TMI Blog1965 (4) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... with its decision cannot be said to be without jurisdiction. Appeal dismissed. - Civil Appeal No. 481 of 1963, Appeal No. 51 of 1960 - - - Dated:- 23-4-1965 - Judge(s) : V. RAMASWAMY., P. B. GAJENDRAGADKAR., K. N. WANCHOO., J. C. SHAH., RAGHUBAR DAYAL., S. M. SIKRI., R. S. BACHAWAT. S.V. Gupte, Solicitor-General of India and S.G. Patwardhan, Senior Advocate (R.H. Dhebar with them), for the respondent. A.V. Viswanatha Sastri, Senior Advocate (I.N. Shroff with him), for the appellant. M.S. Gupta, for intervener No. 6. S. Venkatakrishnan, for intervener No. I. G.C. Kasliwal, Advocate-General for the State of Rajasthan (K.K. Jain and R.N. Sachthey with him), for intervener No. 7. B.V. Subramaniam, Advocate-General for the State of Andhra Pradesh (B.R.G.K. Achar with him), for intervener No. 10. R. Ganapathy Iyer and B.R.G.K. Achar, for intervener No. 4. P. Govinda Menon and Dr. V.A. Seyid Muhammed, for intervener No. 3. B. Sen, Senior Advocate (S.C. Bose and P.K. Chakravarti, for P.K. Bose, with him), for intervener No. 9. N. Krishnaswamy Reddy, Advocate-General for the State of Madras (V. Ramaswami, Additional Government P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution of the present suit, and the suit should, therefore, be dismissed on that preliminary ground. The respondent also contended that the plea raised by the appellant that the said section was ultra vires the Constitution was without any substance. On the merits, the respondent pleaded that the appellant was not justified in claiming a refund of the amount of tax recovered from it for the sale transactions in question. On these pleadings, the learned trial judge framed nine issues. Issue No. 2 was in regard to the jurisdiction of the court to entertain the suit. This issue was tried by the learned trial judge as a preliminary issue. He held that section 20 of the Act was a bar to the institution of the present suit, and on that view, he upheld the plea raised by the respondent. In the result, the appellant's suit was dismissed. The appellant challenged the correctness of the said decision by preferring an appeal before a Division Bench of the said High Court under clause 15 of the Letters Patent. The Division Bench agreed with the view taken by the learned trial judge and dismissed the appeal preferred by the appellant. The appellant then applied for and obtained a certifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary to refer to one fact which is not in dispute. The Act was passed in 1946, and it came into force on March 8, 1946. At that time, the word sale "as defined by section 2(g) of the Act would have taken in all sales whether they were inside sales or outside sales. After the Constitution was adopted on January 26, 1950, article 286 came into force and it protected certain sales specified by it from the purview of State taxation. It may theoretically be true that as soon as article 286 became effective, the expression "sale" as defined by the Act was automatically constitutionally controlled by the limitations prescribed by it. To make this position clear, however, Bombay Ordinance II of 1952 was passed and by section 3, it added section 30 to the Act. In effect section 30 introduced in the Act the relevant provisions prescribed by article 286 of the Constitution, so as to bring the operation of the Act expressly in conformity with the said constitutional provision. Section 3 further made it clear that the addition made by it by introducing section 30 in the Act shall be made and shall always be deemed to have been made in the said Act as so continued in force, with effect fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction. He concedes that even though an order of assessment made under the Act may be passed on a wrong conclusion of fact, it cannot be challenged by a suit having regard to the provisions of section 20. In other words, an erroneous order of assessment made under the Act would be entitled to the protection of section 20; but the said protection cannot be claimed by an order which is passed without jurisdiction. According to Mr. Sastri, the impugned assessment contravenes the provisions of article 286 and as such is invalid. What the assessment order purported to tax was an outside sale and it was beyond the competence of the authority to make the said order. Indeed, it was beyond the competence of the State legislature to levy a tax in respect of an outside sale; and so, on the ultimate analysis, the impugned assessment is without jurisdiction and it cannot, therefore, be said to be an assessment made under the Act within the meaning of section 20. Mr. Sastri did not dispute the fact that the argument thus presented by him would be equally applicable to cases of assessment made erroneously in respect of transactions which are otherwise statutorily exempted from the operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt properly or correctly made. The said clause takes in all assessments made or purported to have been made under the Act. In its plaint, the appellant is undoubtedly calling into question the assessment order made against it, and such a challenge to the assessment order is plainly prohibited by section 20. An order of assessment, though erroneous, and though based on an incorrect finding of fact, is, nevertheless, an order of assessment within the meaning of section 20; and section 20, in terms, provides that it will not be called in question in any civil court. The question has been recently considered by this court in Firm of Illuri Subbayya Chetty Sons v. State of Andhra Pradesh. Dealing with section 18A of the Madras General Sales Tax Act, 1939 (9 of 1939), which corresponds to section 20 with which we are concerned in the present appeal, this court observed that the expression "any assessment made under this Act" is wide enough to cover all assessments made by the appropriate authorities under this Act whether the said assessments are correct or not. It is the activity of the assessing officer acting as such officer which is intended to be protected and as soon as it is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible