Tika Ram & Sons Ltd. Vs. The
Commissioner Of Sales Tax U.P., Lucknow  INSC 75 (22 March 1968)
22/03/1968 RAMASWAMI, V.
CITATION: 1968 AIR 1286 1968 SCR (3) 512
U.P. Sales Tax Act (15 of 1948) as amended by
Act 8 of 1954, ss. 2(h), Explanation II (ii) and 11-Scope of Explanation-If
ultra vires-When Commissioner has right to ask for reference to High Court
Jurisdiction of Revising Authority to refer and of High Court to decide
constitutional validity of provisions of Act.
For the period 1st April 1948 to 25th January
1950, goods (oil) were manufactured produced in the State of Uttar Pradesh by
the appellants who were carrying on business in the State in those goods. Part
of the goods were sent to their depots outside the State before any contract of
sale in respect of them was made, and thereafter, sold to various parties.
those outside sales were also assessed to sales tax under the U.P. sales Tax
Act, 1948. The matter was taken to the Appellate Authority and thereafter to
the Revising Authority constituted under the Act. Though the revision was filed
before last April 1954 when the Amending Act of 1954 came into force, it was
disposed of in 1957, in favour of -the appellants. On the application of the
commissioner of Sales Tax two questions of law were referred to the High Court
one of which related to the constitutional validity of Explanation II (ii) to
s. 2(h) of the Act, according to which, the sale of any goods 'which are
produced or manufactured in U.P. by the producer or manufacture thereof, shall,
wherever the delivery 'or contract of We is made, be deemed for the purposes of
this Act to ,have taken place in U.P' The High Court decided both questions in
favour of the Commissioner.
In appeal to this Court it was contended that
: (1) For attracting tax liability the Explanation requires that the goods
should have been manufactured or produced in U.P.
after the contract of sale was entered into-,
(2) the Explanation was ultra vires as being outside legislative competence,
because, Wes tax legislation was concerned with tax on the transaction of a
completed sale, and a State could not impose sales tax on the basis that one of
the component parts of sale constitutes sufficient nexus between the taxing
state and the sale; (3) the Revising Authority could not refer to the High
Court and the High Court could not decided on such reference, any question
regarding the constitutional validity the Explanation; and (4) the Revising
Authority could not make a reference to the High Court under s. 11, at the
instance of the Commissioner, as the Commissioner had no power to apply when
the revision was filed before the Authority but was empowered to do so only by
the amending Act of 1954 which had no retrospective operation.
HELD : (I) For the application of the
Explanation and attracting tax liability, it is only necessary that the goods
must have been sold by the person who produced or manufactured them, but there
is no requirement that he must have manufactured or produced them after the
contract of sale and not before. (518 C] (2)To confer jurisdiction upon the
'State Legislature to impose sales tax, 'it is sufficient if there is a proper
territorial nexus or connection 512 513 between the taxing authority and the
transaction sought to be taxed. and, the fact that goods were manufactured in
the State constitutes a real and pertinent nexus. [519 C] The Tata Iron and
Steel Co. Ltd. v. State of Bihar,  S.C.R. 1355 and Bharat Siigar Mills v.
The State of Bihar, 11 S.T.C. 793, followed(3) The appellants did not challenge
the jurisdiction of the High Court to examine the constitutional validity of
the Explanation; nor was any such challenge made in the special leave petition
to this Court or in the statement of case.
On the contrary, the appellants contended in
the revision before the Revising Authority that the Explanation was ultra
vires. Therefore, havingvoluntarily submitted to the jurisdiction of the
Revising Authority it is not open to the appellants to challenge the.
jurisdiction Of the Revising Authority to refer the question of the
constitutional validity of the Explanationto the High Court, or of the High
Court to decide it. [522 E-G] (4) The Commissioner had the power to apply for a
reference on the date he applied for a reference, as the amending Act had by
then come into force. There is nothing in the language or in the context of s.
