Kamala Mills Ltd. Vs. State of Bombay
 INSC 120 (23 April 1965)
23/04/1965 GAJENDRAGADKAR, P.B.
(CJ) GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N.
DAYAL, RAGHUBAR SIKRI, S.M.
CITATION: 1965 AIR 1942 1966 SCR (1) 64
R 1966 SC 893 (18) MV 1966 SC1089
(43,46,47,48,51) R 1966 SC1412 (5,15) R 1966 SC1738 (4,6,7) RF 1967 SC 1 (56) E
1968 SC 271 (12) E 1969 SC 78 (19,21,26,30,32,35) RF 1975 SC2238 (22) R 1977 SC
Bombay Sales Tax Act, 1946 (5 of 1946), s.
20-Suits to challenge assessments made under Act and rules made thereunder
barred-'Outside' sales wrongly assessed as 'inside' sales--Suit to recover tax
wrongly charged whether lies,.
The appellant, a public limited company
manufacturing and selling textiles was a 'dealer' under the Bombay Sales Tax
Act 1946. For the period 26th January 1950, to 31st March 1951, it was assessed
to sales tax on certain sales which were treated by the Sales Tax Authorities
as 'inside' sales but which according to the decision of the Supreme Court in
the Bengal Immunity Co. Ltd. v. State of Bihar and Ors.
 2 S.C.R.603, delivered on 6th September 1955, were 'outside' sales non-taxable under the Act. After the above
decision the appellant discovered that it had been illegally subjected to tax
in respect of the said 'outside' sales. The period for remedies under the Act
having expired, it filed a suit for the recovery of sales-tax illegally
collected from it in respect of the 'outside' sales. On behalf of the
respondent State the plea taken in defence was that the suit was barred by s.
20 of the Act.
Accepting the plea, the trial court dismissed
the suit. The High Court, in appeal, took the same view, whereupon, with
certificate, the appellant came to this Court.
The questions, arising out of the arguments
on behalf of the appellant, which fell for determination were : (1) whether an
assessment in violation of a statutory provision could claim the status of an
assessment made under the Act, within the meaning of s. 20; (2) whether the
decision by the appropriate authority as to the nature of the transaction was a
decision on a collateral fact, the finding on which alone conferred
jurisdiction on the authority to levy the tax, or was it a decision on a
question of fact which had to be determined by the authority itself as one of
the issues before it ? (3) Whether s. 20 was valid if construed as being a
complete bar to a suit such as filed by the appellant.
HELD :(i) Section 20 protects "assessment
made under the Act, or the rules made thereunder" by appropriate
authorities. In Firm and Illuri Subbaya Chetty and Sons this Court,
interpreting a similar provision in s. 18A of the Madras General Sales Tax Act
observed that the expression "any assessment made under this Act" was
wide enough to cover all assessments made by the appropriate authorities under
the Act whether the said assessments were correct or not. There can be little
doubt. that the clause "an assessment made" cannot mean on assessment
properly and correctly made. [72 B-D] In its plaint the appellant was
undoubtedly calling into question the assessment order made against it and such
a challenge was plainly prohibited by s. 20. [72C] 65 Firm and Illuri Subbaya
Chetty and Sons v. The State of Andhra Pradesh,  1 S.C.R. 752, relied on.
(ii)If the relevant provisions which confer
jurisdiction on the appropriate authorities to levy assessment on the dealers
in respect of transactions to which the charging section applies are examined,
it is impossible to escape the conclusion that all questions pertaining to the
liability of the dealers to pay assessment in respect of their transactions are
expressly left to be decided by the appropriate authorities under the Act as
matters falling within their jurisdiction. Whether or not a return is correct;
whether or not transactions which are not mentioned in the return, but about
which the appropriate authority has knowledge, fan within the mischief of the
charging section-, what is the true or real extent of the transactions which
are assessable; all these and other allied questions have to be determined by
the appropriate authorities themselves, and so it is impossible to accept the
argument on behalf of the appellant that the finding of the appropriate
authority that a particular transaction is taxable under the provisions of the
Act, is a finding on a collateral fact which gives the appropriate authority
jurisdiction to take a further step and make the actual order of assessment.
The whole activity of assessment beginning with the filing of the return and
ending with the order of assessment falls within the jurisdiction of the
appropriate authority and no part of it can be said to constitute a collateral
activity not specifically and expressly included in the jurisdiction of the
appropriate authority as such. [75 D-H] If the appropriate authority while
exercising its jurisdiction and powers under the relevant provisions of the
Act, holds erroneously that a transaction which is an outside sale is not an
outside sale and proceed,-, to levy sales-tax on it cannot be said that the
decision of the appropriate authority is without jurisdiction. [78B] The
Provincial Government of Madras (Now Andhra Pradesh) v. J. S. Basappa, 15
S.T.C. 144 and Bharat Kala Bhandar Ltd. v. Municipal Committee, Dhamangaon,
C.A. No. 600 of 1964 decided March 26. 1965, distinguished.
Smt. Ujjam Bai v. State of Uttar Pradesh.
 1 S.C.R.
776, relied on.
State Trading Corporation of India Ltd. v.
State of Mysore,  3 S.C.R. 792, Secretary of State, represented by the
Collector of South Arcot v. Mask and Co.L.R. 67 I.A.
'222' Raleigh Investment. Co. Ltd. v.
Governor-General inCouncil, L.R. 74 I.A. 50 Pyx Granite Co. Ltd. v. Ministryof
Yiewsley and West Dryton Urban District
Council,  2 Q.B. 136, referred to.