to a party aggrieved by the said finding to contend that the tax levied on the basis of an erroneous decision about the nature of the transaction is without jurisdiction. If, however, the appropriate authority has been given jurisdiction to determine the nature of the transaction and proceed to levy a tax in accordance with its decision on the first issue, then the decision on the first issue cannot be said to be a decision on a collateral issue, and even if the said issue is erroneously determined by the appropriate authority, the tax levied by it in accordance with its decision cannot be said to be without jurisdiction. As Halsbury has observed : "The jurisdiction of an inferior tribunal may depend upon the fulfilment of some condition precedent or upon the existence of some particular fact. Such a fact is collateral to the actual matter which the inferior tribunal has to try, and the determination whether it exists or not is logically and temporally prior to the determination of the actual question which the inferior tribunal has to try. The inferior tribunal must itself decide as to the collateral fact : when, at the inception of an inquiry by a tribunal of limited jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The Commissioner has to take evidence, has to hear the dealer, can require further evidence to be led by the dealer on specific points and then reach his conclusion on the question as to whether the dealer is liable to be assessed, and if yes, to what extent? In passing his order of assessment, the Commissioner acts on the evidence led before him. Sub-section (5) empowers the Commissioner to levy assessment to the best of his judgment in cases falling under it. It also authorises him to impose a penalty as therein specified. Section 11A deals with turnover which has escaped assessment, and it confers authority on the Commissioner to pass an appropriate order of assessment in respect of the said category of cases. When the Commissioner makes an order of assessment in exercise of the powers conferred on him, a right is given to the assessee to prefer an appeal and a revision under sections 21 and 22 respectively. It would thus be seen that the appropriate authorities have been given power in express terms to examine the returns submitted by the dealers and to deal with the questions as to whether the transactions entered into by the dealers are liable to be assessed under the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning either under similar Sales Tax Acts, or under the Income-tax Act. The question was incidentally considered by a Special Bench of this court in Smt. Ujjam Bai v. State of Uttar Pradesh. In that case, the petitioner, Ujjam Bai, challenged the validity of the sales tax levied on her on the ground that the notification issued on December 14, 1957, had exempted "bidis", like those which the petitioner's firm produced, from payment of sales tax. According to the petitioner, the appropriate authority had plainly misconstrued the notification when it held that the bidis produced by the petitioner's firm were not entitled to claim the protection of the said notification. The petitioner had moved this court under article 32 of the Constitution. Broadly stated, the majority decision was that though the notification may have been misconstrued by the appropriate authority when it rejected the petitioner's contention that the said bidis fell within the purview of the notification, and so, were exempt from payment of tax, no relief could be granted to the petitioner under article 32 on the sole ground that the impugned order of assessment was based on a misconstruction of the notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a finding recorded by a taxing authority as to the taxability of any given transaction cannot be said to be a finding on a collateral fact, but is a finding on a fact, the decision of which is entrusted to the jurisdiction of such authority. Mr. Sastri has no doubt referred us to the subsequent decision of this court in State Trading Corporation of India Ltd. v. State of Mysore in which it appears to have been held that the taxing officer cannot give himself jurisdiction to tax an inter-State sale by erroneously determining the character of the sale transaction. The decision on the question about the character of the sale transaction seems to have been treated as a decision on a collateral fact. With respect, we may point out that the majority decision in Ujjam Bai's case, on which this conclusion is founded does not support that view. We ought, however, to add that in the case of State Trading Corporation of India Ltd., as in the earlier case of Ujjam Bai, this court was dealing with a petition filed under article 32; and as we have already indicated, we are not called upon to consider the extent of our jurisdiction under article 32, when such questions are brought before us by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 188. On appeal, the High Court of Madras took a different view and held that the suit was competent. The Privy Council reversed the conclusion of the High Court and confirmed the view taken by the trial judge. It would be noticed that the relevant words on which the controversy between the parties as to the competency of the suit in that case had to be resolved, were not as emphatic as they are in section 20, and yet, the Privy Council upheld the plea that the suit was barred. It is true that, in the course of the discussion, the Privy Council has observed that " it is settled law that the exclusion of the jurisdiction of the civil courts is not to be readily inferred, but that such exclusion must either be explicitly expressed or clearly implied. It is also well-settled that even if jurisdiction is so excluded, the civil courts have jurisdiction to examine into cases where the provisions of the Act have not been complied with, or the statutory Tribunal has not acted in conformity with the fundamental principles of judicial procedure." In the present case, we are not called upon to consider the merits of these observations or their scope and effect. In Raleigh Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Madras (now Andhra Pradesh) v. J. S. Basappa, it