1 1 to suggest that he could exercise the right only if it existed on the date
on which the revision was filed before the Revising Authority.
The rule that a statute should be
interpreted, as far as possible, so as to respect vested rights has no
application because,, the amendment does not affect any vested right of the
appellants, but only deals with a procedural matter.
[523 E-H] Gardner v. Lucas,  3 A.C.
582, 603, applied.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 1682 to 1691 of 1967.
Appeals by special leave from the judgment
and order dated November 30, 1962 of the Allahabad High Court in Misc.
Sales Tax Reference Nos. 144, 134, 143, 148,
124, 104, 105, 112 and 113 of 1958 respectively.
M.C. Chagla and S. S. Shukla, for the
appellants (in all the appeals).
C. B. Agarwala and 0. P. Rana, for the
respondents (in all appeals) The Judgment of the Court was delivered by
Ramaswami, J. These appeals are brought, by special leave from the judgment of
the Allahabad High Court dated November 30, 1962 in Miscellaneous Sales Tax
Reference No. 144 of 1958 and other connected references.
The appellants are manufacturers and dealers
of oil in the Province of Uttar Pradesh and they have their own depots outside
the Province. For the financial year 1948-49 and the subsequent period from
April 1, 1949 to January 25, 1950 the appellants had sent their goods to their
depots outside the-Province of Uttar Pradesh, for example, to Calcutta in the
State of West Bengal before any contract of sale in respect of the goods was
514 After the goods had reached the depots
outside the Province of Uttar Pradesh, they were sold to various parties. The
Sales Tax Officers of Uttar Pradesh assessed the outside sales of all the
appellants to sales tax under the Uttar Pradesh Sales Tax Act 15 of 1948,
hereinafter called the Act. It appears that this category of sales roughly
amounted to more than one crore of rupees in the case of the appellants -and
the sales tax was levied at the rate of 3 pies per rupee subject to a rebate
under S. 5 of the Act and certain other adjustments. Aggrieved by the
assessments, the appellants took the matter in appeal under s. 9 of the Act.
The appeals were heard by various Appellate Officers called Judge, Appeals.
Some of the Appellate Officers held that the assessment was properly made,
while some others took the view that the assessments made for outside sales
were improper and the assessment order should be quashed.
The parties aggrieved by the appellate orders
filed revisions before the revising authority called Judge, Revisions under S.
10 of the Act. By his judgment dated July 10, 1957 the Judge, Revisions held
that the out of State sales would be taxable (1) if the goods were in existence
in the Province of Uttar Pradesh at the time when the contracts for sale were
made, and (2) if the goods were manufacturer after the contracts for sale were
made in respect of them and were subsequently appropriated towards those
contracts. He further held that sales of goods which were not only manufactured
but also exported before any contracts for sale were made would not be taxable.
II of the Act, the Commissioner of Sales Tax
applied to the Revising Authority for making a reference of the case to the
High Court, By its order dated January 23, 1958 the Revising Authority drew up
a statement of the case and referred to the Allahabad High Court the following
two questions of law for determination :
"(1) Whether clause (ii) of the
Explanation 11 to Section 2 (h) U.P. Sales Tax Act provides for taxing sales in
which goods were manufactured or produced in U.P. but for which the contract
for sale was made after the goods had left the State ? (2) If the reply to the
above is in affirmative, whether this provision is ultra vires ?" By its
judgment dated November 30, 1962, the High Court answered the first question in
the affirmative and the second question in the negative.
It is necessary at this stage to refer to the
relevant statutory provisions which were in force during the material period.