(iii)If it appears that a statute creates a
special right or liability and provides for the determination of the right or
liability to be dealt with by tribunals specially constituted in that behalf
and it further lays down that all questions about the said right and liability
shall be determined by the Tribunals so constituted, it becomes pertinent to
-enquire whether remedies normally associated with actions in civil courts are
Prescribed by the said statute or not. Such an enquiry would have relevance in
the present case in construing the terms of s. 20 as well as in considering the
question of the constitutionality of s. 20.
If the court was satisfied that the Act
provided no remedy to make a claim for the recovery of illegally collected tax
and yet s. 20 prohibited such a claim being made before an ordinary civil
court, the court might hesitate to construe s. 20 as creating an absolute bar,
or if such a construction was 66 not reasonably possible the court might
seriously examine the question about the constitutionality of such express
exclusion of the civil court's jurisdiction having regard to the provisions of
Arts. 19 and 31 of the Constitution. [82 C-F; 83 C-D] Sales Tax Officer,
Banaras & Ors. v. Kanhaiya Lal Mukund lal Saraf,  S.C.R. 1350 and
Commissioner for Motor Transport V. Antill Ranger & Co. Pty. Ltd. State of
New South Wales and Ors. v. Edmund T. Lennon Pty. Ltd.  3 All E.R. 106,
(iv)From an examination of the relevant
provisions of the Act it was clear that the appellant could have either
appealed or applied for revision and prayed for condonation of delay on the
ground that the mistake which was responsible for the recovery of the tax
illegally levied was discovered on the 6th of September 1955, because such a
plea would have been perfectly competent under s. 22B. In other Words if the
appellant had pursued a remedy available to it under s. 21 or s. 22 read with
s. 22B, its case would have been considered by the appropriate authority and
the validity of the grounds set up by it for the refund of the tax in question
would have been legally examined. Therefore it could not be said that even for
the claim which the appellant sought to make in the present suit, there was no
alternative remedy prescribed by the Act. [85 A-C] The above conclusion served
a double purpose. It made it easier to construe the wide words used in s. 20
and hold that they constituted an absolute bar against institution of the
present suit and it also helped the respondent to repel the plea of the
appellant that s. 20 if so widely construed was unconstitutional. The
conclusion therefore followed that s. 20 had to be construed in the same manner
as s. 18A of the Madras General Sales Tax Act was construed by this Court in
Firm and Illuri Subbaya Chetty and Sons and even on this wide construction the
section was constitutionally valid. [85 D-E] (v)Although the suit filed by the
appellant in so far as it related to the recovery of tax illegally collected
was barred by s. 20, it was not barred in so far as it challenged the validity
of s. 20, itself. In terms s. 20 is confined to cases when the validity of
assessment orders made under the Act is challenged. It cannot take in a
challenge to the validity of the section itself. But this finding could be of
no material assistance to the appellant because even if it succeeded on this
point it still had to face the plea of the respondent that on merits the suit
was barred. [85H] & CIVIL APPELLATE JURISDICTION : Civil Appeal No. 481 of
Appeal from the judgment and order, dated
August 7, 1961 of the Bombay High Court in Appeal No. 51 of 1960.
A. V. Viswanatha Sastri and 1. N. Shroff, for
S. V. Gupte, Solicitor-General, S. G.
Patwardhan and R. H.
Dhebar, for the respondent.
S. Venkatakrishnan, for intervener No. 1.
Naunit Lal, for intervener No. 2.
P.Govinda Menon and V. A. Seyid Muhammed, for
intervener No. 3.
6 7 R. Ganapathy Iyer and B. R. G. K. Achar,
for intervener No.4.
N. Krishna swamy Reddy, Advocate-General,
Ramaswami and A. V. Ranagam, for intervener
M. S. Gupta, for intervener No. 6.
G. C. Kasliwal, Advocate-General, Rajasthan,
K. K. Jain and R. N. Cachthey, for intervener No. 7.
C. B. Agarwala and 0. P. Rana, for intervener
B. SEN, S. C. Base and P. K. Chakravarti for
P. K. Bose for intervener No. 9.
B. V. Subramaniam, Advocate-General, Andhra
Pradesh and B. R.
G. K. Achar, for intervener No. 10.
The Judgment of the Court was delivered by
Gajendragadkar, C.J. The principal point of law which arises in this appeal is
whether the Bombay High Court was right in holding that the suit filed by the
appellant, Kamla Mills Ltd. against the respondent, the State of Bombay, was
incompetent. The appellant is a Limited Company and owns a textile mill at
Bombay. It carries on business of manufacture and sale of textile cloth. During
the period 26th January, 1950 to 31st March, 1951, the appellant was registered
as a "Dealer" under the provisions of the Bombay Sales Tax Act, 1946
(No. V of 1946) (hereinafter called 'the Act'). The appellant's case is that
during the said period, it sold goods inside and outside the then State of
Bombay. The total value of goods sold by the appellant outside the State of Bombay
was Rs. 40,20,623-12-0 and Rs.
1,08,946-14-0. On the said sales of Rs.
40,20,623-12-0 General Sales Tax of Rs. 61,885-12-0 was levied, where on the
sales of Rs. 1,08,946-14-0 Special Sales Tax of Rs.
3,301-8-0 was levied. The total Sales Tax
thus levied against the appellant in respect of the outside sales during the
relevant period was Rs. 65,187-4-0.
