the stipulations, the buyers shall have the option, among others, to reject the parcel and claim recovery from the sellers any loss they may sustain. Clause 6 provides that the buyers, that is the plaintiffs, will supply the necessary gunnies to the sellers on the latter's written request. Clause 7 relates to delivery and delivery is to be completed at Marmagoa harbour at the plaintiffs' siding between particular dates. The terms of payment are provided by clause 8. The buyers should advance 90 per cent. of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23rd January, 1942." The procedure adopted as regards these contracts with merchants outside the city is also spoken to by P.W. 1. The sellers after enter- ing into these contracts have to inform the plaintiffs all the names of the up-country constituents from whom the sellers purchased, the quantities and other particulars of the stations from which they would despatch the goods. This information the plaintiffs would pass on to the British Ministry of Food at Bombay who in turn pass on the information to the railways concerned for the supply of necessary wagons at the places indicated by the suppliers and then the sellers consign the goods in the plaintiffs' name as consignor and consignee. These suppliers are from anywhere in India, though the merchants out- side Bombay City shown in Ex. P-5 are in Madras State and in Hyderabad and surrounding places. The sellers under the Post Pass Contracts post the railway receipts to the plaintiffs' office at Bombay and they draw on the plaintiffs hundi for 90 per cent. of the value and send through some bank at Bombay together with the railway receipts. The plaintiffs honour the hundi and take charge of the railway receipts. The railway re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn Mahratta Rail- way Company issued a communication, Ex. P-25 dated 11th October, 1939, regarding the procedure to be followed in respect of particular descriptions of traffic including groundnuts in respect of which it is stated that where the groundnuts are booked to Messrs. Rally Brothers and Louis Dreyfus and Company at Marmagoa harbour they will until further notice be passed by the Customs Authorities at Castle Rock without a licence. The Collector of Salt Revenue, Bombay, wrote on 17th November, 1939, Ex. P-26, informing the plaintiffs that under Section 5 of the Land Customs Act an exporter obtaining a permit for passage of goods via a land customs station should state his name in the export application and if therefore a consignment was booked by one of the constituents and the export application is filled in by him it will not be possible for the Customs manager at Castle Rock to know that the consignment is intended for the plaintiffs or booked on their account; therefore he suggests that along with the name of the consti- tuent in the value declaration form it may be stated that he was the agent of the plaintiffs. To this letter the plaintiffs wrote Ex. P-27 on 20th No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods and then making payment. That right to reject or accept the goods is provided to be exercised only at Marmagoa and not at any time before that. In such circumstances it cannot be stated that the seller has ceased to be the owner of the goods once he puts them in the bags and rails them and that the property in the goods passed to the buyer once they have been put into the bags and railed. Taking the terms of the contracts and the procedure adopted, it could not be said that the property in the goods passed to the plaint- iffs at any time before they exercised the right of rejection or approval at Marmagoa. The learned Advocate-General relied on Section 23 of the Sale of Goods Act for the position that when once these groundnuts were bagged in the bags supplied by the plaintiffs and put in a deliverable state and delivered to a carrier by putting them in the rail for the purpose of transmission to the plaintiffs, the plaintiffs must be deemed to have unconditionally appropriated the goods to the contract and the property in the goods had therefore passed to the buyer as soon as the goods were railed. It could not be said, in view of the terms of the contract, that that approp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the last term of the contract is complied with namely, the approval by the plaintiffs of the goods at Marmagoa, when alone the sellers would be entitled to the balance of the 10 per cent. price. That the determin- ing factor is the intention of the parties is the accepted principle in the English law and it has been observed in Abdul Aziz Bepari v. Jogindra Krishna Roy(1) that the Indian law is the same and the pro- visions of Section 81 of the Indian Contract Act do not exclude the question of intention which is laid in the English cases as the deter- mining factor. Though Chapter VII of the Indian Contract Act con- taining Section 81 has now been repealed by the Indian Sale of Goods Act, it now corresponds to Section 22 of the Sale of Goods Act and I am of opinion that by reason of the enactment of the Indian Sale of Goods Act it can be said that the governing principle which should determine as to the passing of the property in the goods must be to find out what is the intention of the parties. There is no difficulty in this