TMI Blog1957 (3) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... hile in the former case steps were being taken by the defendant-respondent for the collection of the amount by coercive process, in the latter it was stated that the plaintiffs had paid the sum under protest, though the claim with respect to this was confined to only Rs. 3,400 in order to avoid payment of heavy court-fee. The plaintiffs alleged in all these three suits that the goods were being sent by railway to places beyond the Province of Madras, the railway receipts, invoices for the goods and the hundies being lodged with the bankers of the firm to be discounted and for collection of the amounts from the buyers with instructions to deliver the receipts to the buyers only on payment of money. It was, therefore, contended that the ownership of the goods continued to be in the plaintiff-firm till the actual payment by the buyers outside the Province where the goods would be transferred to them. In these circumstances, the plaintiffs averred that the respondent-defendant had no right to impose sales tax on such transactions and the collection in O.S. Nos. 28/49 and 34/50 of Rs. 16,000 and Rs. 3,400 respectively was illegal and ultra vires and prayed for a decree for the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere a third party was shown as consignor and either that party or the plaintiff is shown as the consignee. In the result his finding was that the total sales outside the Province amounted to Rs. 1,95,710-12-0. In O.S. No. 100/49 he held that the sales outside the Province were with regard to transactions in which the goods have been despatched to "self" by the plaintiff prior to 1st January, 1948, and those amounted to Rs. 9,26,775-2-6 and he therefore gave a declaration and injunction with respect to the tax of Rs. 9,267-12-0 said to be levied thereon. In respect to despatches after 1st January, 1948, he held that they are sales within the Province by reason of explanation 2 to sub-section (h) of section 2 of the Madras General Sales Tax Act and he thought it unnecessary to consider whether the plaintiff was entitled to any relief under section 7 of the Act, with regard to sales subsequent to 1st January, 1948, where the consignee is not the buyer and where the suit was not filed for any relief under section 7 of the Act. With respect to O.S. No. 34/50 he held that the sales where the consignor and the consignee himself is shown as the plaintiff (sic) amounting to Rs. 71,458-1-0, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive on that ground. With respect to the first point, namely, the suit in O.S. No. 28/49 is not in conformity with the suit notice, it is necessary to advert to the relevant allegations in the suit notice and the plaint to determine what the allegations were. Exhibit A-94 is the suit notice dated 10th September, 1947, given by Shri Bheem Rao, Advocate, Kurnool, to the Secretary to the Government of Madras and District Collector, Kurnool, on behalf of M/s. C.L. Shah Co., under section 80, Civil Procedure Code. In that notice after setting out that his clients deal in groundnut oil, it was stated that the sale of the goods sold by them, according to the terms of the contract, the intention of the parties and the law applicable to the course of the dealing adopted by his clients, was completed outside the presidency to the buyers who got title only after payment of the value of the goods and therefore not liable to sales tax under the Act. The notice further alleged that the plaintiff had to pay Rs. 16,208-14-2 as sales tax for the period 1944-45 under protest, and that that levy of tax was ultra vires and illegal and unjust and therefore, called upon the Government to refund the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him in the suit notice and in the plaint. All that section 80, Civil Procedure Code, requires is that there should be a substantial compliance in the suit notice with respect to the matters specified in the section. If authority is necessary we may refer to the case of Secretary of State for India in Council v. Perumal Pillai (1900) I.L.R. 24 Mad. 279., where a Bench consisting of Subramania Ayyar and Benson, JJ., following the case of Jones v. Bird5 B. and A. 837., held that the cause of action in the section should not be taken in a narrow sense, the object of the section being merely to inform the defendant substantially of the ground of complaint. In Jahangir v. Secretary of State(1902) I.L.R. 27 Bom. 189, at 206., it was observed that "these notices" must not be too strictly or too narrowly construed. They must not be construed as if they were pleadings and that they need not set out all the details and facts of the case which the plaintiff intends to prove and that the notice must be considered sufficient if it substantially fulfils its object in informing the parties concerned generally of the nature of the suit intended to be filed. There are several decisions on this point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment and collection of taxes, as the period of limitation is not that prescribed under section 18 of the Act, but under Article 62 of the Limitation Act. Under section 18 of the Act a suit with respect to any act done or purporting to be done under the Act must be filed within six months from the act complained of. The section is in the following terms: "No suit shall be instituted