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SUPREME COURT OF INDIA
20th November, 1963
A.K. SARKAR, M. HIDAYATULLAH AND J.C. SHAH, JJ.
The Provincial Government of Madras (Now Andhra Pradesh) represented by the District Collector Kurnool (In all the Appeals), Appellant
Versus
J. S. Basappa (In all the Appeals), Respondent.
Civil Appeals Nos. 494 to 496 of 1962.
Advocates appeared
Mr. A. V. Viswanatha Sastri, Senior Advocate, (M/s. T. V. R. Tatachari and B. R. G. K. Achar, Advocates, with him), for Appellant (In all the Appeals); Mr. K. Bhimasankaram, Senior Advocate, (Miss Chander Kohli and Mrs. E. Udayaratnam, Advocates, with him), for Respondent (In all the Appeals).
SALES TAX - Jurisdiction of Civil Court - Finality of Appellate Order - Exclusion of Jurisdiction - Fundamental Provisions of the Act - Non-Compliance - Validity of Order - Assessment - Severability of Illegal Levy.
Fact of the Case:
The assessee, a groundnut-oil merchant, filed suits for refund of sales tax paid under the Madras General Sales Tax Act, 1939, claiming that certain sales took place outside the Province of Madras and were not subject to tax. The State Government contended that the civil court lacked jurisdiction, the suits were barred by time, and the assessments were not severable.
Finding of the Court:
The Supreme Court held that the civil court had jurisdiction to entertain the suits as the exclusion of its jurisdiction was not expressly provided for in the Act and the finality conferred on appellate orders was subject to revision. The suits were not barred by time as the limitation period prescribed in S. 18 of the Act did not apply to the type of suits filed by the assessee. The assessments were not severable as the tax was a composite one and separating the validly taxed transactions from the invalid ones would require the court to undertake the function of assessment, which was beyond its jurisdiction.
Issues: 1. Whether the civil court had jurisdiction to entertain the suits challenging the sales tax assessments. 2. Whether the suits were barred by time under S. 18 of the Madras General Sales Tax Act, 1939. 3. Whether the assessments were severable, allowing the court to declare only the illegal portion of the levy void.
Ratio Decidendi: 1. The exclusion of the civil court's jurisdiction is not to be readily inferred and requires an express provision or a necessary and inevitable implication in the relevant statute. The finality conferred on appellate orders under the Act was subject to revision and did not bar the civil court's jurisdiction to examine the validity of the orders with reference to fundamental provisions of the statute. 2. S. 18 of the Act, which prescribed a limitation period for suits against the Government or its officers for acts done under the Act, did not apply to the type of suits filed by the assessee, which were for refund of sales tax paid under protest. 3. The assessments were not severable as the tax was a composite one and separating the validly taxed transactions from the invalid ones would require the court to undertake the function of assessment, which was beyond its jurisdiction.
Final Decision: The appeals filed by the State Government were dismissed, upholding the High Court's decision that the total assessments were void due to the inclusion of an illegal levy.
Judgement
HIDAYATULLAH, J. : This judgment will dispose of Civil Appeals Nos. 494 to 496 of 1962. The State of Andhra Pradesh which now stands substituted for the Provincial Government of Madras is the appellant. The respondent is one J. S. Basappa, a groundnut-oil merchant of Kurnool who was selling oil within the province and also exported it to extra-Provincial points. These three appeals concern sales-tax for the year 1944-45, 1945-46, and 1946-47. They arise out of three suits filed by Basappa against the Provincial Government of Madras now represented by the Government of Andhra Pradesh, the details of which are given below.
2. For the year 1944-45, Basappa was assessed to sales tax amounting to Rs. 12,983-2-2 of which according to him, a sum of Rs. 1,594-1-5 only represented sales within the Province. He claimed that the remaining sales took place outside the Province of Madras. He submitted that property in the goods remained with him till the export of the goods to an extra-Provincial point and till payment of price after export. He claimed that these sales could not be included in his turnover under the Madras General Sales Tax. Act 1939 (Act No. IX of 1939) and sales-tax was wrongly demanded from him. In respect of this assessment, he filed O. S. No. 14 of 1950 (original No. O. S. 40 of 1949) in the Court of the Subordinate Judge, Kurnool for refund of Rs. 11,389-0-9. The Madras State Government in a written statement traversed all the allegations and stated that delivery of the goods was made in Kurnool when the goods were booked and further that the goods were despatched at buyer s risk and remained at buyer s risk thoughout. It also contended that the notice under S. 80 was not proper and the suit was not in accordance with the notice and was not maintainable because the orders under the Sales Tax Act were made final by S. 11 (4) of the Sales Tax Act and because Basappa had not exhausted his other remedies under the Sales Tax Act. Lastly, it contended that the suit was barred by time not having been filed within six months from the date of the act complained of as required by S. 18 of the Sales-tax Act or within one year as required by Art. 16 of the Indian Limitation Act.
3. In respect of the year 1945-46, Basappa filed O. S. No. 44 of 1949 claiming a refund of Rs. 8,356/- on similar grounds, and in respect of the year 1946-47 he filed O. S. No.23 of 1949 for a declaration that the levy of Rs. 9,233-6-7 was illegal and without jurisdiction and for a permanent injunction to restrain the taxing authority from collecting the tax. In this suit, in addition to the defences also taken in the other suits it was contended that the suit was incompetent as a revision application was pending with the Board of Revenue.
4. These suits were disposed of by the Subordinate Judge, Kurnool by a common judgment dated February 22, 1951. The main points which were decided were :- (1) whether the suits were not maintainable as (a) the civil court had not jurisdiction and (b) the assessee had not exhausted his other remedies, (2) whether the suits, were barred by time, and (3) whether the sales took place outside the Province of Madras and the levy of the tax in respect of some of the transactions was illegal. The Subordinate Judge held that there was nothing in the Sales-tax Act to exclude the jurisdiction of the civil court and that the finality spoken of by S. 11 of the Sales-tax Act was a finality arising under the Sales-tax Act and had no reference to the jurisdiction of the civil court. He also held that Basappa was not required to exhaust his other remedies before moving the civil court by suit. On second point, the Subordinate Judge held that O. S. Nos. 14 of 1950 and 44 of 1949 were barred by time under S. 18 of the Sales-tax Act or Art. 16 of the Limitation Act whichever might be applied. The learned Subordinate Judge held that Art. 62 of the Limitation Act was not applicable because Basappa had not pleaded in these two suits th
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