case, in finding as to what is the intention of the parties in (1) [1917] I.L.R. 44 Cal. 98 at 115. view of the terms of the contract and the procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods at the relevant time and their being compelled to comply with certain formal requirements, they would not have allowed themselves to be mentioned as consignors which conduct on their part could not deprive them of their rights under the contract or to prevent them from stating what the true intent is. It is also argued that the railway receipt being a document of title under the Sale of Goods Act, it must be held that the goods covered by the receipt belong to the plaintiffs who are mentioned as consignor and consignee. No doubt possession of the railway receipt which is a document of title would entitle the plaintiffs to deal with the goods as persons having possession and control of the goods; but that would not make them owners if in a contract entered into by them regarding these goods with third parties they were not really the owners on that date. Some comment was made on behalf of the defendant as regards Ex. P-19. Ex. P-19 is a printed form with some blank space for men- tioning the place of delivery and 'Marmagoa' is filled in with rubber stamp. It is contended that the suit transactions covered several con- tracts and it cannot be said on the production of Ex. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting the value of the purchases made by the company's Bombay office under the contracts referred to were not included in the said order. The plaintiffs were having on an average 30 sub-agencies in this State during 1944-1945 and these were mainly managed by paid agents. Some of the sub-agencies were functioning under their Bombay office and the turnover effected under these sub-agencies was also included in the assessable turnover. On 6th March, 1946, by Ex. P-2(a), the Deputy Commercial Tax Officer called for information from the plaintiffs as to the purchase of ground- nuts from three parties, covered by items 19,23 and 24 in the list, Ex. P-5. Information was furnished by the plaintiffs in Ex. P-4 dated 31st December, 1946, referring to the contracts with reference to these persons. A copy of the General Port Pass Contract in the form of Ex. P-14 was also sent and it was stated how the purchases were outside the State even though the railway receipts contained the names of the plaintiffs as consignor and consignee. On 28th March, 1947, the Commercial Tax Officer, North Madras, served a notice Ex. P-6 on the plaintiffs stating that under the powers vested in him under Rule 14(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, and it was open to him by virtue of this rule to have assessed this escaped turnover within the expiry of the year 1945-1946 as the assessment year was 1944-1945. Admittedly that has not been done. But the period provided for under Rule 17 during which the escaped turnover can be assessed having expired, the Commercial Tax Officer has levied this assessment over the escaped turnover under Rule 14(2) whereby the Commercial Tax Officer may in his discretion at any time either suo motu or on an application call for and examine the record of any order passed or any proceedings record- ed under the Act by an Assistant or Deputy Commercial Tax Officer working under him, for the purposes of satisfying himself as to the legality or propriety of such order or as to the regularity of such pro- ceedings and may pass such order in reference thereto as he thinks fit. Under this rule the Commercial Tax Officer is vested with powers of revision where an assessment is made initially, and under Section 11 of the Act and under Rule 13(1) of the rules an appeal is provided for from the order of the licensing or assessing authority to the Commercial Tax Officer of the District. However an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and under Rule 14(2) it was not open to the Commercial Tax Officer to go beyond the evidence and the material that was placed before the Deputy Commercial Tax Officer, Harbour Division, when he made the assessment Ex. P-1. It is observed in Ex. P-6, the notice sent by the Commercial Tax Officer, that investigation has however shown that the purchases within the State were such that they are liable to pay the tax. It is stated that he examined the connected assessment file with reference to the details of export of groundnuts from the State. No such file is produced and there can be no doubt that on further information and the material furnished by the depart- ment the Commercial Tax Officer has proceeded to assess this escaped turnover and he did not confine himself strictly within the revisional jurisdiction with which alone he is vested under Rule 14(2). It is argued on behalf of the plaintiffs that apart from the Commercial Tax Officer not having jurisdiction to assess the escaped turnover, the plaint- iffs were prejudiced by reason of the Commercial Tax Officer having proceeded under Rule 14(2) as they had no right of appeal and a further right of revision which they would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... caped turnover there is a specific provision for tackling such turnover under Rule 17 and there is a period of limitation fixed in that rule, namely, the year of assessment