against the Government and no suit, prosecution or other proceeding shall be instituted against any officer or servant of the State Government in respect of any act done or purporting to be done under this Act, unless the suit, prosecution or other proceeding is instituted within six months from the date of the act complained of." The act complained of, according to the Subordinate Judge, is the illegal collection of the tax and eight months would terminate on the 10th May, 1948, and consequently the suit will be barred by limitation. Learned Advocate, however, contends that if section 18 of the Act is applicable to such suits, eight months must be reckoned from the date of the revision and the Subordinate Judge was wrong in relying upon the decision of Chinnammal Achi v. Saminatha Malavayoran [1907] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but also determines whether Article 62 of the Limitation Act would apply, because if section 18, as contended by him, is confined only to suits for compensation or damages against the State Government or any officer or servant of the State Government with respect to acts done or purporting to be done by them under that Act, the court has not only jurisdiction to entertain suits relating to the levy, imposition and collection of tax, but also Article 62 would apply prescribing three years as the period of limitation for the recovery of tax. A case similar to the one we are considering arose for decision by Panchapakesa Ayyar, J., in State of Madras v. A.M.N.A. Abdul Kadar[1953] 2 M.L.J. 181; 4 S.T.C. 202. The point for consideration in that case was whether in a suit for the recovery of Rs. 900 said to have been collected illegally from the plaintiff as sales tax by the defendants, State of Madras, the suit would become barred by limitation in six months under section 18 of the Act or at least within a year under Article 16 of the Limitation Act or whether Article 62 of the Limitation Act giving 3 years will apply. The tax in that case was collected from the plaintiff on 27th May, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving regard to the aforesaid decisions. If section 18 is not applicable to such suits the question is whether having regard to the provisions of the Act is the jurisdiction of the ordinary civil courts ousted or should remedy be found under the Act. This point was also considered by a Bench of the Madras High Court in Province of Madras v. Satyanarayanamurthi (1951) 2 M.L.J. 340; 2 S.T.C. 141. and after discussing the relevant cases on this point it was held that the Act with its subsequent amendments had not ousted the jurisdiction of the ordinary courts. There can be no doubt that an assessee who is called on to pay a tax has a right to seek his remedy in a court of law by challenging the legality of that order. This he is entitled to do unless that right has been barred or taken away statutorily. The fact that there is under the taxing statute a right of appeal or revision against assessments is not by itself sufficient to take away the right of the assessee to have recourse to a court of law. Having regard to the fact that civil courts have jurisdiction to entertain such suits and also the fact that section 18 of the Act does not apply to such suits, the only Article that is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hibit A-28 is the statement which shows the buyer as consignor and consignee. The millers in each case have despatched the goods from the stations within the State. All the contracts produced, that is, A-25, A-20, A-22, A-6, A-23 and A-38 etc., show that the place of delivery is F.O.R., Kurnool, or places within the Kurnool District and that the terms and conditions of payment are that railway receipt should be sent through the bank for payment. In so far as the course of transactions is concerned, there is no dispute on the evidence between the appellants and the respondent. The facts that have been held proved and which are admitted by both sides are that oil was purchased from the millers as well as merchants at Kurnool by the appellants for ready delivery. The delivery was F.O.R. at Kurnool or some other railway station in Kurnool District. The mode of transport is through the common carrier and payment was against railway receipt at the place of destination through the bank. The railway receipts disclose four types of transactions; (1) where the seller is the consignor and the consignee; (2) where the seller is the consignor and the buyer consignee; (3) where the buyer is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se are not conclusive and may be negatived by the seller reserving to himself the right of disposal as under section 25 until fulfilment of certain conditions thereby preventing the passing of the property in the goods from him to the buyer. Prima facie therefore the property passes to the buyer upon the goods being delivered to the railway or to the common carrier. But that inference may be rebutted. For instance where he deals with the railway receipt in such a way as to show that he did not intend to part with the goods until payment in cash. Again the mere fact that payment is to be made against the delivery of railway receipt in an F.O.R. contract is not conclusive of the fact that the property in the goods has not passed to the buyer on the seller delivering the goods to the railway. It is now necessary to see what the