Section 99 of the Government of India Act, 1935 authorised a Provincial
Legislature, subject to the provisions of that Act, to make laws for the
Province or for any part thereof. Section 515 100(3) of that Act provided that,
subject to the two preceding sub-sections, the Provincial Legislature had, and
the Federal Legislature had not, power to make laws for any Province or any
part thereof with respect to any of the matters enumerated in List 11 of the
Seventh Schedule to that Act. The matter enumerated in Entry 48 in List 11 was
"Taxes on the sale of goods and on advertisements." It was in
exercise of this legislative power that the Uttar Pradesh State Legislature
enacted Act 15 of 1948 which came into force on April 1, 1948. Section 3 of the
Act Provides as follows "3. Liability to tax under the Act-Subject to the
provisions of this Act, every dealer shall pay on turnover in each assessment
year a tax at the rate of 3 pies a rupee :
Provided that(i) the Provincial Government
may, by notification in the official Gazette, reduce the rate of tax on the
turnover of any dealer or class of dealers or on the turnover in respect of any
goods or class of goods;
(ii) a dealer whose turnover in the previous
year is less than Rs. 12,000/or such larger amount as may be prescribed shall
not be liable to pay the tax under this Act for the assessment year;
Section 2(c) defines a "dealer" to
mean "any person or association of persons carrying on the business of
buying or selling and supplying goods in the United Provinces, whether for
commission, remuneration or otherwise and includes any firm or Hindu joint
family and any society, club or association which sells or supplies Goods to
its members but does not include any department of the Provincial Government or
of the Indian Union (hereinafter called the 'Dominion Government')".
Section 2(h) is to the following effect " 'sale' means, with its
grammatical variations and cognate expressions, any transfer of property in
goods for cash or deferred payment or other valuable consideration and includes
forward contracts but does not include a mortgage, hypothecation, charge or pledge
Explanation II-Notwithstanding anything. in the Indian Sale of Goods Act, 1930,
or any other law for the time being in force, the sale of any goods516 (i)which
are actually in the United Provinces at the time when in respect thereof, the
contract of sale as defined in section 4 of that Act is made, (ii)or which are
produced or manufactured in the United Provinces by the producer or
manufacturer thereof, shall, wherever the delivery or contract of sale is made,
be deemed for the purposes of this Act to have taken place in the United
Section 10 states "Power of
revision-(1)The Provincial Government shall appoint as Revising Authority a
person qualified under subsection (3) of section 220 of the Government of India
Act, 1935, for appointment as Judge of a High Court.
(2) The appellate authority appointed under
section 9 shall be under the superintendence and control of the Revising
(3) The Revising Authority may -in its
discretion at any time suo motu or on being moved by the Commissioner of Sales
Tax or on the application of any person aggrieved, call for and examine the
record of any order made or proceedings recorded by any appellate or assessing
authority under this Act for the purpose of satisfying itself as to the
legality or propriety of such order or as to the regularity of such proceedings
and may pass such order as he thinks fit.
(4) The Revising Authority shall not pass any
order under sub-section (3) adversely affecting any person unless an
opportunity has been given to such person to be heard.
(5) If the amount of assessment is reduced by
the Revising Authority under sub-section (3) it shall order the excess amount
of tax if already realized to be refunded." Section 11 is to the following
effect "Statement of case to High Court-(I) Within sixty days from the
passing by the Revising Authority of any order under sub-section (3) of section
9 or subsection (1) of section 10 affecting any liability of any dealer to pay
tax under this Act, such dealer may, by application in writing accompanied by a
fee of one hundred rupees, require the Revising Authority 517 to refer to the
High Court any question of law arising out of such order.
(2) If, for reasons to be recorded in
writing, the Revising Authority refuses to make such reference, the applicant
may, within thirty days of such refusal, either(a) withdraw his application
(and if he does so, the fee shall be refunded, or (b) apply to the High Court
against such refusal.
(3) If upon the receipt of an application
under clause (b) of sub-section (2),the High Court is not satisfied that such
refusal was Justified, it may require the Revising Authority to state a case
and refer it to the High Court and on receipt of such requisition the Revising
Authority shall state and refer the case accordingly.
(4)If the High Court is not satisfied that
'the statement in a case referred under this section is sufficient to enable it
to determine' the question raised thereby, it may refer the case back to the
Revising Authority to make such additions thereto or alterations therein as the
High Court may direct in that behalf.
