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SUPREME COURT OF INDIA
23rd April, 1965
P.B. GAJENDRAGADKAR, C.J.I. K.N. WANCHOO, J.C. SHAH, RAGHUBAR DAYAL, S.M. SIKRI, R.S. BACHAWAT AND V. RAMASWAMI, JJ.
M/s. Kamala Mills Ltd., Appellant
Versus
State of Bombay, Respondent.
1. M/s. K. S. Venkataraman and Co. Pvt. Ltd.; 2 to 10, Advocates General for the State of Assam, Kerala, Gujarat, Madras, Madhya Pradesh, Rajasthan, Uttar Pradesh, West Bengal and Andhra Pradesh, Intervenes.
Civil Appeal No. 481 of1963.
Advocates appeared
Mr. A. V. Viswanatha Sastri, Senior Advocate, (Mr. I. N. Shroff, Advocate, with him), for Appellant; Mr. S. V. Gupte, Solicitor General of India and Mr. S. G. Patwardhan, Senior Advocate, (Mr. R. H. Dhebar, Advocate, with them), for Respondent; Mr. S. Venkatakrishnan, Advocate, for Intervener No. 1; Mr. Naunit Lal, Advocate, for Intervenor No. 2; Mr. P. Govinda Menon and Dr. V. A. Seyid Muhammed, Advocates, for Intervener No. 3; M/s. R. Ganapathy Iyer and B. R. G. K. Achar, Advocates, for Intervenor No. 4; Mr. N. Krishnaswamy Reddy, Advocate General for the State of Madras (Mr. V. Ramaswami, Addl. Govt. Pleader and Mr. A. V. Rangam, Advocate with him), for Intervenor No. 5; Mr. M. S. Gupta, Advocate, for Intervenor No. 6; Mr. G. C. Kasliwal, Advocate General for the State of Rajasthan (M/s. K. K. Jain and R. N. Sachthey, Advocates with him), for Intervener No. 7; Mr. C. B. Agarwala, Senior Advocate, (Mr. O. P. Rana, Advocate, with him), for Intervener No. 8; Mr. B. Sen, Senior Advocate, (Mr. S. C. Bose, Advocate and Mr. P. K. Chakravarti, Advocate, for Mr. P. K. Bose, Advocate with him), for Intervener No. 9; Mr. B. V. Subramaniam, Advocate General for the State of Andhra Pradesh, (Mr. B. R. G. K. Achar, Advocate with him), for Intervener No. 10.
SALES TAX - Assessment - Bar of suit - S. 20, Bombay Sales Tax Act (V of 1946) - Assessment order passed without jurisdiction - Whether suit competent - Whether S. 20 creates an absolute bar - Whether S. 20 is constitutionally valid - Whether S. 20 bars a suit challenging the validity of S. 20 itself.
Fact of the Case:
The appellant, a Limited Company, was registered as a "Dealer" under the provisions of the Bombay Sales Tax Act, 1946 (No. V of 1946) (hereinafter called the Act). During the period 26th January, 1950 to 31st March, 1951, the appellant sold goods inside and outside the then State of Bombay. The appellant instituted a suit on the Original Side of the Bombay High Court, claiming to recover the sales tax levied and collected from it on the ground that it had been illegally levied against it. The respondent resisted the suit 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.
Finding of the Court:
The Court held that S. 20 of the Act creates an absolute bar against the institution of a suit challenging the validity of an assessment order passed under the Act, even if the assessment order is passed without jurisdiction. The Court further held that S. 20 is constitutionally valid. However, the Court also held that S. 20 does not bar a suit challenging the validity of S. 20 itself.
Issues: 1. Whether S. 20 of the Bombay Sales Tax Act (V of 1946) creates an absolute bar against the institution of a suit challenging the validity of an assessment order passed under the Act, even if the assessment order is passed without jurisdiction? 2. Whether S. 20 of the Bombay Sales Tax Act (V of 1946) is constitutionally valid? 3. Whether S. 20 of the Bombay Sales Tax Act (V of 1946) bars a suit challenging the validity of S. 20 itself?
Ratio Decidendi: 1. The Court held that S. 20 of the Bombay Sales Tax Act (V of 1946) creates an absolute bar against the institution of a suit challenging the validity of an assessment order passed under the Act, even if the assessment order is passed without jurisdiction. The Court reasoned that the words used in S. 20 are so wide that even erroneous orders of assessment made would be entitled to claim its protection against the institution of a civil suit. 2. The Court held that S. 20 of the Bombay Sales Tax Act (V of 1946) is constitutionally valid. The Court reasoned that the bar created by S. 20 does 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 are no words in the said provision which could be construed as excluding civil Court's jurisdiction either expressly or impliedly. 3. The Court held that S. 20 of the Bombay Sales Tax Act (V of 1946) does not bar a suit challenging the validity of S. 20 itself. The Court reasoned that the bar created by S. 20 cannot obviously be pleaded where the validity of S. 20 itself is challenged.
Final Decision: The appeal was dismissed with costs.
Judgment
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, Kamala 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 textiles 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, whereas 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. 65,187-44.
2. 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 Bengal Immunity Co. Ltd. v. State of Bihar, 1955-2 SCR 603 on the 6th September, 1955. The appellant s case further was that S. 20 if 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.
3. 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.
4. On these pleadings, the learned trial Judge framed nine issues. Issue No. 2 was in regard to the jurisdiction of the Court to entertain the suit. This issue was tried by the learned trial Judge as a preliminary issue. He held that 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.
5. 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 appeal.
6. 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 a
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