intention of the seller was with respect to the passing of the property to the buyer. The contention of the learned advocate for the appellants is that the sellers clearly manifested their intention not to pass the property in the goods in Madras Province but only outside when they stipulated with the buyer that the railway receipt was only to be delivered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment had either taken place or was being made or at any rate it does not show why these letters had to be written; in the second place, the interpretation put by the buyer is not conclusive as to where the sale took place or property in the goods passed. We may here refer to the observations in M. Siddique Co. v. The Mysore Textiles Agencies(1947) 1 M.L.J. 249 at page 251. by a Bench consisting of Wadsworth, O.C.J., and Rajamannar, J., as he then was, which sums up the legal position thus: "Having regard to the terms of section 23(2) of the Act, it must, we think, be held that the sale would be completed by the delivery of the goods to the railway for the purpose of transmitting them to the buyer, provided that the seller did not reserve the right of disposal. Translating this into the terms of ordinary commerce, if the seller delivered the goods to the railway for conveyance to 'self' at Calcutta, there would not be such an appropriation as would pass title to the purchaser. In order to complete the transaction it would be necessary to endorse the railway receipt and deliver it to the buyer. If, on the other hand, when this consignment was booked at the railway station in Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site order on the basis of evidence the taxable and non-taxable items, the order is bad. There is no doubt that the nature of the remedy sought in the three appeals before their Lordships was by way of a writ under Article 226 and on a petition under Article 32 of the Constitution. It is, therefore, necessary to examine the decision of the Supreme Court with particular regard to the facts in that case. The appellants entered into an agreement with several mills to buy as their agents on their account and on their behalf kapas in various markets of Madhya Pradesh and in this capacity they so worked from 1st October, 1949, to 30th September, 1950. The Sales Tax Authorities included the kapas transactions in the appellants' turnover and ordered them to pay sales tax on the said transactions. It was held that in so far as the post-Constitution transactions were concerned they were bad as the ban imposed under Article 286(1)(a) and the Explanation thereto could not be removed by the President's order. It was further held in the petition under Article 32 that apart from the invalidity on the above ground, the assessment was also bad by reason of the transactions being of inter-State na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. As their Lordships pointed out they were not an insignificant component of the total subject matter of the assessment and they expressed the view that the course of action adopted by the Supreme Court of Canada in holding the assessee entitled to a declaration that the assessment and taxation of all personal property in question.......except the dumptors were properly made and imposed was not warranted. In other words, the deletion of the three dumptor items and approving the assessment subject to this deletion was disapproved and it was, dealing with this aspect, then observed at page 816: ".......when an assessment is not for an entire sum, but for separate sums, dissected and earmarked each of them to a separate assessable item, a court can sever the items and cut out one or more along with the sum attributed to it, while affirming the residue. But where the assessment consists of a single undivided sum in respect of the totality of property treated as assessable, and when one component (not admissible as 'de minimis') is on any view not assessable and wrongly included, it would seem clear that such a procedure is barred, and the assessment is bad wholly." The observations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made." The submission of the learned counsel for the appellant was that in effect the explanation enables sales tax to be levied not on sale of goods but only on contracts of sale by reason of the goods being in the State, that it is ultra vires the Madras Legislature to enact the statute having an extra territorial operation, that this provision is repugnant to the provisions of the Sale of Goods Act and therefore should not prevail as the previous sanction of the Governor-General was not obtained for enacting the amendment introduced in 1947. This is the very contention raised before two Benches, one of the Madras High Court in Louis Dreyfus Co. Ltd. v. State of Madras[1954] 5 S.T.C. 307; (1954) 2 M.L.J. 326. and the other in Peri Kameswara Rao v. State of Madras[1955] 6 S.T.C. 143; (1955) A.L.T. 168. Both these decisions proceed on the assumption of the finality of the decisions in Poppatlal Shah v. State of Madras[1953] 4 S.T.C. 188; (1953) 1 M.L.J. 739. and State of Bombay v. The United Motors[1953] 4 S.T.C. 133; 1953 S.C.J. 373. It was held in these cases that any of the elements which constitute a sale would go to establish a sufficient nexus with the territory to j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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