and the year after that. It was therefore not open to the tax authorities to assess the escaped turnover, this being for the year 1944-45, after the end of 1945-46, that is, after 31st March, 1946. Apparently finding that any proceeding under Rule 17(1) is barred, the Commercial Tax Officer has chosen to assess the escaped turnover under Rule 14(2) taking advantage of the fact that no time limit is fixed under Rule 14(2) under which a Commercial Tax Officer may in his discretion at any time either suo motu or on an application call for and examine the record and revise the order of the assessing authority. It is well-established that where there is a specific provi- sion in an enactment, the proceeding must be taken under that provi- sion and not under any general provision, even if it could be said that under Rule 14(2) the Commercial Tax Officer is entitled to consider the case of escaped assessment. But here the act of the Commercial Tax Officer in trying to reopen the assessment which has become complete by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be just or reasonable to call upon the assessees to account for escaped turnover for any longer period prior to the date of the assessment for there will be difficulty for the assessees to produce evidence by way of vouchers and accounts to meet any charge of turnover having escaped assessment if made by the authorities at any time. If the contention on behalf of the State that the Commercial Tax Officer could at any time assess escaped turnover is to be accepted, the pro- vision in Section 19(f) fixing a time limit for assessing the escaped turnover is rendered nugatory. I am satisfied that Rule 14(2) conferred no such power on the revising authority and even if he had acted under Rule 14(2) instead of Rule 17(1) which would be the proper pro- vision he could not reopen an assessment beyond the period fixed under Rule 17. The Commercial Tax Officer in imposing this assessment by his order dated 31st March, 1947, Ex. P-8, has acted without jurisdic- tion and the assessment is therefore illegal and ultra vires of his powers. When the case was taken up for trial, the learned Advocate- General raised an objection as to the maintainability of the suit; but the objection was not rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the plaint. Clause 12 of the amended Letters Patent deals with the scope of the original side jurisdiction of the High Court. It states: "......High Court of Judicature at Madras, in the exercise of its ordinary original civil jurisdiction shall be empowered to receive, try and determine suits of every description if, in the case of suits for land or other immovable property, such land or property shall be situated or in all other cases if the cause of action shall have arisen, either wholly, or, in case the leave of court shall have been first obtained in part within the local limits of the ordinary original jurisdiction of the said High Court or if the defendant at the time of the commencement of the suit shall dwell or carry on business or personally work for gain, within such limits......" The suit is not a suit for land but a suit for recovery of certain amounts which have been collected from the plaintiffs which the defend- ant alleges is revenue while the plaintiffs contend that they are moneys collected purporting to be revenue. Assuming it is revenue has the High Court on its original side, absolutely no jurisdiction to enter- tain a suit where recovery of an amount c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen that the defendant has his office within the limits of the original side jurisdiction of said court and the cause of action has also arisen within the said limits. If that is so, there is nothing preventing the High Court in receiving the plaint where the two conditions mentioned in Clause 12 are satisfied as in this case. But there is a restriction imposed by Section 226 of the Government of India Act in the exercise of such jurisdiction in any (1) 44 Wis. 454. matter concerning the revenue, or any act ordered or done in the collection thereof according to the usage and practice of the country or the law for the time being in force. The scope of the provision corres- ponding to Section 226 of the Government of India Act was considered by Lord Campbell in Spooner v. Juddow(1). In that case in respect of an alleged illegal collection of 'quit rent' it was held that 'quit rent' was part of the revenue of the East India Company and the cause of action was a matter concerning the revenue under the management of the Governor and Council of Bombay and concerning an act done according to the Regulations of the Governor and Council of Bombay. Lord Campbell observes at page 379: "The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of certain facts. It is only then that the court can come to a conclusion whether it is a case where the court could exercise the jurisdiction or should refuse to do so. In that view could it be said that the court has no jurisdiction at all to even enter- tain the plaint though at a later stage, when strictly applying the principles laid down as to in what cases it could be held if the order directing the collection was not bona fide and absurd as laid down by Lord Campbell in Spooner v. Juddow(1). The stage therefore at which the