TMI Blog1971 (12) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... ner is a partnership concern, which came into existence in July, 1960. During the period 1560 upto May, 1963 the petitioner-firm was running two laboratories one at Madras and the other at Kumbakanam, wherein Various medicinal preparations, were manufactured by the addition of tinctures containing alcohol. Subsequent to May, 1963, the petitioner-firm was owning its own laboratory, which it constructed at Velachery situated in Chingleput District. Medicinal preparations containing alcohol were covered originally by the provisions of the Madras Prohibition Act, 1937. By a notification issued under the said Act, the State Government exempted certain medicinal preparations from its provisions except in regard to payment of duty. Even the provision relating to the payment of duty was made applicable only to notified preparations, to which spirit as such was added either in the process of manufacture or to the finished product. The petitioner-firm is not manufacturing any medicinal preparation to which spirit as such is added, but is manufacturing only medicinal preparations to which tinctures containing alcohol are added. 3. In 1955 the Central Government enacted the Medicinal and To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 9 runs as follows: 9. Time and manner of payment of duty--(i) No dutiable goods shall be removed from any place where they are manufactured or any premises appurtenant thereto, which may be specified by the Excise Commissioner in. this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed in these rules or as the Excise Commissioner may require: Provided that such goods may be deposited without payment of duty in a warehouse or may be exported out of India under bond as provided in Rule 97: Provided further that the Excise Commissioner may, if he thinks fit, instead of requiring payment of duty in respect of each separate consignment of goods removed from the place or premises specified in this behalf, or from a warehouse keep with any person dealing in such goods an account-current of the duties payable thereon and such account shall be settled at intervals not exceeding three months, and the account-holder shall periodically deposit a sum therein sufficient in the opinion of the Excise Commissioner to cover duty on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper officer within six months from the date of such payment or adjustment, as the case may be. The petitioner-firm was registered as a manufacturer of medicinal preparations prior to the Act. Subsequent to the Act the petitioner did not take out any licence under the provisions of the Act, as the medicinal preparations manufactured by them according to the petitioner would not come under the Schedule to the Act. The petitioner was manufacturing patent and proprietary medicines from the very inception by adding tinctures containing alcohol. But they were not adding alcohol as such in manufacturing medicines. The Schedule to the Act was amended in 1961. The actual levy is made in accordance with the Schedule. The Schedule prior to the amendment in 1961 ran as follows: 4. The petitioner received a notice from the Deputy Commercial Tax Officer, Madras dated 26th March, 1964, assessing the petitioner-firm to duty on all medicinal preparations manufactured by it after 1st June, 1961, to which tinctures containing alcohol had been added. A similar notice was received from the District Revenue Officer, Thanjavur. Thereupon, the petitioner filed Writ Petitions Nos. 1092 and 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omission on the part of the manufacturer to comply with the rules and called upon him to pay the required duty. It appears to me that such a demand will fall under the residuary power in Rule 12, and therefore the provision about limitation contained in Rule 9 will not apply. 5. In pursuance of the directions issued by this Court, a show-cause notice dated 29th January, 1968, and 20th February, 1968 were issued by the second and first respondent calling upon the petitioner to show cause within 15 days from the receipt of the notice why duty should not be levied against the petitioner-firm in respect of the manufacture or patent and proprietary medicines and whether such medicines contained tinctures or alcohol. The present writ petitions are filed seeking for the issue of a writ of prohibition prohibiting the respondents from proceeding further in pursuance of the show-cause notices. The following contentions were raised by the petitioners in their affidavit filed in support of the writ petition: (1) No dutiable goods should be removed from any place where they are manufactured until the excise duty leviable thereon has been paid and in the present case the goods having be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity of being heard about which they complained on the former occasion before this Court, rushed to this Court for the issue of a writ of prohibition. The contentions in substance put forward by respondents 1 and 2 are that Rule 12 is intra vires, that Article 14 is not contravened in any manner and that the authorities are entitled, to levy the duty. 8. The main question arising for determination is whether Rule 12 is ultra vires. The learned Counsel for the petitioner contends that the rule is ultra vires for the following grounds: (1) Rule 12 will apply only to cases of short levy and not to nil levy; and (2) Rule 12 relates to the residuary power to determine escaped duty in cases of short levy and the power to determine escaped duty being a charging power has to be provided by the Parliament itself in the main enactment and not delegated to the authorities under the rule making power under Section 19 and on this ground the levy is bad and the rule is invalid. 9. The contention put forward in the first ground set out above was raised and considered by Ramakrishnan, J., in W.P. No. 1030 of 1964 etc. batch Pkarm Products Ltd. Tkanjavur and Ors. v. District Revenue O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llusion again an order of nil assessment is passed, in which case no duty would have been paid, according to the appellants Rule 10-A will apply. We do not see any reason to distinguish the above two cases one from the other. Both are cases of collusion and if an assessee in collusion manages to have a petty amount of duty assessed and paid he can effectively plead limitation of three months under Rule 10. Whereas in the same case of collusion where no duty has been levied there will be no period of limitation. In our opinion, that will not be a proper interpretation to be placed on Rule 10-A by us. By the interpretation placed by us on Rule 10, the position will be that an assessee who has been assessed to a smaller amount as well as an assessee who has been assessed to nil duty will all be put on a par and that is what is intended by Rule 10. 