Firm And Illuri Subbayya Chetty and
Sons Vs. The State of Andhra Pradesh [1963] INSC 16 (25 January 1963)
25/01/1963 GAJENDRAGADKAR, P.B.
GAJENDRAGADKAR, P.B.
SINHA, BHUVNESHWAR P.(CJ) WANCHOO, K.N.
HIDAYATULLAH, M.
SHAH, J.C.
CITATION: 1964 AIR 322 1964 SCR (1) 752
CITATOR INFO:
F 1964 SC 807 (28) R 1964 SC1873 (8,9) R 1965
SC1942 (15,18,36) R 1966 SC 249 (28,29,59,66,68) D 1966 SC1089 (13,18) R 1966
SC1738 (6) R 1968 SC 169 (12) R 1968 SC 271 (10) E 1969 SC 78
(7,17,19,24,26,29,31,32) R 1971 SC1558 (19) E 1975 SC2238 (21) RF 1977 SC 955
(15)
ACT:
Civil Court--jurisdiction-Exclusion
of-"Any assessment made under this Act" meaning of-Scope of-Madras
General Sales Tax Act, 1939 (Mad. 9 of 1939), s. 18-A.
HEADNOTE:
The appellant filed a suit against the
respondent for a decree for Rs. 8339/- on the ground that the said amount had
been illegally recovered from it under the Madras General Sales Tax Act, 1939,
for the years 1952-54. The respondent 753 resisted the claim on the ground that
the suit was incompetent under s. I 8-A of the Act. On the merits, it was
contended that the transactions in regard to groundnuts on which sales tax was
levied and recovered from the appellant were transactions of purchase and not
of sale, and it was urged that the appellant having voluntarily made the return
and paid the taxes, it was not open to it to contend that the transactions were
not taxable under the Act.
Besides it was argued that the appellant had
not preferred an appeal either to the Deputy Commissioner of Commercial Taxes
or to the Sales Tax Appellate Tribunal against the assessments and bence the
suit was not maintainable. The suit was decreed by the trial court but the High
Court reversed that decision and dismissed the suit on the ground that in view
of the provisions of s. 18-A of the Act, the suit was incompetent.
Alternatively. it was found on merits that the claim made by the appellant was
not justified. The appellant came to this Court by special leave.
Held, that s. 18-A excludes the jurisdiction
of Civil Courts to set aside or modify any assessment made under the Act.
There is no express provision in the Act
under which the suit can be said to have been filed and it falls under the
prohibition contained in this section. The prohibition is express and
unambiguous and no suit can be entertained by a Civil Court, if by instituting
the suit. the plaintiff wants to set aside or modify any assessment made under
the Act.
Where an order of assessment has been made by
an appropriate authority under the provisions of the Act, any challenge to its
correctness and any attempt either to have it set aside or modified must be
made before the appellate or revisional forum prescribed by the relevant
provisions of the Act. A suit instituted for that purpose is barred under s.
18-A.
When the appellant made its voluntary returns
and paid the tax in advance to be adjusted at the end of the year from time to
time, it treated the groundnut transactions as taxable. The appellant having
conceded the taxable character of the transactions in question, no occasion
arose for the taxing authorities to consider whether the said transactions
could be taxed or not. Even after the impugned orders of assessment were made,
the appellant did not choose to file an appeal and urge before the appellate
authority that. the transactions were sale transactions and as such were
outside the purview of s. 5A (2). If an order made by a taxing authority under
the relevant provisions of the Act in a case where the taxable character of a
transaction is disputed, is final and cannot be challenged in a civil court by
a separate suit, the position is just 754 the same where the taxable character
of the transactions is not even disputed by the dealer who accepts the order
for the purposes of the Act and then institutes a suit to set aside or modify
it.
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 arc correct
or not. It is the activity of the assessing officer acting as such officer
which is intended to be projected 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. 18-A. The fact
that the order passed by the assessing authority may in fact be incorrect or
wrong does not affect the position that in law the said order has been passed
by an appropriate authority and the assessment made by it must be treated as
made under this Act. 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 authority.