jurisdiction is exercised is at the time of the hearing and judgment and not at the time of the entertainment of the suit. Therefore, in my opinion, Section 226 does not provide for an absolute want of jurisdiction in the High Court on its original side but imposes only a restriction on the exercise of its jurisdiction which could only be done under certain conditions and in certain circumstances. In that view it could not be said that this court had no power to receive the plaint or that it has not been properly entertained. This aspect was discussed to a certain extent by Spens, C.J., in Governor-General in Council v. Raleigh Investment Co. Ltd. (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary to appreciate this distinction since in one case as in the present case there is only a restriction as to the exercise of the jurisdiction while in the other case there is absolute want of jurisdiction. This is not case where there is absolute want of jurisdiction. That it is a restriction is also made clear by the proviso to Article 225 of the Constitution which has already been referred to. The words used in the proviso are "provided that any restriction to which the exercise of original jurisdiction by any of the High Courts with respect to any matter concerning the revenue or concerning any act ordered or done in the collection thereof was subject immediately before the commence- ment of the Constitution shall no longer apply to the exercise of such jurisdiction." So it was not a total exclusion of jurisdiction but only a restriction. The jurisdiction could be exercised but is restricted under certain conditions as laid down in Section 226 of the Government of India Act. Mr. Nambiar laid emphasis on the words "exercise of jurisdic- tion" used in Section 226. There is force in this contention that exercise of jurisdiction should refer to the stage when the Court hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isin of the case, it has jurisdiction to try it to a conclusion unless there was any reason for holding that that jurisdiction had been removed. I hold that the High Court had jurisdiction to receive the plaint and entertain the suit and the plaint was properly filed and no question of limitation could arise. It is next contended on behalf of the defendant that even though the restriction as to exercise of jurisdiction has been removed by the Constitution, it being only a repealing provision, it does not affect existing rights. The right which the defendant is stated to have acquired is the right to keep the money by reason of the claim being barred by limitation on the date when this court had acquired jurisdic- tion. Section 6 of the General Clauses Act which is made applicable (1) [1909] I.L.R. 36 Cal. 193 at 206. (3) [1905] I.L.R. 33 Cal. 352. (2) [1905] I.L.R. 33 Cal. 68. (4) [1924] 47 M.L.J. 448. to the interpretation of the Constitution by Article 367(1) of the Constitution deals with the effect of repeal and says that the repeal shall not revive anything not in force or existing at the time at which the repeal takes effect or affect any right, privilege, obligation or lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 1405. within what time I must institute proceedings are questions of procedural law, for they relate merely to the modes in which the courts fulfil their functions." In Ram Karan v. Ram Das(1), Sulaiman, Acting C.J., in a case dealing with jurisdiction observes as follows: "No doubt a substantive right is not assumed to be taken away by a new Act unless it expressly says so. But a right to sue in one court rather than another or a right to wait for a particular period of time before suing is not a substantive right. The selection of forum and the period of limitation are ordinarily matters of procedure only. The selection of a Court in no way affects the right of suit itself." In Hurst v. Hurst(2) where a proceeding could not have been main- tained prior to the passing of the Judicature Act it was observed by Jessel, M.R., as follows: "Before the Judicature Act no bill in equity could have been maintained for that purpose, not because the plaintiff had no right, but because a Court of Equity had no jurisdiction to enforce it any more than the Divorce Court had. But, before the cause came on to be heard, the Judicature Acts came into operation, transferring the jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly enacted statute cannot prima facie be pre- sumed to be retrospective in its effect." In Colonial Sugar Refining Company v. Irving(1) relied upon, the right that was in question was a right of appeal to the Privy Council which right was taken away by a subsequent enactment conferring a right of appeal to the High Court of Australia. It was observed by Lord Macnaghten: "To deprive a suitor in a pending action of an appeal to a superior tribunal which belonged to him as of right is a very different thing from regulating procedure. In principle, their Lordships see no difference between abolishing an appeal altogether and transferring the appeal to a new tribunal. In either case there is an interference with existing rights contrary to the well-known general principle that statutes are not to be held to act retrospectively unless a clear intention to that effect is manifested." The decisions in Hamilton Gell v. White(3) and