On December 20, 1956, the appellant
instituted the present suit (No. 402 of 1956) on the Original Side of the
Bombay High Court, and claimed to recover the said amount from the respondent
on the ground that it had been illegally levied against it. According to the
appellant, the illegality of the impugned assessment, levy, imposition and
collection was discovered by it soon after this Court pronounced its judgment
in The Bengal Immunity Co., Ltd. v. The State of Bihar & Others, (1) on the
6th September, (1) 2 S.C.R. 603.
68 1955. The appellant's case further was
that s. 20 of the Act did not bar the institution of the present suit; and, in
the alternative, if it was held that it created a bar, the said section was
ultra vires the Constitution of India and void.
The claim thus made by the appellant was
resisted by the respondent on several grounds. One of the pleas raised by the
respondent was that the Court had no jurisdiction to entertain the suit. It was
urged by the respondent that s.
20 of the Act created a bar against the
institution 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 3a
preliminary issue. He held that s. 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 certificate from the said High
Court and it is with the said certificate that it has come to this Court in
When this appeal was argued before a Division
Bench of this Court on March 23, 1964, Mr. Purshottam for the appellant
contended that in addition to the point which had been decided by the High
Court, he wanted to urge that s. 20 of the Act was invalid. The case which was
thus presented by Mr. Purshottam was that on a fair and reasonable construction,
it should be held that s. 20 does not create a bar against the institution of
the present suit. If, however, it was construed to create a bar, it was
constitutionally invalid. It appears that though this alternative plea bad been
taken by the appellant in its plaint, no issue was framed in respect of it and
naturally, the point has not been considered either by the learned trial.
Judge_ or by the Division Bench which 69 heard the Letters Patent Appeal. Even
so, the Division Bench of this Court which heard the appeal, allowed Mr.
Purshottam to raise his alternative
contention, and so, the appeal was ordered to be placed before a Constitution
The appeal then came on for hearing before
the Constitution Bench on April 10, 1964. After it was argued for sonic time
the Court decided to issue notices to the Advocates-General of different
States, because it was felt that the question about the constitutionality of s.
20 of the Act which the appellant wanted to raise was of considerable
importance and different States may be interested in presenting their case
before this Court, for a provision similar to that of the impugned section
would be found in Sales Tax statutes passed by many State legislatures. That is
why this Court directed that notices should be served on the Advocates-General
of all States and the matter should be placed for hearing before a Special
Bench. That is how this matter has been placed before a Special Bench for final
For the appellant, Mr. Viswanatha Sastri has
urged two points before us. He argues that on a fair construction of s. 20, it
should' be held that the present suit is outside the mischief of the said
section. In the alternative, he contends that if s. 20 creates a statutory bar
against the institution of a suit like the Present, it should be held ultra
vires the Constitution.
Before dealing with the points raised in this
appeal, it would be 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 as defined by s.
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, Art. 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 Art. 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 If of 1952 was passed and by s. 3, it added s. 30 to
the Act. In effect, s. 30 introduced in the Act the relevant provisions
prescribed by Art. 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 s.
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 from the 26th January, 1950.
70 It is well-known that the controversy in
regard to the interpretation of Art. 286 began with the decision of this Court
in the State of Bombay v. United Motors(1), and ended with the subsequent
decision, of this Court in the case of Bengal Immunity Co.(2) In order to
alleviate the economic crisis which was likely to result in view of the
subsequent decision of this Court, the President promulgated the Sales Tax
Validation Ordinance, 1956 on January 30, 1956, the provisions of which were
later incorporated in the Sales Tax Validation Act, 1956. This Act validated
sales tax collected by different States from 1st April, 1951 to 6th September,
1955 in accordance with the principles laid down by this Court in United Motors'
case. The sales-tax similarly collected between 26th January 1950 to 31st
March, 1951 was also sought to be validated by the Sales Tax Continuance Order,
1950. If we had reached the stage of considering the merits about the validity
of the recovery of tax in the present case, it would have become necessary for
us to consider the effect of this Continuance Order. Mr. Sastri contends that
notwithstanding the Continuance Order, the recovery of the tax is illegal and
that is the main foundation .of his argument before us. The present dispute
between the parties, according to Mr. Sastri, is thus essentially similar to
other disputes between assessees and the respective States where through
mistake, tax was collected or paid in regard to transactions which were relates
to the construction of s. 20. Let us read the said section :
We will now revert to the main points of law
raised before us for our decision. The first question which must be considered
relates to the construction of s. 20. Let us read the said section "20.
Save as is provided in s. 23, no assessment made and no order passed under this
Act or the rules made thereunder by the Commissioner or any person appointed
under s. 3 to assist him shall be called into question in any Civil Court, and
save as it provided in sections 21 and 22, no appeal or application for
revision shall lie against any such assessment or order".
Mr. Sastri contends that s. 20 can have no
application to the present suit, because the order of assessment which the
appellant seeks to challenge in the present proceedings has been made by the
relevant Sales-tax authorities without 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 s. 20. In other words, an erroneous order of assessment made
under the Act would be (1)  S.C.R. 1069.
(2)  2 S.C.R. 693.
71 entitled to the protection of S. 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 Art. 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
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 operation of the Act. If a Sales Tax statute
exempts certain transactions from the purview of its charging section, and the
appropriate authority makes an order of assessment in respect of such an exempted
transaction,, the assessment would be beyond its jurisdiction and can be
impeached by a suit; s. 20 will not protect such an assessment. No doubt, Mr.
