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SUPREME COURT OF INDIA
M. HIDAYATULLAH, J.M. SHELAT AND G.K. MITTER, JJ.
Tata Engineering and Locomotive Co. Ltd., Appellant
Versus
the Assistant Commissioner of Commercial Taxes and another, Respondants.
Civil Appeal No 1604 of 1966
D/- 24-2-1967.
Advocates appeared
Mr. N. A. Palkhiwala, Senior Advocate, (Mr. S. P. Mehta, Advocate, and M/s. Ravinder Narain and O.C. Mathur Advocates, of M/s. J. B. Dadachanji and Co., with him) for Appellant; Mr. Niren De, Addl. Solicitor-General of India, (Mr. U. P. Singh Advocate, with him), for Respondents.
ARTICLE 226 - JURISDICTION OF HIGH COURT - EXHAUSTION OF ALTERNATIVE REMEDIES - EXCEPTIONS - SALES TAX - ASSESSMENT OF TAX ON SALES OUTSIDE THE STATE - JURISDICTION OF ASSISTANT COMMISSIONER - HIGH COURT'S JURISDICTION TO ISSUE WRIT - CIRCUMSTANCES IN WHICH WRIT CAN BE ISSUED.
Fact of the Case:
The appellant company, a public limited company, manufactured Tata Mercedes-Benz trucks, bus chassis, and spare parts in Jamshedpur, Bihar. The company sold its products to dealers in various parts of India, who then resold them to consumers. The company filed returns for the quarter ending on June 30, 1965, under the Bihar Sales Tax Act and Central Sales Tax Act, including sales to consumers in Bihar State and sales in the course of inter-state trade or commerce. The company did not include sales from its stock-yards in any of its returns. The Assistant Commissioner Commercial Taxes, Jamshedpur, sent a notice to the company informing them that the returns appeared to be incorrect as all sales were not included and directed the company to include all its sales in revised returns. The company demurred, claiming that sales from their stock-yards in other States were neither sales in the State of Bihar nor sales in the course of inter-State trade or commerce and were thus not taxable in Bihar. The company filed amended returns under protest and without prejudice to its contentions. The Assistant Commissioner proceeded to assess the company. The company filed a petition under Art. 226 of the Constitution of India in the Patna High Court for directions or orders or writs including a writ in nature of certiorari calling for the records and quashing the order of the Assistant Commissioner. The High Court dismissed the petition at the threshold, holding that the company had not exhausted the internal remedies provided in the Sales Tax Act by way of appeal, revision, or reference and statement of a case to the High Court. The company obtained special leave from the Supreme Court and filed an appeal.
Finding of the Court:
The Supreme Court held that the High Court ought to have taken jurisdiction in this case at least to issue a rule nisi to see what the Assistant Commissioner had to say. The High Court could always decline to decide the case if disputed questions of fact requiring finding thereon, arose but so far as the Supreme Court could see, no such question was likely to arise.
Issues: Whether the High Court ought to have exercised jurisdiction in this case to issue a writ of certiorari quashing the order of the Assistant Commissioner.
Ratio Decidendi: The power and jurisdiction of the High Court under Art. 226 of the Constitution is extraordinary and to be used sparingly. It is not appellate and cannot be a substitute for the ordinary remedies at law. However, there are certain exceptions to this rule, one of which is where action is being taken under an invalid law or arbitrarily without the sanction of law. In such a case, the High Court may interfere to avoid hardship to a party which will be unavoidable if the quick and more efficacious remedy envisaged by Article 226 were not allowed to be invoked.
Final Decision: The Supreme Court set aside the order of the High Court and remitted the case for further consideration after issuing a rule nisi so that the Assistant Commissioner may file a return to the claim put forward by the appellant Company.
Judgement
HIDAYATULLAH, J. : The appellant is a public Limited Company which manufactures the well-known Tata Mercedes-Benz trucks, bus chassis, their spare parts and other accessories at Jamshedpur in the State of Bihar and they are sold to the Government of India, the State Governments State Transport Corporations and others. In the course of its business the appellant Company sells its products, particularly the trucks and bus chassis, to dealers in various parts of India and the dealers resell them to consumers all over India. According to the appellant Company, its sales in the Indian market are of three kinds:
(a) Sales inside Bihar State;
(b) Sales in the course of inter-state trade and commerce; and
(c) Sales effected from their stock-yards located in States other than Bihar. The present appeal concerns sales in the last category and the question arises in the following circumstances.
2. The appellant Company filed returns for the quarter ending on June 30, 1965, under the Bihar Sales Tax Act and Central Sales Tax Act respectively, including in the former sales to consumers in Bihar State and in the latter sales in the course of inter-state trader or commerce, and paid full tax due on such sales. The appellant Company did not include sales from the stock-yards, in any of its returns.
3. On November 12, 1965 the Assistant Commissioner Commercial Taxes, Jamshedpur sent a notice (No. 11284) informing the appellant Company that the returns appeared to be incorrect as all sales were not included and directed the appellant Company to include all its sales in revised returns and all returns to be filed in future. The appellant Company demurred that sales from their stock-yards in other States were neither sales in the State of Bihar, nor sales in the course of inter-State trade or commerce and were thus not taxable in Bihar. This plea was not accepted and revised returns for the quarters ending on June 30 and September, 30, 1965 were ordered to he filed. The appellant Company filed amended returns under protest and without prejudice to its contentions. At the same time the appellant Company disclosed the entire procedure of sales ex-stock yards and relied upon Section 4 (2) of the Central Sales Tax Act to exclude such sales. The appellant Company also inquired whether these sales were to be treated as sales in Bihar for the purposes of the Bihar Sales Tax Act or as sales in the course of interstate trade and commerce for purposes of the Central Sales Tax Act, but no reply was given. The appellant Company further asked for an opportunity to produce declarations from its customers, who are also registered dealers, with a view to claiming a rebate, but this opportunity was denied. The appellant Company objected to the assessment for a period of six months under a tax legislation which it claimed, was intended to operate yearly but to no effect. According to the revised returns filed under compulsion the break-up of the sales was as follows: The total gross turnover was Rs. 33,99,23, 595. The appellant Company claimed to deduct (a) sales from stock-yards at extra State points (Rs. 15,09,24,204); (b) sales in the course of export out of India (Rs. 34,83,671); and (c) sales effected in Bihar on which Bihar Sales Tax was payable (Rs. 3,64 79,209). The balance Rs. 14,90,36, 510, according to the appellant Company, consisted of sales (Rs. 14,33,02,855 to registered dealers taxable at 2 per cent and sales of the balance to unregistered dealers taxable at 10 per cent. The tax for the period April 1, 1965 to September 30. 1965 was computed at Rs. 34,05,028. The appellant Company stated to have paid against it Rs. 34,45,699 as tax in the Government Treasury and denied any further liability.
4. The Assistant Commissioner after turning down the requests for adjournments proceeded to assess the appellant Company v. The gross turnover for the two quarters was taken to be Rs. 35,13,60,725. The difference (Rs. 1,14,37,129) arose because tax in oth
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