By the Amending Act of 1954 (U.P. Act VIII of
1954) which came into force on April 1, 1954 the following provisions were
substituted in place of sub-sections (1), (3) and (4):"(1) Within one
hundred and twenty days from the date of service of the order under subsection
(3) of section 10, the person aggrieved, may, by application in writing require
the Revising Authority to refer to the High Court any question of law arising
out of such order (3) The provisions of subsection (1) shall also be applicable
to the Commissioner of Sales Tax with the modification that it shall not be
necessary for him to deposit any fee.
(4) If on any application, being made under
subsection (1) or (3) the Revising Authority refuses to state the case the
person aggrieved or the Commissioner of Sales Tax as the case may be, may ...
...... apply to the High Court ............" It was argued by Mr. Chagla
in the first place that cl. (ii) of Explanation II to S. 2(h) of the Act means
that the goods should have been manufactured and produced in Uttar Pradesh for
sale 518 to the person who had contracted to buy them. In other words, there
must be a contract for the sale before manufacture or produce. It was pointed
out that in the present case the contract was entered into after the goods were
manufactured and exported out of Uttar Pradesh. It was contended that as a
matter of construction Explanation II does not cover these sales and the
deeming provision will not make the appellants liable to pay sales-tax in
regard to such sales. We are unable to accept this argument as correct. There
is nothing in the language or context of Explanation II to suggest that the
goods should be produced or manufactured in Uttar Pradesh after the contracts
for sale had been entered-into. There is hence no warrant for the argument that
for attracting the tax liability the goods must have been manufactured or
produced after and not before the agreement for sale. In other words, it is
only necessary for the application of Explanation 11 that the goods must have
been sold by the person who produced or manufactured them but there is no
requirement that he must have manufactured or produced them after the agreement
for sale. It is the admitted position in these appeals that the goods were
manufactured or produced in Uttar Pradesh by the appellants carrying on
business in Uttar Pradesh in those goods and therefore the appellants are
liable to pay the tax on their sales irrespective of where and when the
contracts for sale were entered into and also irrespective of the fact that the
contracts were entered into after the goods had been exported out of Uttar Pradesh.
We accordingly hold that the first question was rightly answered by the High
We proceed to consider the next, and more
important, question arising in these appeals, namely, whether the deeming
provision contained in s. 2(h) Explanation II(ii) of the Act was ultra vires
the Government of India Act, 1935. It was argued by Mr. Chagla that the
doctrine of nexus was not applicable to sales-tax legislation, because such
legislation was concerned with the tax on the transaction of sale, that is to say,
a completed sale and to break up a sale into its component parts and to take
one or more such parts and to apply the theory to it would mean that the State
would be entitled to impose tax on one or more of the ingredients or
constituent elements of the transaction of sale which by itself will not amount
to a sale. An identical question has been the subject-matter of consideration
by this Court in The Tata Iron & Steel Co., Ltd. v. The State of Bihar(').
It was held in that case that the provisions of s. 4(1) read with S. 2(g)
second proviso, of the Bihar Sales Tax Act, 1947 as amended by the Bihar Sales
Tax Amendment Act, 1949 were within the legislative competency of the
Provincial Legislature of Bihar. The second proviso added by the amending Act
did not extend the meaning (1)  S.C.R. 1355.
519 of the expression "sale" so as
to include a contract of sale : what it actually did was to lay down certain
circumstances in which a sale, although completed elsewhere, was to be deemed
to have taken place in Bihar. The circumstances mentioned in the proviso to S.