11. The learned Advocate-General relied upon the decision of Ramakrishnan, J., which had become final, and contends that the said decision, which has finally decided the content of Rule 12 has become res judicata. In support of his contention he cited the judgment of the Supreme Court in Sobhag Singh and Ors. v. Jai Singh and Ors. 1968]2S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ruler could not be recognized for the purpose of determining the succession to the Jagir was erroneous. The High Court did in making the final order direct the Tribunal to decide the case in accordance with the law and in the light of the observations made in the Judgment, but the direction was in our judgment, a surplusage. The High Court issued a writ in the nature of certiorari quashing the order of the Tribunal. It was unnecessary thereafter to direct or advise the Board of Revenue to perform its statutory duty to decide the dispute according to law. The Board of Revenue had to decide the dispute in accordance with the law declared by the High Court. All questions which had been expressly decided by the High Court on contest between the parties and other questions which must be deemed by necessary implication to have been decided were res judicata and could not be reopened before the Board of Revenue. In this appeal it is therefore not open to the appellant to contend that the decision of the High Court on the questions decided in the writ petition was erroneous. 12. The learned Advocate-General, therefore, contends that the findings of Ramakrishnan, J., in Pharm Product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him on the question of adoption it was held that the finding on the question of adoption will not operate as res judicata in a subsequent suit between A and B, for a decree having been passed in favour of A, A could not have appealed from the finding that was adverse to him. 15. In Midnapur Zamindari Co. Ltd. v. Naresh Narayan Raj A.I.R. 1922 P.C. 241 : 64 I.C. 231 : 48 LA. 49 : 48 Cal. 460 a similar question arose for consideration. In a suit by the zamindar against his tenant-company, the tenant-company pleaded; (1) occupancy right and (2) that the suit was premature. The Court held that the suit was premature and that the tenant was not an occupancy ryot. Upon an appeal by the Zamindar to the High Court the tenant filed a cross-objection to the finding that there was no occupancy right. The High Court affirmed the decree of the trial Court on the ground that the suit was premature and upon the cross-objection affirmed the finding that there was no occupancy right. The tenant-company filed an appeal to the Privy Council. The Privy Council held that the absence of an occupancy right was not res judicata against the appellant, since the tenant had succeeded upon the other plea. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered in proceedings which are not suits. Their Lordships held that a decision given in a proceeding other than a suit may still operate as res judicata if substantial rights of parties are determined. But if the decision is given in summary proceedings, it does not operate as res judicata. At page 511 their Lordships after referring to Ramachandra Rao v. Ramachandra Rao I.L.R. (1927)Mad. 320 : 51 M.L.J. 99 : A.I.R. 1926 Mad. 774, held as follows: Even though a decision may be given in a proceeding which is not a suit, it may still operate as res judicata if substantial rights of parties are determined. No doubt it is true as pointed out by Mr. Raghava Rao, the learned Advocate for the appellants, that the decision of the High Court in the previous proceedings was appealable and that the Judicial Committee laid stress on the fact that the decision of the High Court though appealable was not in fact appealed against and had been allowed to become final. But, as has been pointed out repeatedly, the question whether a decision operates as res judicata does not depend upon the appeal ability of the decision. A decision may not be appealable and still it may operate as res judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to the determination of the transaction which is the source of the right is res judicata. A previous decision on a matter in issue is a composite decision; the decision on law cannot be dissociated from the decision on facts on which the right is founded. (iii) A decision on an issue of law will be res judicata in a subsequent proceeding between the fame parties, if the cause of action of the subsequent proceeding be the same as in the previous proceedings, but not when the cause of action is different, nor when the law has since the earlier decision been altered by a competent authority, nor when the decision relates to the jurisdiction of the Court to try the earlier proceedings, nor when the earlier decision declared valid a transaction which is prohibited by law. (iv) Where the law is altered since the earlier decision, the earlier decision will not operate as res judicata between the same parties; Tarini Charan Bhattacharjee's case I.L.R.(1929). Cal. 723. It is obvious that the matter in issue in a subsequent proceeding is not the same as in the previous proceeding, because the law interpreted is different. A question of jurisdiction of the Court, or of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Mettupalayam (1966)2MLJ396 , to which one of us was a party. There it was held that Sub-rule (7) of Rule 5 of the Central Sales Tax (Madras) Rules, 1957 providing for limitation and determination of escaped turnover by best judgment is in excess of the rule-making power and the sub-rule, as a, whole, is therefore invalid. Relying upon the aforesaid decision, it is contended that the Act in so far as it does not provide for recovery of escaped assessment or provide residuary powers for recovery of sums due to Government but only provides for them in the Rules, the demand in pursuance of the Rules is unsustainable. The contention of the learned Counsel is well founded. 21. In R. Sundararajulu Naidu v. Entertainment-Tax Officer, Madurai-VII (1967) 1 M.L.J. 458, Venkatadri, J., had occasion to consider a similar question in dealing with the validity of the rule as made under the Madras Entertainment-Tax Act (X of 1939) where in the main Act there was no provision for assessing the escaped income but a provision had been made only in the Rules. The learned Judge held that where the main enactment is silent on the question of levy of escaped assessment, the Rules made under the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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