There is a general presumption that there
must be a remedy in the ordinary civil courts to a citizen claiming that an
amount has been recovered from him illegally and such a remedy could be held to
be barred only on very clear and unmistakable indications to the contrary. The
exclusion of jurisdiction of civil courts to entertain civil causes will not be
assumed unless the relevant statute contains an express provision to the effect
or leads to a necessary and inevitable implication of that nature. The mere
fact that a special statute provides for certain remedies may not by itself
necessarily exclude the jurisdiction of the civil courts to deal with a case
brought before it in respect of some of the matters covered by the said
statute.
There is no justification for the assumption
that if a decision has been made by a taxing authority under the provisions of
a taxing statute, its validity can be challenged by a suit on the ground that
it is incorrect on merits and as such it can be claimed that the provisions of
the said statute have not been complied with. Non- compliance with the
provisions of the statute must be non- compliance with such fundamental
provisions of the statute as would make the entire proceedings before the
appropriate authority illegal and without jurisdiction. If an appropriate
authority has acted in violation of the fundamental principles of judicial
procedure, that may also tend to make the proceedings illegal and void and that
infirmily may affect the validity of the order passed by the authority in
question. It is cases of this character where the 755 defect or infirmity in
the order goes to the root of the order and makes it in law invalid and void
that these observations may perhaps be invoked in support of the plea that the
civil court can exercise its jurisdiction notwithstanding a provision to the
contrary contained in the relevant statute.
Secretary of State v. Mask & Co., (1940)
67 I.A. 222 and Reliegh Investment Co. Ltd. v. Governor General in 'Council,
(1947) 74 I.A. 50, relied on.
State of Andhra Pradesh v. Sri Krishna
Coconut Co. (1960) 1 Andhra W.R. 279, overruled.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 315 of 1962.
Appeal by special leave from the judgment and
order dated November 16,1960 of the Andhra Pradesh High Court in A.S. No. 397
of 1957.
A. Ranganadham Chetty, A. Vedavalli and A. V.
Rangam, for the appellant.
D.Narasaraju, Advocate-General for the State
of Andhra Pradesh, T.V.R. Tatachari and P.D, Xenon, for the respondent.
1963. January 25. The judgment of the Court
was delivered by GAJENDRAGADKAR, J.-The short question which arises in this
appeal is whether the suit instituted by the appellant, Firm of Illury Subbayya
Chetty & Sons, in the court of the Subordinate judge at Kurnool, seeking to
recover Rs. 8,349/- from the respondent, the State of Andhra Pradesh, on the
ground that the said amount had been illegally recovered from it under the
Madras General Sales Tax Act, 1939 (Mad.
IX of 1939) (hereinafter called the Act) for
the years 1952- 54 is competent or not ; and this question has to be determined
in the light of the scope and effect of section 18-A of the Act.
756 The appellant is a firm of merchants
carrying on commission agency and other business at Kurnool and as such, it
purchases and sells ground-nuts and other goods on behalf of principles for
commission. For the year 1952-53 the Sales- tax authorities included in the
appellant's taxable turnover an amount of Rs. 3,45,488/12/10 representing
groundnut sales and collected the tax on the total turnover from it in
September, 1953 when the amount of the said tax was determined and duly
adjusted. The said turnover of Rs. 3,45,488/12/10 in fact represented sales of
groundnuts and not purchases and tax was recovered from the appellant on the
said amount illegally inasmuch as it is only on purchase of groundnuts that the
tax is leviable. As a result of this illegal levy, the' appellant had to pay
Rs. 5.398/4/3 for the said year. Similarly, for the subsequent year 1953-1954
the appellant had to pay an illegal tax of Rs. 1,159/11/,9.
In its plaint, the appellant claimed to
recover this amount together with interest @ 12% per annum and that is how the
claim was valued at Rs. 8,349/-.
This claim was resisted by the respondent on
two grounds.
It was urged that the suit was in-comepetent
having regard to the provisions of s. 18-A of the Act; and on the merits it was
alleged that the transactions in regard to groundnuts on which s lestax was
levied and recovered from the appellant were transactions of purchase and not
of sale. In this connection, the respondent referred to the fact that the
appellant itself had included the transaction in question in the return
submitted by it in form A and that it was making payments tentatively every
month to be adjusted after the final assessment was made at the end of the
year.
Accordingly, the final adjustment was made in
September and the total amount due from the appellant duly recovered.