2(g) of the Bihar Sales Tax Act, namely, the presence of the goods in Bihar at
the date of the agreement of sale or their production or manufacture there must
be held to constitute a sufficient nexus between the taxing Province and the
sale wherever that might take place. It is manifest that a transaction of sale
is a composite transaction and consists of legal ingredients like agreement of
sale, passing of title and delivery of goods but it is not necessary for the
purpose of legislative jurisdiction that all legal ingredients of sale or even
the -transfer of title should have taken place inside the Province. It is
sufficient if there is a proper territorial nexus or connection between the
taxing authority and the transaction sought to be, taxed. The fact that the
goods are manufactured in the Province constitutes a real and pertinent nexus
or connection which confers jurisdiction upon the Provincial Legislature to
impose the tax. In dealing with the question whether the production or
manufacture of goods constituted a sufficient nexus to the subject-matter of
taxation, S. R. Das, C.J., observed as follows :
"For the purpose of the present case it
is sufficient to state that in a sale of goods the goods must of necessity play
an important part, for it is -the goods in which, as a result of the sale, the
property will pass.
In our view the presence of the goods at the
date of the agreement for sale in the taxing State or the production or
manufacture in that State of goods the property wherein eventually passed as a
result of the sale wherever that might have taken place, constituted a
sufficient nexus between the taxing State and the sale. In the first case the
goods are actually within the State at the date of the agreement for sale and
the property in those goods will generally pass within the State when they' are
ascertained by appropriation by the seller with the assent of the purchaser and
delivered to the purchaser or his agent.
Even if the property in those goods passes
outside the State the ultimate sale relates to those very goods. In the second
case the goods, wherein the title passes eventually outside the State, are
produced or manufactured in Bihar and the sale wherever that takes place is by
the same person who produced or manufactured the same in Bihar.
The producer or manufacturer gets his sale
price in respect of goods which were in Bihar at the date when the important
event of agreement for sale was made or which were produced or manufactured in
Bihar. These are relevant facts on which the State could well fasten its
tax." 520 The principle of this decision was reiterated -by this Court in
a subsequent case-Bharat Sugar Mills Ltd. v. The State of Bihar('). In The Tata
Iron & Steel Co. Ltd. v. The State of Bihar(-'), the course of dealing
between the manufacturers and the purchasers was described as follows :
"The intending purchaser has to apply
for a permit to the Iron and Steel Controller I at Calcutta, who forwards the
requisition to the Chief Sales Officer of the assessee working in Calcutta. The
Chief Sales Officer thereafter makes a 'works order' and forwards it to
Jamshedpur. The 'works order' mentions the complete specification of the goods
After the receipt of the 'works order' the
Jamshedpur factory initiates a 'rolling' or 'manufacturing' programme. After
the goods are manufactured, the Jamshedpur factory sends, the invoice to the
Controller of Accounts who prepares the forwarding notes, and on the basis of
these forwarding notes, railway receipts are prepared. The goods are loaded in
the wagons at Jamshedpur and despatched to various stations, but the consignee
in the railway receipt is the assessee itself and the freight also is paid by
the assessee. The railway receipts are sent either to the branch offices of the
assessee or to its bankers, and after the purchaser pays the amount of
consideration, the railway receipt is delivered to him.
These facts are admitted and the correctness
of these facts are not disputed by the State of Bihar." In our opinion,
the ratio of this decision applies to the present case and it must be
accordingly held that Explanation II to s. 2(h) of the Act is not ultra vires
as being outside the legislative competence of the State of Uttar Pradesh.
Reference was made in he course of argument
to the recent decision of this Court in K. S. Venkataraman & Co. v. State
of Madras(3) in which it was held by the majority judgment that an authority
created by a statute cannot question the vires of the statute or any of the
provisions thereof under which it functions. The authority must act under the
Act and not outside it and if it acts on the basis of a provision of that
statute which is ultra vires, to that extent it would be acting outside the Act.
In that event, a suit-to question the validity of such an order made outside
the Act would lie in a civil court.. In this context it was pointed out by the
majority judgment that the reasoning of the Judicial Committee in Raleigh
Investment Co' (4) case was based upon the assumption that the question of
ultra vires can be canvassed and finally decided through the machinery provided
under the Income(1) 11 S.T.C. 793.