Sastri emphasised the fact that the constitutional prohibition against an
assessment in respect of outside sales stood on a much higher pedestal than the
prohibition by a statutory provision in a Sales Tax Act. The first prohibition
is a constitutional prohibition and its breach would entitle a citizen to claim
the protection of Art. 265 and Art. 31(1); but, on principle, according to Mr.
Sastri, a transaction which is exempted from assessment either by virtue of
Art. 286 or by virtue of any specific statutory provision, cannot be validly
assessed, and an assessment made in respect of it cannot claim the status of an
assessment made under the Act within the meaning of s. 20.
A suit would, therefore, be competent to
challenge such an invalid assessment. That, in brief, is Mr. Sastri's argument
on the construction of s. 20.
In dealing with this question, it is
necessary to remember that the normal rule prescribed by S. 9 of the Code of
Civil Procedure is that the courts shall (subject to the provisions herein
contained) have jurisdiction to try all suits of a civil nature excepting suits
of which their cognizance is either expressly or impliedly barred. There is no
doubt that a claim for the refund of sales tax allegation to have been paid by
the appellants through mistake is a claim of a civil nature and normally it
should be triable by the ordinary courts of competent jurisdiction as provided
by S. 9 of the Code; but this section itself lays down that the jurisdiction of
the civil 72 courts to try suits of a civil nature can be excluded either
expressly or impliedly; and so, the point raised for our decision in the
present appeal is whether on a fair and reasonable construction of s. 20, It
can be said that the Jurisdiction of the civil court is barred either expressly
Section 20 protects "assessment made
under the Act or the rules made thereunder" by appropriate authorities.
There can be little doubt that the clause "an assessment made" cannot
mean the assessment 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 s. 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 s. 20; and s. 20, in terms, provides that it will not be called in
question in any civil court.
This question has been recently considered by
this Court in Firm and Illuri Subbayya Chetty & Sons v. The State of Andhra
Pradesh(1). Dealing with s. 18A of the Madras General Sales Tax Act (Act 9 of
1939), which corresponds to s. 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 shown that exercising his
jurisdiction and authority under this Act, an assessing officer has made an
order of assessment, that clearly falls within the scope of s. 18A. It was also
observed that whether or not an assessment has been made under this Act, will
not depend on the correctness or accuracy of the order passed by the assessing
This position is not seriously disputed by
Mr. Sastri before us. He, however, contends that if the impugned order has been
passed without jurisdiction, it cannot fall within the purview of s. 20 of the
Act. In other words, the contention is that when the appropriate authority
purported to levy the tax on the appellant in respect of the transactions in
question, it was attempting to assess outside sale,; and since the said
assessment contravened Art. 286, it was invalid and the order was without
jurisdiction and as such, a nullity. How can an order passed by the appropriate
(1)  1 S.C .R. 752.
73 authority without jurisdiction claim the
protection of s. 20, asks Mr. Sastri.
In deciding the validity of this contention,
it is necessary to examine the scope of the jurisdiction conferred on the
appropriate authorities by the relevant provisions of the Act. Jurisdiction is
either territorial, or pecuniary, or in respect of the subject matter. There is
no difficulty about the assessing authorities' territorial and pecuniary
jurisdiction in the present case. What is the nature of the Jurisdiction
conferred on the appropriate authority in respect of the subject-matter of
sales tax ? Has the appropriate authority been given power to examine the
nature of the transaction and decide whether it is liable to tax or not ? Or,
can the appropriate authority proceed to exercise its power of imposing a tax
only in cases where the transaction in question is assessable to such tax ? In
other words, is the decision about the character of the transaction the
decision on a collateral fact, the finding on which alone confers jurisdiction
on the tribunal to levy the tax, or is it the decision on a question of fact
which is left to be determined by the appropriate authority itself ? If the
jurisdiction conferred on the appropriate authority falls under the first
category, then its finding that a particular transaction is taxable under the
relevant provisions of the Act, would be a finding on a collateral question of
fact' and it may be permissible 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.
It is observed in Halsbury(1) : "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 tile 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 jurisdiction, a
challenge is made to its jurisdiction, the tribunal has to make up its mind
whether it will (1) Halsbury's Laws of England, 3rd Edn. Vol. 11, p. 59.
7 4 act or not, and for that purpose to
arrive at some decision on whether it has jurisdiction or not. There may be
tribunals which, by virtue of legislation constituting them, have the power to
determine finally the preliminary facts on which the further exercise of their
but, subject to that, an inferior tribunal
cannot, by a wrong decision with regard to a collateral fact, give itself a
jurisdiction which it would not otherwise possess".
It would be noticed that Mr. Sastri's
argument that the impugned order of assessment is without jurisdiction and as
such, does not fall within S. 20, proceeds on the assumption that the finding
of the appropriate authority that the transactions in question were taxable
under the relevant provisions of the Act, is a finding on a fact which is
collateral. The question is : is this assumption wellfounded ? In our opinion,
the answer to this question must be in the negative.
In this connection, the relevant scheme of
the Act by which necessary powers have been conferred on the appropriate
authorities, falls to be considered. Section 3(1) provides that for carrying
out the purposes of this Act, the Provincial Government may appoint any person
to be Commissioner of Sales Tax, and such other persons to assist him as the
Provincial Government thinks fit. Section 3(2) then lays down that persons
appointed under sub-s. (1) shall exercise such powers as may be conferred and
perform such duties as may be imposed on them by or under this Act.
Section 4 deals with the appointment of a
Tribunal and provides for its constitution. Section 5 is the charging section.
