1. Dispute over refund of sales tax paid under the Central Provinces and Berar Sales Tax Act, 1947, based on the alleged invalidity of the dealer's registration. (Para 1 , 2 )
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1962 Supreme(SC) 127
SUPREME COURT OF INDIA
B.P. SINHA, C.J.I., P.B. GAJENDRAGADKAR, K.N. WANCHOO, N. RAJAGOPALA AYYANGAR AND T.L. VENKATARAMA AYYAR, JJ.
Central Potteries Ltd., Nagpur, Appellant
Versus
State of Maharashtra and other, Respondents.
Civil Appeal No. 205 of 1961.
Advocates appeared
M/s. Shankar Anand, M. S. Gupta and Ganpat Rai, Advocates, for Appellants; Mr. M. C. Setalvad, Attorney General for India, Mr. C. K. Daphtary, Solicitor General of India, Mr. H. N. Sanyal, Additional Solicitor General of India and Mr. N. S. Bindra, Senior Advocate, (Mr. P. D. Menon Advocate, with them), for Respondent No 3.
Important Points
Substantive tax liability is created by the charging section and is independent of a dealer's registration. Procedural irregularities in the assumption of jurisdiction do not render an assessment void, particularly when the taxpayer has voluntarily submitted to the jurisdiction by filing returns.
Subject
Tax Law - Sales Tax
Act Referred
CENTRAL PROVINCES AND BERAR SALES TAX ACT: S.10, S.8, S.11, S.4, S.3
Headnote
(A) Central Provinces and Berar Sales Tax Act, 1947 - Sections 3, 4, 8, 10, 11 and 21 - Liability to pay tax - Validity of registration - Charging section vs. Registration - Substantive liability to pay tax is created by the charging section and is not conditional upon the registration of the dealer - A dealer who fails to get registered or whose registration is invalid is not absolved from the liability to pay tax under the charging section (Para 5).
(B) Jurisdiction - Want of jurisdiction vs. Irregular assumption of jurisdiction - An order passed by an authority with no jurisdiction is a nullity and open to collateral attack, but an order passed by an authority which has jurisdiction over the matter, but has assumed it otherwise than in the mode prescribed by law, is not a nullity and is not open to collateral attack (Para 7).
Facts of the case:
A company engaged in the manufacture and sale of potteries was registered as a dealer under a notification issued by the government. The registration certificate was issued before the final rules were published. The company subsequently sought a refund of sales tax paid, contending that the officer who issued the registration certificate was not validly appointed because the rules were not yet in force, thereby rendering the registration and subsequent assessments void.
Findings of Court:
The liability to pay tax arises under the charging section and is not conditional on registration. The invalidity of registration does not affect the substantive liability to be assessed to tax.
Issues: Whether the invalidity of a registration certificate issued by an officer appointed before the finalization of rules absolves a dealer from the liability to pay sales tax.
Ratio Decidendi: The charging section imposes the substantive liability to pay tax. Registration is a requirement for carrying on business as a dealer, but not a prerequisite for the tax liability itself. Furthermore, a procedural irregularity in the assumption of jurisdiction does not render the assessment proceedings void, especially when the party has voluntarily submitted to such jurisdiction by filing returns.
Result: Appeal dismissed.
(B) Jurisdiction - Want of jurisdiction vs. Irregular assumption of jurisdiction - An order passed by an authority with no jurisdiction is a nullity and open to collateral attack, but an order passed by an authority which has jurisdiction over the matter, but has assumed it otherwise than in the mode prescribed by law, is not a nullity and is not open to collateral attack (Para 7).
Facts of the case:
A company engaged in the manufacture and sale of potteries was registered as a dealer under a notification issued by the government. The registration certificate was issued before the final rules were published. The company subsequently sought a refund of sales tax paid, contending that the officer who issued the registration certificate was not validly appointed because the rules were not yet in force, thereby rendering the registration and subsequent assessments void.
Findings of Court:
The liability to pay tax arises under the charging section and is not conditional on registration. The invalidity of registration does not affect the substantive liability to be assessed to tax.
Issues: Whether the invalidity of a registration certificate issued by an officer appointed before the finalization of rules absolves a dealer from the liability to pay sales tax.
Ratio Decidendi: The charging section imposes the substantive liability to pay tax. Registration is a requirement for carrying on business as a dealer, but not a prerequisite for the tax liability itself. Furthermore, a procedural irregularity in the assumption of jurisdiction does not render the assessment proceedings void, especially when the party has voluntarily submitted to such jurisdiction by filing returns.
Result: Appeal dismissed.