(3)  2 S.C.R. 229.
(2)  S.C.R. 1355.
(4) 74 I. A. 50.
521 tax Act. The Judicial Committee held that
S. 67 of the Income tax Act, 1922 was a bar to the maintainability of the suit.
The argument on behalf of the assessee in that case was that an assessment was
not an assessment "made under the Act" if the assessment gave effect
to a provision which was ultra vires the Indian Legislature; that in law such a
provision, being a nullity, was nonexistent; and 'that an assessment
justifiable in whole or in part by reference to, or by such a provision was
more aptly described as an assessment not made under the Act than as an
assessment made under the Act. The argument was negatived by the Judicial
Committee for the reason that the circumstance that the assessing officer had
taken into account an ultra vires provision of the Act was immaterial in
determining whether the assessment was "made under the Act". The main
reason that persuaded the Judicial Committee to accept the construction they
placed on S. 67 of the Income-tax Act may be stated in their own words as
"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 a
effected 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." It was
held by this Court in K. S. Venkataraman & Co. v. State of Madras(') that
the assumption underlying the reasoning of the Judicial Committee was not
correct and it was not open to the Income-tax Officer the Appellate Assistant
Commissioner and the Appellate Tribunal to decide any question as to the ultra
wires character of any provision of the Income-tax Act. In other words, the
question of ultra vires could not be deemed to arise out of the Tribunal's
order and if an assessee raises such a question, the Tribunal can only reject
it on the ground that it has no jurisdiction to entertain the objection or to
decide upon it. The High Court also cannot possibly give any decision on the
question of ultra vires, because its jurisdiction under s. 66 is a special
advisory jurisdiction and its scope is strictly limited. On behalf of the
appellants it was suggested that in the present. case the Revising Authority,
under the Act cannot, on a similar line of reasoning, refer to the High Court
any question regarding the constitutional validity of Explanation 11 of S. 2(h)
of the Act. It was, however, pointed out on behalf of the respondents that in a
number of cases in which proceedings relating to taxation have reached the High
Courtís by way of a reference, appeal or revision, the question of constitutional
(1)  2 S.C.R.229.
522 validity of the statute under which the
authority functioned was raised, entertained and decided. For instance, in Tata
Iron & Steel Co. Ltd. v. State of Bihar(1) a reference was made by the
Board of Revenue raising questions as to the validity of certain provisions of
the Bihar Sales-tax Act and decided by the High Court, and ultimately by this
Court. Similarly, in Sardar Baldev, Singh v. C.I.T., Delhi'& Ajmer(2) in an
appeal from the order of the Income-tax Appellate Tribunal with special leave,
the constitutional validity of s. 23A of the Indian Income-tax Act, 1922 was
permitted to be challenged. Again, in Navinchandra Mafatlal v. The C.I.T.,
Bombay City(3) in a refrence under S. 66(1) of the Indian Income-tax Act, 1922
a question as to the vires of s. 12-B of the Indian Income-tax Act was raised
before the Income-tax Appellate Tribunal and was referred to the Bombay High
Court. This Court in appeal from the opinion expressed by the High Court on on
the reference also considered that question. Also, in Gannon Dunkerley &
Co. v. State of Madras(4), the proceeding reached the High Court of Madras in a
revision petition under s. 12-B of the Madras General Sales Tax Act, 1939 and
the High Court entertained the plea of ultra vires and decided it in favour of
It is, however, not necessary in the present
case for us to decide the question as to whether the principle laid down in K.
S. Venkataraman's case(5) is applicable. The reason is that the apellants did
not challenge the jurisdiction of the High Court to examine the question of law
regarding the constitutional validity of Explanation 11 to s. 2 (h) of the Act.
Nor was any such challenge made in the Special Leave Petition to this Court or
in the statement of the case. On the contrary, the appellant has itself applied
to the Judge, Revisions under s. 10 of the Act contending the Explanation II to
s. 2(h) was ultra vires. It is not therefore open to the appellants to deny the
jurisdiction of the Revisional Authority to decide the question or to challenge
the jurisdiction of the High Court to examine the question of law referred to
it under s. I 1 of the Act and to pronounce upon the constitutional validity of
the impugned section.