Thus, the appellant having voluntarily made
the return and paid the taxes, it was not open to him to 757 contend that the
transactions in regard to groundnuts were not taxable under the Act. Besides,
the appellant had not preferred an appeal either to the Deputy Commissioner of
Commercial taxes or to the Sales Tax Appellate Tribunal ;
and so, it had not availed itself of
-remedies provided by the Act.
On these pleadings, the trial Court framed
three principal issues. The first issue was whether the suit was barred by s.
18-A of the Act; the second was whether there had been excess collection of
sales tax for the two years in question and if so, how much ? And the third
issue was whether the appellant was estopped from questioning the validity of
the assessment ? According to the trial court, the respondent had failed to
prove its pleas against the apppellant's claim and so, it recorded findings in
favour of the appellant in all the three issues. In the result, a decree
followed in favour of the appellant for the recovery of Rs. 6,558/- with
interest 6% per annum from November 12, 1955 till the date of payment.
This decree was challenged by the respondent
by preferring an appeal before the High Court of Andhra Pradesh. It appeared
that the decision of the said High Court in the case of State of Andhra Pradesh
v. Shri Krishna Cocoanut Co.
(1), was in favour of the view taken by the
trial Court ;
but the respondent urged before the High
Court that the said decision was erroneous in law and require reconsideration.
That is why the respondent's appeal was
placed before a Full Bench of the High Court. The Pull Bench has upheld the
contentions raised by the respondent. It has held that in view of the
provisions of s. 18-A of the Act, the suit is incompetent. Alternatively, it
has found that on the merits, the claim made by the appellant was not
justified.
The result of these findings was that the
respondent's appeal was allowed and the appellant's suit was dismissed (1)
(1960) 1 Andhra W.R.279.
758 with costs. The appellant had filed
cross-objections claiming additional interest on the decretal amount, but since
its suit was held to be incompetent by the High Court, its cross-objections
failed and were dismissed with costs.
it is against this decree that the appellant
has come to this Court by special leave.
Mr. Ranganathan Chetty for the appellant
contends that the High Court was in error in coming to the conclusion that the
appellant's suit was incompetent because he argues that the High Court has
misjudged.the effect of the provisions of s. 18-A In dealing With the question
wether civil courts jurisdiction to entertain suit is barred or not it is
necessary to bear in mind the fact that there is a general presumption that
there must be a remedy in the ordinary civil courts to a citizen claiming that
an amount has been recovered from him illegally and that such a remedy can be
held to be barred only on very clear and unmistakable indications to the
contrary. The exclusion of the jurisdiction of Civil Courts to entertain civil
causes will not be assumed unless the relevant statute contains an express
provision to that effect, or leads to a necessary and inevitable implication of
that nature .The mere fact that a special statute provides for certain remedies
may not by itself necessarily exclude the jurisdiction of the , civil courts to
deal with a case brought before it in respect of some of the matters covered by
the said statute.
It is, therefore,necessary to enquire whether
s.18- Aexpressly or by necessary implication excludes the jurisdiction of the
civil court to entertain a suit like the present. Section 18-A provides that no
suit or other Proceeding shall, except as expressly provided in this Act.
be instituted in any Court to set aside or
modify any assessment made under this Act. It is common ground that there is no
express provision made in the Act under which the present 759 suit can be said
to have been filed, and so, it falls under the prohibition contained in this
section. The prohibition is express and unambiguous and there can be no doubt
on a fair construction of the section that a suit cannot be entertained by a
civil court if, by instituting the suit, the plaintiff wants to set aside or
modify any assessment made under this Act. There is therefore, no difficulty in
holding that this section excludes the jurisdiction of the civil courts in
respect of the suits covered by it.
It is, however, urged by Mr. Chetty that if
an order' of assessment has been made illegally by the appropriate authority
purporting to exercise its powers under the Act, such an assessment cannot be
said to be an assessment made under this Act. He contends that the words used
are "any assessment made under this Act" and the section does not
cover cases of assessment which are purported to have been made under this Act.