Section 8 requires the registration of dealers, the expression
"dealer" having been defined by S. 2(c).
Section 10 imposes an obligation on the
dealers to make returns. Section 11 deals with the assessment of tax, subs. (1)
(a) provides that the amount of tax due from a registered dealer shall, in the
case of first assessment, be assessed in respect of such period not exceeding
twelve months as the Commissioner may determine. Sub-sections (2), (3) and (4)
of S. 11 contain provisions in regard to the procedure which has to be followed
by the Commissioner in determining the question about the liability of a dealer
to pay assessment. The Commissioner has to take evidence, has to bear 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-s. (5) empowers the
75 Commissioner to levy assessment to the best of his judgment in cases failing
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
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
relevant provisions of the Act or not. In our opinion, it is plain that the
very object of constituting appropriate authorities under the Act is to create
a hierarchy of special tribunals to deal with the problem of levying assessment
of sales tax as contemplated by the Act. If we examine the relevant provisions
which confer jurisdiction on the appropriate authorities to levy assessment on
the dealers in respect of transactions to which the charging section applies,
it is impossible to escape the conclusion that all questions pertaining to the
liability of the dealers to pay assessment in respect of their transactions are
expressly left to be decided by the appropriate authorities under the Act as
matters falling within their jurisdiction. Whether or not a return is correct;
whether or not transactions which are not mentioned in the return, but about
which the appropriate authority has knowledge, fall within the mischief of the
charging section; what is the true and real extent of the transactions which
are assessable; all these and other allied questions have to bedetermined by
the appropriate authorities themselves; and so, we find it impossible to accept
Mr. Sastri's argument that the finding of the appropriate authority that a
particular transaction is taxable under the provisions of the Act', is a
finding on a collateral fact which gives the appropriate authority jurisdiction
to take a further step and make the actual order of assessment. The whole
activity of assessment beginning with the filing of the return and ending with
an order of assessment, falls within the jurisdiction of the appropriate
authority and no part of it can be said to constitute a collateral activity not
specifically and expressly included in the jurisdiction of the appropriate
authority as such. We are, therefore, satisfied that Mr. Sastri is not right
when he contends that the finding of the appropriate authority that a particular
transaction is taxable under the charging section of the Act, is a finding on a
collateral fact and CI/65-6 7 6 it is only if the said finding is correct that
the appropriate authority can validly exercise its jurisdiction to levy a sales
tax in respect of the transactions in question. In fact, what we have said
about the jurisdiction of the appropriate authorities exercising their powers
under the Act, would be equally true about the appropriate authorities
functioning either under Sale-,-tax Acts. or under the Income-tax Act.
This question was incidentally considered by
a Special Bench of this Court in Smt. Ujjam Bai v. State of Uttar Pradesh(1).
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 'bides', 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 Art. 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 Art. 32 on the sole ground that the
impugned order of assessment was based on a misconstruction of the notification
The Act under which the notification was
issued was valid;
the validity of the ,notification itself was not
and so, the narrow ground .which the Court
had to consider was if the appropriate authority misconstrued the notification
and imposed a tax on a commodity .Which in fact fell within its protection,
could the validity of suck ,an order be impeached under Art. 32 of the
Constitution on the ground that it contravened the fundamental right of the
petitioner under Art. 19(1) (g) ? The two answers given in accordance with the
majority opinion were against the petitioner; and so, the majority decision can
be said to have rejected the petitioner's argument that a question of
jurisdiction was involved in the misconstruction of the notification in
question. It would thus appear that according to the majority view, the
question about the taxability of a particular transaction falls within the
jurisdiction of the appropriate authorities exercising their powers under the
taxing Act, and their decision in. respect of it cannot be treated as a
decision on a collateral fact the finding on which determines the jurisdiction
of the said authorities.
(1) 1 S.C.R. 778.
77 It is true that the separate concurring
judgments delivered by learned Judges who spoke for the majority view indicate
that their approach to the several problems posed by the two questions referred
to the, Special Bench, was not uniform and they emphasised different aspects in
somewhat different ways; but in regard to that aspect of the matter with which
we are concerned in the present appeal there appears to be unanimity amongst
them. Indeed, even the minority judgment which radically dissented from the
majority view in regard to the scope and effect of the powers of this Court
tinder Art. 32 and the extent of the fundamental right conferred on the citizen
to move this Court by the said Article, does not appear to have differed from
the majority view on this point.
Whilst we are referring to the decision of
this Court in Ujjam Bai's(1) case, we would hasten to add that we are not
dealing with the scope and effect of our powers under Art.
32, or with the powers of the High Courts
under Art. 226.
Our object in referring to the majority
decision in Ujjam Bai's(1) case is merely to show that the tenor of the opinion
expressed by the learned Judges in the said case is in support of the view that
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
Mr. Sastri has no doubt referred us to the
subsequent decision of this Court in The State Trading Corporation of India,
Ltd. v. State of Mysore (2) in which it appears to have been held that the
taxing officer cannot give himself jurisdiction to tax an interState sale by
erroneously determining the character of the sale transaction. The decision on
the question about the character of he 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(1) 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. (2 as in the earlier case of Ujjam
Bali(1), this Court was dealing with a petition filed under Art. 32; and as we
have already indicated, we are not called upon to consider the extent of our
jurisdiction under Art. 32 when such questions are brought before us by
citizens for relief on the ground that their fundamental rights have been
contravened by assessment orders. At this stage, we are only dealing with the
question as to whether Mr. Sastri is right (1)  1 S.C. R. 778.