In other words, it must be taken that the
appellants had voluntarily submitted to the jurisdiction of the Revisional
Authority and of the High Court on the matter in issue and having submitted to
the jurisdiction and having taken the chance of judgment in its favour, it is
not right that the Appellants should take exception to the jurisdiction of the
High Court when the judgment has gone against it. We cannot therefore permit
the appellants to canvass in this Court for the first time the question whether
it was competent for the (1)  S.C.R. 1355. (2)  1 S.C.R. 482.
(3)  1 S.C.R. 829. (4) I.L.R. 
(5)  2 S.C.R.229.
523 High Court to decide the question of law
referred to it under s. 11 of the Act. We accordingly reject the, argument of
the appellants on this aspect of the case.
It was lastly submitted by Mr. Chagla that a
reference to the High Court under s. II of the Act at the instance of the
Commissioner of Sales-tax was incompetent as the Commissioner was neither a
dealee nor 'a person aggrieved within the meaning of the section as it
originally stood and the amendment effected in sub-s. (3) of s. I 1 by U.P.
Sales tax Act 8 of 1954 which came into force on April 1, 1954 was not
retrospective in character and could not apply to proceedings which had been
initiated earlier before Sales tax authorities as well as before the Revising
It was pointed out that the appellate order
was made on January 4, 1952 and the revision application was filed before the
amending Act of 1954 came into force. It further appears that the revision
application was disposed of on July 8, 1957 by the Revising Authority. The
contention put forward on behalf of the appellants was that the Commissioner
had no power to apply for a reference at the time the appellants had made the
application for revision.
It was conceded by Mr. Chagla that at the
time the Commissioner applied for a reference under S. 11 of the Act the
amending Act 1954 had already come into force and under the amended section the
Commissioner was empowered to ask for a reference. The point taken was that the
material date was the date on which the appellants made the application for
revision and not the date on which the application was actually decided by the
Revising Authority. We are unable to accept this argument as correct. The right
to apply for a reference is conferred upon a person aggrieved by an order
passed under s. 10 and this right exists regardless of when the application for
revision was made. Only the existence of an order under s. 10 is required for
the accrual of the right to make an application for a reference. It was
suggested by Mr. Chagla that the Commissioner did not have the right to apply
for a reference because the right did not exist when the appellants had made
the application for revision. But the right did exist on the date on which the
Commissioner applied for a reference and -there is nothing in the language or
context of s. II to suggest that the Commissioner could exercise the right only
if it existed on the date on which the application for revision had been made.
On behalf of the appellants Mr. Chagla referred to the well recognised rule
that a statute should be interpreted, as far as possible, so as to respect
vested rights. But this rule has no application to the present case for we do
not think that amendment of s. 1 1 of the Act by enabling the Commissioner also
to ask for a reference of a question to the High Court alters any vested or
substantive right of the assessee. On the contrary, we consider that the L7Sup.C.1168-9
524 amendment is merely a procedural matter and the present case falls within
the general principle that the presumption against a retrospective construction
has no application to enactments which affect only the procedure and practice
of courts. For "it is perfectly settled that if the legislature forms a
new procedure, that, instead of proceeding in this form or that, you should
proceed in another and a different way, clearly there bygone transactions are
to be sued for and enforced according to the new form of procedure. Alterations
in the form of procedure are always retrospective, unless there is some good
reason or other why they should not be." (Gardner. v. Lucas) (1). We, are
accordingly of the opinion that Mr.Chagla is Unable to make good his argument
-on this aspect of the case.' For 'these reasons we hold that there is no merit
in these appeals which are accordingly dismissed with costs-there will be one
V.P.S Appeals dismissed.
(1)  3 A.C. 582,603.