In support of this argument he has referred us to the provisions of s. 17 (1)
and s. 18 where any act done or purporting to be done under this Act is
referred to. It would, however, be noticed that having regard to the
subject-matter of the provisions contained in ss. 17 (1) and 18 it was
obviously necessary to refer not only to acts done, but also to acts purporting
to be done under this Act. Section 17 (1) is intended to bar certain
proceedings and s. 18 is intended to afford an indemnity and that is the reason
why the legislature had to adopt the usual formula by referring to acts done or
porting to be done. It was wholly unnecessary purl to refer to cases of
assessment purporting to have been made under this Act while enacting s. 18-A,
because all assessments made under this Act would attract the provisions of s.
18-A and that is all that the legislature intends s. 18-A to cover.
The expression "'any assessment made
under this Act" is, in our opinion, wide enough to coverall 760
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.18-A. The fact that the order passed by the assessing authority may
in fact be incorrect or wrong does not affect the position that in law, the
said order has been passed by an appropriate authority and the assessment made
by it must be treated as made under this Act. Whether or not an assessment has
been made under this Act will not depend on the correctness or the accuracy of
the order passed by the assessing authority. In determining the applicability
of s.18-A. the only question to consider is: "Is the assessment sought to
be set aside or modified by the suit instituted an assessment made under this
Act or not?" It would be extremely anomalous, to hold that it is only an
accurate and correct order of assessment which falls under s.18-A. Therefore,
it seems to us that the orders of assessment challenged by the appellant in its
suit fall under s.18-A.
In this connection, it is necessary to
emphasise that while providing for a bar to suits in ordinary civil courts in
respect of matters covered by s.18-A, the legislature has taken the precaution
of safeguarding the 'citizens' rights by providing for adequate alternative
remedies. Section 11 of the Act provides for appeals to such authority as may
be prescribed; s. 12 confers revisional jurisdiction on the authorities
specified by it; s.12-A allows an appeal to the appellate Tribunal; s.12-B
provides for a provision by the High Court under the cases specified in it;
s.12-C provides for an appeal to the. High Court; and s. I 2-D lays down that
petitions, applications and appeals to High Court should be heard by a Bench of
not 761 less than two judges. The matter can even be brought to this Court by
way of a petition under Art. 130 of the Constitution. It would thus be seen
that and dealer who is aggrieved by an order of assessment passed in respect of
his transactions, can avail himself of the remedies provided in that behalf by
these sections of the Act. It is in the light of these elaborated alternative
remedies provided by the Act that the scope and effect of s.18-A must be
judged.
Thus considered, there can be no doubt that
where and order of assessment has been made by an appropriate authority the
provisions of this Act, any challenge to its correctness and any attempt either
to have it set aside or modified must be made before the appellate or the
revisional forum prescribed by the relevant provisions of the Act. A suit
instituted for that purpose would be barred under s. 18-A.
The facts alleged by the appellant in this
case are somewhat unusual. The appellant itself made voluntarly returns under
the relevant provisions of the Act and included the groundnut transactions as
taxable transactions. It was never alleged by the appellant that the said
transactions were transactions of sale and as such, not liable to be taxed
under the Act. It is true that under s.5A(2) groundnut is made liable to tax
under s.3(1) only at the point of the first purchase effected in the State by a
dealer who is not exempt from taxation under s. 3(3), but at the rate of 2% on his
turnover. When the appellant made its voluntary returns and paid the tax in
advance to be adjusted at the end of the year from time to time, it treated the
groundnut transactions as taxable under s.5A(2). In other words, the appellant
itself having conceded the taxable character of the transactions in question,
no occasion arose for the taxing authority to consider whether the said
transactions could be taxed or not; and even after the impugned orders of
assessment were made, the appellant did not choose to file an appeal and urge
762 before the appellate authority that the transactions were sale transactions
and as such, were outside the purview of s.5A(2). If the appellant had urged
that the said transactions were outside the purview of the Act and the taxing
authority in the first instance had rejected that contention, there would be no
doubt that the decision of the taxing authority would be final, subject, of
course, to the appeals and revisions provided for by the Act. The position of
the appellant cannot be any better because it did not raise any such contention
in the assessment proceedings under the Act. If the order made by the taxing
authority under the relevant provisions of the Act in a case where the taxable
character of the transaction is disputed is final and cannot be challenged in a
civil court by a separate suit, the position would be just the same where the
taxable character of the transaction is not even disputed by the dealer who
accepts the order for the purpose of the Act and then institutes a suit to set
it aside or to modify it.