(2)  3.S.C.R. 792.
78 in contending that an erroneous conclusion
of the appropriate authority on the question about the character of the sale
transactions on which the appellant has been taxed, can be said to be without
jurisdiction. In other words, if the appropriate authority, while exercising
its jurisdiction and powers under the relevant provisions of the Act, holds
erroneously that a transaction,. which is an outside sale, is not an outside
sale and proceeds to levy sales-tax on it, can it be said that the decision of
the appropriate authority is without jurisdiction? In our opinion, this question
cannot be answered in favour of Mr. Sastri's contention. Whether or not such a
conclusion can be challenged under Art. 226 or under Art. 32 of the
Constitution, and if yes, under what circumstances, are matters with which we
are not concerned in the present proceedings. For the purpose of construing s.
20, we are not prepared to hold that an assessment based on an erroneous
finding about the character of the transaction, is an assessment without
jurisdiction and as such, is outside the purview of s. 20 of the Act. We would
like to repeat that it is only this narrow question we are considering in the
Reverting then to s. 20, it seems to us plain
that the words used in this section are so wide that even erroneous orders of
assessment made would be entitled to claim its protection against the
institution of a civil suit. Several decisions have been cited before us where
similar questions have been considered. We may usefully refer to some of them.
In Secretariat of State, represented by the Collector of South Arcot v. Mask
and Company(1) the Privy Council had occasion to consider the effect of the
provision contained in s. 188 of the Sea Customs Act (VIII of 1878). The said
provision was that every. order passed in appeal under the said section shall,
subject to the power of revision conferred by s. 19 1, be final. Mask & Co.
had instituted a suit in which it sought to recover duty collected from it
under protest on the around that it was illegally recovered. The trial Court
had rejected the claim on the ground that the suit was barred under s. 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 no as emphatic as
they are in s. 20, and yet, the Privy Council upheld the plea that the suit was
barred. It is true that in the course (1)67 I.A. 222.
79 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" (p. 236). In the present case, we are
not called upon to consider the merits of these observations or their scope and
In Raleigh Investment Company Ltd. v.
Governer-General in Council(1), section 67 of the Indian Income-Tax Act (XI of
1922) which barred a suit, fell to be considered. The Privy Council held that
the said provision barred a suit where the plaintiff sought to challenge an
assessment order made by the appropriate tax authorities under the provisions
of the said Act. In construing the effect of the words "no suit shall be
brought in any civil court to set aside or modify any assessment made under
this Act", the Privy Council thought it necessary to enquire whether the
Act contained machinery which enabled an assessee effectively to raise in the
courts the question whether a particular provision of the Income Tax Act
bearing on the assessment made is or is not ultra vires. "The presence of
such machinery", observed the Privy Council, "though by no means
conclusive, marches with a construction of the section which denies an
alternative jurisdiction to enquire into the same subjectmatter. The absence of
such machinery would greatly assist the appellant on the question of
construction and, indeed, it may be added that, if there were no such
machinery, and if the section affected to preclude the High Court in its
ordinary civil jurisdiction from considering a point of ultra vires, there
would be a serious question whether the opening part of the section, so far as
it debarred the question of ultra vires being debated, fell within the
competence of the legislature". In other words, these observations
indicate that the Privy Council took the view that where an appropriate
authority is exercising its jurisdiction to levy a tax in respect of any
transaction, it would be competent to such an authority to consider the
validity of the taxing provisions themselves. We do not think it is necessary
for us to examine this aspect of the matter in the present appeal, because the
validity of the charging section is not impeached in the present proceedings.
It is true that Mr. Sastri has challenged the validity of S. 20, but the said
section has no bearing on the assessment made, and (1)74 LA.. 50, at pp. 62-63.
80 so, that plea has no relevance to the
point which the Privy Council was considering in the observation. to which we
have just referred.
On the question of construction, Mr. Sastri
has relied on two decisions of this Court to which it is necessary to refer
before we part with this topic. In The Provincial Government of Madras (Now
Andhra Pradesh) v. .J. S.
Basappa(1), it was held by this Court that
the finality attached to orders passed in appeal by s. II (4) of the Madras
General Sales Tax Act (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 s. 18A which came into force on May 15, 1951;
and it was s. 18A which was construed by this Court in Firm and Illuri Subaya
Chetty Mr. Sastri has also referred to the majority decision in the case of
Bharat Kala Bhandar Ltd. v. Municipal Committee, Dhamangaon(3). In that case,
according to the majority decision, s. 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 questioned, in any other manner or by any other authority
than is provided in this Act".
According to the majority view, the bar
created by this provision did not amount to the exclusion of the jurisdiction
of the civil court to entertain a claim for refund of the tax alleged to be
illegally recovered, because there were no words in the said provision which
could be construed as excluding civil court's jurisdiction either expressly or
impliedly. The minority view, however, held that a suit for refund was barred.
We do not think Mr. Sastri can successfully
advance his case before us by relying on these two decisions. After-all, as the
Privy Council observed in the case of Mask & Co.(4), the determination of
the question as to whether S. 20 bars the present suit, must rest on the terms
of s. 20 themselves, because that is the provision (1) 15 S.T.C. 144.
(3) C. A. No. 600 of 1964. Decided March 26,
1965 (2)  1 S.C.R. 752.
(4) 67 I. A. 222.
81 under consideration "and decisions on
other statutory provisions are not of material assistance, except in so far as
general principles of construction are laid down" (p.