Legal Category Hierarchy
Advocates:
C.K.DAFTARY, GANPAT RAI, H.N.SANYAL, M.C.SETALVAD, M.S.Gupta, N.S.BINDRA, P.D.MENON, Shankar Anand Zinjarde
C.K.DAFTARY, GANPAT RAI, H.N.SANYAL, M.C.SETALVAD, M.S.Gupta, N.S.BINDRA, P.D.MENON, Shankar Anand Zinjarde
Table of Contents
2. Whether invalid registration under Section 8 and failure to follow procedural notice requirements for non-registered dealers render tax assessments illegal and void. (Para 2 , 6 )
3. Substantive tax liability under the charging section is independent of registration; procedural irregularities in assuming jurisdiction do not render assessment orders nullities. (Para 5 , 6 , 7 )
4. Liability to pay tax under a charging section is not conditional upon registration; irregular assumption of jurisdiction is not a want of jurisdiction. (Para 5 , 7 )
5. Appeal dismissed with costs. (Para 9 )
6. Does invalid registration under Section 8 affect the liability to pay tax under the charging section?
No. The liability to pay tax arises under the charging section and is not conditional on registration. A dealer who is unregistered or has an invalid registration remains liable to pay tax. (Para 5 )
7. What is the distinction between want of jurisdiction and irregular assumption of jurisdiction?
An order passed by an authority without jurisdiction is a nullity open to collateral attack. An order passed by an authority with jurisdiction, but assumed otherwise than prescribed by law, is a mere irregularity and not a nullity. (Para 7 )
8. Does the failure to issue a procedural notice for assessment to a non-registered dealer render the assessment void?
No. Such failure is a mere irregularity in the assumption of jurisdiction, not a want of jurisdiction. The assessment remains valid, particularly when the dealer has voluntarily submitted returns. (Para 6 , 7 )
Judgement
VENKATARAMA AIYAR, J. : The sole point for determination in this appeal which is directed against the Judgment of the High Court of Bombay, is whether the appellant is not liable to pay tax under the provisions of the CENTRAL PROVINCES AND BERAR SALES TAX ACT , 1947 (Act 21 of 1947), on the ground alleged that it had not been validly registered as a dealer under S. 8 of the Act. The facts bearing on his contention are that the CENTRAL PROVINCES AND BERAR SALES TAX ACT , hereinafter referred to as "the Act", received the assent of the Governor-General on May 23, 1947 and came into force on June 1, 1947. On May 27, 1947 a notification No. 601 was issued by the Provincial Government publishing draft rules which it "proposed to make, in exercise of the powers conferred by S. 28 of the Act" and on August 15, 1947, the rules as finally adopted were published. In the meantime two other notifications Nos. 597 and 599 had been issued on May 27, 1947, No. 597 under S. 8 of the Act fixing August 15, 1947 as "the date by or on which all dealers liable to pay tax under the said Act shall get themselves registered" and No. 599 under S. 3 of the Act appointing the District Excise Officers as the Sales Tax Officers for "receiving applications for registration and for issuing certificates under S. 8 of the Act."
2. The appellant is a Company carrying on business in the manufacture and sale of potteries and chinaware in Nagpur. On July 2, 1947 it presented, pursuant to the notifications aforesaid, an application to the Sales Tax Officer for registering itself as a dealer under the Act. On this application a certificate was issued on July 21, 1947 and actually delivered to the appellant on September 13, 1947. Thereafter, the appellant had been duly submitting returns as provided in the Act and assessments were made thereon and taxes paid from the period commencing from June 1, 1947 to June 30, 1951. Some time thereafter the idea dawned on the appellant that the proceedings taken by the respondents under the Act were unauthorised, that the assessment were illegal and that in consequence it was entitled to refund of the amounts paid as sales tax. And so, on December 18, 1951, it instituted the suit out of which the present appeal arises claiming a refund of Rs. 6,650-11-9 being the amount paid for sales tax during the period June 1, 1947 to June 30, 1951 and a sum of Rs. 2,000 as damages, in all Rs. 8,650-11-9. Though a number of grounds were put forward in support of the claim, it is necessary now to deal with only one of them, and that is that the Sales Tax Officer who issued the registration certificate to the appellant on July 21, 1947 was not authorised to do so under the Act and that in consequence all the assessments and recoveries of tax were illegal and void. The basis for this contention is that S. 3(1) of the Act confers authority on the State Government to appoint any person to be a Commissioner of Sales Tax, and "such other persons under any prescribed designations" to assist him as it thinks fit. By notification No. 595 dated May 27, 1947 the Government appointed in exercise of the powers conferred by S. 3(1) the Excise Commissioner, Central Provinces and Berar to be the Commissioner of Sales Tax, Central Provinces and Berar. The validity of this notification is not now in question. The attack is on the notification No. 599 dated May 27, 1947 whereby the Government acting under S. 3 of the Act directed that the District Excise Officers in charge of districts shall be the Sales Tax Officers for purpose of registration of certificates under S. 8 of the Act. It is said that S. 3(1) authorises the Government to appoint "other persons under any prescribed designations", that the word "prescribed" is defined in S. 2(e) as meaning "prescribed" by rules made under this Act" and that as the rules finally came into force only on August 15, 1947 the appointment of District Excise Officers as Sales Tax Officers for the purpose of S. 8