was held by this court that the finality attached to orders passed in appeal by section 11(4) of the Madras General Sales Tax Act, 1939 (IX of 1939), was a finality for the purposes of the said Act and did not make valid an action which was not warranted by the Act, as for example, the levy of tax on a commodity which was not taxed at all or was exempt. We ought to add that this decision was based on the fact that the said Act at the relevant time did not contain section 18A which came into force on May 15, 1951; and it was section 18A which was construed by this court in Firm of Illuri Subbayya Chetty Sons. Mr. Sastri has also referred to the majority decision in the case of Bharat Kala Bhandar Ltd. v. Municipal Committee, Dhamangaon. In that case, according to the majority decision, section 84(3) of the Central Provinces Municipalities Act, 1922, which deals with "bar of other proceedings", did not make incompetent the suit with which the court was dealing. The said section provides that: " No objection shall be taken to any valuation, assessment, levy, nor shall the liability of any person to be assessed or taxed be q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the respondents that the court had no jurisdiction to grant the declarations asked for, since by the combined effect of sections 15 and 17 of the Town and Country Planning Act, 1947, the decision of the Minister on an application to determine whether permission was required was made final and the only method of determining such a question was that provided by section 17(1), and that the wide discretion conferred by section 14 on the Minister to impose conditions disentitled the company from coming to the court for a declaration that the conditions were invalid. In coming to the conclusion that the jurisdiction of the civil court was not excluded, the House of Lords noticed that there was nothing in section 17 or in the Act which excluded the jurisdiction of the court to grant declarations; section 17 merely provided an alternative method of having the question determined by the Minister." It is a principle not by any means to be whittled down ", said Viscount Simonds, " that the subject's recourse to Her Majesty's courts for the determination of his rights is not to be excluded except by clear words. That is, as McNair J. called it in Francis v. Yiewsley and West Drayton Urba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent might have been labouring under the same mistake of fact and law, because the true constitutional and legal position in regard to the jurisdiction and authority of different States to recover sales tax in respect of outside sales was not correctly appreciated until this court pronounced its decision in the Bengal Immunity Co.'s case. That being so, can it be said that the Act provides an appropriate remedy for recovering a tax alleged to have been illegally levied and collected, where the party asking for the said relief pleads a mistake of fact and law ? It would be noticed that this inquiry may have some relevance in construing the terms of section 20, and it would be both relevant and material in considering the question of the constitutionality of section 20. That is the twofold purpose which such an inquiry would serve in the present case. If we are satisfied that the Act provides for no remedy to make a claim for the recovery of illegally collected tax and yet section 20 prohibits such a claim being made before an ordinary civil court, the court may hesitate to construe section 20 as creating an absolute bar, or if such a construction is not reasonably possible, the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected in relation to the operation of any public motor vehicle in the course of or for the purposes of inter-State trade before the commencement of this Act which were collected pursuant to the relevant provisions of the principal Act, shall be extinguished. When a claim made for the refund of tax illegally recovered was resisted on the ground that it was incompetent in view of section 3, it was held that the denial of the right to recover money paid in satisfaction of charges which were illegal by virtue of section 92 of the Commonwealth of Australia Constitution offended equally against section 92. In other words, where the impugned statutory provision purported to extinguish absolutely a cause of action, it was struck down as unconstitutional. Let us, therefore, examine the question as to whether the Act with which we are concerned in the present appeal, provides for a remedy to claim a refund of tax alleged to have been illegally recovered. Section 13 of the Act expressly provides for refunds. It lays down that the Commissioner shall, in the prescribed manner, refund to a registered dealer applying in this behalf any amount of tax paid by such dealer in excess of the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. Though the appellant's suit may be incompetent in so far as the appellant seeks for a decree for refund, it still remains to be considered whether its suit can be said to be incompetent in so far as it seeks to challenge the validity of section 20 itself. It would be recalled that the alternative claim made by the appellant in its plaint was that section 20, on which a plea of bar is raised by the respondent, is invalid. The High Court has not considered this aspect of the matter; but since the appellant has been allowed to raise the point about the validity of section 20, we must deal with it. This point presents no difficulty whatever. The bar created by section 20 cannot obviously be pleaded where the validity of section 20 itself is challenged. That can of course be done by a separate suit. In terms, section 20 is confined to cases where the validity of assessment orders made under the Act is challenged. The said provision cannot take in a challenge to the validity of section 20 itself, and so, we must bold that technically, the appellant's suit is competent in so far as it seeks to challenge the validity of section 20. This finding, however, is of no material assista ..... X X X X Extracts X X X X X X X X Extracts X X X X
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