1962 Supreme(SC) 299

SUPREME COURT OF INDIA
B.P. SINHA, C.J.I., P.B. GAJENDRAGADKAR, K.N. WANCHOO, J.C. DAS GUPTA AND J.C. SHAH, JJ.
Amalgamated Coalfields Ltd. and another, Appellants
Versus
Janapada Sabha Chhindwara and others (In all the Appeals), Respondents.
Civil Appeals Nos. 469, 470, 506. 507 and 529 to 534 of 1962. Petns. Nos. 70 and 71 of 1962.
Advocates appeared
M/s. Sachin Chaudhari and B. Sen, Senior Advocates (M/s. J. B. Dadachanji, O. C. Mathur and Ravinder Narain, Advocates of M/s. J. B. Dadachanji and Co. with them), for Appellants; (In C. As Nos. 469 and 470 of 62) and the Petitioners (In Petns Nos. 70 and 71 of 62); (Mr. A. V. Vishwanatha Sastri, Senior Advocate; (Mr. R. Ganapathy Iyer, Advocate and Mr. G. Gopalakrishna, Advocate of M/s. Gagrat and Co. with him), for Respondent (In C. A. No. 469, 470, 506 and 507 of 62) Respondent Nos. 1 and 3 (In C. As. Nos. 529 to 534 of 62) and Respondent No. 1 (In Petns. No. 70 and 71 of 62); Mr. B. Sen, Senior Advocate (Mr. I. N. Shroff, Advocate, with him), for Appellant (In C. A. Nos. 506 & 507 of 62); Mr. N. C. Chatterjee, Senior Advocate, (M/s. Y. S. Dharmadhikaree 1015 and M. S. Gupta, Advocates, with him), for Appellants, (In C. As. Nos. 529 and 534 of 62); Mr. I. N. Shroff, Advocate, for Respondents Nos. 2 and 4 (In C. As. Nos. 529 to 534 of 62).

Headnote:(1) Civil P.C. – S. 11 - general principles of res judicata apply to writ petitions under Arts. 226 and 32 - decisions on tax liability for different period - constructive res judicata, if applies – Constitution of India – Arts. 226, 32 and 141.

       The general principle of res judicata applies to writ petitions filed under Art. 32 or Art. 226. But the application of the doctrine of res judicata to the petitions filed under Art. 32 does not in any way impair or affect the content o the fundamental rights guaranteed to the citizens of India. It only seeks to regulate the manner in which the said rights could be successfully asserted and vindicated in Courts of law. AIR 1960 SC 1186 and AIR 1953 SC 33 and AIR 1961 SC 1457, referred to. [Para 17]

       Where the liability of a tax for a particular year is considered and decided, in considering the question whether the decision for that particular year operates as resjudicata in respect of the liability for a subsequent year, it may be necessary to distinguish between decision on questions of law which directly and substantially arise in any dispute about the liability for a particular year, and questions of law which arise incidentally or in a collateral manner, as the effect of legal decisions establishing the law would be a different matter. If, for instance, the validity of a taxing statute is impeached by an assessee who is called upon to pay a tax for a particular year and the matter is taken to the High Court or brought before the Supreme Court and it is held that the taxing statute is valid, it may not be easy to hold that the decision on this basic and material issue would not operate as res judicata against the assessee for a subsequent year. In this connection, it would be relevant to add that even if a direct decision of the Supreme Court on a point of law does not operate as res judicata in a dispute for a subsequent year such a decision would, under Art. 141, have a binding effect not only on the parties to it, but also on all Courts in India as a precedent in which the law is declared by the Supreme Court. The question about the applicability of res judicata to such a decision would thus be a matter of merely academic significance. [Paras 18 & 28]

       Constructive res judiaata which is a special and artificial form of res judicata enacted by S. 11 of the Civil Procedure Code should not generally be applied to writ petitions filed under Art. 32 or Art. 226. This principle would be applied to cases where Courts are dealing with cases where the impugned tax liability is for different years when the question as to whether any law has been declared by the Supreme Court by implication, such implied declaration, though binding, must be held to be subject to revision by Supreme Court on a proper occasion where the point in question is directly and expressly raised by any party before this Court. [Para 24]