237). Besides, in regard to these two
decisions, we may, with respect, point out that they do not purport to lay down
a general rule that the jurisdiction of a civil court cannot be excluded unless
it is specifically provided that a suit in a civil court would not lie. In
fact, as the decision of the Privy Council in the case of Mask & Co.(1
shows, the jurisdiction of a civil court can be excluded even without such an
express provision. In every case, the question about the exclusion of the
jurisdiction of civil courts either expressly or by necessary implication must
be considered in the light of the words used in the statutory provision on which
the plea is rested, the scheme of the relevant provisions, their object and
their purpose. We would also like to make it clear that we do not think it is
necessary in the present case to consider whether the majority opinion in the
case of Bharat Kala Bhandar Ltd.(2) was justified in casting a doubt on certain
observations made by the Privy Council in Raleigh Investment Co.'s(3) case, or
on the validity or the propriety of the conclusion in respect of the effect of
s. 67 of the Income-tax Act.
Mr. Sastri has also invited our attention to
the decision of the House of Lords in Pyx Granite Co. Ltd. v. Ministry of
Housing and Local Government and Others(4). In that case, the House of Lords
repelled the preliminary objection raised 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 S. 17(1); and that the wide discretion conferred by s. 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 Lord,, noticed that there was nothing in s. 17 or in the Act which excluded
the jurisdiction of the court to grant declarations; s. 17 merely provided an
alternative method of having the question determined by the Minister. "It
is a principle no,, 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.
(1) 67 I.A. 222.
(2) C.A. No. 600 of 1964. Decided March
(3) 74 I.A. 50.
(4)  A.C. 260 at p. 286.
82 called it in Francis v. Yiewsley and West
Drayton Urban District Council(1), a 'fundamental rule' from which I would not
for my part sanction any departure". Approaching the task of construing s.
17 from this point of view, his Lordship came to the conclusion that there was
nothing in s.
17 which excluded the jurisdiction of the
civil court to entertain the claim in question. We do not see how this decision
can afford any assistance to the appellant.
There is one more aspect of the matter which
must be considered before we finally determine the question as to whether s. 20
excludes the jurisdiction of the civil court in entertaining the present suit.
Whenever it is urged before a civil court that its jurisdiction is excluded
either expressly or by necessary implication to entertain claims of a civil
nature, the Court naturally feels inclined to consider whether the remedy
afforded by an alternative provision prescribed by a special statute is
sufficient or adequate. In cases where the exclusion of the civil courts'
jurisdiction is expressly provided for, the consideration as to the scheme of
the statute in question and the adequacy or the sufficiency of the remedies
provided for by it may be relevant but cannot be decisive. But where exclusion
is pleaded as a matter of necessary implication, such considerations would be
very important, and in conceivable circumstances, might even become decisive.
If it appears that a statute creates a special right or a liability and
provides for the determination of the right and liability to be dealt with by
tribunals specially constituted in that behalf, and it further lays down that
all questions about the said right and liability shall be determined by the
tribunal-, so constituted, it becomes pertinent to enquire whether remedies
normally associated with actions in civil courts are prescribed by the said
statute or not. The relevance of this enquiry was accepted by the Privy Council
in dealing with s. 67 of the Income Tax Act in Raleigh Investment Co.'s(2) case
and that is the test which is usually applied by all civil courts.
In the present case, the appellant wants
relief of refund of tax which is alleged to have been illegally recovered from
it by the respondent, and the ground on which the said relief is claimed is
that at the time when the tax was recovered, the appellant was under a mistake
of fact and law. According to the appellant, even the respondent might have
been laboring 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 (1)  2 Q.B. 136, 148.
(2) 74 I.A. 50.
83 recover sales tax in respect of outside
sales was not correctly appreciated until this Court pronounced its decision in
The Bengal Immunity Co.'s(1) 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 S. 20, and it would be both
relevant and material in considering the question of the constitutionality of
s. 20. That is the two-fold 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 s. 20 prohibits such
a claim being made before an ordinary civil court, the Court may hesitate to
construe S. 20 as creating an absolute bar, or if such a construction is not reasonably
possible, the Court may seriously examine the question about the
constitutionality of such express exclusion of the civil court's jurisdiction
having regard to the provisions of Arts. 19 and 31 of the Constitution. It is
with this two-fold object that this aspect of the matter must now be examined.
Before proceeding to examine this matter, we
ought to refer to the decision of this Court in the Sales Tax Officer, Banaras
& Others v. Kanhaiya Lal Mukundlal Saraf. ( 2 ) In that case, this Court
has held that the term "mistake" in s. 72 of the Indian Contract Act
comprises within its scope a mistake of law as well as a mistake of fact and
that, tinder that section a party is entitled to recover money paid by mistake
or under coercion, and if it is established that the payment, even though it be
of a tax, has been made by the party labouring under a mistake of law, the
Party receiving the money is bound to repay or return it though it might have
been paid voluntarily, subject, however, to questions of estopped, waiver,
limitation or the like. Basinhimself on this decision, Mr. Sastri contends that
since the Act does not provide for adequate remedy to recover illegally
collected tax from the respondent, we should either put a narrow construction
on s. 20 so as to permit institution of a suit like the present, or, in the
alternative, should strike it down as constitutionally invalid. If a citizen is
deprived of his property illegally by recovering from him unauthorisedly an
amount of tax where no such tax is recoverable from him, he ought to have a
proper and appropriate remedy to ventilate his grievance against the State.