A Debtor, In re, Debtor ex parte(4) were cited. These related to cases where a party has acquired certain rights under a previous statute which however a repealing Act could not disturb. But by virtue of Section 226 what all the defend- ant could contend is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and decided, the plaintiffs must be deemed to be bona fide prosecuting the suit. Though the contention on behalf of the plaintiffs can be appreciated in view of the peculiar circumstances of the case, Section 14 in terms cannot however be made applicable. Even assuming that the court has no juris- diction to entertain the suit, I do not think that the court is prevented, when once it acquires jurisdiction, to proceed with its trial, the plaint having been presented but not returned to enable the plaintiffs to seek the proper forum. This question does not however arise in view of my find- ing that there is no absolute want of jurisdiction in the High Court in respect of this suit and that it had jurisdiction to entertain the suit and the suit was properly entertained. Coming to the application of Section 226 of the Govern- ment of India Act to the facts of this case it has to be con- sidered whether this is a suit concerning revenue, or concerning any act ordered or done in the collection thereof. The assessment for the year 1944-1945 was completed by the order of the Deputy Commercial Tax Officer dated 27th March, 1946, Ex. P-1. The amount of the tax was paid, but long therea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciples laid down in Spooner (1) [1944] 1 M.L.J. 477 at 481; 12 I.T.R. 265. (2) [1846-50] 4 M.I.A. 353. (3) [1946] 1 M.L.J. 415. v. Juddow(1) by Lord Campbell. In Governor-General in Council v. Shiromani Sugar Mills Ltd.(2), their Lordships of the Federal Court raised two points for consideration, namely, (1) whether the High Court purported to exercise jurisdiction in a matter concerning the revenue or concerning any act ordered or done in the collection there- of; and (2) if so, whether the last words of the sub-section "according to the usage and practice of the country or the law for the time being in force" qualify "original jurisdiction in any matter concerning revenue" as well as "concerning any act ordered or done in the collection thereof." As regards the latter their Lordships were satisfied that grammatically the last words of the sub-section in question can only qualify the words immediately preceding "concerning any act done or ordered in the collection thereof". As regards the former it was observed as follows: "There was much discussion before us in this case, as there had been in other cases, whether a matter concerning an act ordered or done in the collection of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be stated to be a matter concerning revenue. It relates to revenue and one cannot see how if an order is made for the collection of the revenue it could be stated as not concerning revenue. The former is wider and the latter is restricted; but at the same time it cannot be said that in cases where assessment is made and is objected to as illegal and an assessment order directs the collection and notice is issued for such collection in pursuance of the order of assessment it cannot be said that it concerns only revenue and does not relate to an act which orders collection. Their Lordships of the Federal Court in Governor-General in Council v. Shiromani Sugar Mills Co. Ltd.(1) have appreciated the difficulty of drawing a line between the first part and the second part of Section 226 of the Government of India Act and therefore left the matter without coming to any final conclusion. The matter is not easy to decide and lay down the class or classes of cases which could be said to concern revenue alone and which could be treated as acts ordered or done in its collection. In this case I am inclined to hold that by virtue of the assessment order of the Commer- cial Tax Officer, Ex. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de exercise of his power, nor can it be treated as an honest in- tention to act within his powers. If he had acted only in accordance with the statutory powers, then it may be stated that he was acting in good faith and bona fide but the statutory powers prevented him from reopening any assessment after a certain period and with that knowledge he acted. In such a case, could it be said that it is a bona fide act. With respect, I am unable to agree with Coutts Trotter, J., that it must be shown to be a mala fide act or aggressive act. Lord Camp- bell has not gone so far but stated "not bona fide and absurd". In the circumstances of this case where the authority has acted to get over the bar of time laid down under the express provisions of the rules, under which alone he could act, and invoked the support of a provision the effect of which would be to nullify the express provisions relevant to assessment, could it be said that the authority acted bona fide? He acted with the full knowledge that he had no power to act. But it appears to me he was anxious at any cost not to allow the assessee to escape assessment and therefore invoked rule 14(2) which could have absolutely no applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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