The question about the exclusion of the
jurisdiction of the civil courts to entertain civil actions by virtue of
specific provisions contained in special statutes has been judicially
considered on several occasions. We may in this connection refer to two
decisions of the Privy Council. In Secretary of State v. Mask. & Coy., (1)
the Privy Council was dealing with the effect of the provisions contained in s.
188 of the Sea Customs Act (VIII of 1878). The relevant portion of the said
section provides that every order passed in appeal under this section shall,
subject to the power 'of revision conferred by s. 191, be final. Dealing with
the question about the effect of this provisions the Privy Council 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. Lord Thankerton who delivered the opinion of the
Board, however, proceeded to add that (1) (1940) 67 I.A. 222,236, 763 "it
is also well-settled that 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." It is
necessary to add that these observations, though made in somewhat wide terms,
do not justify the assumption that if a decision has been made by a taxing
authority under the provisions of the relevant taxing statute, its validity can
be challenged by a suit on the ground that it is incorrect on the merits and as
such, it can be claimed that the provisions of the said statute have not been
complied with. Non-compliance with the provisions of the statute to which
reference is made by the Privy Council must, we think, be non-compliance with
such fundamental provisions of the statute as would make the entire proceedings
before the appropriate authority illegal and without jurisdiction. Similarly,
if an appropriate authority has acted in violation of the fundamental
principles of judicial procedure, that may also tend to make the proceedings
illegal and void and this infirmity may affect the validity of the order passed
by the authority in question. It is cases of this character where the defect or
the infirmity in the order goes to the root of the order and makes it in law
invalid and void that these observations may perhaps be invoked in support of
the plea that the civil court can exercise its jurisdiction notwithstanding a
provision to the contrary contained in the relevant statute.
In what cases such a plea would succeed it is
unnecessary for us to decide in the present appeal because we have no doubt
that the contention of the appellant that on the merits, the decision of the
assessing authority was wrong, cannot be the subject-matter of a suit because
s. 18-A clearly bars such a claim in the civil courts.
The next decision to which reference may be
made was pronounced by the Privy Council in the 764 case of Releigh Investment
Coy. Ltd. v. Governor General in Council (1). In that case the effect of s. 67
of the Indian Income-tax Act fell to be considered. The said section, inter
alia, provides that no suit shall be brought in any civil court to set aside or
modify any assessment made under this Act. It would be noticed that the words
used in this section are exactly similar to the words used in s. 18-A with
which we are concerned. In determining the effect of s. 67, the Privy Council
considered the scheme of the Act by particular reference to the machinery
provided by the Act which enables an assessee effectively to raise in 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
judgment, though by no means conclusive, marches with a construction 'of the
section which denies an alternative jurisdiction to enquire into the same
subject-matter. It is true that the judgment shows that the Privy Council took
the view that even the constitutional validity of the taxing provision can be
challenged by adopting the procedure prescribed by the Income-tax Act; and this
assumption presumably proceeded on the basis that if an assessee wants to
challenge the vires of the taxing provision on which an assessment is purported
to be made against him, it would be open to him to raise that point before the
taxing authority and take it for a decision before the High Court under s. 66
(1) of the Act.' It is not necessary for us to consider whether this assumption
is well founded or not. But the presence of the alternative machinery by way of
appeals which a particular statute provides to a party aggrieved by the assessment
order on the merits, is a relevant consideration and that consideration is
satisfied by the Act with which we are concerned in the present appeal.
The clause "assessment made under this
Ace' which occurs in s. 18-A. also occurs in s. 67 with (1)(1947) 74 I.A. 50,
68.
765 which the privy Council was concerned,
and in construing the said clause, the Privy Council observed that "the
phrase "made under this Act" describes the provenance of the
assessment : it does not relate to its accuracy in point of law. The use of the
machinery provided by the Act, not the result of that use, is the test "
These two Privy Council's decisions support the conclusion that having regard
to the scheme of the Act, s. 18-A must be deemed to exclude the jurisdiction of
civil courts to entertain claims like the present.
In the result, we must hold that the view
taken by the High Court is right and so, the appeal fails and is dismissed.
There would be no order as to Appeal
dismissed.
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