       In the earlier decision of the Supreme Court one of the points sought to be raised was in regard to the validity of the increase in the rate of tax from 3 pies to 9 pies per ton; and since this point had not been taken in the petition and relevant material was not available on record, the Court refrained from expressing any opinion on it. The point had not been considered. This point was sought to be raised before the High Court in subsequent writ petition. In the subsequent petition the attack against the validity of the notices was based on grounds different and distinct from the grounds raised on the earlier occasion. It was not as if the same ground which was urged on the earlier occasion was placed before the Court in another form. The grounds now urged were entirely distinct.

       Held: The decision in earlier occasion did not operate as constructive res judicata in subsequent writ petition before the High Court. [Para 24]

       (2) Local Self - Government Act, 1920 (C.P.) - Ss. 51, 79 (1) (xv) - rules under S. 79 framed by Local Govt. Rr. 3, 7, 8, 9 - impost of tax under S. 51 - Art. 19 (1) (f) is not violated.

       It cannot be suggested that the impost of tax under S. 51 authorised by relevant statutory provisions and the rules in a capricious administrative or executive affair and so should be held to violate Art. 19 (1) (f). [Para 27]

       (3) Local Self - Govt. Act, 1920 (C.P.) - Ss. 79 (1) (xv), 51 - rule under S. 79, R. 3 -deletion of R. 3 - impost of tax on coal at rate higher than 3 pies per ton is not invalid.

       The scheme of the Rules under S. 79 (1) (xv) provides ample opportunity to the assessees to object to the notice of demand served on them specially when the demand notices are substantially based on the figures supplied by the railway companies and the concessionaires and the statements submitted by the assessees themselves. AIR 1961 SC 552, distinguished. [Para 27]

       Rule 3 which provides that the tax shall be levied at 3 pies per ton of coal must be deemed to provide for the maximum rate which can be levied and that is 3 pies per ton and no more. Rule 3 will have to be read in the light of the power conferred on the local Government by S. 79 (1) (xv) and ,hat would mean that the rate of 3 pies per ton has been prescribed by the Rules as the maximum rate permissible. But Rule has been subsequently deleted by a notification on September 6, 1943 published in the Government Gazette on September 10, 1943 and therefore the argument based on the construction of R. 3 is not available to challenge the increase in the rate. Therefore the contention that R. 3 prohibits the levy at a rate higher than 3 pies cannot succeed since the Rule itself has been subsequently deleted, and was not a part of the Rules at the relevant time when the impugned notices were issued. [Para 29]

       (4) Local Self Govt. (C.P.) - Ss. 51 (2), 79 (1) (xv) - compliance with S. 51 (2) - "First Imposition" of tax - sanction of local Govt. - first imposition does flat mean initial impost but includes every fresh imposition levied at increased rate - such imposition should receive sanction of local Govt. - imposition of increased rate held did not receive sanction of local Govt. and hence was not valid. [Paras 30 & 31]

       (5) Local Self - Government Act, 1920 (C.P.) – S. 79(1) - rules under, R. 10 – assessment – finality - assessment cannot be reopened.

       Scheme of the Rules clearly provides that at the end of each six monthly period, the tax has to be assessed, notices to be issued to the assessee, his objection to be considered and the tax to be ultimately determine in the light of the decision on the said objections; and under R. 10, the two decisions specified therein become final. It may be that the Rules do not prescribe any limitation within which these steps have to be taken by the Janapada Sabha for each period. In view of the provisions of R. 10 it is difficult to hold that the Sabha is entitled to reopen assessments already made and rendered final under the said Rule. There is no other provision for reopening assessment and the Sabha is not justified in issuing notices for the years which are covered by assessment orders already passed. The finality provided for by R. 10 will work as much against the Sabha as against the assessees. [Para 33]