Normally, such a remedy (1)  2 S.C.R. 603.
(2)  S.C.R. 1350.
84 would be in the form of a suit brought
before an ordinary civil court; it may even be a proceeding before a specially
appointed tribunal tinder the provisions of a tax statute;
and it can also be an appropriate proceeding
either under Art. 226, or under Art. 32 of the Constitution.
In support of this contention, Mr. Sastri has
referred to the decision of the Privy Council in Commissioner for Motor
Transport v. Authority Ranger& Co. Pty., Ltd. State of New South wales and
Other v. edmund T. Lennon Pty, Ltd.(1).
In that case, s. 3 of the State Transport
Co-ordination (Barring of Claim and Remedies) Act, 1954 had provided, interalia,
that every cause of action against Her Majesty or the State of New South Wales
for the recovery of any sums 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 s. 3, it was held that the denial of the right to
recover money paid in satisfaction of charges which were -illegal by virtue of
s. 92 of the Commonwealth of Australia Constitution offended equally against s.
92. In other words, where the impugned statutory provision purported to
extinguish absolutely a cause of action, it was struck down as
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 alleagd to have been illegally
recovered. Section 13 of the Act expressly provide-, 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 amount due from him under this Act. The proviso to this section
prescribe period of limitation of twenty-four months from the date on which the
order of assessment was passed or within twelve months of the final order
passed on appeal, revision, or reference in respect of the order of assessment,
whichever period is later. Then, we have s. 21 which provides for the remedy of
an appeal; and S. 22 which provides for a revisional remedy. It is significant
that though s. 21(1) prescribes a period of sixty days for appeal and s. 22
prescribes a period of four months for revision, under s. 22B the prescribed
authority is given power to extend the period of limitation if it is satisfied
that the party applying (1) 3 All. E.R, 106, 85 for such extension had
sufficient cause for not preferring the appeal or making the application within
such period. Section, 23A provides for rectification of mistake.
It is thus clear that the appellant could
have either appealed or applied for revision and prayed for condonation of
delay on the ground that the, mistake which was responsible for the recovery of
the tax illegally levied, was discovered on the 6th September, 1955, because such
a plea would have been perfectly competent tinder S. 22B. In other words, if
the appellant had pursued a remedy available, to it under s. 21 or s. 22 read
with s. 22B, its case would have been considered by the appropriate authority
and the validity of the grounds set up by it for the refund of the tax in
question would have been legally examined.
Therefore, it cannot be said that even for
the claim which the appellant seeks to make in the present suit, there is no
alternative remedy prescribed by the Act. This conclusion serves a double
purpose. It makes it easier to construe the wide words used in s. 20 and hold
that they constitute an absolute bar against the institution of the present
suit, and it also helps the respondent to repel the plea of the appellant that
S. 20 if it is so widely construed, is unconstitutional. Our conclusion,
therefore, is that s. 20 should be construed in the same manner in which s. 18A
of the Madras General Sales-Tax Act was construed by this Court in Firm and
Illuri Subbayya Chetty & Sons(1) and that even on this wide construction,
the said section is constitutionally valid.
This conclusion, however, does not finally
dispose of the 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 s. 20 itself. It would be recalled that the
alternative claim made by the appellant in its plaint was that s. 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 s. 20 cannot obviously be pleaded where the validity of s.
20 itself is challenged. That can of course be done by a separate suit. In
terms, S. 20 is confined to cages where the validity of assessment orders made
tinder the Act is challenged. 'Me said provision cannot take in a challenge to
the validity of s. 20 itself, (1) 1 S.C.R. 752.
86 and so, we must hold that technically, the
appellant's suit is competent in so far as it seeks to challenge the validity
of s. 20. This finding, however, is of no material assistance to the appellant,
because even after it succeeds on this point, it has still to face the plea of
the respondent that on the merits, the suit is barred; and on that plea, the appellant
must fail, because s. 20 is a bar to the appellant's claim that the amount in
question which is alleged to have been illegally recovered from it should be
refunded to it. That is a matter which falls directly within the mischief of s,
What then is the ultimate position in this
case? The Act Linder which tax was recovered from the appellant is valid and so
is the charging section valid; the appropriate authorities dealt -with the
matter in regard to the taxability of the impugned transactions in accordance
with the provisions of the Act and in consequence, tax in question was
recovered on the basis that the said transactions were taxable under the Act.
The appellant contends that the transactions were outside sales and they did
not and could not fall under the charging sect-ion because of Art. 286, and it
argues that the tax was levied because both the appellant and the appropriate
authorities committed a mistake of fact as well as law in dealing with the
question. Assuming that such a mistake was committed, the conclusion that the
transactions in question fell within the purview of the charging section cannot
be said to be without jurisdiction or a nullity and the assessment based even
on such an erroneous conclusion would claim the protection of s. 20. If, after
discovering the mistake the appellant had moved the appropriate authorities
under the relevant provisions of the Act, its claim for refund would have been
considered on the merits. Having failed to take recourse to the said remedy, it
may have been open to the appellant to move the High Court under Art. 226.
Whether or not in such a case, the jurisdiction of the High Court could have
been effectively invoked, is a matter on which we propose to express no
opinion. As we have pointed out during the course of this judgment, we are not
dealing with the scope and effect of the High Courts jurisdiction under Art.
226 as well as the scope and effect of this Court's jurisdiction under Art. 32
viv-a-vis such claims for refund of tax alleged to have been illegally
In the result, the appeal fails and is
dismissed with costs.